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Zero Divergences
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Zero Divergences

by The MoleDecember 3, 2014

With all that’s going on I often forget that not all of my loyal Zero subs have been around for years. But recently a few noobs have signed up and thus it’s important to share the occasional titbit:

2014-12-03_Zero

Here’s a great example of a bearish divergence which occurred about an hour into the open. Now, I concede that it didn’t produce a big move but it’s the kind of stuff we look out for. In simple terms: if the signal is congruent with price direction then the market appears to be truthful – if you see divergences like these then pay attention as short term tops and bottoms often happen shortly after. Of course in such a compressed VWAP bubble we probably won’t see large gyrations.

Now the only exception are very strongly trending days – when the signal is above 2 (or below -2). On those days be very cautious about picking any ST tops or bottoms, unless there is a very pronounced divergence (even then proceed with caution). The same applies to the blue scalping signals. Look at the two signals yesterday – those were great conditions for a little swing trading. During trend days however it’s best to completely ignore them.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

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.
  • ridingwaves

    Question for Ivan, would you run an RBT that could be a direct opposite of a current RBT but sector/timing are not aligned in any way..

  • http://evilspeculator.com molecool

    If I may – institutionals run a whole host of systems which often act orthogonal to each other.

  • ridingwaves

    Mole, thanks for reply please know I erred and should have included you…you the man so you can always May….though in retrospect that is my wife’s name so I will have to deflect you probing there :)

  • BobbyLow

    Whoa, I had to look that one up. Can’t mean at “right angles” so it must mean “statistically independent”.

    Google is my friend. :)

  • BattleZone

    Thanks Mole! Another happy Zero sub here!

  • BobbyLow

    Oil’s been a real CT over the past few days. I’ve since hedged my Lottery tickets but all this means is that I’ll be “running in place” for awhile.

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

    yeah. and MultiDimensional at that
    wrap you head around that.

    http://math.stackexchange.com/questions/52786/orthogonal-planes-in-n-dimensions

  • http://evilspeculator.com molecool

    or·thog·o·nal
    ôr?THä??nl/
    adjective
    1.
    of or involving right angles; at right angles.
    2.
    STATISTICS
    (of variates) statistically independent.

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

    oh gaawd, what’s next? normal vectors of local maxima? make it stop.

    https://dyinglovegrape.files.wordpress.com/2010/05/graph3b.jpg

  • BobbyLow

    That’s for sure. :)

  • BobbyLow

    BTW, it might be changing form a little on shorter time frames but still looks like shit on the daily.

  • ridingwaves

    campaign update on IDRA, this is now a lot of R’s for my account, my question to Mole on let winners run, where would you move your stop… momo is moving this fast and if it gets to 5 it will have a ton of institutional buyers…entry on red arrow

    http://s13.postimg.org/wydfrphxj/idra_campaign_3.jpg

  • ridingwaves

    boiling for dollars…nat. gas 2x etf…what a widow maker that commodity…

    http://s27.postimg.org/6lga0jaqr/Boiling_channel.jpg

  • BattleZone

    Bearish divergence on a flat top?

  • BobbyLow

    I messed around with nutty gas a few years ago. I found it too difficult to trade. I suppose Intra Day Trading it would be OK but it’s just not for me.

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

    I threw a Fibonacci on UCO, another dollar down to go.
    but who knows!? nobody.

  • ridingwaves

    commodities in general seem like a bearish divergence…Gold is nutty now also…
    Draghi will set the tone for the rest of month tomorrow, he could go all in on QE or will they wait and see what happens with the programs announced last month…I’m leaning torward it will be wait and see by draghi and they will use that as cover for end of year tax selling down move of no more than 5%

  • BattleZone

    Lol, the higher we go the more bearish the divergence! (j/k)

  • ridingwaves

    seems to early in the month to get that 18K Dow….but boy are they trying and getting there with ease
    who needs qe4 when its already here in oil prices…and that should bring SP to 2100….GS target…
    those faithful traders of god are not to be messed with…..

  • http://evilspeculator.com molecool

    That’s way too much tape in between – PLUS we’re near EOD, so there’s not enough time for it to resolve.

  • http://www.ProfitFromPatterns.com/ Ivan K

    RW … I am unsure of your meaning of ‘a direct opposite’ …

    From my side there can be 2 valid reasons to include a RBT that is neither profitable … nor mega losing … into a winning stand-alone RBT … all too often people turn their backs on an idea / setup / RBT that, by itself, is not stellar … this is a bit like throwing the baby out with the bathwater.

  • http://evilspeculator.com molecool

    Watch this one on hyperbolic geometry – awesome stuff.

    http://www.ted.com/talks/margaret_wertheim_crochets_the_coral_reef?language=en

  • Billabong

    Covered SCCO short for +0.63R.

  • Billabong

    Opened long GE @ $26.36 with $25.85 SL at support.

  • BattleZone

    Dig the “too much tape between” point, thanks. Not something I’ve previously considered, but it fits in well with my clean-Zero-waves preference.

    I might beg to differ about not enough time to resolve… IF there were anywhere to go, e.g. if the vwap was usefully lower. Totally agree in this context though.

  • http://evilspeculator.com molecool

    Right – it’s got to be ‘connected’ – you can’t just draw lines all over the place.

  • BattleZone

    LOL +1

  • Malcolm O’Mara

    I took myself to woodshed today. As I was traveling Thursday, I placed stops on
    my TZA, FAZ and UGAZ positions, till month end………..I thought. I am back today and figured I
    had been stopped-out of all my positions. I almost fell out of my chair. The stops I placed expired
    Friday last and not today. Very sloppy of me. Right now, I am undecided on what
    to do. There’s nothing to be done now. Tomorrow is another day.

  • http://evilspeculator.com molecool

    Oooeeehh – you are scre-ewd. Why did they expire? Some ETF shenanigans?

  • mugabe

    month end ie end of november

  • mugabe

    sorry to hear that. i imagine we’ve all done some variation of that.

  • Billabong

    Been there and done that … I put two SLs on while I was on the road in Oct-Nov. It turned out to be day SLs not 30 day. My situation also brought into question position sizing when a dumb mistake is made… The toughest part for me was deciding how to exit after going through my SL and my R SL. Hope wasn’t part of the strategy. I ended up placing a floor (no lower) SL and looked to sell into strength.

  • Billabong

    Don’t forget bonus money!

  • newbfxtrader

    WTF legalized robbery?

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

    ah yes, FAZ. I believe I was calling for 13.50.
    and even I the great oracle of leechdom missed. 13.25 currently.

    http://stockcharts.com/h-sc/ui?s=FAZ&p=D&yr=1&mn=0&dy=15&id=p44651998832

  • mugabe

    This is interesting, though I realise that it’s not the focus of this blog:

    According to investor Jim O’Shaughnessy, Fidelity Investments once ran a study to see which types of Fidelity investors performed best. The winner?

    “The accounts of people who forgot they had an account at Fidelity.” O’Shaughnessy said.

    http://morganhousel.tumblr.com/post/100002469198/how-to-ruin-your-life

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

    Reminds me of my bull friend. Forgot he had some long calls.
    3 weeks later they closed out at 2.5X
    downside? He underwent an emergency quintuple bypass and recovery.
    Geeez.

  • strider

    Crazy Ivan has had a good week so far.

  • Scott Phillips

    This should always be so, because an average investor is going to ruin his account through overtrading and bad trading. Only a truly exceptional trader will beat the market

  • Scott Phillips

    I’ve done the same thing or similar things many times :) Suggest you take a few days off, there is a potential to get sucked into a pattern of bad trading after an unfortunate accident.

  • Scott Phillips

    What Ivan is trying to say is that if you have a particular ruleset which is heavily optimized for one market type, say like Thor with trending markets. It can make perfect sense to add a sideways market optimizied ruleset, even if the results are ordinary, if it reduces drawdowns in the bad times.

    As a general thing reducing drawdowns is where your efforts should lie

  • mugabe

    it’s a bit like asset allocation but instead it’s strategy allocation

  • Bernie

    A double inside day on the CAD. Prefer the long side as per Mole’s

  • http://www.ProfitFromPatterns.com/ Ivan K

    Scott … close yet no cigar … there is another valid reason for adding a secondary RBT … besides the obvious one of potentially reducing drawdowns.

  • Scott Phillips

    That needs to be decided BEFORE you get into the trade. You are no longer objective and have little chance of getting it right once you are in. Polling for opinions once you are in a trade is a bad warning sign :)

  • ridingwaves

    Scott, I’m not polling or trolling…as stated before my weakness lies in a couple areas with exiting a trade something I’m trying to get better at..Mole seems to have a knack for letting winners run…I believe this is running…thus the honest question…

    Bad warning sign seems like a bit of hyperbole…I had a much earlier exit planned but it’s running hard and I moved stops up….

    Take it easy on RW, your in Thailand with ladies all around, warm weather and a lot of bank….

  • DollarChaser

    Yeah I saw the trade log last night and thought of you. Have you managed to take every trade? I admire the psychological strength that must of taken if so.

  • Malcolm O’Mara

    No shenanigans. I was in a hurry and didn’t adjust the date. It’s
    entirely my fault. The big loss is in UGAZ. FAZ and TZA are small positions, losing
    positions, but not serious yet. I may just close them out.
    UGAZ is another story. My average cost is 10.39, and the
    size is big. This is a bad situation.

  • strider

    Thursday night is the only night I stay up to take the 11pm trades. The other days I am up around 3:45am and review the 11pm trades. Sometimes I miss some winners, sometimes I miss some losers, sometimes they haven’t triggered and sometimes I get in a few ticks late. I do not have ‘psychological strength’ and have the meds to prove it. I am following rules that will make money.

  • http://evilspeculator.com molecool

    That’s it – I’m organizing emergency surgery for y’all.

  • http://evilspeculator.com molecool

    Thor vs CI – good example.

  • http://evilspeculator.com molecool

    Thor vs CI – good example.

  • Billabong

    Multi-month high on DX and subsequent low on 6E. Plus new high on YM … Spring is breaking out!

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

    JNK hasn’t risen yet.

    {Yoda voice}
    Inverse correlation is strong, Yesss.

    http://stockcharts.com/h-sc/ui?s=JNK&p=D&yr=0&mn=6&dy=0&id=p06654920461

  • mugabe

    it certainly didn’t like the forecast for 2015 growth either

  • ridingwaves

    19 hours ago…commodities in general seem like a bearish divergence…Gold is nutty now also…
    Draghi will set the tone for the rest of month tomorrow, he could go all in on QE or will they wait and see what happens with the programs announced last month…I’m leaning torward it will be wait and see by draghi and they will use that as cover for end of year tax selling down move of no more than 5%…

    I could easily pass for an economist…..get some stuff right, lie a little and smile….

  • ridingwaves

    what was that?

  • mugabe

    yep- wild! euro all over the place

  • ridingwaves

    my whole screen lit up for a minute..a christmas tree fully decorated….

  • mugabe

    santa’s finally come to town!

  • ridingwaves

    rudolph was in the lead too

  • BattleZone

    Woo hoo! That was awesome! Let’s do that again! (hope everyone’s on the okay-side of that one.)

  • mugabe

    shades of Airplane– ‘looks like I picked a bad day to start day-trading the euro’

  • captainboom

    Nanex reported a massive buy program. 10x normal in 1 minute.

  • http://evilspeculator.com molecool

    hehehe – that spike really fucked some of the top pickers :-)

  • BattleZone

    I got kinda lucky today. I had to work until 4am last night, so I stumbled to the computer at 11 this morning, and the setup was nicely bullish so i bought it double-hard. And yes I got the movie to prove it! :-)

    Flipped to short at 2075 and hoping for a bloodbath…

  • http://evilspeculator.com molecool

    I think someone is impatient for Santa to arrive.

  • mugabe

    that was Santa!

  • http://evilspeculator.com molecool

    Someone really punched it in there! LOL

  • BattleZone

    The one thing this-here top picker has going for me is that I know how dangerous it is. I only want to try that shit near a high tick. Imagine chasing that move down this morning, getting bleatedly (!) short at like 2063 on some wacky ‘confirmation’… not fun at all.

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

    Lightening up a little now, made 3 points on the short side so far.

  • http://evilspeculator.com molecool

    Is that white bear humping the tree?

  • mugabe

    no. he’s someone from the Slope and he’s bashing his head against the tree

  • http://evilspeculator.com molecool

    Careful – T.K. has spies here 😉

  • http://evilspeculator.com molecool

    No particular reason for this but just crank it up whilst watching this tape:

    https://www.youtube.com/watch?v=Ae829mFAGGE

  • mugabe

    just knew that Guiliani was in on it. mafia’s always lurking

  • mugabe

    too much minced pie- finger got stuck to the keyboard

  • BattleZone

    Stop moved to break-even. I’m not giving back a cent of my evil gains today.

  • ridingwaves

    Stocks edge higher in the wake of fresh ECB hopes
    https://www.youtube.com/watch?v=9K30e9O3Nng

  • http://evilspeculator.com molecool

    Hard to believe but I can top that one:

    http://youtu.be/ye5BuYf8q4o

  • BattleZone

    Hey Mole, can i assume you still gots your ES longs on? I wanna see you hit that crazy target the P-n-F was indicating, which was higher than I can currently recall.

  • mugabe

    This is what Draghi’s listening to

    https://www.youtube.com/watch?v=JSUIQgEVDM4

  • ridingwaves

    me thinks that you might enjoy the stay as the day moves on, that buy program might just be a blow off type move…

  • BattleZone

    wowww… the memories… being a teenager on the loose in California in the early 80s… what a time…

  • ridingwaves

    full short…

  • BattleZone

    just keep it reeaall frosty… and good hunting

  • ridingwaves

    2077 stop…tight as a frog booty

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨

    ¨°º¤ø„¸ C O M E „ø¤º°¨

    ¸„ø¤º°¨ A N D “°º¤ø„¸

    ¨°º¤ G E T I T ! ¤º°¨

    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • http://evilspeculator.com molecool

    I showed up in 1991 and it was still a great place to be. It all went downhill after 2000.

  • ridingwaves

    I lived in Balboa Newport in 91-92….it was Nirvana….women, waves, taco tuesday, Malarkeys, more women, strippers, cheerleaders, more waves…work…