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Welcome To The Jungle!
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Welcome To The Jungle!

by The MoleAugust 3, 2008

Most of you reading this today probably followed our markets forecasts on OA last week until ‘blog politics’ pulled the plug on our postings (hey, say that five times in a row – LOL). Now, let me dismiss any rumors right away that it was Jeff who asked us to leave – he did NOT. As a matter of fact he offered for us to post updates in his discussion board, which I consider more than generous. However, knowing the limited amount of traffic in that section of OA, at least during trading hours (and because we’re pansies and like to be difficult), lead us to consider building our own site.

As many seemed to have liked our insights (or the lack thereof) we found it essential that we find a forum where we can post without having to worry about violating someone else’s blog rules. We also didn’t want to hijack Jeff’s own discussion threads, and feared that our postings may not be in the spirit or direction of where he wants to take his site.

There are certain advantages having worked in the software industry for 15 years and I was able to scrape this site together in the last two days. Something I found to be essential was to integrate with disqus since all of our own favorite trading blogs make use of it. This makes it easy for any of you to jump between blogs with the same avatar/id. Before anyone complaints about how much it sucks – this is only a beginning and will obviously be fleshed out by Berk and myself in the days and weeks to come. Assuming we can attract an audience that is – we shall see.

Now, I must disappoint anyone hoping to see an end of the two A/B scenarios. Unfortunately we are still on even footing on both until the rules disqualify one of them. Let me re-emphasize that this situation is not the norm and not some kind of cope-out. As I’ve said over at OA – we’re dealing with probabilities here and unless we can disqualify one of two equal probabilities we need to keep our options open.

(Wave 3)

Scenario A: Wave 3

Wave (c) of 2

Scenario B: Wave (c) of 2

I have updated the charts somewhat, but you get the drift. My shiny new trend indicator on your right is thus set to ‘mixed’ for the short term, and ‘down’ for the long term. What does that mean? Glad you ask! This means that ‘today/tomorrow’ we may go either way. In the ‘longer term’ both charts however show that we will drop hard – thus I’ve set the long term trend to ‘down’. If anyone cares, the possibilities here are ‘up’, ‘down’, ‘sideways’, and ‘mixed’.


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.
  • StanLake

    Nice first effort guys! Those charts are showing a higher low, my sentiment is leaning slightly (ever so slightly) bullish. It seems like the market is craving any reason to go up, I'm just not convinced it can stand on its own. Good luck with your new venture.

  • old_lefty

    Wow, a place to look at waves!

    My gut says there is one more move up before we fall off the cliff, but the longer term trend is down and I've sold some spreads so far and nibbled a little on puts and double inverse funds. Fed meeting on Tuesday should be some kind of catalyst.

  • Scoops

    Right on Molecool!

  • molecool

    FOMC meeting on Tuesday keeps Scen. B in the running. Trust me guys, I'm as frustrated about this as the next guy as it keeps me mostly in cash for the time being. But eventually it'll resolve itself – it always does…

  • molecool

    Can you share your chart? Would like to see what/how you're seeing. Are you using fibs, past resistance, or black magic to determine your highs/lows?

  • molecool

    Thanks Scoops – glad you could make it here. We'll keep stuff coming as the market chugs along on Monday.

  • molecool

    As many of you know Berk and I are waiting for the big shoe to drop. The market action so far supports this but we need to see more weakness to reach the 'going all in level'. In the interim we've been busy little bees and have produced an 'overbought' list of stocks. This list represents stocks that have little floating short positions, few days to cover, and have a high beta to the market.

    http://screencast.com/t/RCjrDHT1

    It's one thing for the market to make a move – it's another to profit as much as possible. The simple solution would be to simply pick up puts or calls in your favorite index. However, I prefer to correlate recent performance and project that to candidates I expect to get hit the hardest.

  • Scoops

    You're quite welcome. I always look forward to your insights.

    What are your thoughts on the Kondratieff Cycle? I haven't done alot of reading on EWT but have a pretty good understanding of the former.

  • http://z-stock.blogspot.com/ zstock

    I can't believe I stumbled on to this site. This is exciting.
    I agree with scenario #2.
    I think DOW has to re-test 50 day, before the Abyss–
    Scenario #1 might be here —Really tough to call

  • balljet

    hello guys.. nice place you got here, I love what you've done with the place.. lol!
    If you go to the slope of hope website, there is a discussion about the EW theory, one comment I have read is that there has been some sort of “warning of doom” since like .. forever?
    Comments on that?

  • http://www.evilspeculator.com berkshire

    Yup…It lies ahead. Stay tuned and we will get you updated on the Stairway to hell…

    Skol.

  • http://www.evilspeculator.com berkshire

    The Kondratieff Cycle, as with any time cycle, can get skewed depending on stagnation period in the “markets” which it is tracking. If I had to give an educated guess about where we would be in the Kondratieff Cycle, it would be as follows…

    We should be either peaking the top of the cycle, in which a rapid deflationary period should just be beginning. OR, we are in the platuea area, with the Iraq war being the “peak war.”

    Hope that helps. If you have differing thought, I would love to hear them.

    Skol

  • http://www.evilspeculator.com berkshire

    How have your spreads been faring in this market? Are you holding them 'til expiry, or are you cashing out early to keep banking dough. I know directionals are getting slaughtered and were wondering if the spread-traders were having a better time.

    Hope all is going well.
    Skol

  • StanLake

    July 28 and 29 on your chart shows a higher low.

  • StanLake

    Calendars have been doing well with the higher IV. Iron Condors with wide spreads were doing well all the way to expiration. Butterflies and verticals haven't fared much better than straight directional plays. I use the Thinkorswim analysis tab to make my “landing zone” as wide as possible. This has been like parachuting into a hurricane and sometimes landing waaay off mark.

  • molecool

    Good move Stan – buying horizontal spreads at low IV can pay just nicely – if you are into that kind of stuff…

  • molecool

    Thanks mate – we'll try to keep it exciting. Please come back regularly.

  • StanLake

    I'm into putting probabilities in my favor while making money. I like to sell calendars with a rising IV and sell straight options with a high IV that is dropping. Every time the IV pops over 30 or so I start to sell everything I can push out the door. Iron Condors have been good all year, better than most straight directional plays.

  • molecool

    Berk and I were talking about playing some calendars on $UTIL right now (through XLU or SDP). If you look at the long term chart (2 year plus) you'll see the completion of one of the best H&S patterns I've ever seen. This is the Mount Everest of H&S – LOL. Buying the dirt cheap Jan 10 and selling front months could be a nice play here. Thoughts on that?

  • StanLake

    Nice looking head and shoulders pattern. My only thoughts are the obvious, if you are bearish you should be thinking put diagonals more than calendars if you are interested in spread trading.

  • Scoops

    From what I've read we are supposed to be entering the “Winter”, which is as you said a rapid deflationary period. The consensus seems to be we are entering the long wave down, but what I don't nessarily agree with is where the price of gold is headed. The gold bugs love the KC, but what I don't see happening atm is the price of gold hitting new highs as it is supposed to do. The way theorists measure the peaks and valleys of the long wave is how many ounces of gold will buy the DOW.
    If anyone is interested in a website that can explain it a hell of a lot better than I can I can post it. I just don't want to jack someone's blog.

  • http://www.evilspeculator.com berkshire

    Scoops, I would actually be quite interesting in seeing that link, if you don't mind. I would be curious to see what it had to say. If you are worried about hijacking the blog, just send it to

    berkshire.rockaway@gmail.com

    Skol.

  • molecool

    Dude, obfuscate your email addy somewhat. Cuts down on the spam šŸ˜‰

  • Scoops

    Sure thing Berk, here is an excellent source of which I've spent more than a few hours with
    http://www.thelongwaveanalyst.ca

  • StanLake

    Nice looking head and shoulders pattern. My only thoughts are the obvious, if you are bearish you should be thinking put diagonals more than calendars if you are interested in spread trading.

  • Scoops

    From what I've read we are supposed to be entering the “Winter”, which is as you said a rapid deflationary period. The consensus seems to be we are entering the long wave down, but what I don't nessarily agree with is where the price of gold is headed. The gold bugs love the KC, but what I don't see happening atm is the price of gold hitting new highs as it is supposed to do. The way theorists measure the peaks and valleys of the long wave is how many ounces of gold will buy the DOW.
    If anyone is interested in a website that can explain it a hell of a lot better than I can I can post it. I just don't want to jack someone's blog.

  • http://www.evilspeculator.com berkshire

    Scoops, I would actually be quite interesting in seeing that link, if you don't mind. I would be curious to see what it had to say. If you are worried about hijacking the blog, just send it to

    berkshire.rockaway@gmail.com

    Skol.

  • http://evilspeculator.com molecool

    Dude, obfuscate your email addy somewhat. Cuts down on the spam šŸ˜‰

  • Scoops

    Sure thing Berk, here is an excellent source of which I've spent more than a few hours with
    http://www.thelongwaveanalyst.ca

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