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Whip-dee-dooo
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Whip-dee-dooo

by The MoleJanuary 13, 2009

UPDATE 11:18am EST: Seems the permabulls didn’t enjoy my little taunt last night 🙂

I bought back my short positions (the futures) in the Zero account once we got that exit signal – fortunately early enough to exit with profits. Since then it’s been one wild pony ride – some very violent tape we got ourselves here. I knew that we’d get a rally today but I didn’t expect futures to first rally last night, then drop, then rally like wild, and then drop again. It’s been fun (not!) but thus far my account has taken it in stride.

I think we’re going to drop a bit more but there’ll be another rally attempt. There’s a big buyer lurking in the futures at least. Trick is going to be to pick the best spot for a hedge – breaching 857 today is probably not in the cards unless some trigger event happens. Watch the Yen folks – as any its weakness is being exploited in equities. Also watch the VWAP – we’re currently below in the index futures – if we rise above again it might get wild.

UPDATE 12:04pm EST: Some people were wondering if I cut my long term puts today: HELL NO! I said I’ll hold them throughout the plunge. Today is only a little correction….

Long term thinking people – long term thinking – that’s the key. Now sit back and take the punishment like a big boy (girl). You didn’t think this trip was a one way ticket, did you?

UPDATE 1:48pm EST: BIG Yen buyer just showed up – should have seen these candles. I think we’re going to see 860 after all – nice. Anyone’s guess what happens there. At minimum we won’t take it out easily – expect the bulls to make a stand there.

UPDATE 1:58pm EST: I reckon many of you are curious what will happen at 860. Well, take a look at this Yen/Dow futures correlation chart:

What are the probabilities that the Yen is going to keep pushing up? A few months ago I would have said – slim. But I have seen days in the past where the Yen’s stoch keeps doing the ‘dragon tail wiggle’ around the 80 line and just keeps going up. That big buyer scared the shit out of a lot of bulls just half an hour ago. So, my answer is: I don’t know! Based on today’s tape I think anything’s possible.

Either way – I like my account a lot better now than 2 hours ago 🙂 If nothing else hedging right here can lock in existing gains. If we really breach 860 with confidence then it’s easy to jump out. Expect some fireworks before the close.

UPDATE 2:40pm EST: I guess that buyer just showed up again. The bulls made their stand. 860 shall hold for now.

UPDATE Closing Bell: Today was painful to watch – we basically were going nowhere fast. Typical bear market consolidation day – they can be painful to bulls and bears alike. I’m not sure if I’m doing a forecast tonight – feeling a bit worn out and I need to atch up with some personal business. So, if I post one it’ll be in the evening and it’ll be brief. So, I’ll do a  quick one right now.


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 the usual social media waterholes.
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  • http://www.aggressivelyuninformed.com nepharis

    Are we in Wave 5?
    The highs of last week came within 12 points of a 38.2% retracement of Wave 3, which may have been the top for Wave 4.
    Alternatively, was the high of last week a peak for the first segment of Wave 4, and are we now in sub-wave B of Wave 4?

    Either way, the tempa-bull in me is shitting bricks right now.

  • BigHouse(Aka Mr Vix)

    Citi big move off the lows

  • http://guidepostings.blogspot.com perspective

    i have learned to drop the taunt out of trading- whenever i feel cocky enough to taunt, it's usually a sign someones about to steal my lunch money;!

  • http://tradingperspective.blogspot.com perspective
  • molecool

    LOL – we knew it was coming and they won't steal what I made thus far – mark my words 🙂

  • molecool

    Did you read my weekend forecast? Did you read what Berk wrote last night?

  • standard_and_poor

    Was telling Mole last night we'd prbably see 890 within next 9 mkt hours, hopefully we won't get there.
    Just comleted “mini” a and b waves, early stages of mini “c” in progress. Lower stops on nine stocks to break even. I'm keeping my qqqq puts, might hedge with calls if it gets ugly.

  • thecountofmc

    Newbie to your site, wanted to say a big thanks for bringing FSLR to our attention. I bought some small puts before the close on the trend break and loved that gap down this morning! Now if only I had the cajones to buy back the puts on the gap fill…

  • Jammer63021

    When you say exit short positions, did you hold your Mar/Jun SPX puts?

  • Keirsten

    GS hitting resistance at 78

  • standard_and_poor

    Not so bad so far, sit tight and don't get scared out of your puts.

  • GMunni

    I’m thinking this is part of a B of 4 wave and we should get a drop then a pop in C later today.

  • molecool

    My FUTURES position in the Zero account…

  • Erikd

    XLF 11.20 level holding nicely..

  • cnbs08

    TIme to take some profits in SKF short? Let the rest ride and leg out…..down around 120ish and maybe even 117 for the greedy. Stop up around 127ish.

  • http://www.aggressivelyuninformed.com nepharis

    Yeah, but I fell asleep reading about your put spreads. =P (kidding…)

    So, basically we're waiting for a confirmation, right? Up means still in 4, down means 5?

  • Enfinity

    Regarding your oil contango chart…

    If you recall CL was contango in early summer 08. Most people are wrong and nearly every opinion I hear/see on oil is that oil should be MUCH higher.

    🙂

  • BigHouse(Aka Mr Vix)

    I think we are going right through there after this pull back.

  • OldChicago

    Mole,

    You might have discussed this before. I noticed that the “white” line on Zero dipped to -6 and turned up. Is there something that we need to take note when the white line dipped so? Thx.

  • moneyfarm

    Berk’s COL setup from last week is starting to move
    http://stockcharts.com/h-sc/ui?s=COL&p=D&yr=0&mn=9&dy=0&id=p02631572819

  • molecool

    Yes – market sentiment changed.

  • Takitandrun

    While waiting for the paint to dry, I have a question. Thinking ahead of the upcoming updraft in the indexes- and not willing to be long options with hi IV, does it make sense to be short an inverse ETF instead? Assuming the IV would rise as the price falls, does this make sense? Inviting all comments . . .

  • GMunni

    I don't disagree. But something is going on as otherwise the big boys would be shorting out along the curve and taking the arb money.

  • HuckFinn

    Funny how days go, yesterday every move was wrong, today making back what I lost….Hope I got that piece O' crap outta my account!

  • http://www.pikertrader.com pikertrader

    “Long term thinking people – long term thinking – that’s the key. Now sit back and take the punishment like a big boy (girl). You didn’t think this trip was a one way ticket, did you?”

    Thank you. Sometimes I need smack in the face to start thinking Long-Term again.

  • http://spnakr007.blogspot.com/ Steve

    2 scratch trades from the long side…Now on the side line…
    RE: One way ticket, people want instant gratification…

  • http://gemstowear.etsy.com Jan

    I’m holding those mothers untl they hit $300. I know it against the traders creed, but it’s personal with these banks.

  • standard_and_poor

    So far the corrections have been rather tepid, we might be in wave 5 rather than wave 4, time will tell.
    Keep the puts, sell the temerity.

  • krazykev

    Mole did you short GOOG yet ? looks like AAPL FSLR can't get off the mat today . I think its time jump in on the short side of APOL ESI STRA – they're break-out to downside .

  • http://zstock7.com/ zstock

    Hi Mole!!
    Last year, I used to be the only volume when I played the VIX options. I just noticed today, that probably, the overall volume looks like it's topping 1,000,000. That's a 1,000,000% increase, just kidding. I'm sure there was some volume last year.
    I like the FEB 55 calls. FEB 50 calls are really gaining in OI. ( now they look like the best.
    and the VIX feb 70 ( which I would never play because it's too far out of the money), well the volume is up 500% today
    I am not buying VIX calls today. I'm just posting some history.
    zee

  • http://gemstowear.etsy.com Jan

    I'm analyzing charts while we chop. CME looks like a descending triangle on the daily. Target around $160?

  • http://zstock7.com/ zstock

    UNG under 22 again—looks good to go–Buying UNG

  • Enfinity

    That is happening…

    🙂

  • MaxPainMan

    NOTE:
    RSI on SPX is pretty much at where it was on 11/21/08 & 10/27/08

  • rhae

    Roller Coaster to Hell, just roll in and out with the ride…

  • BigHouse(Aka Mr Vix)

    I covered XLF at 11.06 Erik. I'm thinking we go up some more.Then i will re short and get back on the yellow brick road..

  • standard_and_poor

    As of 12:05 cst the recommendations I made onSunday night of nine shorts show an overall profit, even if
    we get stopped out on all positions we'llshow a profit. Some of the targets show a risk reward of 5:1 on the shorts. I'll post numbers in a few days.

  • rhae

    so far today is meaningless to me, an inside day is about the same as a big fat doji… However, as a NR7 day … They are winding up the spring.

  • GMunni

    They'd be naked shorting. These guys are hedging so they are just taking advantage of the spreads without confidence that the spreads are ridiculous.

  • molecool

    I'm probably going to wait with adding further puts once/if we see a large retracement. Today was only a preamble.

  • T.B. Aurelius

    VIX

  • rubberbullet

    oh man I thought it is SPY, instead it is VIX!!

  • standard_and_poor

    Buying more FAZ (3x, short financials etf) soon.

  • cyberbaloch9

    Me too. Master plan is to get rid of diesel trucks and use natural gas to operate those 18 wheelers. Long term play 3-4 years

  • Enfinity

    Meet the face on the other side of your trade!

    muahaha

    🙂

  • geckoman

    Q's and DIA are trying to hang onto the bear channel. Looking at the zero it's a safe bet these two follow the SPY and IWM and fall out of the channel.

    http://www.screencast.com/users/geckoman/folder

  • standard_and_poor

    Just added more FAZ.

  • geckoman

    Another BB Squeeze on the 30 m chart. These have been sooo profitable.

  • standard_and_poor

    watch out below if we break 857 on spx

  • http://investingadventures.com Jorge

    SRS double bottom confirmation. Thoughts?

  • molecool

    Anything's possible today…

  • bender_b_rodriguez

    holy crap, did other people know you can put option symbols into the TOS chart tab and get charts of the option prices…that rocks!

    bender

  • jigdaddy

    i think thats where there will be some resistance but after that it looks like it has a clear path to 80-85

  • standard_and_poor

    just bought more cube puts

  • geckoman
  • Erikd

    look at a 10day 2hour chart on XLF $TNX USO FXY $VIX trends still look very normal…

  • molecool

    Share a chart buddy. Pass it around and let everyone have a puff.

  • http://guidepostings.blogspot.com perspective

    nice tatas with the bkx

    tradepostings.blogspot.com

  • DMS425

    SMACK BITCH!!!!

  • geckoman

    Here is a chart of the 30 min BB Squeeze. I have noticed the hourly squeezes to produce better fruit with more juice. The 30 min squeeze has been working. There are those times where you get the squeeze on both the 30m and the 60m and across multiple indexes. Those are phat.

    http://content.screencast.com/users/geckoman/folders/Jing/media/3ed2726a-8a44-4f04-9110-ea1fe8166620/2009-01-13_1421.png

    edit: The red dots tell you to get ready that the BB bands are ready to break out of K channels. Notice we are set up for another one.

  • mikeri

    dndn. CEO up soon on CNBS. watch it. Buy out rumors. Bios getting a bid. OI in Puts HUGE. This could run. But remember, I have lost my calls for the last 3 OPEX weeks. Heartless POS. Maybe my luck changes. Watch it.

  • cnbs08

    So I guess you're holding shares then right…..not options…..looks like it's gonna do some backing and filling before it moves back up again but that's jmho of course

    I'd say 200 is in the offing at some point and 300+ if we have another complete meltdown of the financial sector. Good luck on your target tho.

  • traderbull

    Looks like the zero is firing on all cylinders in this market, thanks mole

  • de3600

    I swear mole and art cashin are the same people

  • BigHouse(Aka Mr Vix)

    I'm looking for XLF to go back up to the highs. Its holding up. Keep your eye on it.

  • jigdaddy

    on another note, how does SRS go down 2 bucks when dow goes up 20 and SPX goes up 4?? these ETFs are brain damage.

  • standard_and_poor

    just go stopped out on a few puts, stupid human, I should be robot.

  • pricey

    Great call on the 860

  • Steve_H

    Art Cashin rocking out to Rammstein..thanks for that mental image..

  • Keirsten

    Is it just me, or is the Yen just stuck on stupid right now?

  • pricey

    only thing I'm thinking is JPM puts a bullet into opex? Just a thought

  • AKJ

    Plus, the XLF pretty much hit the 61.8% Fib retracement yesterday (from nov lows to dec highs). We'll see how much it can bounce. Yesterday's close so far proving to be resistance for FXY.

  • molecool

    It's overbought – not much room to go.

  • El Gato

    Does anyone have anything on the education short trade?? APOL/ DV ?? Kass is shorting aggressively

  • geckoman

    Allright who’s getting played like a violin right now? I did today. This is wild action here.
    SPX 862 to 873 back to 864 in less than an hour.

  • Keirsten

    Would not surprise me, and they now have less than a week now for any kind of an Obama rally to cook up.

  • mikeri

    dndn…sold 10 of 20 for beer. Playing with house's dough. This damn heartbreaker stock. I was ass deep almost 2 years ago in the biggest battle on Wall St. Was anyone else there? My good gosh, that was a wild month. Many trades. Ended up 1500. That was the most entertainment I have had in a long time in stocks. The crooked FDA killed my last play back in 2007. We'll see. OI is heavy in favor of puts. My remaining bet is that Chicago wants to queer those puts. Check it out. Damn heartbreaker stock. Hell, I rather date a redhead.

  • geckoman

    I have a similar story with Crystallex a few years back.

  • Keirsten

    All I know is APOL had their estimates bumped up by .06 and came back with blowout earnings- what's his reason to short them? I found this for you in the meanwhile, but not sure how reliable this source is.

    http://www.citronresearch.com/

  • benji12

    so you are short DNDN, Mike?

  • El Gato

    Thanks Keirsten. His trade is fundamentally based; mainly on market multiple relative to the group. The behaviour of the stock is interesting. After 'blowout' numbers the stock has reversed hard. DV and ESI have their numbers out in the next few weeks, so if institutional players think the long trade is over , then we should start to see weakness soon.

  • Keirsten

    I'll keep my eye on that. Thanks for the heads up. 🙂

  • Send Help

    mikeri — as long as I live, I will never forget that DNDN time…….missed it…..that was my first BIG miss…..It was a triple play…I was to focused on ELN/NBIX and missed DNDN…..no more biotechs for me, lesson learned…..the hard way

  • BigHouse(Aka Mr Vix)

    Looks like xlf trying to bust out

  • Keirsten

    Can anyone tell me the volume they see on the March 56 calls for IWM? Either they jumped from 861 to 55861 or I'm getting pitiful data here.

  • http://guidepostings.blogspot.com perspective

    looks like the downtrend is broken. we shall see.

    tradepostings.blogspot.com

  • Marc

    Keirsten:

    From interactive Brokers, for the IWM March 56 calls 58, 861 a moment ago

  • Keirsten

    Talking to myself now…
    The volume on those calls did jump 55K in a matter of minutes.

  • Keirsten

    Thanks very much Marc- sometimes I have to question what I get through Shidelity's live stream.

  • T.B. Aurelius

    Ya! Share it Reptile!
    Even if it's a roach!

  • Erikd

    End of day Recap:
    XLF closed below 11.20 $BKX closed below38.20 which were key levels as i stated earlier here today
    coupled with the fact that technicaly we had a up day at the close on the S/P.and negated the 3 days down in a row effect.. also with OPEX within 3 days market makers will run away (down)from ST traders levering to the upside and burn the Theta.. STILL SHORT expecting GAP down overnight.

  • geckoman

    I did…see a couple posts above this.

  • geckoman

    I did…see a couple posts above this

  • minion of the ppt

    Folks, key today's numbers into the RL… Today's probs of breaking 860 were equal to the next downmove's probs of making a new low…

  • Anonymous

    Lurker that found this site last month, love the analysis and comments – keep up the good work!

    What does everyone think about buying SRS at this point? I was looking at some of the other short ETFs, but they all have various indicators that lean towards overbought. SRS is sitting right at about the 20 day moving average, which looks like it is flattening out, and with the state of the economy I can’t imagine real estate going up in the short term.

  • Reza

    Erikd, do u have a blog

  • peterey

    Erikd,

    Can u please explain this “also with OPEX within 3 days market makers will run away (down)from ST traders levering to the upside and burn the Theta”.

    Thanks

  • GMunni

    So how you playing it and why? You trade crude futures?

  • Erikd

    No, I only make posts here on this blog, as i was the the first to pop (post on thier new site)Berkshire and Molecools cherry when they started this site last year..

  • Erikd

    short term traders have started building long positions expecting market to bounce short term,
    option expiration is 3 days away. market will whip down and then back up by friday burning out front month options this week.

  • peterey

    Thx, very clear and smart, let's see how it plays out.

    How did u gain your experience?

  • geckoman

    I own it. It';s one of those that I am willing to hold through and not look at too much for all the reasons you mentioned.

  • HuckFinn

    Mike, I was playing that pig, that was a nice Home Run for me, turned $1500 into 21K in a couple days. knocked the cover off the ball! Too bad this happens once in a great while. For me it was a lucky trade!

    HF

  • http://guidepostings.blogspot.com perspective

    like i have said before – there is a tremendous amount of headline risk here. more than adequate supply to climb the proverbial wall of worry. overall the market has shaken off quite a bit since the november lows.

    lately i have been struggling with the observation that so many bears have become overwhelmingly smug and sure of themselves. they have arrived at the same place bulltards were a few years ago in 100th of time. i'm not saying that the bear market is over – but crashes happen in a blink rather than the slow creep up the slope of hope provided bulltards.

    i do feel like the market is transitioning here. just anecdotally, the rash of bear market bloggers seem to be a pretty young group collectively (myself included). i believe they may well be surprised with the historic parallels – since these kinds of markets are quite rare, but certainly follow very similar arcs and very similar timeprints.

    it's anyones guess as to tomorrows action – but i do like the overall perspective going forward.

    tradepostings.blogspot.com

  • anon

    Erikd have best star chart, no question! :]

  • Erikd

    by losing 250K trading front month options for two years and then regaining those loses in 3 months once I developed the skills I use today.

  • molecool

    CLEAN CUPS!

  • Erikd

    Good to hear from you, been sometime, I think I have seen you this past month looking thru my telescope looking at th moon this past month.. :>)

  • peterey

    did you develop these skills by yourself or attending courses or working with someone?

  • T.B. Aurelius

    Ugh!
    Sorry Geico!

  • T.B. Aurelius

    Ha!
    I actually read about this in John Carter's book.
    Right on Geico!

  • Reza

    Erikd, any comment on QLD

  • Erikd

    completed investools PHD program, and following bloggers on various web sites. most of all after all the knowledge.. it takes making trades, lots of them and time in the market. and experience, good and bad..

  • Erikd

    still holding at EOD…

  • TriathlonTrader

    Erik, Knowing what you know now, would you recommend the Investools program? Would you recommend any others?

    I need formal training and not sure where to begin though I have a fairly good knowledge base regarding equities.

    Thank you,

  • Erikd

    I would recommend Investools to anyone as it is equivalent to the type learning that a 4 year degree college would teach.excellent foundation to build from. But once you get out of college you have to put that knowledge to work in the real world. As in the real world having a formal education is not a prerequisite to becoming successful.I guess everyone learns at there own pace the disciplines and techniques that determine thier success level. getting educated about something no matter how that comes far outweighs staying ignorant especially when one knows what is holding them back…developing mentors is critical to closing the gap on bad habits that everyone develops along the way.

  • Erikd

    will mirror the market. molecools post tonight is a good guide..

  • TriathlonTrader

    Erik, thanks for that feedback, much appreciated. I will look into Investools.

    Good luck with your trading, and keep up the good analysis.

    TT

  • Erikd

    I would recommend Investools to anyone as it is equivalent to the type learning that a 4 year degree college would teach.excellent foundation to build from. But once you get out of college you have to put that knowledge to work in the real world. As in the real world having a formal education is not a prerequisite to becoming successful.I guess everyone learns at there own pace the disciplines and techniques that determine thier success level. getting educated about something no matter how that comes far outweighs staying ignorant especially when one knows what is holding them back…developing mentors is critical to closing the gap on bad habits that everyone develops along the way.

  • Erikd

    will mirror the market. molecools post tonight is a good guide..

  • http://www.triathlontrading.com TriathlonTrader

    Erik, thanks for that feedback, much appreciated. I will look into Investools.

    Good luck with your trading, and keep up the good analysis.

    TT