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Alien Versus Predator
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Alien Versus Predator

by The MoleAugust 10, 2014

My money is on the aliens every time. And when it comes to finding analogs in the financial markets the Alien is the bond market and Predator is played by equities. Simply speaking – bonds (and forex) are the dog that wags the equities tail. So it makes sense to correlate the two and find out who’s lying. We play this game every once in a while and it’s particular useful when price data on the equities side keeps us guessing.

Let’s look at some ETF correlations first. Why? Because they’re easier to get in/out of for the average retail trader. So they have meaning given the overall message the bonds are telling us, however they may show us short term trends as well. Here’s JNK (guess what it represents) vs. the TLT which has 20-year treasury bonds as its underlying. That was a beautiful divergence near the top – took a while to break equities. As I said above – it’s a dog/tail relationship and bond traders are usually smarter than their equities slinging cousins.

I see a tiny bounce there at the bottom but we’ll have to give it another day or so.

Let’s zoom in a little but this time compare it with corporate bonds, which have been very very popular in the past few years. Better timing on this one on a short term basis – not if you are a fund manager who needs to flip a few Million shares. But to us this one offers better clues regarding direction on the equities side. What’s it doing right now? Bouncing a bit – which confirms our general view that we should see a re-test of the highs. Well, at least an attempt to do so. IF this really is at least a medium term correction then it has to happen anyway. Trends to just fall off the plate – they form a top first.

Now let’s mix it up with a few managed mutual funds – with more long term implications:

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

    I’m fond of the the Predator code, but those Aliens…

    http://bulk2.destructoid.com/ul/162754-avp.jpg

    Xenomorphs, while not the smartest creatures in the universe, are very capable of some critical thinking, and their queens are exceptionally intelligent. They utilize stealth and surprise to ambush victims and turn them into nom nom noms (sorry everyone). They even cut the power in Aliens, much to the surprise of Hudson (Bill Paxton): “What do you mean, “*They* cut the power”? How could they cut the power, man? They’re animals!” well Mr. Paxton, they are fucking smart, killing machine animals and they kill you everyone else. In the same film the Queen Alien uses an elevator after only seeing it used once, and even manages to lay eggs on the ship that’s leaving. The Alien is even shown outsmarting the Predators in both AvP’s, ambushing them, tricking them into thinking they are dead, and fleeing when they realize that they have their fucking shoulder blaster cannons. In the first Alien versus Predator the drones attack the queen briefly to release her acid blood and melt away the chains that bind her. Not only that but one uses its cut off razor tail to spurt blood at a Predator, forcing him to remove his armor or be killed by its prey’s FUCKING BLOOD. The same thing occurs in Alien Resurrection, where 2 aliens kill a third to escape their holding chamber. Either these things are pretty fucking smart, or they have perfectly honed predatory instincts something the so-called “predators” seem to be lacking.

    excuse me while I cover myself in mud and hide some place secluded.
    -Gerb

  • Billabong

    Brett Steenbarger has done some interesting work. I’m currently doing some refresher work using his book, “Enhancing Trader Performance”.

    Shorter Time Frame Traders vs Longer Time Frame Traders

    1. Thought Process – Implicit vs Explicit

    2. Learning Process – Repeated trials vs Market research

    3. Trading Style – Intuitive, by feel vs Analytical, by rules

    4. Source of Trading Edge – Experience vs Knowledge

    5. Duration of the Learning Curve – Accelerated vs Extended

    Steenbarger webinar link:

    https://www.youtube.com/watch?v=2LKW1fbDNOo

  • Billabong

    Ha! I wrote a note to myself earlier today to stay away from TBT until there’s a shift in direction…

  • Darkthirty

    I learned to scalp while learning EWT. Seeing as it’s fractals, the minute charts will narrow your focus, plus it doesn’t take weeks The computers have got EWT fugged up pretty good, it still applies…………

  • Scott Phillips

    Have you made money in the long term with Elliot Wave?

  • Darkthirty

    You wouldn’t believe me…………….

  • Scott Phillips

    Simple question

  • Scott Phillips

    I believe it is possible, though difficult, to trade with wave theory. There are some useful take aways from it, for example after a strong move (wave 3) you are likely to have a choppy time (wave 4). However I don’t think many of the claims of wave theory ie predicting what happens next are even remotely plausible.

  • Malcolm O’Hara

    I wonder what the good doctor would make of me. I rarely place more than 1 trade per day, and not every day. A trade will be 99-100% of my account, I don’t scale in. I employ stops within 1 hour. Stops are 50-50. 50% break even, 50% -1%. I never place a sell order, only stops. When I buy, it’s usually a market order. Order moves in my direction, I advance my stop 100% of my position. Have I left money on the table? Yes. Do I care? No. There would have to be a big + for me to carry overnight. It has happened.

  • Darkthirty

    I generally don’t work 4 and 5. Been caught too many times. 1-2-3 or a-b-c. When it’s unclear I GTFO. I just want the profit, don’t care about being right.

  • Scott Phillips

    That can work

  • Darkthirty

    My 10 y/o granddaughter can call the turns with the indicators, couple of anomalies, but 95% sure and backtests at all timeframes

  • Malcolm O’Hara

    Elliot wave theory is the Prector guy, right? I could never
    wrap my head around that.

    Do I believe that you can toss a pebble in a bucket of water
    and count the waves..And do it again, and get the same result? I am not in a
    position to doubt, or argue that. It’s a theory. Nothing more.

  • Darkthirty

    Ralph Elliot noticed it and worked it out. .Robert Prechter is an arrogant, self important asshole. EWT is akin to Tao, Huna, Zen et al, in that it comes to you, if forced it doesn’t exist. If you want to have someone tell you how to trade, throw your $ in a hedge fund.

  • Darkthirty

    Main rule is ALWAYS have 2 counts, follow the rules and one will prove false.

  • Malcolm O’Hara

    No offense intended, Darkthirty.

  • Prop Joe

    Any truth to the rumour that Priceline is making a play on $away?

  • Darkthirty

    None taken, took 4 digits to 7 digits in 3 months with EWT while prechter kept flapping his jibs and missing. I do my thing you do yours, but if yours works, I want to learn it!

  • Scott Phillips

    I’m sure he would be fine with that. You have a method, you stick to it, doing the same thing every day.

    If your method has a positive expectancy (and I take you at your word that it does) and you do what you are supposed to you will end up rich.

  • Skynard

    They report Monday.

  • Malcolm O’Hara

    Scott, I don’t want to end up rich. I have done other things
    that have provided me with a comfortable life. Some might consider me rich now. I do
    what I do, to show other people how to build wealth. I post my trades for a
    reason. That would be, that you see when I enter and exit and how I exit. I post trade confirmations to show that it is ‘real”.A little guy, provided he has patience, can increase his wealth, he just needs to know that it is possible. My mistake, was not to use real numbers.. I felt I had to blank out my account details. Next time I will trade numbers an everyday guy can relate to. I wish others
    might chime in too.

    Mole has his reasons for the blog, and I have my reasons for
    posting… Or, is that my brain injury coming to the fore?

  • phylum

    Have you looked at the validity re: stocks, fx, commodities, etc …. have you seen any differences?

  • mugabe

    looking at the very low recent volume on AWAY, it wouldn’t seem so

  • Scott Phillips

    Still stuck in the trade?

  • Scott Phillips

    Do you post your trades? You haven’t posted them here yet. Please do 🙂 No need to post confirmations, just share what you do.

  • https://evilspeculator.com molecool

    We don’t care about rumors.

  • https://evilspeculator.com molecool

    Actually EWT is the Elliot guy.

  • mugabe

    powerful insight

  • mugabe

    powerful insight

  • mugabe

    Scott (or anyone else),

    Nothing to do with this, but have you ever come across volume spread analysis? If so, any opinions?

  • mugabe

    Scott (or anyone else),

    Nothing to do with this, but have you ever come across volume spread analysis? If so, any opinions?

  • Scott Phillips

    I bought a book on it but can’t remember much about it. Seemed like there was something to it.

  • Billabong

    What’s happening Scott? Looks like a possible continuation of Friday … we’ll see at 9
    :30 EST. Interesting earlier discussion on EW. I used to use it as one of the tools in the tool box. I believe it can work if used in it’s simplest form. It’s when folks start doing subsets and set within sets it becomes very murky. EW is supposed to represent the order found in nature….

  • dragan ilic

    Bulls gettin started… 1936.9 SPX new bullish infection point!!

  • dragan ilic

    European markets seems to be accepting this new leg up.

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

    the ema 20 & 40, let’s see if they act as resistance.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=0&id=p77660759531

    -Gerb

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

    Nice 1 Gerb. I missed it. I would play this baby like this…. Enojoy ride to 1953-55. Then jump of long positions and let the market retest EMA 20 and 40. That way Late buyers will suffer for a while because making the mistake buying a spike.

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

    good to have a plan. I just checked the options expiry calendar.
    it’s THIS week. so be especially careful guys.

  • Billabong

    This may be an interesting week with a move up (forcing shorts to cover?) into options expiration …. where is market equilibrium?

  • DollarChaser

    now 5R in the green on a USDCAD short i picked out after receiving a volatility alert from DarthMole. thank you sir.

  • DollarChaser

    Hourly IP-S risk=5pips

  • BobbyLow

    Congrats. I’m curious though with only 5 Pips to Stop there’s not a lot of room in the trade. So it has to work quickly or it’s a stop out no?

  • DollarChaser

    yeah that is true, pretty much the minimum im comfortable with. i simply started looking for an entry, long or short after i got that darthmole alert at 1am EDT, i missed that hammer then that next thing i saw that i am familiar with was that inside period, so i took it according to the rules i know. closed out now via my trailing stop, ended up with 4.5R. price has moved a little further south since but im still happy, followed the rules and it worked out.

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

    between the new moon and the full moon (high and low) a 50% fibonacci would be at 1948.
    ;-D

  • BobbyLow

    At 1 AM EDT, I was sleeping. I was Long this pair and I eventually got whacked. That’s the way it goes as evil shit happens during the darkness. 🙂

    Regarding your minimal amount and comfortability factor, I suggest using the Evil Speculator FX Risk Calculator. This way your size is based on a percentage of your account and the number of Pips between your entry and your stop. Your minimal amount and comfortability factors will remain the same using this tool.

  • ridingwaves

    Could timing be sweet for sugar, maybe wait for inside day

    http://s10.postimg.org/q0qjgcqkp/Sugar_bottoming_out.jpg

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

    VXV:VIX ratio went below 1.00 –
    BPSPX turning neutral

    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=9&dy=0&id=p26468242150

    -Gerb

  • DollarChaser

    oh yes i do that, i always size so if im stopped out it costs me just 1% of my account. i just think that with an ISL much less than 5 pips away there is no room for the trade to breath.

  • Skynard

    /CC patiently waiting, train leaving the station. Keep an eye out:)

  • https://evilspeculator.com molecool

    Dead here today – may not be worth putting up an update!

  • https://evilspeculator.com molecool

    Yeah, that one was awesome 🙂

  • mugabe

    wait for the next big down day- there’ll be loads of comments:)

  • https://evilspeculator.com molecool

    So predictable…

  • newbfxtrader

    He he. Too many permabears here.

  • ridingwaves

    I picked up MNKD on beat down after positive news at $8.50…tons of shorts in this one covering today, not often you see a pharma beating SPY on volume….think diabetic insulin spray…Huge Pharma partner announced, think no more shots if your a diabetic….holding for upside or core to trade around… nothing in chart that makes me want to post it…

  • mugabe

    It’s been traded today so far by the equivalent of almost the entire population of the UK (ie one share per man, woman and child). Didn’t know they were so interested in the stock over there:)

  • mugabe

    If you’re gonna stay in it, you could do worse than to start spreading those rumours around the web. That’s what the pros do 🙂

  • https://evilspeculator.com molecool

    I certainly hope not.

  • Scott Phillips

    Daang – I took it long and got stopped out!

  • dragan ilic

    This candle right here should make both bulls and bears nervous…8 H

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

    OpX Tuesday!?!? – Nahwwwwww.
    😉

  • dragan ilic

    I prefer bank coin tuesday-wednesday 🙂

  • Scott Phillips

    One thing you should understand is that Ivan’s setups have a profound negative edge at the time these alerts are going out. Once it starts to move they will be positive again. I would strenuously argue against just “looking for an entry”.

    My experience so far trading these is it’s best to make your best value judgement on direction and just jump in. 5 pips is too small imo

  • newbfxtrader

    Lol. You guys beat me into shape! Scott and you. Plus I switched to FX so I didnt have a bias.

  • SS_JJ
  • https://evilspeculator.com molecool

    One has to keep an eye on you guys!

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

    how about a nice slow change?
    from range bound, to trending

    http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=6&dy=0&id=p63911441019

    RSI near 70, woohoo.

  • Kidd Cudi

    seems straightforward to me

  • newbfxtrader

    Short? yeah good one.

  • Scott Phillips

    Looks quite reasonable. You can increase the odds of it working by waiting for a break of the daily low, indicating that price is actually doing what you want it to.

  • Scott Phillips

    Odds favor a retest of the lows tomorrow

  • Scott Phillips

    FX is easier, for sure

  • Scott Phillips

    You talking short I hope

  • SS_JJ

    I hope slow is the past now.

  • Billabong

    Looks like it’s following the general mkt direction … Earnings release 12 Aug; looking for 23 cents. Lot of turnover today 2.3 X normal volume …hmmm

  • Billabong

    PM miners looking good! Lots of buy signals over the last week. Still riding those coal miners … Yee Haa.

  • dragan ilic

    Will be a very interesting week. I am still long, and as far as we dont get a close below 1927 SPX i will keep my long positions. A close below 1936.9 SPX will be first bearish warning signs.

  • Scott Phillips

    For the 1000th time – don’t do charting on the ETF. It’s like driving at night wearing sunglasses

    Very different picture on the real chart

    http://www.barchart.com/chart.php?sym=GCZ14&style=technical&template=&p=DO&d=M&sd=&ed=&size=M&log=0&t=CANDLE&v=2&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

  • Scott Phillips

    Great setup today in November Soybeans, short 1 tick below the daily low, stop at the daily high. Move stop to BE at 1.2R, shoot for 4R

  • SS_JJ

    Can go either way, but if the bullish side wins then i see today as a retest of the 25 d sma and acceleration line.
    http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&b=5&g=0&id=p90331128968

  • DollarChaser

    Ok, ill remember that. These alerts seem to come out after a bit of a sideways period, so would you suggest making a directional judgement based on the price action before the sideways period or look for the subtle hints within the sideways period itself?

    Also, you said once price starts to move again Ivans setups will again have a positive edge, so could I wait for the tape to pick a direction after a sideways period (and a darthmole alert) and then take a trade based on an Ivan setup? what are your thoughts there?

  • Scott Phillips

    Think it could go either way – I could be biased since I’m currently short related market copper

  • Scott Phillips

    Well there are 3 basic situations

    1) Trend continuation
    2) What Mole calls the “bitch slap” where it fakes out counter trend and then blasts off in trend direction
    3) Trend reversal

    I think some research is needed into the volatility conditions and multi-timeframe conditions that give odds to each situation.

    Personally I haven’t got a handle on it yet. I think specifically waiting for the bitch slap could be an idea

  • Scott Phillips

    I think there is a small subset of things which are true about it, which cretins extrapolate to being a theory of everything. That idea, that markets are predictable and if you got it wrong the count is wrong, is DEMONSTRABLY BULLSHIT. Also the idea that you can look at one timeframe of one market and explain it is also demonstrably wrong. A change in one market affects all markets in subtle and not so subtle ways.

    Take Friday’s price action for example. As Dragan stated the bears went all in before market open and got hurt. If the bears had have won it would have changed everything. Every single day has the capacity of totally changing the game up. There is no “oh the count is wrong”, that is complete unadulterated garbage and anyone who believes in that is mentally deficient.

    If you believe that the future is set in some kind of cosmic order and that we can count a fib extension and expect the market to rally over months, stopping at exactly that point – you have a fundamentally incorrect understanding of markets (and I know you don’t think that way Billabong)

    If you believe that after a powerful wave 3 type move upwards we have to have another leg up – I can show you hundreds of times each day that that doesnt happen, and some times where it does.

    Now don’t get me wrong, there are some things that are higher probability outcomes which wave theory explains nicely.

    – A nice retest of a high is another name for a wave 2
    – After a period of easy time one way traffic the market will most likely give you a period of hard to trade choppy price action (a wave 4)
    – Sometimes we can see fractal patterns within patterns, although that does NOT have to mean they exist all the time

    Eliot wave is poor logic and bad science

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

    I’ve dabbled with the 20/40 & even 80ema.
    but hey what about the 10?

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=2&dy=0&id=p12582882966

    1936.77 ema10 / 1936.92 close = 0.999926
    close enough for gov’t work.

  • Scott Phillips

    That pump n dump shit actually works

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

    The one market characteristic that is a prerequisite for any directional strategy is movement … aka volatility … on the other hand volatility is a pain for those granting options … by and large.

    Markets evolve through distinct phases / cycles … I refer to those as Good Cop (GC) / Bad Cop (BC) phases … the two are inextricably linked … and to that extent, interdependent.

    There are many many ways of measuring volatility / movement in any market … they may be market movement based … or indicator based … either way they provide a filtering mechanism for all approaches … including for my setups.

  • Scott Phillips

    I think we might get a retest of the lows to suck in some early shorts, price action yesterday was not a lot of follow through

  • phylum

    Why not try fibs ….8,13,21, etc ….. they’re all the rage you know

  • Scott Phillips

    NEW POST

  • mugabe

    volume profile is v interesting. bounce on low volume and then indecisive candle on high volume. the trouble is the earnings release. I wouldn’t touch it the day before earnings.