What You Wish To Believe

When browsing the comment section I continue to see a lot of mental masturbation as to where the tape may be heading next.  So in my ongoing mission to protect you all from yourselves I thought it once again was time for a mental reset. And this just may do the trick:

When you are studying any matter, or considering any philosophy, ask yourself only what are the facts and what is the truth that the facts bear out. Never let yourself be diverted either by what you wish to believe, or by what you think would have beneficent social effects if it were believed. But look only, and solely, at what are the facts.

In case you wonder who the heck this dude is: Bertrand Russell was one of the greatest thinkers of his time. Among other things he was a prolific philosopher, logician, mathematician, historian, and social critic. Frankly, they just don’t make them like this anymore. If you ever heard the phrase ‘we all stand on the shoulders of giants’ – this is who they are referring to.

So, now that I set the table – let’s talk about facts, shall we?

Seems like pigs may be able to fly after all. The greenback somehow managed to bust through some pretty significant resistance, much to the delight of this Euro paying expat. From a trading perspective this is a long and if you missed it I would strongly suggest you wait for a retest, which may not be out of the question. There is some support gracing us below at this point, first the 100-day SMA followed by a NLSL. Should all that fall apart then we’d have a failed break-out which in turn would be bearish.

Copper heading toward quite a bit support and a bounce here should happen given the current context. The bulls are not in trouble until 3.675 (I should have extended that diagonal).

Crude needs that 25-day SMA to hold or we may be talking trend change.

Of course you want to hear about equities – who can blame you – but I’m as confused as you are. Thus far this continues to look like a sideways correction – if this is supposed to resolve lower then it’s starting to run out of time. Eight sideways candles at this point – the bears simply can’t take this one lower it seems.

Much to my surprise we actually got a bonafide VIX Buy Signal yesterday. Which of course is followed by a push back higher just to add to the overall confusion. I don’t want to argue with this chart but the small BB range on the VIX right now is making me a bit skeptical. Bug nevertheless – given the signal the bulls still retain the home team advantage.

A few more setups for the road – please join me in the lair:
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.

NZD/USD – I’d be long if we get a test of that 100-day SMA.

EUR/JPY – I like the context here on the hourly and the daily. I’m long and won’t be short until it breaches that daily NLSL, which is good for four more days.

Ditto on CHF/JPY.

NZD/JPY – same idea as with the first two.

ZN – very interesting lunch higher and I’m tempted to grab a long here on a retest. Of course this could be another failed break out and thus I’m open to a short if it falls back below that 25-day SMA.

Silver – very very very good setup, mark this one on your calendar. There is a very pronounced trendline here and I am short as soon as it breaches that SMA.

Gold – I have been talking about this and I hope you guys pay attention. Look at all that intra-day volatility and look at the daily. This puppy is coiled up and ready to pounce! Use the trend lines as your trigger but here’s a caveat. Quite often we get a fake breach before it takes off in the other direction. You need to be prepared for that fact – so maybe start small and scale yourself in as the trade resolves in the right direction. Use Bernie’s Pyramid Calculator if you are mathematically challenged.



This entry was posted on Thursday, February 7th, 2013 at 2:08 pm. Both comments and pings are currently closed.

  • http://ibergamot.blogspot.com/ i Bergamot

    You don’t have to yell, i heard you first time :)

  • Joe_Jones

    I love the Silver set-up :-)

  • ridingwaves

    I think they hold market up thru end of month…regarding your message on last posting…

    no fed open market sells all month kind of signaled intentions…

  • Joe_Jones

    I am skeptical about the POMO thingy, especially as it was published on ZH before Mole mentioned it in his post :Fed vs ECB. IMHO, if ZH followers have been warned by Tyler Durden not to short on POMO days, I would do precisely the opposite as they are almost always on the receiving side of the peg. Further, the POMO story is getting very old now. I would have paid much more attention to it back in late 2012 than now.

  • Joe_Jones

    Mole’s tough love can save you a fortune…. as long as your ego allows for it.

  • ridingwaves

    I posted fed pomo sales record of going short prior to Mole’s posting, mos. back…it was a good odds bet on big sales days especially tied into big treasury auction at same time…indirect bidders or MM’s now days were stuck with less liquidity…

    I don’t read ZH…So I have no ideas what they are saying

  • Guest11235

    glad you read this post, lol. 

  • ridingwaves


  • Joe_Jones

    To me the price action right now looks like a topping pattern, especially given the lack of “context” at these price levels. Of course I could be wrong, but I like the idea of playing the big intra day swings we have seen in the last few days and the AH / overnight action on FX, especially AUDJPY and EURUSD

  • http://dartht.blogspot.com/ Darth_Gerb

    wasn’t that another Mole’ism.
    Are you here to ‘be right’?, or make coin!

  • Guest11235

    we all do it, some to a much greater extent than others, and some do it with every breath they take in markets…the key to winning is overcoming it

    hope that didn’t come across as rude rather than what I thought was an honest observation, yours was the first comment I saw as I was playing the video in the thread

  • BobbyLow

    Afternoon Folks.

    I’ve been scarce as of late because I’ve been tied up with some unavoidable “Stuff”.

    There is only one thing that I Truly “Believe” when it comes to the Markets and that is The Markets are Completely Full of Shit at All Times.  (AKA Bobby Low Axiom Number One.)

    However, there is a worthy dichotomy here because regardless of what made it happen, Price is Always Right because it is what it is.

    On the trading front, I had some nice setups get hit with Midnight Stop runs (the bastards)  LOL.  One of them was the short EUR/USD.   I  chased that one to get it back after the 8 AM hourly close.  Chasing usually sucks but it worked out OK this time.  There were two others that got hit by stop runs that I didn’t chase but wish I had.   Fortunately I didn’t get stopped out overnight on my Long USD/CHF (just missed) and that one exploded to the upside.  

    Went Short Oil on Friday after the third attempt failed to break through the Upper Band of the 100 Daily BB.  

    Anyhow, the Markets are just being the Markets and count on them to overdue EVERYTHING.  In order to deal with the Markets that are Laden with obfuscation that promote unhealthy “Mental Masturbation”, I try to remember to look at a sign above my desk which says:

    The Markets are Completely Full of Shit at All Times.   :)

  • Joe_Jones

    I assume that if you bank coin then you are automatically right? 😉 

  • newbfxtrader

    Yes. Price is always right.

  • AmazingLarry

    Thanks for putting the hammer down, Mole. I personally hate the “the market is going to do this next” comments here, but it’s a trap everyone needs to learn to overcome. Just trade the set ups and don’t get mad at any funky ass tape because it’s always a losing proposition if you chose to argue.

    That said, AAPL is holding the 100 hr while working on the 1/24 candle. There’s still a NLBL on the daily at 459.28. Huge volume hole above at 465 acting as resistance. Daily stochs no longer embedded. Positive div, too. 

  • Joe_Jones

    reloading and adding to shorts now

  • http://dartht.blogspot.com/ Darth_Gerb
  • Schwerepunkt

    Isn’t it trading ex-div today too, and yet, it’s up?

  • BobbyLow


    Actually Axiom Number Two is :

    Never Forget Axiom Number One.   :)

  • http://ibergamot.blogspot.com/ i Bergamot

     Thanks guys

  • AmazingLarry

    Whoa, what did I do!?! $470.

  • Skynard

    Anyone know off hand when /SB re-opens. Closes at 1400 hrs, not sure when it starts trading. Thought it was 900 hs.

  • http://ibergamot.blogspot.com/ i Bergamot

     Purely theoretical…, but I somewhat disagree.
    If you follow your rules/system and loose money –  you are still “right” and will  make money over time (if system working that is).  I think what DG is referring to is making a forecast and sticking to it, regardless of adverse price action.  We all want to be “right” before our peers, but its a crapshoot.
    Been there, done that
    My ego-trips always been rectified by loosing money, although its happening less since I took up a residence here and started to keep a journal.

  • Rightside_ot_trade

    ICE shows 2:30 EST

  • mrmik3

    haha no shit!!

  • bdoone

    There’s also the phenomena of being right————eventually, but losing before you get there.

  • Skynard

    Ok thanks, 2:30 AM EST right?

  • Rightside_ot_trade

    Yeah about when you finish dinner :)

  • Skynard

    Hehe, all night gang:)

  • newbfxtrader

    Right about your 15th cup of coffee? 

  • http://ibergamot.blogspot.com/ i Bergamot

     I know exactly what you mean, but its different.
    This is a flaw of methodology, if you had a good idea but missed it or was shaken out and didn’t re-enter.
    Or there is a problem of being undercapitalized – that happened to me too.
    Or bad luck…you know

  • http://dartht.blogspot.com/ Darth_Gerb
  • Skynard


  • Joe_Jones
  • http://dartht.blogspot.com/ Darth_Gerb

    the BPSPX adds a little more red.
    again, this 0.2 setting is hypersensitive.  Neutral would be the best descriptor.
    The music is still playing, but it looks like the D.J. needs a bathroom break.
    should I stop dancing with the hot chicks and grab my chute?


  • Schwerepunkt

    That thing ever do a HnS? Would need to start building a right shoulder . . . 

  • fairmorn

    Mole, Your ES chart has the note ” thus far no ID breach” By my reconing the inside day was breached first to the upside and then to the downside, you also have today marked as an OP. could you clarify what constitutes a bonafide inside day breach / trade signal? Thanks

  • http://dartht.blogspot.com/ Darth_Gerb

    I looked back to 2009, nope.

  • Schwerepunkt

    So they’re always 1 or 2-step turns.

  • http://evilspeculator.com molecool

    Cheat sheet – explained there.

  • http://dartht.blogspot.com/ Darth_Gerb

    yes, 90% of the time.
    but let me throw this one up here, I spotted it while scanning back.
    perhaps you see why I hang out here.


  • http://evilspeculator.com molecool

    Nah – the market is always full of shit. It’s like dating a valley girl.

  • thepercolator

    Just passing this along from Sentiment Trader.  Retail investors are back in a big way – greatest 3 month sum in the past decade!

  • thepercolator

    From the cheat sheet “One way to trade an inside day is to go long on a breach of the inside
    candle’s high with a stop set slightly below the inside candle’s low.
    Alternatively go short on a breach of the inside candle’s low with a
    stop slightly above the inside candle’s high.”

    According to my definition of “Breach” the ID triggered both on the high and low, so I’m curious what your definition of a breach is – close only? 

  • convictscott

    If, for example you breach long, you should be immediately long with a stop a tick below the low. If you get stopped out you should reverse and go short. 

    It is actually a higher probability trade after a false breach, but the inside day MUST be viewed in context, otherewise the edge is small, though real.

  • convictscott

    Sentiment is often a little early

  • Y KW

    Context is uber important with IP (Inside Periods/days) … and also quite straightforward … as per the attached view … additionally not all IP’s are the same … O-C relationships play a major role

  • Skynard

    Put a long /SB, here is a chart. Also shorted /ES on the hourly NLBL failure.

  • http://evilspeculator.com molecool

    A failed breach provides more context. Unfortunately most traders get frustrated and focus on the small loss.

  • http://evilspeculator.com molecool

    You guys are looking at a smaller sample size. Retail investors have been leving in droves. We discussed this here in the past days. Such look up the Google search terms ‘stock market’, ‘investing’, ‘stock tips’ over the past few years.

  • bullregard

    The Market is like the sea. You can see the shit floating or the waves to surf… one’s choice only. Is the sea “wrong”? Doesn’t make sense.

  • Maumaj

    The TD-Ameritrade Investor Movement Index (IMX) is a relatively new index that measures the change in net equity exposure of the TD-Ameritrade customer. Surprisingly, their net exposure fell in January despite being net buyers of equities:Clients were net buyers of equities in January, but their investments held and adjusted portfolio compositions (net of trading activity) were less volatile relative to the S+P 500 than in previous periods. This lowered clients’ overall exposure to the equity market and drove the IMX down last month.


  • Schwerepunkt

    Holy spooge, USD.CAD just spiked.

  • http://evilspeculator.com molecool

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

  • Skynard

    What was your target on nat gas Bro? 2.16

  • bullregard

    Yes, P&F with ATR… Also on the weekly candles…

  • thepercolator

     Yeah, I like trading a failed breach reversal though like you said the context is important.

  • thepercolator

    The chart I provided is a rolling 3 month sum of money flow into mutual funds and ETF’s and right now it’s the highest its been in a decade.  It may not be retail directly, but indirectly through advisers and brokers either way a lot of dumb money is entering the market and I wouldn’t want to be long (I trade on a much longer time frame than most rats here).

    Regarding google trends I don’t think its much use other than market crashes like 08 and the flash crash.  I’ve searched various terms like you said and many others  and there really isn’t much difference today than there was in 2006-2007.  I found some that are trending down, some up and some flat.  What really stands out though is 08/09 and the flash crash.

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