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We’ve Got Movement
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We’ve Got Movement

by The MoleAugust 14, 2012

Rather interesting session today. We got that little short squeeze I was proposing on Sunday as well as on Monday when Mr. VIX was strongly suggesting that the woodshed was going to be booked out all through OPEX week.

So, let me get this right – yesterday we were trending down (before the final EOD safe) while the VIX was dropping below 14. And today the spoos are actually are trading higher than yesterday but VIX has pushed up below the 15 mark. Right…

Today I’m seeing the inverse pattern on the VIX:SPX ratio – while the SPX gapped the open the ratio dropped hard, indicating that VIX opened higher as well. Most fascinating. Hey, it’s not that I didn’t warn you guys.

Meanwhile over at Evil Santa’s workshop I am counting eight consecutive higher highs on the spoos. Not on the SPX – that one had a down day yesterday – remember while the VIX was pushing into record lows again. I looked up the probability of the E-Mini ratcheting up a ninth day and it’s about 0.8%. Hey, not impossible but if you want to be long here then I wish you the very best – actually I don’t as you would have to f…ing stupid.

Here’s a freebie I thought everyone deserves after gold has once again shown us the big finger. RBW sent me a few long term gold charts and his actually uses the 25-week SMA just like me. In addition I also use the 100-week as most of you subs know, and it seems to me that gold is locked between those two on a medium term basis. So until we get a break out and as long as we stay in this sideways formation from hell it may just be wise to use the 100-week and 25-week SMAs for a bit of swing trading. FWIW – I think there are easier ways to bank coin as the ATR on this is has gone to hell in a hand basket.

Alright, I have surprisingly much to share today – in particular the FX side is looking rather tantalizing. Please join me in my air conditioned 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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Alright, let’s get this show on the road. We have a 25-day SMA touch on the NZD/USD, which I plan to use as a long opportunity. A breach of the SMA leads us lower so I am prepared to flip my position if stopped out.

EUR/AUD is once again testing a NLBL – so far every attempt has been failed in the past few months. And that means the Mole is short hoping for an encore. If it finally breaches then it would also push above the 25-day SMA – and that would be a rather strong argument to join the long side.

Now here is where it is getting interesting – the EUR/USD is also testing its NLBL – same idea here although it’s less weak then the EUR/AUD.

EUR/JPY – same setup as on the EUR/USD – NLBL test. I am short all three BUT I am secretly hoping to get an opportunity to take long trades here as I see a lot more profit potential. So I’ll be keeping my eyes on these guys.

CAD/JPY however finally breached its Maginot Line – that was a sweet entry yesterday and if it pushes higher I’ll be sure to rub it into the faces of all those leeches 😉

On the futures side we have ZN (10-year treasury futures) right on the Maginot Line. I am long here with a TINY position as I suspect we may get a little stab lower first. Even if this initial entry fails then it’s worthwhile revisiting, assuming we get some sideways action. Odds are reasonable for that to happen.

ZB – the 30-year – it’s a step behind but looking similar. So keep an eye on both.

 

There was a great inside day setup on sugar but it just got ruined by a 1-tick drop below yesterday’s low. At any rate – it’s been closing lower (and has not breached above the previous day’s high) for 11 days. Now – THAT is what I call trending! 😉

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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.
  • DarthTrader

    I’m seeing all kinds of bearish footprints here as well though the Dollar keeps showing up with Bearish Divergences.

    I have tilted portfolio to the bearish side though if we get an end of day rally I tilt even more

  • ronebadger

    Thanks Mole!

  • ronebadger

     OK, my name is ronebadger, and I’m a closet bear……there, I’ve said it….(NOW, watch what happens)

  • Darth_Gerb

    sideways trend caught between two moving A’s.
    Genius.  (sometimes I forget this one tip)

    8 consecutive?!
    even Scotty looks a little worried.
    http://jc1701.com/jamesdoohan_as_scotty3_x.jpg

  • MrMargin

    My data for the SPX since 1950 shows overall odds of 0.0051% of 8 green days occurring in a row (based on 81 instances) and 0.0012% of 9 green days (based on 42 instances). However, looking at those numbers would be misleading as we already know that there will be 8 green days in a row. It is thus required to apply conditional statistics leading to a probability of 51.85% for another green day.

  • BobbyLow

    It’s good that you “came out” Ronebadger.  :)

    I think most of us here have been a CB at one time or another.   But in order to change behavior one must first recognize that something must be changed. 

    Being a Bear or even a Closet Bear can facilitate Self Loathing as we continue to get beaten down over and over again. 

    May I suggest a Health Coach?   :)

     http://www.infinitehealthcoach.com/behavior-change-programs.html

  • AMCabrera
  • DarthTrader

    The option bid ask on the SPXU has suddenly begun to look quite bullish  LOL

    I’m glad I shift weightings rather than sell all or buy all

    That dollar bearish Divergence may come over the next 2 hours and lift the S&P to my target level(s)

  • BobbyLow

    Also can I ask if any Red Day of 1 Point or less on the SPX negates any consecutive number of green days on the SPX?

    Volar got me to believe that statistics are important however when you get into conditional statistics it’s a whole new game isn’t it?

  • Darth_Gerb

    (I thought stats were the thing, until Volar reminded me this is NOT an evenly distributed Market)  still trying to wrap my head around the Halitosis part.)

  • AMCabrera

    ooh volar, I do miss him. I miss Cerberus (Mole, Volar, CS)..I do not know how to add fearless in the mix. I like him too.

  • AMCabrera

    taking a long nap see you guys later tonight.

  • DarthTrader

    One might be the tail that wags the 3 headed dog

    I’d say Volar but my exposure to them all is less than you guys

  • MrMargin

    In my calculations yes. I’m only counting days where close – open > 0. My point in this case is that we’re not interested in the probability of any period of nine days containing only green candles, but the probability of any period of nine days containing only green candles if we already know that the first eight are green. Because we already know that there are eight green candles, it changes the probabilities. It’s not really that difficult once you understand it. There’s a popular example for conditional probabilities know as the Monty Hall Problem (http://en.wikipedia.org/wiki/Monty_Hall_problem ).

    The bottom line in this case is that there’s no clear edge. Odds for continuation of a red or green trend up to a length of 9 are usually between 47 and 55%. Odds for a continuation of an up trend are always a bit higher than 50 and odds for continuation of a down trend are mostly a bit lower than 50% One exception exists. If there’s one green candle, there’s a 61.6% chance of a second one.

    I think the reason for this is that the market spends most of its time chopping around without any clear trend and thus the results are near random.

  • DarthTrader

    Monty Hall Problem is cool but your link has nothing about it.

    “Wikipedia does not have an article with this exact name. ”

    Think I first read about it in “The New Market Wizards”

  • DarthTrader
  • MrMargin

    Disqus once again enjoys scrambling my links. Fixed it.

  • BobbyLow

    “I think the reason for this is that the market spends most of its time chopping around without any clear trend and thus the results are near random.”

    Thanks MrMargin.  Your explanation makes a lot of sense.

  • BobbyLow

    Somebody mentioned GOOG yesterday and it printed a new 52 Week High today.  AAPL is only $11 from a new 52 Week high.  XOM tagged it’s 52 Week High today as well.  

    There is some serious market cap at work here.   Hmmmm.

  • http://evilspeculator.com molecool

    I have been in touch with Scott – he’s involved in a new business and has limited his trading. Volar is doing a lot of fundamental grain stuff – not sure why. I asked him for some updates but he responds sparingly, so I guess he’s busy.

  • DarthTrader

    Yes, the Generals are leading the troops

  • Joe_Jones

    Glad to hear The Convict and Volar are doing fine

  • BobbyLow

    Me too.

  • MrMargin

    Double top on $APPL? http://scharts.co/N0RHLd That pattern eerily reminds me of something: http://scharts.co/N0RFTA

  • BobbyLow

    Now that’s eerie and if repeated could very well play into an early fall tumble.   But I don’t have the balls to play it that way at this point which is probably a good thing.  :)  

  • Darth_Gerb

    well, the Value Line is trying to roll over.
    http://stockcharts.com/h-sc/ui?s=$XVG&p=D&yr=0&mn=4&dy=0&id=p68107366479
    but one indicator is not enough.

  • Skynard

    Was away for the day and see that the market went nowhere. Still net short and waiting for some rips to short on grains.

  • amokta

    Interesting -im still scratching my head!

  • MrMargin

    I wouldn’t play it that way either. Sentiment data still points to another major leg up in the intermediate term. As long as nothing big happens, I’m not going to try to fight the odds. Short term I either expect a short and possibly violent shakeout or some sideways movement to work off the overbought condition before the up move can start.

  • Skynard

    Very close to shorting /CL on a break here:)

  • Skynard

    Hum, another bounce off the trend line:)

  • Jake_38

    huge block trades on the dollar around 82.55 whats up with that

  • ridingwaves

    Google went parabolic just before 08 crash…crazy similarities…

  • Joe_Jones
  • Darth_Gerb

    DarthT, 
    Venus retrograde ended June 27th, and well, I’m getting a little nervous.
    it’s not that I’m expecting accuracy, but it’s nearly 2 months overrun.
    I’m not looking for a 2008 drop, but dam it, the bulls have had enough fun!

    write soon, or I’ll have to flush this idea down the toilet.

    (while I still have the ‘luxury’ of running water)
    http://www.forbes.com/sites/kellyclay/2012/08/14/bill-gates-thinks-about-poop-and-you-should-too/ 
    sincerely,
    -DG

  • Skynard

    Got it with a back test, now short:)

  • Skynard

    Long /ZB at the 100sma daily:)

  • Skynard

    Need a good flash crash, haven’t seen one of them for a while:)

  • Skynard

    Shorted /ZS again

  • Tronacate

    me too

  • Skynard

    Precious going down hard:)

  • Tronacate

    s ES  l ZB  s ZS s GG l DX

  • gsavli

    DAX in a textbook downtrend from the gap down open. Red day ahead.

  • Skynard

    Burn MoFo, Burn!

  • gsavli

    Managed to short the last intended batch today at the open, so, yeah – burn mofo! :-)

  • gsavli

    Yeah, this silly, rigged, HFT infested market needs it like desert needs the rain.

  • Skynard

    Managed to catch this one:)
    Short  /CL /GC, SI ,HG, /ES, ZS, AUDJPY
    Long /ZB, /DX ,NG, EURAUD

  • Tronacate

    Lets see continuation of this nice move……..

  • Skynard

    One last kiss:)

  • finansreven

    Gave up the gold.

    Have joined the evil shorts at SPX.

  • Skynard

    Big daddy coming up:)

  • Tronacate

    hoping……seen enough curve balls lately

  • Skynard

    Added to /GC & /SI

  • Skynard

    Played out almost too well:)

  • Skynard

    Big coinage OPX week. Need /ES to cool it’s jets now.

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

    to me it still looks rangebound, bulls attempted break to upside yday, but so far failure..HOWEVER until bottom of range is taken out significantly the bull shave upper hand…and another attempt at highs may be sooner rather than later..

  • Skynard

    /DX still in play on a save @ the 25sma hourly so far.

  • Tronacate

    On the ride with ya

  • Tronacate

    Tapped out…..otherwise i would have grabbed that play…..missed out

  • gsavli

    yes, in fact, it is still rangebound. however, i still expect a red day (but probably inside this range, so far it does not smell of blood here). But, the move down, if it comes, will probably be very violent and I want to be positioned beforehand. One additional bonus is that it is fairly easy to place a narrow SL here – in this kind of market it is either a narrow SL or an entry with a stop below the range.

  • Skynard

    Stopped out of EURAUD, guess that if both tank so does this pair:)

  • Skynard

    Currencies on the move today:)

  • DarthTrader

    Looking like a Dollar S&P RATchet Job

    Spike dollar hold S&P flat then Walk dollar down to add push to S&P Rally

    We’ll see if it works

  • DarthTrader

    Decent potential for a Big Pop & Drop today with the Dollar levering all the action

    Or it could simply be a drop

  • Skynard

    Flipped /NG after lossing it’s bullish case:)

  • DarthTrader

    From Merriman

     But back to the markets, which of course is all about numbers. In addition to the Mars-Saturn conjunction of August 15, next week will also find Venus making a T-square to the Uranus-Pluto square on August 15 and 16. This is also known as a “translation” of Venus (money, as in currencies and stocks) to Uranus (sudden news) and Pluto (debt and taxes). The value of things is apt to change sharply around those days. And with transiting Mars so prominent in aspect to planets in the NYSE chart, we can look to stocks as the leader of this possible change in trend. Additionally, both of these aspects (Venus to Uranus-Pluto and Mars to Saturn) have to do with weather and grain prices. Hot and dry may finally break now.

  • Skynard

    Can someone smack /ES please:)

  • Skynard

    Want anything done guess you have to do it yourself:) Nothing ever changes!

  • Darth_Gerb

    (certainly you have a few evil allied algo’s that are up at this time of day)

  • Skynard

    Shake and bake baby:) How about that Aussie!

  • Darth_Gerb

    still sideways.
    slipped under the 200. but bollingers constricting!
    http://s9.postimage.org/rvqfo8y99/temp1.png

  • Skynard

    Not mant allies in this bussines, they all want your program:)

  • AMCabrera

    todays forecast..High chance of top calling in equities while a category 5 stop loss hurricane is forming in currency.

  • Darth_Gerb

    Wave surfers are discouraged from entering tidal surges?

  • AMCabrera
  • Schwerepunkt

    More like sharks in the water . . . 

  • ridingwaves

    eur/dx looks to be heading for 1.21 again or lower…

    ARNA is back on for trade on any pullbacks..

  • ridingwaves

    in at 8.35 stopped out…

  • AMCabrera

    usd/nok doing it too. sigh* oh well

  • StrikeFirst

    Dollar trying to break through its 50 day SMA.

  • http://evilspeculator.com molecool

    How’s everyone?

  • AMCabrera

    waiting for Thursday. 😉

  • Darth_Gerb

    can’t complain.
    glad I’m out of treasuries for the moment. month.

  • Darth_Gerb

    *amateur hour passed*

  • Joe_Jones

    Same as the same. Flat mood.

  • StrikeFirst

    I’m very excited.

    The market is going to pick a direction soon, and I’m going to bank some serious coin.

  • BobbyLow

    Ich bin gut.   :)

  • StrikeFirst

    Very bearish if $UTIL breaks below its 50.

  • Skynard

    Holding my guns for now. Heard something about bulls being taken to slaughter or something like that. Stopped out of /ZS re-shorting in the bloody nose section:)

  • Darth_Gerb

    if it breaks, there is the possibility of a back test kiss.

  • Skynard

    Dollar needs to stick it here to send the rest of commodities in a spiral like /HG right now.

  • Brishort

    They’ve done it many times, and I think they just did it again. This is OPEX and summer. 
    Thanks for all your astro post, I don’t know if I could trade it, but I did appreciate empirically through time that it is a valid indicator as well. Unsure why it works, but the odds are worth watching. Just not knowledgeable at all myself to do it, so thank you for posting!

  • Darth_Gerb

    SPX April 27th daily High 1406.64
    Aug 7th gave it some respect.
    price is respecting it today.
    where is the VWAP?

  • Brishort

    Around with extremely small size positions. Time to keep capital and be ready for action. 
    Low liquidity & low volatility = pressure cooker building stops & breakout orders population just outside the range, up and below it. . When it picks a direction, it may become a tradable bonanza. As you said, very few reasons to be long, therefore….

  • ridingwaves

    The system can’t be saved….corruption is beyond what any of us can comprehend….340 million for 250 billion….chump change…if you sent money to Iran…you are jailed…not so if bankers

    http://www.marketwatch.com/story/standard-chartered-to-pay-regulator-340-mln-2012-08-14

  • Joe_Jones

    And to top that the US is now financing Al Qaeda and supplying them with tanks and stinger missiles.

  • ridingwaves

    Yves had good write up on how financial crimes are today
    http://www.nakedcapitalism.com/2012/08/reuters-runs-interference-for-elite-corruption-scrubs-article-that-shows-how-banks-get-out-of-jail-free.html 
    Reuters lays out the steps that SCB took that normally should be enough to minimize any consequences for violating Iran sanctions. First, you hire Sullivan and Cromwell and act contrite. Then, you pay a consultant to conduct a review and claim the violations involved just $14 billion million in transactions as opposed to $250 billion shown in your bank records.As part of a review the bank sought to give to regulators, Standard Chartered hired Promontory Financial Group, a Washington D.C. consulting firm run by Eugene Ludwig, who served as U.S. Comptroller of the Currency from 1993-98. Promontory was hired to review Standard Chartered’s transactions tied to Iran. The bank’s review ultimately settled on the figure of less than $14 million for improper transactions.Then you bury all the embarrassing details showing willful flouting of the rules, so the proles don’t learn how craven banks really are.I suspect, for the reasons laid out here, that OFAC will still find a way to give SCB a nice cushy settlement. But Lawsky has revealed what really goes on behind these settlements: the coziness, the misrepresentations, the complicity in hiding the true face of banking.
    Mole’s right news doesn’t matter because it’s all washed by the PTB

  • http://evilspeculator.com molecool

    I appreciate your thoughts but let’s keep politics aside. It’s too easy to get upset and get drawn into endless debate. Plenty of blogs out there for that kind of thing – ZeroEdge is one of them. Let’s focus on the charts and on honing our trading edge.

  • ridingwaves

    Sorry mole…my bad…I will refrain…cheers…

  • Skynard

    Lost trend or 5 min and hourly now.

  • http://evilspeculator.com molecool

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    ¨°º¤ø„¸  N E W  „ø¤º°¨ 
    ¸„ø¤º°¨ P O S T “°º¤ø„¸
    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    No worries – I know it’s a boring session. I just don’t want to start drawing in the ZH crowd – we all love the little digital den of doom we’ve build ourselves here 😉