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A Terrible Thing To Waste
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A Terrible Thing To Waste

by The MoleJanuary 16, 2009

UPDATE 10:12am EST: I was just catching up with the latest thread of comments and one in particular by standard_and_poor stood out:

After reading today’s posts it seems many of us are trying to toy and fine tune an already perfect scenerio. We’ve been waiting for an impulse wave for many frustrating weeks, let’s not let our reptilian brain screw this up. Wait for the 2nd fib retracement or even 3rd if we get there to add to shorts. Most of us should be somewhat hedged anyway. Don’t get scared out of your shorts by not having your exit and re-entry strategies prepared before market open; otherwise you’re trading on emotion and adrenalin (seeking pleasure, avoiding pain at all costs even if at the core we are aware of our errors). Odds are favorable that we’re amidst [intermediate] wave 5 eventually awaiting at least 739 spx. I know it’s a tough call for us but look at the bank stocks (new lows seem imminent), $cpc, etc., etc. I’ll be lightly nibbling around pivot zones at most. Sure the brain is terrilbe thing to waste but so is an impulse wave!

I have to say, I couldn’t agree more with his sentiment – not sure if we’re in (5) or still in (4) but I frankly don’t care because I’m just sitting and watching at this point. Now, I’m not saying I’m not doing anything or plan to head for the beach (nice warm weather over here in L.A.) – I’m browsing through tons of charts to pick victims for the invariable trip to the downside. But that may be a week or more away, so let’s be patient folks – in trading timing is everything.

Besides, today is expiration Friday – my least favorite trading day of the month. I completely despise this day as market makers are out in force with high voltage cattle prods inflicting maximum pain on hapless rats hoping to make an easy buck. Trust me – those guys will have your breakfast – spit you out – and then roast you on stick for the main course. Just stay away.

Zero was triggering a long ETA but that disappeared quickly – I have put my criteria on the chart and unless all three are fulfilled I’ll stay out of taking trades in that account as well. No sense to blow profits on slippage and whipsaw tape.

UPDATE 10:30am EST: We’re slowly drifting downward – take a look at this:

Nice channel we got ourselves here – we basically keep bouncing against a dropping VWAP. Keep an eye on that channel – perfect for day/swing traders I might add.

UPDATE 10:36am EST: GREAT – I post the damn chart and we break through the channel – LOL. Let’s see if it holds – retest coming.

UPDATE 11:11am EST: Somewhere deep in the murky depths of currency markets something strange is happening today:

Yen is pushing to the upside right now, which is bearish for equities. But see how ES futures were previously dropping along with the Yen – that’s a bit irregular IMHO. If you’re getting all excited here whilst loading up on puts be very very careful – this smells like a major bear trap to me. I also see 4 indecision candles on the Zero, also indicating that the current drop has no underlying momentum. Watch your six – expiration Friday can be treacherous.

Okay, I’ll grab breakfast – will be back in about 30 minutes.

UPDATE 12:18pm EST: Wonderful, I step away for some morning nourishment and come back to see an ETA and a VTA. Was only 8 minutes late on the VTA, so I grabbed it. Judging by the comments you guys are aware that WFC and other banks just fell off the plate. RKH has some nice candles on it. Yup, reality finally catching up with those boys…

UPDATE 19:26pm EST: I have to be honest – I did NOT expect such a large move today. This actually strengthens the case for intermediate (5). As a matter of fact, the force of the past 10 days has contributed to that scenario becoming more plausible every day. But for now it doesn’t matter as no critical points have been breached. I’m watching that channel I posted earlier this morning:


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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  • katzo7

    I'll be the first.
    Thanks mole.
    This last posting is right on IMO.

  • toad37

    Thanks Mole. You are crushing it lately. It's a beautiful thing.

  • katzo7

    Come to pappa.
    Suck in those longs.

  • Jammer63021

    Thanks mole and berk for all you do. I push this site relentlessly wherever I post. Question: do you perform your own VWAP calculations or do you have charting software where that indicator is available. I use TOS and find no indicator or study to do this calculation. Thanks in advance.

  • Osso

    read the post, 100% share it, and join the comment of its accuracy……905 could e top if still in wave 4 final up leg…..but from there …its wave 5 down……if we havent started wave 5…….

  • molecool

    It's in TOS charts actually but those wankers decided to add the study under 'Cumulative VWAP'. Add that and hide the upper/lower boundaries and you're good to go.

    Herzeleid!!

  • katzo7

    Mole,
    Got burnt badly by using options in the past (six months ago with IV).

    I read your Sunday posting.
    I am thinking about giving it another try.
    Any comments?

  • Keirsten

    Thinking out loud, whilst sticking to the main road map set out by Mole and Berk. And I concur about hating options ex week – I usually have a personal rule not to trade anything past the Tuesday of options ex week, but I broke that rule based on what I perceive as a pretty good opportunity to trade the plan.

    I realize the “norm” has been for the financials to lead a rally, but we've had several in the past few months that were led by the oil complex or materials sector. Just something to keep tucked in the back of our pretty little heads. Can the financials be a drag? Of course, but they aren't the whole enchilada either.

    Only two days for the Obama rally- today and Tuesday only. BAC was originally scheduled to report on Tuesday, and I can't help but think both C and BAC were “urged” to get this bad mojo off the table so some sort of rally can ensue. I could be wrong of course. Meanwhile, we do have Big Blue reporting on Tuesday, but I think that's after the bell, so…..

    Then of course we have a long weekend. However.. given that the so called surprises (BAC and C) are off the table, traders may not feel as inclined to bail before the bell. Guess we'll know in about 5 hours or so.

  • https://evilspeculator.com molecool

    So, what are you saying?

  • molecool

    Don't give up. Past experience has no impact on future performance. As long as you learned from your mistakes, have a plan (i.e. system), and are able to stick to it.

    The odds usually are against option buyers, trick is to pick those moments in time/space when your edge tells you that you things have a chance to go your way. Finally, don't cut off your legs. Let those winners run and cut the losers short. it's not personal and don't have an ego – the market is NOT out to get you. Usually it's the traders who defeat themselves. Maybe pick up meditation – embrace nothingness.

  • MaxPainMan

    Mole,
    How about gold today? Short at 80 and let it run up a bit to 82?

  • katzo7

    Thnx, great reply. Very funny.

    I am patiently waiting for my target of 861-2 to short. What do you think?

    Sometimes we get paid well to wait.
    And, IMO, this is sucking in the longs. That is all this move is about.
    I look at day spx chart and can see clearly what is in store.

  • standard_and_poor

    FAZ is putting up a good fight, Eric would be proud. : )

  • wex

    FWIW you might want to try spread trades to represent your view. you relinquish some upside but you can avoid some of the premium deterioration. There is a good free magazine FOT that you can get online.FOT= Futures and Options Trader. I like to sell moderately in the money puts for shorter term bullish trades. Tim Knight put on a deep in the money put trade to reflect a bearish view on TLT. That way there is less premium erosion.

  • mrktneutrl

    845 test.

  • molecool

    Hehehe – see, I know that shiny metal. Well, we're at 83.3 now – this is actually not a bad spot as that diagonal should serve as resistance. Maybe worth a shot grabbing a few puts here – stop at 85.

  • katzo7

    Thnx wex.

  • https://evilspeculator.com molecool

    ..

  • KrazyKanuck

    A yesterday's bottom, I read this formed a “Hammer Candlestick” pattern. What is this please, and what (besides the short rally) does it portend?

  • T.B. Aurelius

    I think,…ultimately….it's not even what is right move or wrong move…..
    It also is not what gains and what loses that matters……..IMV….
    Beneath all that visible stuff that measure the score of a trader, a lot more important and fundamental condition lies….I reckon…

    I think it is..”Do I trade what I see?, thus trading my set ups…”
    VS. “I trade guru's picks, Barrons articles, Hot tips from a hot blog, or someone else's opinion who sounds more secure than I…”

    As Jesus said(no religious dogma intended), A man must build a house on a rock, not on the sand….
    What's the point of building a mansion, if it can crumble down at any moment?

    This is what I remind myself at all times…
    There are times, when the opinion of successful trader's shake me with doubts about my trade…
    That is when I ask myself this question, and come around a circle, again and again…
    Happy trading…

  • mrktneutrl
  • MaxPainMan

    ok, going for it….

  • Keirsten

    Beats the heck outta me. 😛

  • geckoman

    Can we talk about JPM, WFC, USB? I think the shorts are driving these into the ground like they did LEH, BSC before them. The Gov't needs to be very worried here that the shorts are excercising their gov't puts on these. I love it.

  • mrktneutrl

    break 845, then 843 (lows for the day), then next to Pivot Point of 833.5
    AD Line still looks fine though. Option Expiry day sucks

  • standard_and_poor

    I'm looking for VWAP in propet.net, perhaps under a different name. Is on balance volume similar?
    Any suggestions prophet users?

  • DZZ

    Stubborn metal 😉

  • https://evilspeculator.com molecool

    Okay, I just checked my trusted stochastics on GLD and the 2hr as well as the daily are currently pointing up. So, I would be cautious here actually and set my stop a bit tighter. Possibility we push a bit higher here. Sorry – I’m usually only look at the futures and GLD is harder to measure because it’s an ETF that tails the futures.

    Anyway, I would set a stop at 83.5 if you’re already in.

  • Erikd

    mettle tested keeps you balanced…..

  • BalaB

    Cumulative VWAP.

    Get rid of Upper and Lower Band

  • Jammer63021

    Thanks molecool. Ich muss ein Narr! I found it in TOS charts and applied it and nothing shows up on the chart at all. Used One Day 1 minute. Chart shows I have applied the study, but nothing. I do not find it in Prophet Charts but it looks above like you have plotted it in Prophet?. Any advice? Sorry to waste your time.

  • katzo7

    Mole,
    Is there anything you would change now as the market has changed in applying your Crazy Bull Put Spread?

  • Erikd

    $BKH KBE KRE RKH all making a run down at the moment lets see on this first test to the bottom if it can drag XLF with it…

  • MaxPainMan

    ok SPX… go to 900, starting… NOW!

  • Sal

    We are on path to nationalize the banking, auto, real estate, shoe stores your local coffee shop……… So do we (Gov) want to pay $50 a share to take a piece of it or just bring it down to pennies. This way we can nationalize every thing and called it bail out. Irish were bold enough today to Nationalize a bank and did not hid behind the word bail out. Yes JPM will go down the tube. They are the biggest players of derivatives. I believe I heard 1:100 leveraged. Check out this site many intelligent macro and micro economic articles. http://www.moneyandmarkets.com
    Off course the simpler way is to follow Mole and Berk (Emperors of us Leeches and Steel Rate) and the Wave count they present.

  • https://evilspeculator.com molecool

    He’s talking Prophet charts – not TOS charts.

  • molecool

    Ugh, you guys just can't sit and do nothing…. sigh…

    Okay, why would I change anything? I'm nicely hedged and this is b.s. expiration Friday tape. Unless we touch 820 or 920 today I have no reason change anything. The plan worked fine so far – market now needs to tell me what it wants to do.

    2nd guessing yourself or your system/plan will invariably lead to losses.

  • http://www.triathlontrading.com TriathlonTrader

    Erik, what do you think of FAZ at $60. Too expensive?

    I got shaken out early because I didnt believe either SRS or FAZ will ever see triple digits and am surprised to see FAZ at $60.

    thanks,

  • KrazyKanuck

    XLF approaching yesterday's $9.60 low

  • standard_and_poor

    Thanks, found it under cumulative volume index with no bands already, great. Much obliged!

  • Erikd

    $BKX KBE making fresh lows below yesterdays levels..

  • DZZ

    Getting ready to short Gold again!

  • http://implicittrading.com Implicit Trader

    Yo. Got out of MA. $BKX looking too sick right now.

  • standard_and_poor

    I 2nd that! Gotta embrace it!

  • MaxPainMan

    uh oh… gold…

  • Erikd

    it will follow market direction.. Banks making another run down now lets see if it bulls buy this one up today like yesterday..

  • mrktneutrl

    Totally agree. That’s why I love Iron Condor Credit Spreads – fire and forget and let the probabilities work out. Plus, if I have done my homework, and I have, then I will win twice as many times as I lose.

  • katzo7

    I am thinking of doing more. Same strikes?

  • Erikd

    say what….

  • mb_cnbc

    cnbc's headline just said “financials lead stocks higher”

  • mrktneutrl

    Internals all rolling over. Shakeout before the breakout?

  • Erikd

    BANKS FREEFALLING….. new LOWS…

  • http://wadecapitalmanagement.typepad.com/blog/ Duuuuuude

    I agree to be careful here. The $SPX is sitting at the bottom of the channel…….right at 38.2 Fib retracement…….CCI just gave buy signal. If my JING worked, I would post a pretty picture.

    Here it is: http://screencast.com/t/y1IoRRs2l

  • BigHouse(Aka Mr Vix)

    I feel there will be no Obama rally .Banks are going down the tubes. Selll Selll Selll. I just have a feeling we are in wave 5.Its going to be a slow grind down.

  • Erikd

    RKH taking out nov 21 lows to join $BKX that is already below the nov 21 lows … momentum is building to the downside….

  • standard_and_poor

    ORALE faz! (That's L.A. slang for right on faz.)

  • Erikd

    just follow the yellow brick road we are still on a 8 day trend line…. until it breaks.. then reevaluate.. K.I.S.S.

  • Duuuuuude

    Yes…….and did you hear Charlie Gasparino throw Dennis Neal under the bus! It was brutal! I jumped out of my chair and gave a big Hell Yea!

  • BigHouse(Aka Mr Vix)

    Dennis Neal is a tool. Where did they find that ass clown?

  • Erikd

    XLF set-up i posted is kicking ARSE.. 1 turn already… took out initial invest. and will play with bull money the rest of day 8>)

  • TroyMcClureRIP

    +1 for “ass clown”

  • Keirsten

    WFC broke through Nov lows and is now clear back to '03 levels.

  • TroyMcClureRIP

    2. ass clown

    1. One whose stupidity and/or ineptitude exceeds the descriptive potential of both the terms ass and clown in isolation, and in so doing demands to be referred to as the conjugate of the two.

  • BigHouse(Aka Mr Vix)

    Lets get xlf in the basement.

  • Erikd
  • Erikd

    8>)

  • mikeri

    lzr. Still only have 100 this time from 8.70. OBV up to 1.4 million on 1.8 million float. Maybe in the next week, this thing flys. Watch the OBV. Maybe we hit 1.6 million, and it goes. That would leave only 200k. Once the float is bought, it goes. Remember, no more than you can afford to lose grecefully.

    Looking to go back to the indexes and play Zero. That 940 short call was a freakin beauty. Had a couple nice trades this week, and too many small losers. Small caps game losing it steam. Where are the hedgies?

  • Erikd

    WOW …. you mean you are going to let me start on the basement design.. this is the first time you have shifted psychologically.. you have been making the market do a punchout the last 3 days.. thats telling …to me as the rest of the market will follow now…. 8>)

  • BigHouse(Aka Mr Vix)

    This is amazing banks are going down the drain. This is a clear warning to the general market. Get Out. It’s going to be a slow grind in the rear end.

  • DZZ

    Just saw your message below. “Okay, I just checked my trusted stochastics on GLD and the 2hr as well as the daily are currently pointing up. So, I would be cautious here actually and set my stop a bit tighter. Possibility we push a bit higher here. Sorry – I'm usually only look at the futures and GLD is harder to measure because it's an ETF that tails the futures.
    Anyway, I would set a stop at 83.5 if you're already in.”

    Actually waiting on the next leg up, then DZZ all the way 😉
    Thanks

  • Keirsten

    Or.. is that a contrarian indicator? Yikes!

  • BigHouse(Aka Mr Vix)

    I’m not Cramer lol

  • BigHouse(Aka Mr Vix)

    I have shorted and covered the past 3 days. I went long yesterday at 9.77. The rally didn't last so i got out at 9.80 .This told me short and stay short.

  • Erikd

    OBAMA speaking in one hour… do you think the GOVERNMENT knows what is set-up in the markets today.. will the markets run him over or will they imbrace him today … or wait til later this year…. comments…

  • standard_and_poor

    BAC,
    Bank of America currently down 10.7% at new 52 week low.

  • Erikd

    I know you go bothways but how many girl friends can you put in that BigHouse.. J/K
    greatjob!!

  • Heiko

    Hello “Zero”, sorry to bother you, I have a few questions:
    Are you planning to release a trading system based on the Zero indicator? Or should I trade based on the Chart you are posting?
    Did you develop the indicator by yourself? And how reliable is it? I saw the case study, but it is only a few weeks old, I'd like to see a litte longer track record.

    thank you,
    Heiko

  • DMS425

    Replay: FOS

  • sibekp

    OPEX still scares me to put money in short… even with the ETA…. OH just got a VTA now. Alright I'm going short but setting these stops tight… got burnt bad on opex friday in Nov.

  • https://evilspeculator.com molecool

    Trading system is posted – did you read the tutorial?

    Track record: I’m planning on rewriting the Zero in NinjaScript which would give us 9 months+ of a track record. Stay tuned on that.

  • https://evilspeculator.com molecool

    “It’s going to be a slow grind in the rear end.”

    That’s naughty…

  • Keirsten

    …or Krudlow for that matter. Lawl. 😉

  • BigHouse(Aka Mr Vix)

    looks like Atilla is long tf ,sp, es and now bgu. He feels there will be a rally next week. Seems that everyone thinks Obama will rally market. I think the exact opposite. Welcome to wave 5.Nighty night keep your butthole tight.

  • BalaB

    “Slow grind in the rear end”

    http://www.youtube.com/watch?v=ebIZ1LVfPbA

  • slartybardfast

    Heiko, No disrespect intended, but if you just read a few of the past posts on this website, all your questions and more are answered. Stick around a bit and you will get some great tips on how to use the zero.

  • http://investingadventures.com Jorge

    So upset.. my lines before market open today.. sigh…

    http://screencast.com/t/SIbLLhw2Yf

  • mikeri

    I neglected to mention the profit book at 820 was another freakin beauty. Great trading this week gents. Grutsi. How about some Rocklette? And don't forget the Dole.

  • molecool

    Based on what I'm seeing the case for intermediate (5) is strengthening.

  • Donna

    PPT in play today?

  • pricey

    This boy's on top of your updates http://www.youtube.com/watch?v=3xQLTxvDkk4

  • green

    Mole at what point are you looking to hedge you self?

  • Heiko

    Alright, thanks. Yes I read the tutorial, but when I first read it I didn’t really know what it was, I’m rather new to Trading and have never used Futures before. But I suppose in this kind of market the only way to make money is by trading the huge volatility.

    How good are you performing using your zero indicator, what is your monthly/yearly? I’m just wondering, looking for sth very reliable, which I can learn and use for myself. There are so many financial newsletters out there, most of them are probably really bad. I subscribed to a few of them just in order to see the model portfolio and the track record, they keep losing money and worst, they keep recommending poor trade after poor trade ! Last year I lost 50% of my portfolio by following bad advice, now I try to find a way to recoup my losses.

    I’m just searching for someone who I can trust. I cannot afford to lose any more money.

  • Erikd

    are you ready to eat what you write…..LOL PEACE!

  • Keirsten

    Looks like GS just hit support right on the pivot.

  • mrekim

    Did not hedge my 65 spy puts yesterday. Is today my 2nd chance?

  • Kurious

    There is a rumor that the FED is going to be working over the weekend to save 2 major banks. Just from what I was reading on someone's website.

  • MaxPainMan

    selling some SKF february calls here…

  • mb_cnbc

    can you post the link or mention which website?

  • katzo7

    Hating on that guy (Kudlow)

  • DoubleNaughtSpy

    But his dad is PISSED about it.
    http://www.youtube.com/watch?v=tvFefAefBdQ&NR=1

  • green

    hi
    are you hedging your self from here or not yet?

  • BigHouse(Aka Mr Vix)

    I think the market is tired of these bail outs. Whatever is planned it will be met with more selling next week.

  • Keirsten

    I've been hedged since yesterday.

  • http://guidepostings.blogspot.com perspective

    freaky friday playing out –

    tradepostings.blogspot.com

  • BigHouse(Aka Mr Vix)

    Obama said nothing new. Can’t see this market going up.

  • http://www.shadestrades.blogspot.com shadestrades

    Some mention of Barclay's on CNBC. All the big banks are f'd. Let them fail. The small regional banks will then take over.

  • Erikd

    STRATEGY I will use today to hedge myself over the weekend.. just in case something implodes over the MLK holiday.. would be to buy a front month contract JAN EXPIRY at the close today and hold it over the long weekend just in case something implodes over the weekend… you do not have to close it out until the market opens tuesday… TOS has closed this position after 10 a.m. the next trading day. but if you can close it out in the first 30 minutes at your time frame depending how the market opens.
    for accts under 25k this does not count as a daytrade.. just the cheapest way to hedge yourself IMO..

  • standard_and_poor

    TOP OF CHANNEL, buying more puts, close stop, low risk..

  • molecool

    CLEAN CUPS!

  • molecool

    Did you send me an email?

  • standard_and_poor

    Continuous new lows in bac is citibank next?

  • green

    can you please explain
    Clean Cups?

  • Steve

    are you sure the yen/s&p correlation is still valid? with us interest rates as low or lower than japan's there wouldn't seem to be a need to go abroad for low cost leverage.

  • T.B. Aurelius

    Isn't Jan. Contract worth $0 next week?

  • Pheesh

    Heiko,
    you will keep losing money as long as you are relying on others to make good decisions with it.
    Between this blog and some others you can get a good enough sense to do fine on your own. Don't pigeon hole yourself into one source of information, or one world view. I really like this blog, but I don't blindly follow trades if I don't agree with them.

    I read articles on sites like
    http://www.nakedcapitalism.com
    http://www.marketoracle.co.uk
    http://www.market-ticker.denniger.net
    then occasionally http://www.marketwatch.com to see how the mainstream view is.
    The more diverse the viewpoints that you can find out there the better decisions you will make. Since you were just following on your previous trades you didn't learn from the mistakes that were made in them. If you make stock picks based on your judgement of a myriad of factors, regardless of the outcome you will learn a lesson from every trade. If you just follow someone you learn nothing.

    For technical trading I generally follow this blog and xtrends.blogspot.com for insight into something I don't have a lot of experience with.

    Mole- my apologies if you don't like other links posted here, feel free to strip them out if it's any issue.

  • CK999

    Banks are getting crushed but I don't trust this to go short on opex so I'm staying out.

    The last time BAC was this low was Feb 1991!

  • geckoman

    It means new blog post. It was the euphymism used on Jeff Kohler's site option addict penned by one of the forumites there.

  • DMS425

    “would be to buy a front month contract JAN EXPIRY at the close today and hold it over the long weekend just in case something implodes over the weekend… ” FOS, Please explain how you plan on doing such a think?

    I AM UNDER THE IMPRESSION TODAY'S CLOSE IS THE SETTLEMENT. SO WHAT DIFFERENCE DOES IT MAKE?

  • DMS425

    +1, FOS has outdone himself again.

  • mrktneutrl

    Doubt it. 🙂 Not today anyway according to his posts.
    I don't like opt expiry day because:
    1. Spreads are not “real” – I am a credit spread writer
    2. Increased Vol reduces the effectiveness of my probabilty models.

    Today, I did what I usually do on opt expiry- Nothing but wait for my premiums to be locked in.

  • Lawrence_Chiu

    What is this 'FOS' that keeps popping up in the comments?

  • Erikd

    catching up today on some posts i missed when we went to another comment cleaner page.. yesterday see the re-post on the next comment cleaner and you can see the details of how this hedge strategy flows out…

  • Erikd

    you show your lack of judgement when you run off at the…._ _ _ _ _ before you have the fcts..

  • Erikd

    catching up today on some posts i missed when we went to another comment cleaner page.. yesterday see the re-post on the next comment cleaner and you can see the details of how this hedge strategy flows out…

  • Erikd

    you show your lack of judgement when you run off at the…._ _ _ _ _ before you have the facts..