Education
Now Reading
Waiting For Godot
50

Waiting For Godot

by The MoleJune 6, 2017

Another difficult lesson to be learned as an aspiring trader or investor is that trending markets are either the easiest or the hardest to trade. Clearly it’s great if you got in early and your positions are flashing bright green. Otherwise it very much depends on your trading style and of course whether or not you managed to get a seat on the bus. You may prefer to wait for a confirmation retest before hopping on an unfolding trend, you may not get filled (it happens!), or perhaps you simply got kicked off just before it took off.

So it’s fair to say whenever you equities take off you can be sure that retail in particular is looking for the proverbial BTFD to enter, which of course may never materialize or may occur way too late when the meat of the advance becomes ancient history. Which bodes the question: should you wait for a dip or should you enter during an advance? Well, yes and yes.

2017-06-06_spoos

As Yogi Berra once said: If you come to a fork in the road, take it! Look, it all depends on your trading style. A trend trader doesn’t think twice about buying high and selling low. His success rate is low but when it does catch a trend he rides it as far as possible. Things are a bit more complicated for me in these situations. For one I love to ride trends and my campaign management logic is designed to give them sufficient time/space to run.

On the other hand I don’t like chasing the tape higher unless I see a pressing reason. Late stage advances are definitely not part of the package and approaching roll-over dates are always a big red flag for me. As you may know CME equity futures (i.e. the ES, YM, NQ) roll into September on Thursday and it’s not just a bit early to grab the new front month but I also expect a bit of volatility as folks are rolling their existing positions.

Tape Reading

2017-06-06_spoos_snooze

Now while we’re on the topic I need to point out once thing and make sure you pay close attention. See that Bollinger squeeze on the E-Mini followed by an FU shake out (which caught yours truly) followed by the ramp higher? I drew a little blue square around the moment when it touched the upper Bollinger. This is when you buy. Every. Single. Time. No excuses and no ifs and no buts.

I actually did screw up there last week as I had just been stopped out and for some reason didn’t read the chart properly. Clearly there are never any guarantees but a Bollinger touch after a squeeze has a very good risk to benefit ratio. The risk is what you see happened on the downside – big bear trap. It’s quite possible to you may have gone short on a touch of the lower BB – it’s not a bad setup. But often the first touch is the fake out followed by the inverse resolve. Which is why the second touch had much better odds and I’m pretty miffed I didn’t take it.

On the other hand, had I taken it then it’s quite possible that I would have been stopped out by now as advancing my stop to a major spike low is rather common after 3R in profits. Which would make it 2R at maximum at this point, but once again that’s part of the game plus we are in a volatile market period.

2017-06-06_USDCAD_update

USD/CAD was actually my favorite setup yesterday but it decided to give me a good scare after hours. It has since been recovering so if it can push back above its 100-hour SMA then it may just be ready to get going.

2017-06-06_1404

A reader asked me about the 6C in comparison and although it doesn’t trade perfectly inverse the setup is basically a mirror of the USD/CAD.  As you can see the USD/CAD seems to be leading a little, at least this morning. Either way once 6C breaches 0.7449 then we may see an inverse resolution, so put your stop a few ticks above that.

2017-06-06_EURUSD_update

EUR/USD is looking solid – much to my chagrin as you can imagine. At least my setup is looking good thus far as it continues to paint higher highs and higher lows. Which however also means that it needs to hold the current spike low near my entry range.

2017-06-06_GBPUSD_setup

GBP/USD was an entry yesterday and I’m posting it again as it’s back in the same range. Nothing much to add here as I don’t see cause for concern yet. Holding the 100-hour SMA would be highly desirable here as well. Anyway, cable is volatile as heck since the whole BREXIT thing started and I wouldn’t recommend dropping more than 0.5R max into this one – make it 0.25 and you probably sleep better.


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 the same thing happened to me on gold last week as your ES shakeout stop run and now its moved north and touching the upper BB…..hmmm what to do….

  • http://evilspeculator.com Sir Mole III

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

    You know what the master is thinking at the end? “I can’t berieve he rearry kicked the tree!”

  • ridingwaves

    they would throw me in jail fast here, I don’t look the sanctuary city part….

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

    I would have titled it “waiting for Wonder Woman”.
    😉
    Gadot, Godot?…if I have to explain it, it’s not funny!

    ..go go Gold!

  • BobbyLow

    Gold began it’s overnight move shortly after the beginning of the Asian session around 9 PM ET last night and left some of us here in the states with the question of whether to chase or fade this morning. I’m leaving on Vacation tomorrow so I am going to pass on both choices but Ms. Market doesn’t make it easy does she? :)

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

    maybe your ranking has changed?
    have a great Vacay.

  • ridingwaves

    yea if it was easy I would have bought at same time as the NUGT comment yesterday….bammmm….8% today….

    Vacation sounds much better….Enjoy your time off….heading out to nature?

  • Mark Shinnick

    No not at all, though there was some good setup for going long even with the opening here.

  • BobbyLow

    You made an interesting point yesterday about the amount of recent noise causing abnormal ATR on the miners. I think this could very well be the case because my chart looks like crap right now.

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

    ATR, LOL.
    stick with RSI, 50 either works, or not.
    NO SOUP GOLD for U.

    http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&mn=3&dy=0&id=p92866363435

  • BobbyLow

    Thanks RW. Yes, my wife and I are going out to the mountains for a week in the western part of the state. Going to do some hiking etc. We might even do some zip lining if I don’t chicken out. :)

  • BobbyLow

    Thanks GG.

  • BobbyLow

    Nah, I’ll stick with BB’s, ATR and Velocity Momentum. I’m not crazy about RSI but to each their own. For whatever reasons we tend to find certain things that we can read well and others not so much.

  • Mark Shinnick

    My own tool box uses several time frames – where something like atr in the shorter ones goes to pot, to me it signals a significant period of indecision – a great time to get chopped-up and thrown off the bus.

  • ridingwaves

    do the zip line….unless its one of those slow ones where you have to go from tree stand to tree stand…

  • ridingwaves

    The auto parts chain short trade ORLY, AZO, AAP looks to be active trade as pushes higher are now selling off….
    Amazon is going to put more hurt on…..I’m looking for one more move higher and shorting those symbols…

  • OzarkHillBilly
  • Mark Shinnick

    That auto accessory/parts brick-morter scene suffers too with increasing commoditization and complexity of cars into things fewer of us can work on anymore.

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

    The German’s got it right, a loong time ago.
    go VW. (something I could actually work on)

    http://majorperformanceracing.com/wp-content/uploads/2012/10/vw_aircooledsteet1.png

  • ridingwaves

    diesel innovation wizards complete with secret emission device decoder rings

  • ridingwaves

    vacation sounds better but getting into NUGT would have been good too….

  • http://www.captainboom.com/ captainboom

    That image looks a bit like a one-eyed Darth Vader.

  • BobbyLow

    I just looked at it and it’s up almost 12% today. Damn! This was getting close but wasn’t a long via my hourly lens by the COB yesterday. So it’s one of those missed trades that just happens. I don’t even want to look at what the Daily says because it wouldn’t have made any difference. For me, trading the Daily on the 3X Miners means smaller positions, much wider stops, takes balls of steel, fewer trades and overall makes less money.

    But in any event, the movement in these things can be amazing.

  • http://evilspeculator.com Sir Mole III

    That sounds like fun. Make sure to post some pictures!

  • http://evilspeculator.com Sir Mole III
  • Billabong

    Consider taking a position if it meets your criteria and putting in a 30 day SL when you leave on vacation….

  • Billabong

    The long move in gold looks like an offset against the USD/JPY trade … room for thought?

  • ridingwaves

    definitely…the weekly and monthly are more impressive
    https://s11.postimg.org/kd2xbrq2b/gold_usdjpy.png

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

    We are looking for confirmation bias?
    quite convincing starting in late March.

    However, on the far left there was a time when it was not so.
    I would like to see a longer time-frame.

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

    pattern recognition. searching for similarities via reptilian brain.

  • Billabong

    Anyone own any Bitcoins? Currently $2803 with just under 13M mined … Satoshi Nakamoto is or would be proud his/her/their achievement.

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

    no, dam it.
    Still waiting for a pullback to 1600’ish.

    this thing is on nuclear fire!

  • Billabong

    Mole, based on your discussion above, GC hitting the upper BB line today would qualify as a buy?

  • Billabong

    LOL … It’s the Asians. I’m still trying to fully comprehend block chain technology and how it recovers after a grid meltdown for one reason or another.

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

    hey, some of my best friends are Asian.
    Gamblers, all of them. LOL.
    ..probably just a billionaire or two trying to circumvent the Yuan,etc.
    Welcome to the Future.

    http://www.worldofleveldesign.com/categories/level_design_tutorials/how_to_plan_your_next_map/images/movies02.jpg

  • Billabong

    This current ST GC trend started around the 11th of May and I had a confirmation buy on the 19th (daily). The overall trend has been a continuation of a trend trade dating back to the 15 Dec 2016. If someone was able to hang with the trend over the last six months, they would be up just over 15%. And if they were so inclined, bought ABX and held it during the same time frame (and didn’t sell in Mar at 20.78), they would be up 20.6% … The volatility in miners is a killer (I picked ABX as a large cap example and didn’t cherry pick to fit the numbers).

  • Billabong

    They are wild players at LV on the 21 table … hitting on 17, 18 ,19.

  • http://evilspeculator.com Sir Mole III
  • http://evilspeculator.com Sir Mole III

    Can you show me your chart please?

  • Billabong
  • Billabong

    oops … It’s an EOD chart … + $13.40 puts it right on the edge of the BB at 1298.

    Note: First chart I have posted on ES. I will do better in the future.

  • Skidmarkalot

    Actually a man

  • Billabong

    It’s not a pseudo name?

  • Skidmarkalot

    Real person in his sixty’s

  • BTrader

    very nice…nailed it!

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

    it’s a tough call.
    double the BB period to 40. works for me. (reduce curve fitting)

    The range players are looking for a reverse.
    The trend players are looking for a final break above $1300.

    https://uploads.disquscdn.com/images/cdc63db326b8b78e9470de5d2bfd61ac013eeeba3cdc4b9b55c140b92487254c.png
    -GG

  • Scott Phillips

    It is antifragile in the case of a grid meltdown. Far more so than the most of the net services we now take for granted.

    There are some problems, and some excellent points about BTC. The feature, that you can’t just print more, makes it non-fiat.

    Because it isn’t fiat currency, supply is finite and it becomes susceptible to the kinds of booms and busts that all hard assets get.

  • Scott Phillips

    I just drove a little BMW 1 series diesel around Italy, I was actually very impressed with it. I’d never driven a diesel before, I would actually own one. Not much power but a lot more torque than I would have expected.

    I did 1600km in a single day, driving to Zurich and back from Tuscany, they really do use hardly any fuel.

  • http://evilspeculator.com Sir Mole III

    No, it would have to be a compression. What you are thinking is more in line of traditional trend trading, which mostly works with futures contracts by the way (gold was one of their favorites). As you can see the hit rate is low but if it gets going it can run for a while (e.g. on the very left on your chart).

  • http://evilspeculator.com Sir Mole III

    Some of my best enemies are Asians! 😉