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Another Cunning Plan
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Another Cunning Plan

by The MoleFebruary 12, 2019

I may be jumping the gun a bit here but the current price action suggests continuation higher and a spike high breach seems imminent. The prudent and more conservative approach (I presented yesterday) is to wait for a breach of the ES 2736.5 Net-Line Buy Level (NLBL). However it’s going to be a busy day for me and I decided to take out a small exploratory long position right now with a stop < ES 2702.

Here’s the setup and as you can see ISL sits below two prior hourly spike lows. I would have loved to put it < the 2680 SL, however that would represent almost 50 ES handles, which is a bit much.

Caveat

The setup is incomplete for one. Plus the 100-day SMA is still pointing down, which means the onus is on the bulls to prove themselves. Relentless runs like these happen regularly, especially during early bear markets, so this campaign has about the same odds of success as any of Baldrick’s cunning plans panning out in Black Adder’s favor.

As human beings we look at a chart like this and fill in the future with our respective perspectives. A bull looks at this and thinks: “What a run higher – I don’t want to miss out!” Similarly a bear looks at this and see a last kiss goodbye before the bottom finally gives way.

Cunning Plans B and C

The odds would be much better for the bulls if we would first paint a retest of the 2650 range, where a second entry attempt could be staged after a convincing spike low. On a weak bounce I may even consider a short position, if the 25-week SMA would hold the advance.

So plenty of entry opportunities for both sides here IMO and what they all share in common is that we don’t want to bet the farm on any of them. Easy does it – remember we are still in technical no-man’s land.

What works in our favor are the historical stats for week #7, but of course that’s no guarantee and a slight positive bias at best.

Implied volatility has been easing up a bit but the VIX has not yet managed to drop < 15 – which all through 2017 until 2018 was considered a high and pretty bearish reading.

The LT VIX panel shows us the 2018 parallel from a 10,000 perspective. Which does not mean we are going down the very same rabbit hole. Clearly risk is still priced with a premium, albeit a much lower one than let’s say a month or so ago.

Anyone who told you that they accumulated large put positions on the way down is now effectively broke (vega burn is a bitch) and is increasingly hoping for a miracle.

Lottery Puts

That said, IF you are staunchly bearish and you loaded up most recently then this was probably the best timing any self respecting grizzly could have hoped for. Because ten handles higher and the bears are effectively dead in the water, and in terms of IV this is either the floor or the inflection point for a drop lower back toward VIX 11 plus minus.

So given that the acquisition of a few lottery puts would be an excellent way of hedging early long positions plus they may pay up in spates should the market take a turn to the red side. I personally believe that scenario has a less than 20% probability, which is why cheap far OTM SPY puts (240 or lower) would be appropriate.

Expect them to expire worthless (as they usually do), so consider this merely relatively affordable insurance (and a possible lottery ticket) near a crucial bull/bear inflection point.


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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  • evilasevildoes

    thursday 7 ish est big planetary ugly

  • HD
  • maxcherry
  • evilasevildoes

    We are currently rallying into the next 94 Trading Day (TD) Cycle, that last saw the 9/21/18 major High and is next due 2/11/19+/-3. The
    94 TD Cycle has been consistently in the markets for more than 4 years
    now, since the 12/29/14H and has been often exact, but at times off 3-4
    Trading Days.

    The same triangle that projected 2739 SPX price target has an Apex CIT due today 2/12, right at the double 2/12 Geometric time CITs and the 94 TD Cycle suggesting a 2/12 swing High being made.

    All
    trends remains up, since the projected 12/26/18 major Low and the
    markets have been in an hourly up channel. We would need to break this
    up channel to get an initial Sell signal.

    What’s Next: We should make a 2/12 swing High+/- and start a retrace.

  • Ted

    The transports broke out yesterday and the small caps today. I wish I had followed my gut on Friday afternoon and gotten back in.

  • Jason13

    More not tradeable info…largest 2 month decline in small business good time to expand https://uploads.disquscdn.com/images/07beec0e3843828b8d2af5f08f3b129a0be8c0112a80ed82b972cd8cc3f1ca93.jpg

  • maxcherry

    i’m still holding the 2575 puts , went long the 2750 calls yesterday, glad i did

  • ridingwaves

    the previous 4 were really good by the looks of that graph….economy is chugging along even with all the distractions, monetary perspectives is going broke hoping for the end of the world….

  • ridingwaves

    the dec. low is the low for a long time….there were 2 90% up days in 2 weeks after….that was a bottom buying frenzy

  • Jason13

    Me thinks so too..

  • ridingwaves

    carnival hucksters are not good at this….seeing only darkness….

  • mSquare

    Don’t jinx the rally!

    Unless Trump refuses to sign the agreed upon ‘deal’ and shuts down the govt. we are going higher than your 2740s

  • Sp00nman

    Sure looks like this wants to goto ~2800 before any big retrace/pullback. That would be the top of the balance of last year

  • Julie 35 – 25 – 36

    SPX Another defined channel 2800 resistance zone will intersect approx mid channel JULIE https://uploads.disquscdn.com/images/8c44d9d1ea6d30fab97ed886f67b2a8285c3a1ad950025f81f7819a4d59cd920.png

  • HD

    Anybody have R at 2743 ish ?

  • Julie 35 – 25 – 36

    IHD I have 2743 to watch
    JULIE

  • Sp00nman

    200dma at ~2743.

  • Jason13

    Hello 200MA…

  • Jason13

    Zero not showing a lot of buying but zero selling thats for sure.

  • Jason13

    I feel better playing treasuries than directly shorting this beast.

  • Jason13

    Oops I think I accidentally deleted my zero comment….sorry

  • Julie 35 – 25 – 36

    Jason I saw the comment. We both have pointed out the ho hum buying and lack of selling
    JULIE

  • Julie 35 – 25 – 36
  • TomW4

    The question is how high can the lack of selling prop this market up for…

  • Jason13

    Yeah, just giving an update.

  • Jason13

    The million dollar question, Tom

  • https://evilspeculator.com Sir Mole III

    You guys get it 🙂

  • Julie 35 – 25 – 36

    Tom We just watch the resistance levels for a reversal Today’s up move news driven i.e. supposed resolution of Govt. Shutdown Need a break of the lower newly drawn parallel channel
    JULIE

  • TomW4

    I don’t get how the resolution of the gov’t shutdown is positive. We didn’t really go down in the 2-3 weeks the gov’t was shut down LOL.

  • randomuser6789

    TVIX behaving weirdly – going up with the market on 1 min timeframe.

  • Julie 35 – 25 – 36

    Tom I don’t either Also it’s been approx 6 weeks since end of quarter December and bulk of SNP have reported earnings too.Talking the market up. I am watching 2743
    JULIE

  • https://evilspeculator.com Sir Mole III

    How’s my crew? It’s been quiet lately!

  • https://evilspeculator.com Sir Mole III

    That happens sometimes as TVIX looks at a futures based index to remain in sync. As a matter of fact VIXEN is based on some of these divergences.

  • BKXtoZERO

    Just got up………….

  • https://evilspeculator.com Sir Mole III

    Okay guys – are you ready? I have a dentist appointment tonight – better have your puts ready LOL :-))

    j/k

  • Ronebadger

    The more it hurts at the dentist…the bigger the downturn? Is that the way it goes? I lost my Rules Sheet…

  • Ronebadger

    VIX not really buying today’s action

  • Julie 35 – 25 – 36

    Duly Noted Chief ! My new crown fell out last night eating a piece of chicken. Going in on Wednesday afternoon so a possible double whammy
    JULIE

  • Julie 35 – 25 – 36

    Thanks RB Was watching $VIX also
    JULIE

  • Ronebadger

    I’ve got a dozen crowns in me…I’m worth a pretty-penny when I croak…

  • BKXtoZERO

    Long TVIX 35.05, I was holdling small position from yesterday 36.75, thanks for dentist tip

  • Sp00nman

    Ya short term looks like this wants to pullback to me.

  • TomW4

    I just hope the rally ends here. If we go above the 200MA then I think bears are in big trouble.

  • Julie 35 – 25 – 36

    Tom There is a pattern recognition previous attempts 200 sma. It could go slightly above per pattern JULIE https://uploads.disquscdn.com/images/23399093155000aba2a0a980af6fb170ded4e825802a0e953876da822af0f18b.png

  • TomW4

    Thanks for pointing that out.

  • BKXtoZERO

    My DRV is looking good. IYR has serious divergence and looks like it is done.

  • https://evilspeculator.com Sir Mole III

    You’ve GOT to be kidding me. FIRE your dentist!!!

  • https://evilspeculator.com Sir Mole III

    Yup pretty much. Red candles galore guaranteed – LOL

  • https://evilspeculator.com Sir Mole III

    That is concerning…

  • https://evilspeculator.com Sir Mole III
  • Julie 35 – 25 – 36

    It’s going to be a freebie now. They said so on the phone
    JULIE

  • Ted

    Divergence on the short term panel, although, i guess that’s to be expected after a big move.

  • BKXtoZERO

    Ruh Ro! Thanks Mole

  • BKXtoZERO

    Not to me it isn’t!

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Julie 35 – 25 – 36

    SPX Watching 2743 as noted below watching SPY 10 min chart Watching for a break below lower uptrend line and VWAP Hmmm ! https://uploads.disquscdn.com/images/d3d090f39434787d548ca1a0b541339876a005dea509d5c7d82d505c0ff532fb.png JULIE

  • Sp00nman

    Ya, been busy at my day job.. lol That and the market has been relatively tame.

  • Julie 35 – 25 – 36

    Hi GG Thanks for the guest appearance. Thinking of you !
    JULIE

  • Sp00nman

    Finally got that 200dma touch. Ya, another move up towards the top of the range at about 2800 would make sense.

  • BKXtoZERO

    Sold my small position from yesterday TVIX 36.75 to 35.25. I am in larger from today. I don’t mind taking small dings (200 shares) to stay current and see that a small order doesn’t turn into a larger problem.

  • Julie 35 – 25 – 36

    DB One of the most important Banks to watch There derivative exposure is HUGE JULIE

  • Julie 35 – 25 – 36
  • https://evilspeculator.com Sir Mole III

    Okay guys – I’m off to the dentist. Hold the fort!

  • David Goldstein

    Dentist day – at 55, going to have my first ever tooth extraction today; infected old root canal.

  • TomW4

    What does everyone think of the possible negative divergence building up relative to 5 days ago (2/5/19 high of 2739 in SPX)? You can see the slight negative divergence on the MACD, RSI, NYMO.

  • Darkthirty
  • Julie 35 – 25 – 36

    Tom they are important esp when overbought at a resistance and non confirming volume
    JULIE

  • TomW4

    The overbought and non-confirming volume has been persisting for a while now… I’m just concerned this can keep extending in those conditions.

  • BKXtoZERO

    out of todays TVIX 34.75 from 35.05…. looks like they want more

  • Julie 35 – 25 – 36

    Tom IMO Now trend lines are primo We play this on the daily.A failure now going up into mid channel at 2800 resistance would be bearish. A lower channel break coinciding below the 5 ema would be bearish JULIE
    https://uploads.disquscdn.com/images/7b1fd62f9a27704ffcc344ebc82da41339149d7b3c0558196e436f7fe0d02647.png

  • Mark Shinnick

    Yeah…I really don’t think much of those tools…like many, the indications have proven so misleading much of the time.

  • Mark Shinnick

    Its a interesting eroding of volatility support in here. BTW, what’s tvix atr these days?

  • Ted

    The market will continue to rise until the small caps get to the 200 day sma. It will be the only one not to break the barrier. Nothing cracks until it cracks.

  • Julie 35 – 25 – 36

    IMO They give a heads up when trend lines are drawn on indicators
    JULIE

  • Julie 35 – 25 – 36

    Ted IMO Small caps going up with a rising dollar … Rotation
    JULIE

  • Julie 35 – 25 – 36

    Hey We just received a VISA Card ZERO interest for 20 months. Now I know it’s over ! LOL!
    JULIE

  • Ted

    Give the bears a chance Julie! Throw in the towel! It’s the only way. LOL – just good natured ribbing. Better yet they are waiting for me to go long again. I’ve got a terrible record of playing break outs. LOL

  • BKXtoZERO

    No fun but it is what it is….

  • Julie 35 – 25 – 36

    Ted My small short is approx 1/4 of 1% of trading capital.
    JULIE

  • Mark Shinnick

    Yeah, like getting a ballpark idea of what might be.

  • Ted

    No problem then, you can easily take one for the team. LOL

  • Darkthirty

    Mars /Uranus conjunction 2/13 +or – 3 days……….?

  • Mark Shinnick

    …back in my youth, this was called “a pilot position”.

  • Julie 35 – 25 – 36

    Now called probe LOL! A probe keeps me alert I have rules which I strictly adhere
    JULIE

  • Mark Shinnick

    Yeah…guess you don’t probe-around just anytime….got have some standards 🙂

  • Julie 35 – 25 – 36

    Ted Approx 70% of breakouts fail. I usually wait for the breakout to retest the breakout turned support. On a breakout if 2% above breakout level with increased volume usually succeeds
    JULIE

  • Julie 35 – 25 – 36

    Ted EXAS A great example of breakouts. Red horizontal line failure. Blue horizontal line the breakout then waiting for an approximate retest JULIE https://uploads.disquscdn.com/images/3ce999c4d81f242f36a29d7a1a83c22ea99c61902bb00e63e4a3f839ee01e716.png

  • Darkthirty

    Cougars are like that.……….

  • maxcherry
  • TomW4

    How many % retracement is that below the arrow in the 2011 chart?

  • TomW4

    Honestly, I’m ready to throw in the towel @@disqus_qkFlPoMLUZ:disqus …

  • Julie 35 – 25 – 36

    Tom .. 61.8% retracement
    JULIE

  • Julie 35 – 25 – 36

    Very important Tom The August low was retested in October
    JULIE

  • TomW4

    @disqus_qkFlPoMLUZ:disqus , I think maxcherry is pointing out that the dec 2018 low mimics the oct 2011 low. So he’s saying we won’t retest the dec 2018 low. We are where the arrow is pointed on his 2011 chart.

  • maxcherry

    .618

  • TomW4

    Thanks @maxcherry:disqus

  • Julie 35 – 25 – 36

    Tom always remember if it can;t take out the high then it will reverse and attempt to take out the low.OK Now presently if SPX can’t take out the November and December highs approx 2800 then it may reverse and attempt the December low. In 2011 it attempted to take out the September high and failed. Reversed and retested the August low
    JULIE

  • TomW4

    I hope you are right.

  • TomW4

    If today will mimic your 2011 chart, we better turn soon LOL. We are way past the .618 retracement now.

  • Julie 35 – 25 – 36

    BAC This is what I was watching for chart and comment previous thread BAC breaking out above trend line of falling wedge and daily 5 ema. Also very strong resistance 28.68. BUT This breakout is weak JULIE https://uploads.disquscdn.com/images/dd1a4cea6562d921a1ca38d1506226ef9888f8040e00961a0a8fd9c202c1f478.png

  • maxcherry

    up about 17% in 33 days

    i misunderstood your retracement question, the 2011 Oct high was 73.63% of the may 20111 to oct 2011 sell off

    the .618 was the selloff from the 200 dma

  • Julie 35 – 25 – 36

    BAC So now we redraw … Tomorrow since breakout of falling wedge appears weak let’s see if there is follow thru or a failure at gap (red horizontal line or upper trend line of redrawn channel JULIE

  • Julie 35 – 25 – 36
  • https://evilspeculator.com Sir Mole III

    Hey gang – I’m back from the dentist. Everything went well. Caries below an old crown of mine. It wasn’t pretty!!

  • bankwalker
  • http://iberianviews.blogspot.com/ catracho

    Looks like the trade deal with China is fully baked in, barring the pop on the “news” when it happens

  • BKXtoZERO
  • Darkthirty

    LOL, had to get a root canal. Week before I kept looking around cause I kept smelling a dumpster………

  • Julie 35 – 25 – 36

    Chief .. Well as long as you are not snaggle toothed ! LOL!
    JULIE

  • BKXtoZERO
  • Julie 35 – 25 – 36
  • Julie 35 – 25 – 36

    Caution Bulls TLT Intraday reversal at 13 ema and support JULIE

  • Julie 35 – 25 – 36
  • ridingwaves

    That symbol is printing money for me

  • BKXtoZERO

    They seem pretty worried. I hit one of them in the foot with my face earlier and I think I got their attention.

  • Sp00nman

    Nice chart. Even a ~5% pullback from here would put us at ~2600.

  • Julie 35 – 25 – 36

    SPX Perhaps a false breakout above 2738 ? Esp with TLT intraday reversal .. Again caution Bulls
    JULIE

  • maxcherry
  • Sp00nman

    A ~73% retracement would put us right around 2770 on ES. Towards the upper end of this range.

  • maxcherry

    2600 would be a good place to go long for the tax season rally

  • maxcherry

    i think today was 67%

  • Sp00nman

    Just did the math and we’re at 69.18% using today’s high of 2748.

  • Jason13

    For those who care. Platinum had a nice reversal off its bottom today. I’m in more than half of my desired position. Hoping to see follow through. Disclosure- This is a longer term trade for me.

  • https://evilspeculator.com Sir Mole III

    AND the temporary crown already got loose. For f…s sake… ^%!$@

  • Darkthirty

    With palladium / platinum both having the same properties, is the price differential due to availability? Or is use driven by price?

  • MonetaryPerspectives

    Mole, you’ve bought the top.
    Brilliant..
    I bought more Vix calls today. So many signs that was it. Love it.

  • Jason13

    Great question and I honestly don’t know but I suspect price.

  • Darkthirty

    I questioned the ramp considering catalytic converters on cars, and sales way down. With the EPA in check, there is a lot more uses than that……..

  • Jason13

    Yes I agree. I’ve been trying to short Palladium but keep getting stopped out at break even or small losses. Violent little buggar and its the metal equivalent of Nutty gas. Probably subject to some fixing and shenanigans

  • Jason13
  • Darkthirty

    Cue the “Everything is Wonderful” lego song …..

  • Julie 35 – 25 – 36

    Jason IMO emplyment is as good as it gets too. Wait until one family member loses their job
    JULIE

  • Darkthirty

    I have yet to find a market that isn’t manipulated to some extent. Been trading too long, maybe. Index rally mirrors QE, and is too dangerous for me to trade. I’ll wait till TA starts working……

  • Julie 35 – 25 – 36

    Global powerhouse CAT wallowing in the mire. Is Lululemon ; McDonalds restaurant and bars going to power the Big Caps up or does the market need the big industrials ? IMO present business cycle long in the tooth and cycle very late stage JULIE https://uploads.disquscdn.com/images/fa5950ca9b6ca4e3ba68d7c58d018bd1265437f4ae43a3c361ea45c243dc8fca.png

  • Julie 35 – 25 – 36

    Do you feel comfortable with Ford lower highs and lower lows or Nike and soccer balls and tennis shoes powering higher.I personally feel more comfortable about the economy if F and CAT were leading JULIE

  • Julie 35 – 25 – 36
  • ridingwaves

    auto led us out of 2010, its the vertical that is cooling off and needs too, 120 million new cars in 6 years says time for slowdown…..its been expected….

  • ridingwaves

    the low is in….it will not get near the dec low…..2600 is always doable…

  • Ted

    LOL – Ford is irrelevant. Nike is a much larger company. GM’s chart looks much better.

  • Julie 35 – 25 – 36

    SPX Now at % levels above 21 and 55 ema’s where a pullback can be expected. Also $CPC (total put / call ratio) at 0.78 Getting dicey for the Bulls Caution warranted esp with TLT today bouncing off it’s 13 ema and a support continuing it’s uptrend. JULIE https://uploads.disquscdn.com/images/b5357f9f4ac644206e175759ade923c3a3686869c9f3693485401594a75654db.png

  • Darkthirty

    hurricanes/flooding helps that a lot…if you had insurance