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Trouble In Paradise
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Trouble In Paradise

by The MoleJune 3, 2016

The May NFP jobs just dropped half an hour ago and the numbers were was so dismal that it left a smoking impact crater across equity futures. Apparently we added 38k jobs which was several standard deviations below the median forecast of 160k. The number was the lowest since September 2010 and adds insult to injury after the April report was already revised downward from 160k to 123k. Smoking!!! Let’s do a quick review of the damage inflicted thus far:

2016-06-03_spoos

The E-Mini futures – couldn’t have happened at a better time. The tape literally flipped on a dime here and I don’t recommend stepping underneath that falling sword.

2016-06-03_ZB

Bonds – sometimes I’m getting tired of being right all the time (no – I’m not). Recall how I mused that a rate hike may still drive t-bonds higher? Well until about an hour ago that was the expectation and now that it’s probably off the table bonds are literally exploding higher. I’ve said it before and I’ll say it again: There’s no stopping bonds – it’ll be the most profitable vertical in the months/years to come.

2016-06-03_gold

Gold – I was already long here as you recall and this campaign just became very profitable 🙂

2016-06-03_yen

There’s not stopping the Yen as of late – good (perceived) U.S. economy and expectation of hiking rates = bullish. Bad economy and rate hike shelved once again = even more bullish. Rumor has it Kuroda is preparing himself for ritual seppuku right now…

2016-06-03_EURUSD

Last not but least the Euro – I’m glad that I have been literally draining my local ATM over the past few days as this is going to leave a mark. Not happy about this one – looks like I’m going to have to double subscriptions rates next month (j/k).

Alright I keep you guys posted over the session. For now I don’t recommend bottom fishing or top calling. Let the shockwave pass and then start looking for limping victims that may make easy prey 


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.
  • ridingwaves

    Mole is looking gold….I do like paradise though…this will put a kink in plans..

  • randomuser6789

    That is a serious candle!

  • Time Bandit

    So the question is does the market recover and rally today because as we already know there will be no rate increases forever. . .? Savers are screwed forever too with a 50 to 60 year time frame for a CD to double.

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

    Hmmm … perhaps the ‘only’ question should be … ‘what does my RBT say I should do?’

    And then Nike.

  • ridingwaves

    that is the question of today….lower dollar would seem to = risk on…commodities should love it…
    I was hoping for further pounding of gold to get in NUGT at a gap near 60…no go…
    Financials are getting pounded, GS just went below 100sma

  • Time Bandit

    Just making idle converstion but my RBT tells me the best decision I ever made in this business was to only trade the energy/basic material sectors along with a couple of currency pairs and leave the rest of the markets the hell alone. 🙂

  • mugabe

    equities moves relaltively muted .. but yen, long bond and gold – gangbusters!

  • Ronebadger

    I got your Black Swan right here… uhhh…maybe not…

  • mugabe

    so far big moves in forex .. wouldn’t say black swan though

  • ridingwaves

    I would look to the far east for black swan or a paper default on metals…
    June is active delivery on silver…

  • mugabe

    correct – jogging removes the tension

  • Yoda

    In spite of the big red candles at the open there is hardly much fear in the market. That might change though if/when stops of recent (nervous) bulls get hit. Anyway the writing was on the wall all along.

    Have a fugly Friday.

  • http://evilspeculator.com Sir Mole III

    Ah – she bounced right back. Interesting…

  • Mark Shinnick

    Yeah, no real break in trend.

  • http://evilspeculator.com Sir Mole III

    Wouldn’t be so sure yet. It’s Friday so nobody is going to want to be left hanging over the weekend. They’ll show their cards before the end of the session 😉

  • Yoda

    Oh, and Happy National Doughnut Day

  • ridingwaves
  • Yoda

    yum!

  • ridingwaves

    commodities longs should hold up, that was a complete smack down on gold shorts especially on NFP day…

    I’m kinda of getting giddy about silver and gold here…
    spec bio still getting bids makes me leery of this move
    HUI monthly seems to be reaching for critical juncture over long term and now has some support..silver and gold look good in summer too…’
    http://s33.postimg.org/5vto2s3hb/HUI_Monthly.jpg

  • Yoda

    Yeah the long dollar trade really got kicked in the nuts today. Technical damage is really bad.

  • Mark Shinnick

    Looks like I’ll begin easing into tight stop TVIX somewhere around here.

  • ridingwaves

    in hindsight, the 100sma rejection on daily should have been telling for DXY… risk on…94 falls and 92 next… if HUI gets above 200/50 congestion above it bull orgy begins…

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

    ..enough to make a reversal in the ratio, but nothing to write home about.
    [GLD:UUP]
    http://stockcharts.com/h-sc/ui?s=GLD%3AUUP&p=D&yr=1&mn=0&dy=0&id=p39829610112

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

    somebody reached for safety

    gold sector and treasury bonds snapped higher
    [TLT]
    http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=1&mn=0&dy=0&id=p00077507972

    however, High yield [JNK] isn’t selling off on the daily. Mixed message in my book.
    if the Spoos 5m gets under the VWAP, take a stab.

    Going to be Hot here in Phoenix today, traditional 114F – stay cool.
    -GG

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

    I guess in a world where borrowers are now demanding interest from the lenders, some sort of conventional sanity must still exist in at least one market.

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

    In a world of lies, the Truth is a weapon.
    Unfortunately, the Market can stay irrational, longer than us.
    ..just another reason to hang out at Evil Spec.

    ps. 4hr charts are good for my soul. A dash of Zero doesn’t hurt.
    😉

  • Time Bandit

    Irrational is a relevant term. Irrational is also being a perma bear like a lot of us were in the past blaming the crooks for “making us” have massive short positions while the markets kept rising because we knew what was right. 🙂

  • Time Bandit

    Salvaged +.4 R on on Long XLE. FBOW, now short Integrateds via ERY.

  • Yoda

    and stay hydrated

  • ridingwaves

    it’s simple as risk on…

  • ridingwaves

    TB/BL
    What is behind the switch compared to yesterday? DXY down, risk on, commodity up seems is still in play..heck JUNK chart looks bullish also. Trying to get idea on your switch, not critiquing…
    775000 oz of gold taken for delivery this month is an aberration from the norm for paper comex…

  • Time Bandit

    I use a Combo of ATR Trailing Stops and BB’s for my Entries and Exits. At 1:30 PM my 4 Hour Chart of XLE and the close of the 9:30 candle called for a flip. I’m still Long Crude via UCO and still Long Basic Materials via XLB. If this turns out to be a false alarm, I’ll take the loss and re-enter Long XLE on a candle close above $67.40 -$67.47 based on the present view.

    I have follow my plan or I’ll become completely lost. Another thing is that I’ve already dodged a bunch of bullets this week because of my high concentration in Energy and Basic Materials. I also did not want to commit the sin of allowing a winning trade to become a loser.

  • ridingwaves

    good plan…
    GDX about to explode thru some resistance…
    32 first target, 37 resistance on weekly…

  • http://evilspeculator.com Sir Mole III

    Looks like everyone got fucked today – glad I stayed away. Anyone trade the swing up?

    .

  • mugabe

    most days recently have closed higher than they’ve opened … bullish

  • Mark Shinnick

    Sort of…by not being short 🙂

  • Ronebadger

    Not a whole lot of conviction…either way

  • Yoda

    bots just working out the high volume profile. Close should be interesting

  • mugabe

    ‘I have to follow my plan or I’ll become completely lost.’

    I feel the same. I’m not good enough or psychologically tough enough to be discretionary.

  • mugabe

    I’m not sure rational or irrational are v useful terms if you want to make money: the price trend is what it is

  • Time Bandit

    OK it’s diatribe time. I haven’t bitched about anything in a long while but I have a big bitch today and that is about trading relatively thinly traded options. Last Friday, my position in XLB was a little shaky so I sold some $47.50 calls June 3 (one week out) near the money calls against some of my position. I thought for awhile that they would expire this afternoon out of the money. But they’re in the money now by a few cents so I either have to roll them out one week or close the calls out at breakeven (as of right now). I looked into rolling out at the Mark Price (half way between the sucker price and minimum price). Well the Mark price on a roll is so far off the mid point between bid and ask on the individual options that it’s nothing but a screw job.

    So what’s the point? The point is unless you really want to get shafted by the option market, stay the fuck away from anything but high volume options because there are way too many ways to lose or at the very least not make any money.

  • mugabe

    114?? not looking forward to the big heat coming to madrid. with a bit of luck we’re a month or so off yet

  • ridingwaves

    92 retest on DXY looks in play, breaks on thru their and we go to the other side
    https://www.youtube.com/watch?v=rOpQjD-rX0g

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

    I agree. but instead of jumping on the cynic wagon –
    I have to remember the other way of trading with low probability, high reward strategy.

    ie. If 9 out of 10 fail, but the last pays off BIG, some people do & can make it work.
    Myself, I know I can’t.

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

    I stayed away.
    good thing too, price never touched vwap.

  • Time Bandit

    I hear ya. But for me it’s the old chestnut of “doing the same thing expecting different results” and have results be the same over and over again so in its most simple terms – fuck selling covered calls. 🙂

  • mugabe

    have to agree about high volume options. bit suprised that this happened to XLB – would have thought it was fairly liquid.
    btw, still in xlb for next two weeks, but not in xle. was a close call for xle (almost kept it) but there were better candidates in my rules-based portfolio universe.

  • kudra

    kudos to Mole for nailing the recent move in gold. Anyone short GDX got pummeled all day long. Thankfully it wasn’t me. Have a great weekend, all.

  • CandleStickEmUpper

    The day started off well for the bears but they ended up getting raped by day’s end. What else is new? Staying away from this market for now.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://evilspeculator.com Sir Mole III

    Look – I told you this morning to stay out. This has nothing to do with the market but everything with your inability to pay attention and follow time tested advice.

  • http://evilspeculator.com Sir Mole III

    Thank you sir.

  • mugabe

    short term view – no prizes for identifying where support is

  • evilasevildoes

    I have a nuther theory …..China and Japan made a deal with US to Buy Saudis Oil and Bonds with Gold

  • Billabong

    It was good to see most folks doing well today. Miners did really well adding on avg 10-12%. Still no 52 week new highs but anything is possible next week. One area I didn’t see discussed today was financials taking a hit regardless of whether the general markets were up or down through the day. The NFP probably didn’t help, but BAC and C were definitely the financial weak links. I’ll be checking the banks for sub-prime auto loan exposure this weekend … Those $70K pick’em me trucks may be coming home to roost.

  • Billabong

    It looks like we have the same pattern with the BPI as last year. We’re now down to 3/12 sectors above 80% and Utilities getting stronger at 96.5%. The VIX was strange today with a slight negative close and YM/ES/NQ also closing down … It’s a derivatives thing (LOL).

  • Billabong

    I’ve now been sitting in a hotel watching 4 hours of Flip or Flop and Master Flippers … This stuff is down right addictive. It’s now time to watch the US play Columbia. Have a great weekend…

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

    Perhaps it is more accurate to say ‘where support was’ … or ‘where potential future support may be’ … not withstanding the semantics, how does your / a RBT dictate that this view is to be played ?

  • mugabe

    Many trading challenges are embedded in the language we use to describe markets.

    Among
    the most common things I hear from traders is that markets are
    difficult to trade because they are “choppy” and “noisy”. What,
    precisely, does this mean?

    A
    clue to the meaning is that we never hear the opposite. When was the
    last time you ever observed a trader high-fiving because markets were
    “smooth” and “predictable”? When have you heard someone making money
    attribute profits to market “noise”?

    Yet
    another clue to the meaning is that very few traders actually measure
    market choppiness/noise. It’s not that noise and signal are part of an
    explicit trading framework; rather choppiness is used as a reason to
    either explain losses or to not trade at all. From that perspective, a
    choppy market is one that cannot be successfully traded. It’s the
    market equivalent of playing in a casino where the game is severely
    rigged against the gambler. Perhaps that is why so many conversations
    that start on the topic of market chop veer onto the topic of “algos”
    and their “manipulation” of markets.

    http://traderfeed.blogspot.com.es/2016/06/how-language-defines-our-limits-and-our.html

  • mugabe

    I personally don’t use support and resistance. However, possible uses might be:
    stay long while above support, buy when/if prices reach support, sell if/when a bar closes below support, etc.

  • Billabong

    Two primary types of markets / sectors; sideways / channel or trending. Identifying the market type and then support / resistance lines followed by volatility level using any of the volatility tools lays the cornerstone. Then apply the right RBT for the situation. It should be easy but it isn’t because of the physiological issues involved. The critical component is expunging biases and belief systems on a regular basis. Timeline wasn’t discussed because it’s a DNA issue and the individual needs to know what level of stress they can handle.

  • http://evilspeculator.com Sir Mole III

    Ahem – I do… 😉

  • mugabe

    V good points. I think timeline and stress is a very individual issue e.g some people would find trading off monthlies v stressful (you can’t sell until the monthly is closed) whereas others would find trading off 5 minute bars equally stressful.

  • mugabe

    I think another differentiation between markets is quiet and volatile

  • mugabe

    you are one o the ‘very few’ he’s talking about 🙂

  • mugabe

    feast of football with Americas cup and euros starting in a week. but remember – the two best club teams in the world this year were both from Madrid 🙂 That is a staggering achievement.

  • mugabe

    I think one of the best ways of getting rid of your biases is being careful about your information diet

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

    Miners,
    excellent place for that reversal,
    Don’t you think?
    😉

    http://stockcharts.com/h-sc/ui?s=%24BPGDM&p=D&yr=5&mn=0&dy=0&id=p34677450226

  • Time Bandit

    Flip or Flop is like watching like “Ken and Barbie” Flip Houses. 🙂 I like the show but the prices of most of the houses that they flip in California are absolutely nuts. Some of these houses they buy are 1200 square ft. rat and cockroached infested shit holes that they buy for around $320K put $70K into them and sell them for $450K. I wonder what kind of money does the average person have to make in order to live in that area?

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

    B’bong – From my perspective your proposition above involves many steps … each of which, by definition, creates a weak link.

    1) Trend or non-trend market phase – the important aspect is where the market is in relation to said definition … ie just starting in a phase or in the middle etc.
    2) Support / resistance levels – recognition in real time is a challenge … additionally my earlier comment regarding ‘previous’ or ‘potential’ comes to the fore.
    3) Volatility measure – refer to 1 above.
    4) Right RBT – yet another decision.

    My preferred road is to have a robust RBT (consisting of more than 1 event / setup) that performs ‘adequately’ under all market conditions / phases. Logic would dictate that this approach will not produce the ‘best’ results … yet a results vs effort view may show that this road is far more effective.

    Each to their own … below is a weekly EqC (covering 12 months) of such an approach employed by a student.

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

    M’gabe – I have stressed the importance of matching the 3 sets of DNA here before … DNA of the person + DNA of the market / timeframe + DNA of the RBT.

    When all three fit like a glove, then the Journey can become much easier.

  • mugabe

    Would ‘consisting of more than one set-up’ mean,in crude terms, a combination of different approaches: break out from a range, buying the dip, trend continuation, rebounding from resistance? I don’t mean necessarily the ones I’ve mentioned, but you get the idea

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

    M’gabe – exactly … a number of setups / events / ideas that each produce ‘adequate’ results (as measured by YOUR personal gauge / goal / tolerance etc – DNA in short).

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

    A graphic from a previous comment I made here ages ago regarding the DNA fit is below.

    EDIT: ‘IQ factor’ refers to your ‘Impatience Quotient’.

  • mugabe

    ‘B’bong – From my perspective your proposition above involves many steps … each of which, by definition, creates a weak link.’

    I that that’s true. It’s a ‘big ask’ to be right about all of those things consistently enough to make money. It’s not impossible by any means, but requires a high degree of skill – as discretionary trading indeed does.

  • Billabong

    I understand your point. In my mind it’s simple but for someone else it could be confusing. Also running a longer time frame changes the perspective.

  • Billabong

    Is it discretionary or intuitive. This indeed leads into a serious discussion about qualitative and quantitative trading. And goes full circle back to the one common denominator – emotions / psychological stability.

  • Billabong

    Thanks … like the chart … picture is worth a thousand words/

  • Billabong

    I suspect they have multiple properties going at one time and cherry pick them for the show. Also, a large swath of these shows are buying at market or above with little if any negotiating room. Last time I saw this was 2006-7. The first casualty of the downturn was ratings and followed by the shows. Do you remember Flip This House?

  • Crofx

    You should come to Sydney, Australia and see what that gets you, if you do find something at that price you will welcome the cockroaches

  • http://evilspeculator.com Sir Mole III