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The Long Con
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The Long Con

by The MoleSeptember 11, 2014

As you can imagine I wanted to wait out Draghi’s announcement before putting up a post but that didn’t leave me with much time before the bell. So here we go in no particular order:

2014-09-11_spoos_update

Equities still in whipsaw mode but I’m actually starting to give the bears more credence here. Neither side has been able to make much of a dent but let’s not forget that 1) the onus is on the bulls to continue the trend and 2) there are really no bears left. In a late bull trend downside corrections are usually generated by a lack of bulls as opposed to being caused by strong selling pressure. Which is why we have seen the tape plot extended tops followed by a quick fall to the next support zone.

Bottom line: The bulls need to push this turd back above 1997 – if we close the week below it tomorrow then there may be a price to be paid next week.

2014-09-11_ZN_update

Bonds are on the way now – my new target area is 123’295ish. Glad I flipped that initial long to a short after being stopped out. A lack of directional bias does have its rewards 😉

2014-09-11_cotton_update

Cotton is accelerating higher and I’m moving my stop to the 2R mark. Very happy camper because I think we may have a runner here. Current target near 76 – if we touch that I may just be able to afford a turkey for Christmas!

2014-09-11_cocoa_update

The cocoa campaign also back on track and we may have another runner here as well. Target – well, who cares – there’s nothing but air below. I have to say – the fun has been in futures lately!

2014-09-11_coffee_update

Coffee is looking great today – inside day candle right on top of a very tested 100-day SMA. I’m taking either breach it’ll throw my way tomorrow/tonight.

2014-09-11_EURUSD_update

EUR/USD – may attempt a bottom here (much to my chagrin of course) – time to hedge, triggers on the chart.

2014-09-11_dollar_update

And I promise I won’t boast about my DX campaign (snicker) – but for the rest of you guys here may be a chance to play a shake out. Double inside day – usually decent odds on that as velocity seems to be slowing up here. A breach in either direction is a good play. I’ll put my stop at today’s lows – if stopped out I’ll be short with a stop near yesterday’s highs.  If we get a double whammy (stop out both ways) I’ll continue higher with my current position size.

FWIW – the long con across various futures contracts seems to be the play of the year. This is easy money folks with beautiful prime rib entries and strongly trending tape. If you keep staring at equities all day you may not just go blind but also miss out on a lot of fun. And that – my dear steel rats – would be unforgivable. So get with the program!

 

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Cheers,


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Dave

    Scott, you mentioned the hammer on the daily AUD/JPY yesterday. Any reason you didn’t take that trade long on the breach of the high overnight?

  • Xan

    Great post mate. EUR, Coffee and SPX have my attention……..

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • SS_JJ

    second that. fock equities. fun is elsewhere.

  • newbfxtrader

    Price is all you need. Volume has been declining for years but doing wonders for the SPY price hasnt it?

  • SS_JJ

    this one is a buy too in my book.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    true. just sniffing around for a snap upward.

    UCO found some wood today.

    http://stockcharts.com/h-sc/ui?s=UCO&p=D&yr=0&mn=1&dy=0&id=p68966309390

  • newbfxtrader

    Setup looks better now. Took out the lows, reversed. Put your entry above todays candle. If you get follow through you should be good.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    good council. don’t want to step in front of the train.
    let it prove itself.

  • Scott Phillips

    Looked very bearish yesterday, super strong reversal. In context this smells like a change of trend to long.

  • Scott Phillips

    You said it yourself… trying to find evidence for something you want to do. Looks like a good early entry to me.

  • Scott Phillips

    Just position sizing limits for me, I only allow myself a maximum of 4 trades where the stop has not yet moved to breakeven or better.

    It would have been a losing trade (so would EURAUD which was also a correlated setup). In other words, pure luck.

  • Scott Phillips

    My daily chart system works very poorly at the end of trends, but very well during the beginning and middle. Perfect example is crude which made 1.2R on the short yesterday and then reversed stopping me out for breakeven. Nothing will work all the time, and my setups are not magic, in fact they only work around 55% of the time. However when they win they win big and many of the losses are small losses.

  • Scott Phillips

    My only setup for today is a long YM Z4 on break of the daily high. I absolutely fucking hate this trade, but have committed to taking every setup good or bad for 90 days

  • http://evilspeculator.com molecool

    Cause he’s an Ozzi and he doesn’t like sushi.

  • http://evilspeculator.com molecool

    Going to bed – hold the fort.

  • Scott Phillips

    aye aye captain

  • Scott Phillips

    Ahh it opened outside the previous day’s range, so no setup for me.

  • Dave

    I understand the correlated trades and only taking one or splitting the risk up between a couple but why the position sizing limits? Is it a psychological thing or something else? Seems that maximizing the number of trades with a winning system would maximize gains. What am I missing?

  • Dave

    NQ and ES are both hammers also, why not go long one of those on a break of the high? YM looked like the better setup with two back to back hammers with the last also an inside stick.

  • Billabong

    Is YM down? I’m showing 16964.

  • Billabong

    I was slow off the stick on CL. Currently BE.

  • Billabong

    Anyone notice PM miners showing signs of life … possible set-ups.

  • SS_JJ
  • Scott Phillips

    I’m looking at December

  • Scott Phillips

    AHH shit a kinetick data snafu – I’m incorrect!

  • Scott Phillips

    Yes you are correct. Maximizing the number of trades with a winning system would maximize profit.

    However I don’t know about you but I am uncomfortable with the prospect of a worse case $100,000 daily drawdown. If trading for a long time has taught me anything it is that having multiple positions open they are ALL implicitly correlated. If you calculate the odds of 8 positions simultaneously being stopped out if your win rate is 50/50 the odds are 1/512. My experience is that the real odds of this are about 1 in 180 or twice a year.

    Fat tails. In a weird way soybeans are related to bonds are related to audjpy. It’s all connected

  • Dave

    Got it, thanks!

  • Billabong

    Yes, December. Is it really down 100 or is it a glitch?

  • Billabong

    Looks like GDX is one day behind…

  • Scott Phillips

    glitch on my end

  • Scott Phillips

    In my opinion letting price break the high of the daily candle to get long is EXTREMELY good practice, saves you many bad trades

  • http://www.ProfitFromPatterns.com/ Ivan K

    Depends on your definition of a Hammer.

  • Scott Phillips

    Correct. My system has a condition that if the upper bollinger is falling or flat (for a long) a trade must have 1.2R to the upper bollinger, so I can’t take the others, even though NQ is recently the stronger market.

  • Scott Phillips

    Mine is a lot different from your classic definition :)

  • http://www.ProfitFromPatterns.com/ Ivan K

    There are many roads to Rome … all with detours along the way.

  • Scott Phillips

    Indeed

  • Scott Phillips

    Absolutely. One thing I’ve noticed lately is how ridiculously trendy the whole ag space is. Corn, Beans, Meal, Wheat, Oil.

    I know it doesn’t last forever but right now futures is the place to be

  • BobbyLow

    FWIW, Oil has to have a little more consistent upside to go before I jump into it. We’ve had one up day out of the last six. I’d rather pay more per share and have more confidence in the trade. But that’s just me. :)

    OTOH, you have shit stirring in the ME again but there’s always shit stirring there. So who knows? In any event, I want to see some follow through and there is not enough evidence for me yet.

    JMHO

  • http://www.ProfitFromPatterns.com/ Ivan K

    Very very few daily reversals occur with an OPu (Outside Period up) … let alone a KRu (Key Reversal up) … a lot of energy has been expended in creating this bar … a better opportunity to have a long campaign than buying a break of the High of this bar usually lies ahead … additionally the prerequisite Retest of this low is still outstanding.

  • wandering196

    Looking at this chart it strikes me that we haven’t touched the upper band of either the 25 or the 100. Usually we do. Goes along with moles first chart
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p24401770800&a=367317953

  • Scott Phillips

    Good point

  • Scott Phillips

    Usually meaning the last few times. Is that a statistically valid sample?

    The real question is “would it catch people by surprise if that didn’t happen?”

  • bdoone

    Probably seeing ES rollover from Sep to Dec contract… 8 handle difference

  • BobbyLow

    Wandering, I don’t know if this means anything at all. IMO, this is a more subjective than objective matter. Also what happens if these upper bands don’t get touched? Is there any reliable back testing that can show what “usually” happens when they don’t touch?

  • Ronebadger

    The lines are just a “guide”…a part of the puzzle, not the key part

  • wandering196

    You are all right. It was late, I was looking for justification of the down side. The most difficult thing I face is getting rid of my biases.

  • BobbyLow

    I agree. Indicators are only as important to each individual in relationship to their ability to assimilate an edge. This edge should be able to prove that when X happens, there is at least a 50% or better probability that Y is going to happen. Otherwise a flip of a coin might perform just as well.

    BTW, this “edge” does not have to be proven to the world. There are many, many indicators with a wide variety of usage and some work fine for certain people and not for others. Nevertheless, these indicators without a proven edge are just lines and numbers.

  • BobbyLow

    NZD/USD keeps on making new lows. Amazing. I only have a partial position remaining but it’s still cool to watch. :)

  • http://evilspeculator.com molecool

    And down she goes…

  • Skynard

    Signal getting much stronger now.

  • Skynard

    Signal getting much stronger now.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    gap fill on SBUX.

  • SS_JJ

    This should be fun for a change

  • Skynard

    Real pissing match:)

  • SS_JJ

    LOL! So true.
    STFR is my trade plan for the day

  • bdoone

    Large OI in weekly SPY 200 strike: 122K calls, 135K puts..wouldn’t be surprise to see a rip above to keep bulls intererested…then pull the rug. TICK firmly -ve all morning so far.

  • Skynard

    Still bearish, below the signal line.

  • SS_JJ

    ZL is my guide today.

  • http://www.ProfitFromPatterns.com/ Ivan K

    BL – What difference do you see between ‘probability’ (50%) and ‘strike rate’ (50%) ?

  • ridingwaves

    Alibaba IPO is not a signal of a market top: strategist

    you don’t say….hmmm…now I’m much more confident about my long vix buy after the baba roll out…

  • SS_JJ

    Let see some long red candles now 😉

  • TrayTard Martin

    Please selloff. I need some cash money for the weekend, gnomesayin?

  • Skynard

    She’s gana roll………..bulls jumping ship.

  • TrayTard Martin

    Need to break through the center BB on the daily SPY

  • Skynard

    Still eye balling that gap @ SPX 1970 for first profit. Looks like first wave

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • SS_JJ

    plenty of volume at this level. I’d be looking at SPX 1940 for a first stop.
    http://evilspeculator.com/wp-content/uploads/2014/09/2014-09-10_spoos_profile.png

  • Skynard

    Bigger move in the making, check the hourly now:)

  • Ronebadger

    Just hit low tick of the day on NYSE and NDX

  • Ronebadger

    Don’t forget, the bigger of the two CMEs coming is coming right about now.

    http://www.solarham.net/

  • Skynard

    Bounce territory for a reload is all.

  • ridingwaves

    it’s going to be 100 degrees in parts of Napa Valley today…I’m just done setting up a stand selling zinc oxide alongside this most excellent winery….http://www.gunbun.com/wines

    A CME and a nice Cab will be a good way to kiss the ass goodbye…

  • BobbyLow

    Not sure what you mean Ivan. My point was to mention a need for a back tested and forward tested proven edge. If you are referring to a strike rate as a win rate, I’m aware that it is possible to make money with win rate under 50% with proper campaign management. I’m actually running a 52% Win rate right now and am fine with that.

  • Ronebadger

    you have to BEND OVER for that….watch it….

  • ridingwaves

    which might be more dangerous than the CME around here…

  • http://www.ProfitFromPatterns.com/ Ivan K

    “there is a better than 50% probability that Y is going to happen” … implies strike rate.

    EDIT: Strike Rate may be the same as your ‘win rate’.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    A cabernet sounds good, don’t forget the classical music.

    https://www.youtube.com/watch?v=EWEQMV-FJwY

  • Billabong

    Update: Closed T short for BE. Also moved SL from -1R to BE for FSLR and AAPL.

  • Skynard

    Div 5 min, we will ignore based off of the ZL.

  • BobbyLow

    7 PM Greenwich Mean Time – Where are you located?

  • Billabong

    ES LOD…

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    10 min candles, she’s a movin.

  • Billabong

    This is for all of our Australian / European friends … US this week / next week who knows / Oct I’ll be in Asia Minor.

  • http://evilspeculator.com molecool

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    ¨°º¤ S H A K E N ¤º°¨

    ¸„ø¤º° B A K E !“°º¤ø„¸

    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • ridingwaves

    the last dip and buy ended on a friday with similar move down…