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Treat Carefully
173

Treat Carefully

by The MoleAugust 20, 2012

We all have seen this song and dance before in the past few years. Technically we are looking at a veritable laundry list of reasons why the tape should make a turn. Except that it doesn’t. You try every conceivable angle to make sense out of the tape but it only leads to frustration and more likely a series of trading losses. My approach when heading into uncharted territory so to say: Scale it down – slow it down – let it go. Whatever is going on – it will only make sense in hindsight. So swallow your ego and instead relax, crack open a cold one and wait for a better time to strike.

One possible explanation supporting my general reluctance to touch equities with a ten foot pole right now is the VIX. If you compare the February to April period to July to now then it’s rather easy to draw parallels. Although a reversal is what ‘should have happened’ (how pretentious was that assumption in the first place) the shorts got squeezed to pieces for a few more weeks. I am pretty sure there weren’t many bears left on that bus when it finally departed in late April.

In case you think that the Mole is full of it and that there’s very little risk to the upside then here’s some more food for thought. Recall how we have been slowly gyrating higher in the past ten days all through OPEX week? Now look at the volume profiles that accompanied that little summer marathon. Anything salient standing out? Even the up days were dominated by DVOL and the strongest of them had UVOL and DVOL in a clean tie. But if you want to make big bets to the upside here then be my guest.

Well, just because equities are screwed right now doesn’t mean we steel rats can’t keep ourselves busy. I actually was able to dig up quite a nice collection of setups. You leeches get one freebie – the rest is for my subs:

Thank you sir, may I have another? Are you ready to give gold one more try? I am looking at a possible second sideways triangle formation and although I don’t know when it’ll make a run for it there’s two way’s to approach it. Play the inside swings or get positioned on a breach of either line. Recall that you often will see a false breach before it runs off in the opposite direction, so don’t get married to one direction.

A lot more where that came from – please step into my lair:
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More charts and non-biased commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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ZB (30-year treasury futures) is swinging back up and it’s quite possible that we’ll get a ‘last kiss goodbye’. If you are short right now be prepared for that and don’t get faked out. If you are waiting for an entry then wait for a touch of the 100-day SMA.

Silver is kissing its Maginot line and I expect resistance. Great spot to be short unless we breach. FWIW – silver has been as weak as diet beer all summer, thus slightly increasing our odds of a reversal. Of course never make assumptions that will keep you from turning to the other side if necessary – price trumps analysis every single time.

Boy – sugar must be tinted red at this point as it’s been one brutal slaughter. This has been one of the most systematic sell offs in recent history and I have been waiting for a chance to get long. Which means I and pretty anyone else trading this contract – which is why I’m betting at a NLBL failure right now. Again, a breach would be a huge change in the medium term trend and if it happens I’ll swallow my oversized ego and hop on the long bus.

But we’re only getting warmed up – great setup on USD/CHF. I have an inside day + NR4 combo, an expired NLSL (freeing up space to the downside) and if you call right now I’ll throw in a 25-day SMA looming right above (a breach of which would propel this one higher). Going to hold my nose and take whatever breach offers itself. Let’s not over think this. You want to be right or you want to bank coin? Your choice.

What a juicy setup on the NZD/USD – an inside day right at the 25-day SMA. There’s also a NLBL above which will act as resistance. Thus I would be mostly interested in taking a breach of the NLBL or the SMA tomorrow.

Cable – inside day + NR4 setup. We’ve been harvesting those all year – say no more.

EUR/USD – here’s another one! If you don’t know the rules then please check the cheat sheet.

EUR/CAD – looking like a possible floor here and we’re getting an ID + NR4 combo. How considerate and I intend to get a small helping of whatever is bering served tomorrow.

AUD/USD – yet another inside day setup. And it’s happening right on top of the 25-day SMA. How cool is that? If we get a breach in either direction we’ll have the SMA to provide additional support. Now, that’s the way we like it 🙂

Keep yourself busy but don’t get drawn into taking any big bets. This market is treacherous and will eat you alive if you have the slightest allusions of knowing where we’re heading right now. Let equities play out and instead focus on higher probability setups on the commodities and FX side. Whatever you do – keep it frosty – mentally and physically. It’s been one long and hot summer.

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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 the usual social media waterholes.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

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  • newbfxtrader

    Woot you have outdone yourself again Mole! Best money I ever spend being a sub anywhere.

  • bdoone

    ‘Even the up days were dominated by up volume’: Not to question the master but shouldn’t that be ‘dominated by down volume’?

  • newbfxtrader

    Is there really a diet beer or beer is the diet?

  • StrikeFirst

    I had the same question.

    So… are you saying this is a sign of distribution?

  • http://evilspeculator.com molecool

    Made a correction above: “Even the up days were dominated by DVOL and the strongest of them had UVOL and DVOL in a clean tie.”

  • http://evilspeculator.com molecool

    Right – I corrected that sentence already – sorry, just saw it.

  • http://evilspeculator.com molecool

    Spread the word – my non-existing children need new shoes.

  • StrikeFirst

  • Darth_Gerb

    whew, for a few minutes there, I thought Mojo was dead!

    http://s10.postimage.org/5ud247otj/temp1.png

  • newbfxtrader

    heh JBTFD!

  • newbfxtrader

    U trade FX? Moles got some juicy setups oh never mind….

  • newbfxtrader
  • Darth_Gerb

    proof positive, don’t let a trade get under your skin.

  • newbfxtrader

    Just pulling your leg I don’t really trade the /es much. Past two weeks been trying various eur longs vs other currencies. First week was terrible. Pretty good since last week. Also trying some Aussie longs since yesterday. Steady as she goes….U should try some FX some time.

  • Darth_Gerb

    I waiting for the invite from AMC.
    I hear Carolina is nice in the Fall.
    😉

  • newbfxtrader
  • newbfxtrader

    hehe. trust me you are better off. You don’t want them little ones to take over your life…

  • amokta

    Interesting – seems like a indicator for use with longer time-frame trades

  • newbfxtrader

    Yeah I think so. Most of my equity trades run for months. Cant day trade them. Also for my 401k I think its useful. Cant short in that one.

  • amokta

    Thanks!

  • StrikeFirst

    What’s up with this?

  • Schwerepunkt

    Uh . . . what dip would that be?

  • ronebadger

    It’s a BUY Signal?   (did I win?) No, wait….SELL signal?

  • AMCabrera

    Oh yes it is! I’m really looking forward to it.

  • newbfxtrader

    Aussie (aud/usd) dumped over 200 pips past few days. Why don’t you try some /6A? Same for the kiwi.  /ES is not the only game in town. If you want to scalp look at the eur/aud pair sky, amc and myself have been salivating over. Buy every RSI below 30 on hourly and sell at over 70. Or use whichever indicator you use to scalp.

  • Darth_Gerb

    glitch in the Matrix.
    cloud reboot.

  • newbfxtrader

    Battle of the bots…

  • http://evilspeculator.com molecool

    Boy you guys are quiet today – can’t really blame you though… Hope some of those setups are appetizing enough.

  • newbfxtrader

    http://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/scalping_report/2012/08/07/AUDUSD_Weekly_Scalp_Setup-_Bearish_Below_1.06_China_CPI_in_Focus.html

    We are at the bottom of the channel. Buy! Let the market prove you wrong before shorting. Good chance you are going to test the declining trendline up top from 2011.

  • Darth_Gerb

    Less is more

  • newbfxtrader

    hehe you haven’t seen the setups!

  • http://evilspeculator.com molecool

    The curse of the leech.

  • Skynard

    This bot shorting /ES 1416:)

  • Darth_Gerb

    *Market Closed*

  • bdoone

    Didn’t know it ever opened 🙂

  • newbfxtrader

    Hey count me in when you start shorting the grains again.

  • Darth_Gerb

    Dr. Copper ain’t buying it today.
    50sma flat as a penny.

    http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=0&mn=5&dy=0&id=p80468715488 

  • Skynard

    Almost double top on /ZS, short-able right now. If it does not make a new high we could see a giant move next with small risk:)

  • Skynard

    Looks like a very fast gap fill.

  • Skynard

    Better call a doctor:)

  • MrMargin

    “Employees who own Facebook shares are only able to watch at this point.
    Lockup expirations in October, November and December will allow Mr.
    Zuckerberg and other employees to sell more than 1.4 billion shares. The
    biggest lockup expiration, freeing more than one billion shares, is set
    for Nov. 14. The last lockup expires next May.”
     — http://tinyurl.com/9saa2c2

    That’s going to hurt.

  • newbfxtrader

    Okies. Thx took a shot now lets see.

  • Skynard

    Good timing:)

  • newbfxtrader

    If you did take /6A, stops to breakeven enjoy the ride.

  • Skynard

    AAPL new high 666.

  • Joe_Jones

    Hahaha, that would be evil! 😉

  • Joe_Jones

    Judging by today’s move I’d be looking into buying for a day trade Nov 15 or 16th
    http://stockcharts.com/h-sc/ui?s=FB&p=D&yr=0&mn=0&dy=10&id=p75256089492 

  • grednfer

    I think the bottom of the S&P was 666 in march 2009…..
    Whoever said computers don’t have a sense of humor.
    They’re still buying the dips…..should break soon
    Short but hedged.

  • AMCabrera

    well, so far so good went long at 1.2330 from yesterday as it took it again. I wiil* take half profit and set at b/e which will more than likely make it a magnet.

  • fuw

     Good call on gold. I’m positioned for a run in silver since a while back (already with profits), which is basically the same play. With the jump today its close to a breakout.

  • http://evilspeculator.com molecool

    Hey, our FX setups are progressing nicely! 🙂

  • http://evilspeculator.com molecool

    That thing is coiled up to the max. And just look at those gyrations – so many folks have been whipsawed to pieces. When this one finally takes off odds are it’ll hit the rocket boosters.

  • AMCabrera

    Im going to have to pull aud/usd I went long again at 1.0440 but this time it played nicely. Now I can look at eur/aud but only look.

  • AMCabrera

    the eur/usd is nearing 1.2430 

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/7f7fac7d-f262-4509-887e-bd86e1d223e0/2012-08-21_0619.png
    very simple really. I do not care. Update pulling GBP/USD (1.5700) just now my USD/NOK was triggered.

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/47f4e994-b133-46ac-88f9-d2267103269d/2012-08-21_0624.png
    http://content.screencast.com/users/AMCabrera/folders/Jing/media/4ee0df8e-ce17-4f11-9e6a-1109aa44acc9/2012-08-21_0625.png
    http://content.screencast.com/users/AMCabrera/folders/Jing/media/39625720-dc65-4f74-96ad-6e30d6cd34fd/2012-08-21_0625.png
    the only thing that bothers me about eur/aud. However, by de jure I had to let go of the aud/usd because 1.0500 was my target play and now that the double red is finished and the book flow looks more balanced I will now look to sell rallies in the AUD/USD. At 1.0600 I will sell no doubt if it loses support here AUD/USD will become my first long dollar position in a while.

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/f0011627-6da8-4090-adde-b6f80e922508/2012-08-21_0631.png
    http://www.youtube.com/watch?v=MJTGwZM05lQ&feature=related
    This tape is about thigh deep in sucker territory. HOWEVER, I fully expect this move to finish off any that continue to move short. Perhaps today it overheats some and bears escape to attack.

  • gsavli

     AUD/USD has a nice channel. Very tame pair to trade at the moment.

  • gsavli

     maybe DO NOTHING signal?

  • http://iberianviews.blogspot.com/ catracho

    interesting EURJPY, GBPUSD, EURUSD al at “resistance zones”…BUT will they sell off or break higher?  A break higher can see much higher targets..

  • http://iberianviews.blogspot.com/ catracho

    yes…if it can go..so many are negative on precious metals..

    copper threw me out  🙁 but may get back in on a break higher..

  • newbfxtrader

    Today is a break higher day. Strap in!

  • newbfxtrader

    @Schwerepunkt:disqus Did you take anything I hinted yesterday? You don’t need FX account to trade currencies.

  • Skynard

    Short /HG again @ 3.44

  • AMCabrera

    belly is getting very full.

  • itslance

    What do you use to trade currencies in lieu of an fx account?

  • Schwerepunkt

    No, was too busy with other things. Can’t wait for the regular schedule once kids go back to school. Wife is a teacher too, so she’s hovering in the background ALL SUMMER. Not conducive to trading. 

  • Schwerepunkt

    We’re right at upper resistance, and USD at support. Which way will it break?  Best to watch and let the market tell us. No sign of P3, or even P2.5 . . . LOL.

  • http://iberianviews.blogspot.com/ catracho

    on other side! 😉

  • newbfxtrader

    No worries I sensed your frustration yesterday. /6A was a great setup yesterday. I was hoping you took it. Plenty more coming! Join the FX club!

  • AMCabrera

    zombie horde now eating stops alive it looks like in eur/usd. So much better than last Friday.

  • Schwerepunkt

    I’m looking at aud.jpy right now. Of course, I’d like to see a pullback, but this stealth rally is really annoying and long in the tooth.

  • newbfxtrader

    I feel like most people are trying to top pick the /ES while beautiful FX setups are being ignored. Mole made some great calls on euro, aussie, GBP etc. If you have a futures account you can use /6A for Aussie /6B, /6E etc just as easily. Stop banging your head trying to short the equity market that doesn’t want to go down.

  • Skynard

    Think the /DX sticks 82 level for now. We are now at very strong resistance and don’t see it going much higher. Scouting out a /SI short today as well.

  • newbfxtrader

    I still got the eur/aud senor from couple weks ago!

  • newbfxtrader

    today is going to be a trend day!

  • AMCabrera

    yea I was just triggered a while ago currently profitable that is just today and if you have it from couple weeks ago DAMN. It brings a tear to my eye seeing you eating victims alive.

  • AMCabrera
  • newbfxtrader

    97 and counting!

  • newbfxtrader

    Mole usually has P&F targets. When I see them I am like “yeah like that’s going to happen” and then two weeks later I am like damn I should have stayed in! He saw this coming a mile away. unfortunately I had my hands full of eur/aud longs to add more usd/cad shorts.

  • Skynard

    Short /SI @ 29.2

  • AMCabrera

    belly is too full cutting up my eur/aud. 

  • newbfxtrader
  • AmazingLarry

    Time to go to the school of John Bollinger. To this day the longest consecutive closes outside the BB streak in anything ive seen has been 7. Anyone seen longer?

  • AMCabrera
  • BobbyLow

    I’m sportin wood right now on Crude and might take 1/2 off the table today.  🙂

  • http://evilspeculator.com molecool

    Did anyone grab gold at the line?

  • beentohardknocksU

    Wow – just pulled up the chart after reading your descriptive.  To quote the grandaddy of all zombie movies:  “send more cops”.  Stops don’t seem to have run out yet!

  • http://evilspeculator.com molecool

    Anyone? Bueller?

    http://youtu.be/NP0mQeLWCCo

  • AMCabrera

    LOL! sorry boss..I like to keep it paper to paper. 

  • DarthTrader

    Dollar in an ABC down to 81.765 the yellow one

    There is another ABC down in play to 81.41 the red one

  • newbfxtrader

    I wish. I got my hands full of FX positions!

  • http://evilspeculator.com molecool

    You guys GOT to be kidding me. If I’m wasting my time here I may as well take some time off.

  • newbfxtrader

    lol. I got Eur longs up the wazoo plus nzd longs plus gbp longs plus aud longs and if you lend me some more sure I will get some gold longs too!

  • Turps

    In

  • saltwaterdog

    Tracking 99% above the zero line so far… High Prob UTD in the making….

  • http://evilspeculator.com molecool

    At least someone… thank you!!

  • http://evilspeculator.com molecool

    My loan contracts are signed with blood… 

  • ridingwaves

    I agree…29 was solid resistance..

  • http://evilspeculator.com molecool

    Ever seen ‘The Merchant Of Venice’?

  • Tronacate

    I’m in 

  • Tronacate

    l GG  sDX  s ZB  l ZS  l ES

  • StrikeFirst

    Anyone else uncomfortable that Mr. VIX is slightly up?

  • newbfxtrader

    lol!

  • Skynard

    Nothing but air on the hourly. Just getting my feet wet:)

  • http://evilspeculator.com molecool

    I think at this point VIX is giving us little direction – we are in the squeeze zone.

  • captainboom

    To quote my dad:  “So many women, so little time…”   It’s the same with all those attractive setups boss.  I don’t have enough dicks to fuck them all.

  • newbfxtrader

    VIX usually bottoms before the markets top. Check earlier this year.

  • BobbyLow

    Just took 1/2 of my Crude Long off the table and am letting the remaining 1/2 ride for now.  

    I was able to grab a few points as this was part of a 13 Day Swing Trade.   One of the toughest things for me is not my entry points but my exit points which still need work.  But nevertheless, I’m pleased with this trade.  

  • Joe_Jones

    Blue arrow and neg div on 5 min ZL. I’m adding 1/4 position short. 

  • AmazingLarry

    Atta boy Bobby. Right there with you. I’m just a small fry playing USO but its nice to be in good company. Well played, sir.

  • AmazingLarry

    Fo sizzle. Been waiting 9 months. Thx for the added confidence. Interested in your thoughts as it unwinds here, too.

  • Skynard

    took /ES as well on that:) Additionally, WTIC tagged the 200 and got rejected.

  • Joe_Jones

    Hehehe. Glad to have company. if VWAP fails, I’ll add some more.

  • BobbyLow

    Thanks Larry and I’m glad this one worked for you too.

    BTW, I’m just another small fish trying to survive in a very large ocean.  But it is nice when I’m able to stay one fin ahead of the Sharks.   🙂

  • MrMargin

    Seems like MMs are starting to price in some downside risk.

  • Skynard

    Ya, not much bear air around here lately:)

  • MrMargin

    $AAPL taking it in the face on heavy volume, down almost $14 from the intraday peak.

  • ridingwaves

    just noticed that..the Gold breakout of your wedge chart yesterday is telling..if it doesn’t get slammed by end of this week…1800 could be back in play…

  • Skynard

    LOL, check out the Q’s:)

  • Tronacate

    Are we picking tops???…..tsk tsk

  • MrMargin

    Doesn’t look too good. ES, on the other hand, looks better. I’m not yet pulling my buy order at VWAP.

  • AMCabrera

    Nope. You cant unless you want a small riot in here. (serious face) I just dont mess with metals.

  • AMCabrera

    Going short AUD/USD 20 pip stop loss it is having a hard time.

  • MrMargin

    Chart certainly looks interesting. However, GC is still below the 200d at 1646.9. Needs to be taken out before anything can happen.

  • Joe_Jones

    Hehehe, looking good…

  • AMCabrera
  • itslance

    Anybody else just see VIX fall off a cliff or is my data feed screwed up?

  • http://evilspeculator.com molecool

    13.47 while equities are pushing down. I’m not touching equities with a ten foot pole right now.

  • Joe_Jones

    Adding more shorts now

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/cc16bf7c-8f8e-46d3-9e30-1cb2783611ac/2012-08-21_1129.png
    still looks just warm enough but getting hot. However, until it can get below and stay below upper BB you can presume that this will boil first. THEN it will be time.

  • AMCabrera

    added another 5 feet for me. 

  • http://evilspeculator.com molecool

    Maybe – or they could just be pricing up all those OTM lottery tickets. But yes, bears watching.

  • Joe_Jones

    Reads like a recipe for boiling a frog 😉

  • http://evilspeculator.com molecool

    Good job guys.

  • AMCabrera

    yea it has pull away from the upper BB line a bit much but you know the deal. Are you pulling the shot guns out at 1433. WAIT did it go higher than 1425?

  • Joe_Jones

    Let see how the day goes. May not have to wait until 1433. Currently 3/4 of trading position short, 1/4 cash.

  • ridingwaves

    slow rise on light volume into previous big top…Ringling brothers freak show pattern in play..

  • Skynard

    Oh the games, check r out now:)

  • Skynard

    VIX signaling a big move here, would gather it would be down:)

  • Joe_Jones

    losing support on AUDJPY (5 min)

  • Skynard

    ZL making em a liar:) Added /ES on the ramp.

  • ridingwaves

    seems the 10 yr wants to find 2.00 again…ben will not be pleased…equities are not worried about it though..running into 200sma right now..

  • Darth_Gerb
  • Schwerepunkt

    EURO is out of line, though. Trying to figure that one out.

  • MrMargin

    Long ES 1417, stop 1415.75.

  • amokta

    Long, the market, me me me too 🙂

  • Darth_Gerb

    headfake or resistance becomes support?
    find out soon enough
    [SPX]
    http://s17.postimage.org/6bhufi8r3/temp1.png 

  • AmazingLarry

    $OEXA50 at 91 and flattening. The 200 Day still has room to run. 
    $BPSPX at 70 with a lot more room to run. 

    End the Fed? Nah, just ignore them. 

  • StrikeFirst

    It might be more instructive to look at the DOW:

  • StrikeFirst

    Today’s close will be very important:

  • StrikeFirst

    Forgot the image:

  • amokta

    Ben-B, The God of Traders, favours the longs?

  • AMCabrera

    aud/usd and eur/jpy both short. Not very serious positions. However, I have not set a take profit the only thing I have set is my stop loss both of which are very low tolerance ones. Also, the AUD/JPY just triggered short.

  • StrikeFirst

    NYA

  • StrikeFirst

  • Skynard

    Shorting EURUSD now for some dollar rampage:)

  • AMCabrera

    yup im in the mood for the American chick too.

  • newbfxtrader

    cough *chicken* cough…

  • AMCabrera

    http://content.screencast.com/users/AMCabrera/folders/Jing/media/28ca4aa6-035e-4e95-b78a-dd6c3bd0760c/2012-08-21_1346.png
    who knows perhaps zealous graham followers or just those who follow the news.. I will love to go short once that top bulge gets busted out none the less. But yes for now Im done being long. 

  • amokta

    Resistance is futile – flash crash or what?!

  • Skynard

    SPX 1410 up next:)

  • ridingwaves

    sure looks like a gap and trap in multiple indexes, sectors and commodities etc…

  • Darth_Gerb
  • Schwerepunkt

    Seems the trend day did not work out . . . 

  • Skynard

    Sure looks like ZL broke the div, need a few more candles to determine.

  • Darth_Gerb

    depends, trend down or up?
    😉

  • captainboom

    The TD alert kept me from shorting the blue light specials at the top.  Historically, they haven’t worked on a TD.

  • Skynard

    VIX having to much fun, down we go:)

  • Darth_Gerb

    Inverse-T post hole setup.
    [SPX]http://s17.postimage.org/ja6sg1n7z/temp2.png 

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨ 
    ¨°º¤  S H A K E   N ¤º°¨ 
    ¸„ø¤º° B A K E !“°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • Darth_Gerb

    ARGH!

  • DarthTrader

    Outside day Helluva a way to make a  top

    Break two prior highs then reverse