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Back To Basics
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Back To Basics

by The MoleMarch 2, 2018

Increased price volatility, especially on an intra-day basis, produces noise which isn’t just difficult to navigate as a trader but also leads to mental confusion and emotional exhaustion. As an analyst I need to be very cautious at this stage as it’s very easy to trip over your own ego or personal ambitions. This in particular spells true when one is lucky enough to command a growing audience looking for guidance.

What I have learned over the years however is that it’s best to relax and remain calm when everyone else is running around with their hair on fire. A course of action, which is sometimes difficult to appreciate by info-addicted contemporaries bombarded constantly with attention grabbing headlines, rumors, clickbait, and juicy sound bites.

Trading this week was difficult with various campaigns stopping out or ending at break/even. There were a few small winners which made up for the losses but there is a warning here to be heeded. Clearly markets across the board are becoming more volatile and unpredictable. What used to be a high probability BTFD moment is now increasingly ending up as a bull trap. We have fared exceptionally well throughout all the hubbub however we should take note that the effervescent market regime we have enjoyed over the past decade is coming to an end.

Simply observe the formation shown above on the daily E-Mini panel. Now project forward in either direction – up or down. Even if we push back up from right here we need to embrace the fact that bull markets do not move like this. There is still a chance that this resolves into new all time highs, sure – but ask yourself how many would have been able to ride it higher? Confidence is slowly waning and let’s not keep in mind that the Fed’s eternal put is in the process of expiring.

Of course market tops take their merry time and predicting them is nearly impossible. What now looks like a very bearish formation could easily turn into a bullish one again today. We are still within the inflection point range in which the bulls are fighting off the big grizzly waiting to emerge from a decade long hibernation.

Of course what drives much of what is happening in equities is decided implicitly by the U.S. Dollar. Which is very tough to read right now and I quite frankly don’t want to force the issue either. What we currently have on the daily panel is an attempt to establish a low but let’s not forget that the weekly panel is still pointing downward on all fronts. As much as I would like to see a strengthening in the Dollar it looks like this may take a while.

If we disconnect ourselves from all the daily drama and the eternal chatter of the pundits we should realize that the trend still favors the Euro and not the Dollar, at least for now. Once the pendulum swings back it’ll undoubtedly turn into a short squeeze of massive proportions. But until then it seems that short of a civil war in Europe very little seems to impede the advances of the EUR/USD.

Unless the USD/JPY finds a strong bid and that soon the target range of ~100 seems probable. Over the past few months it’s been attempting to gain strength in a sideways range but if even bullish soundbites by the newly coined Fed chairman can’t produce a push higher then we may be looking at another sell off phase. As the old saying goes: you snooze, you lose.

Bonds on the other hand seem to be back en vogue but color me a bit skeptical, given what’s going on with the Dollar. It’s way too early to make a determination and the same perspective as stated above with the Dollar applies: until we see technical evidence we are still in a downtrending market here.

Bitcoin seems to have been a good entry thus far and I’m moving my stop to break/even. But just like equities the crypto space is still recovering from a massive spurt in volatility plus increasing talks of regulations out of the U.S. have kept a lid on the usual bullish exuberance. Plus with rising transaction fees and constant volatility (recently to the downside) many merchants are waking up from a bit of a hangover and are asking themselves if they want to continue supporting or adopting bitcoin.

Mind you, this is a healthy and much needed transition which should have been clear to everyone, as we won’t be able to exchange a government controlled fiat system for one that’s only held up by hopes, dreams, lofty ambitions, and source code. Reality is a wonderful testing ground for new ideas and what comes next in the crypto space most likely will be type of consolidation the nascent auto industry went through in first two decades of the 20th century.

Call me a crusty Luddite but I simply do not see a future for tens of thousands of circulating crypto currencies. There simply won’t be enough liquidity or long term interest to support them. Consolidation is not just needed but a necessity for the crypto space to be taken seriously and to survive over the long term. Of course that comes with the disadvantage of exposing a handful of high value targets to be manipulated or to be bent into submission by various interest groups, may those be government or privately supported. Which is why the current phase is needed and mainly serves for laying the ground work for a globally accepted, sufficiently regulated, and less volatile crypto currency system. Blockchain as a global ledger system of course is another story for another day.

Bottom Line

There are easy and difficult periods in every market vertical and almost all across the board we are currently traversing the latter. The exception being soybeans and a few other grains, otherwise everything is moving in sudden spurts and mostly reactive in response to some breaking news. The only way of surviving crappy market periods is by hunkering down and observing. Instead of attempting to project forward let’s just observe and wait until we once again enter easy time, no matter if it entails green or red candles.


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.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

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  • Dyellowflash

    Entered long the Dow at 24366 SL below 24310. This is the EU session fill. I have 60% more depending on zero and US mkt situation.

  • Tomcat

    You gonna make us guess?

  • Ian Naugler

    I thought it was obvious lol, BITCOIN!!!

  • Yoda

    If we are going to hell, might as well going there singing

    https://www.youtube.com/watch?v=gEPmA3USJdI

    Happy red Friday

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

    AC/DC for breakfast?
    damn! that’s hardcore.

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

    Hurry now, why supplies last.
    you want to buy my Pet Rock?

    http://stockcharts.com/h-sc/ui?s=%24NYXBT&p=D&yr=0&mn=6&dy=0&id=p22979490712

  • Tomcat

    Where are the wave counters today???

  • Darkthirty

    11 minute pump

  • Darkthirty

    Surfin

  • Darkthirty

    You looking for 3 domed houses with a peak? inverted bat wings? cup and handle? Head and shoulders? We got all that, but waves…..don’t work, and ya can’t use fib numbers either…….

  • Tomcat

    What about three black crows???

  • ridingwaves

    L SPY 268 ladybug maneuver….in ode of Darkthirty….

  • Darkthirty

    Candles??? How archaic!

  • Dyellowflash

    This time round, mkt seems to have some strength. I am fully filled long near Mole’s arrow. Hmm… not a good fill – SnP 2660 n US2000 1496, Dow 24294. Maybe i am wrong, but if it doesnt make a new low, it could be the bottom of this whole down move.

    Edit – if u want to go long, maybe 24270s and 24240s.

  • Mark Shinnick

    Went long labu a bit earlier see what happens…

  • Mark Shinnick

    Did seem like time to shake things up a bit, met some measuring objectives so went long for time being…

  • Tomcat

    As long as the 100MA holds, I think you are good.

  • Darkthirty

    Europe closes shortly

  • Brishort

    Check the trend day alert…. be careful with longs here. The theory says we should be more on the watch to sell rallies….

  • Brishort

    Metals weakness on deck as well. Looking for short entries.

  • Mark Shinnick

    That’s exactly how I’m working this. If a short squeeze could be interesting.

  • ridingwaves

    I should have loaded up on NKTR at my 79 buy point instead of buying a small lot….200 by end of the year is my guess

  • Dyellowflash

    I am on the long side, but this is probably very 50-50. If u want to be on the short side, its probably the best time to short now at dow 24300s.

  • Darkthirty

    Pulled up 2608 as a target this AM

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

    agreed.
    looks like a double dip may be in progress.

    [BPSPX]
    http://stockcharts.com/h-sc/ui?s=%24BPSPX&p=D&yr=3&mn=3&dy=0&id=p23636844647

  • Darkthirty

    VIX just got a 10 point beatdown

  • Mark Shinnick

    Yes, volatility is saying exactly that emotional expectation BUT it is re-washing some worn/retested local pricing.

  • Mark Shinnick

    Yes, that seems to be the disparity.

  • BobbyLow

    Got off to a late start this morning mainly because I was in all cash after closing my Energy Shorts yesterday afternoon. I use very little discretion in my trades because emotion can creep into my trading decisions making most decisions wrong. I used discretion yesterday and given the circumstances with the massive selling going on in most sectors while the energy sector was holding up demonstrated that there was underlying strength in the energy sector. Consequently any temporary rebound in the markets would be relatively stronger in the energy sector. At least that’s the way it used to be prior to Bots taking everything over. In any event if I had to do it all over again, I would make the same decision.

    In the mean time, the talking heads are speaking about a trade war. I don’t think history has shown where trade wars have ever been a good thing. But what do I know? All I’m going to do is follow prices.

  • Edgy

    Looking for long entry here, too. Around 2662

  • ridingwaves

    that VIX golden cross on the daily that you gerbiled as non-sense is now looking like it was pretty accurate…..the weekly held the money line https://uploads.disquscdn.com/images/2b579006a71e0d860a07b4bbc0e601e8b79d4c21208799098a09359b2671dfb2.png

  • Mary

    Smart Bobby. Just because the talking heads are speaking about a trade war doesn’t mean that there will be a trade war. They get paid to get people to watch, nothing more, nothing less. Keep following your prices.

  • Brishort

    NDX opening gap now closed. SPX opening gap about to close. On watch for any resistance at gap close for new short positions.

  • Brishort

    Metal short entries triggered as well. GC for now, but SI similar.

  • Mark Shinnick

    …meanwhile volatility still holding indicating no particular emotional “buying into” short covering.

  • ridingwaves
  • BobbyLow

    It might only be temporary but /CL is green and XLE is very close at this moment.

  • Brishort

    At this point, still giving trend day alert priority as to type of signals to look for. Will not go long on down trend day alert even with the probability announced. Closing morning gap is one of the most consistent profitable trade on SPX. Does not indicate anything in my experience as to overall day direction,

  • Yoda

    Gap’s close, time to pay attention

  • Mark Shinnick

    Its the emotional gap which needs to be reconciled, and squeeze is the fastest way to accomplish that ๐Ÿ™‚
    https://youtu.be/rRBPS3o_IvU?t=5

  • Brishort

    Fully agreed. Next most important short term view is NYDNV. As long as it has the lead, very bad odds of a continuing bounce. This indicator is always on top of my desktop, I rarely take positions against its positioning.

    http://schrts.co/LeF6oH

  • https://evilspeculator.com Sir Mole III
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    I didn’t say I was perfect.
    =P

    TVIX daily,
    RSI 50 held, welcome to a paradigm shift.
    http://stockcharts.com/h-sc/ui?s=TVIX&p=D&yr=1&mn=0&dy=0&id=p72042888370

  • Julie

    Closing short positions UNP – USO and remaining 1/4 position long TLT. TLT took 3/4 off yesterday as the advance was a corrective 3 waves. Maintain RIOT long
    JULIE

  • HD

    holy crown royal I got sideways last night. Looking left SPX testing that little B wave yesterday 2689.

  • Darkthirty

    closed yet? getting hinkey short signals……….

  • BobbyLow

    Congrats Julie. FWIW, if price continues to rise and hold, I might pick up a long Crude position before the COB.

  • HD
  • Julie

    Thanks BL did great on the USO and UNP shorts but do not want to hold over the weekend. As you and Yoda stated yesterday can’t go wrong taking profits. Like you will re enter. BL if you go back in Crude watch USO very strong resistance 12.45 — 12.51.
    JULIE

  • Julie
  • https://evilspeculator.com Sir Mole III

    Evil Speculator rule # 1: Fade the news.

  • https://evilspeculator.com Sir Mole III
  • Julie

    YUP Chief …. Just noise as you have stated many times. Only price pays
    JULIE

  • Julie
  • ridingwaves

    nailed it….damn I’m on fire….this is going to be like 2008….

  • Julie
  • https://evilspeculator.com Sir Mole III

    VWAP touched – I’m long if I see:

    1) Spike low
    2) Positive Zero signal

  • ridingwaves

    2008 documentary on how big banks only pay fines and 1 small player is the target of the govt. pigmen for hire, banker and government schisters….
    https://youtu.be/KeGYZSndCPc

  • BobbyLow

    I just try to “go with the flow” with Crude Julie. Once again we can have totally different approaches and still be on the same side of a trade. I don’t use support and resistance levels of any kind. My approach is very simple and as old as the hills in that I try to “buy strength and sell weakness” within whatever time frame I’m trading. With the exception of rare cases like yesterday, I’ll hold a trade until it appears that the tape has run out of steam based on my BB’s and ATR and I’m out.

    The way the tape is going as of this moment, it appears that I’ll most likely be in cash over the weekend. Regarding holding over weekends, I’m a big believer in back testing and in my most recent back test, I found that based on my current system price was in favor of holding over a weekend 80% of the time (not including 3 day weekends). Of course past performance is no guarantee of future performance etc. etc..:) Still a long way to the close.

  • Julie

    RIOT possibly making a move today breaking out of a consolidation. Bullish above 10.45.
    JULIE

  • ridingwaves

    I think they unwind some volatility next week….I’ll wait until monday to see….but tell me why…
    https://www.youtube.com/watch?v=dplpWIpofHI

  • Julie
  • Brishort

    Hummm. 1 achieved. 2 not there. IMHO, tug of war from NYDNV may hold the key. Nothing resolved at this point.

    http://schrts.co/LeF6oH

  • Julie

    BL Understand completely as I previously tested your method of BB’s and ATR. BL A great way to follow momentum with a built in target i.e. the BBs and ATR. When I re enter I use the 30 min with 7 ema – 18 ema and 30 ema with trend lines along with a CCI (14)
    JULIE

  • https://evilspeculator.com Sir Mole III
  • Edgy

    Got out a bit ago for a quick gain. Now back to watching and waiting.

  • Julie

    BAC Today’s bounce exactly off the daily 55 ema Double top. Support 30.87 — 30.95 Resistance 32.41. If 32.41 attained will short with a bearish 60 min reversing candle. If not attained then will short breaking below the support levels mentioned JULIE https://uploads.disquscdn.com/images/97be1ef5ba9b841a2b8c54745ecd14b353099fcd9fbd0552438a17132d586a5f.png

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

    89 was the close ‘Hero’ yesterday.

    but 80? Well, it’s looking like the high low today.

    Keep an eye out for those worms.
    https://uploads.disquscdn.com/images/d0a5c09222e26d1919c98d2782494f88167240340f1a2194ee7dca45d2d21733.png
    -GG

  • Mark Shinnick

    Gerbil food?

  • Julie

    Hi GG SPX 2718 is the conversion line(8) ; 2717 is the declining 21 ema both matching the lower cloud boundary 2723 is your blue line JULIE https://uploads.disquscdn.com/images/f6a254aba40a27f6f4d53b605bb9bb0b64d648f71f74f92c75ac379d7b3e79af.png

  • Julie

    GG Omitted The baseline (21) matches your red line and circle . Must close above
    JULIE

  • Mark Shinnick

    Squeeeeeeze.

  • Tomcat

    I am actually waiting for the price to come up a bit to short. Siding with Julie, I think gaso/cl are not done going down.

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

    Agreed, trade wars may be good for some companies, but they are not good for consumers. Auto companies and one of my client Molson Coors is already thinking about how they are gonna have to pass the cost of rising aluminum to their consumers. Bottom line, this will create artificial inflation.

  • Yoda

    A close at the low on a Friday would be a bad omen for bulls.

  • Julie

    Yoda Usually Fridays are neutral to positive. They do not want to spook everyone with a dump as they want people to spend over the weekend. Holding the market up on Fridays has been a ploy utilized for many years.
    JULIE

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

    kind of a purgatory, trapped between heaven and hell.
    no edge for me at this point.

    https://uploads.disquscdn.com/images/71673f0a7421b136a073d7139d45c7371c9421e0bffe562cbe75d7909a8f9bcc.png

  • Tomcat

    Hey Julie, trying to find out more about this company. Is this how you trade bitcoin/blockchain?

  • Yoda

    That’s why I said that.

  • BobbyLow

    Call me crazy but I just went long Crude via OILU.

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

    calm down you two.
    Yoda, have a glass, Julie is! ๐Ÿ˜‰

    https://www.shopperpoints.co.uk/wp-content/uploads/2016/12/IMG_3879-300×300.jpg

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

    did you follow your plan? I think *not*.

  • Julie

    BL Why not … A bounce off the bottom of the cloud with the 21 ema above the 55 ema. Oversold Stochastic 5,3,3. Two candles with bottom tails i.e. tweezer bottom.
    JULIE

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

    I think I’m a closet bond vigilante..
    TBT
    http://stockcharts.com/h-sc/ui?s=TBT&p=D&yr=0&mn=6&dy=0&id=p85497819447
    looks like yesterday was the time to nibble.

    -GG

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

    Time.
    Check.

  • Mark Shinnick

    …never come down!! “Don’t do it”. Get hooked baby….
    https://youtu.be/gI37UZXO2Cc?t=91

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

    gawd, what a bad tune. but +1 for context.

  • https://evilspeculator.com Sir Mole III

    Did anyone follow me into the abyss?

  • BobbyLow

    I trade a 30 Minute Chart and a corresponding game plan to that chart. My lens said to be long right now. There are 3 major things that can happen on Monday and that is One:, price reverses enough for me to get stopped out. Two:, price is the same and I’m already long and 3:, price gaps up and I have to chase it if I want to be in. That’s two out of three outcomes in my favor.

    Like I keep saying over and over again. I’m buying strength and selling weakness on crude within defined parimeters. Nothing earth shattering and not rocket science. And I most certainly followed my plan.

  • Mark Shinnick

    Hanging w you man…

  • Yoda

    Not me.

  • Julie

    Hi Chief SPX closing above 2684 was crucial. Going to watch it at 2718 (conversion line (8) ; declining 21 ema (2717) matching the lower cloud boundary and fib arc. Have A Great Weekend Chief JULIE https://uploads.disquscdn.com/images/497dfa070dcb5b4dd5f5ec172b9c88f5b970248ead7c841f778fcfeca33c8811.png

  • Julie

    Everyone Have A Great Weekend Be Safe !
    JULIE

  • BobbyLow

    You too Julie. ๐Ÿ™‚

  • Mark Shinnick

    Yeah…done that. Aren’t bad, actually.

  • Julie

    Hi TC Another one to watch is BLKCF I do not trade the cryptos Just block chain specifically RIOT
    JULIE

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

    then you are not crazy.

    today.
    ๐Ÿ˜‰

  • ridingwaves

    making a chicken stew with base plus ginger, lime garlic, oregano, thyme, bay, other stuff shrooms, rice, potatoes, onion, bok choy, carrots….yum…cheers

  • Edgy

    I was in and out, then in and out. Got my sell in ES filled in the last minute of after hours for an all-cash weekend.
    To quote the great T,
    “Today I didn’t even have to use my AK! I gotta say it was a good day!”

  • https://evilspeculator.com Sir Mole III

    You too Julie – thanks for all the charts this week.

  • https://evilspeculator.com Sir Mole III

    Not sure I can forgive you but I’ll try! ๐Ÿ˜‰

  • Mark Shinnick
  • Edgy

    Can I get some P-Funk in here?

  • Edgy

    I had a coworker next to me who would talk to himself under his breath when thinking hard. Then I’d whisper back to him, loud enough for him to hear, “The Worm is the Spice. The Spice is the Worm…”
    I had to explain it. Totally ruined the moment for me.

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

    notice the trend in Sept/Oct.
    Use the pullback in November to anchor first ring (1)
    confirmation with pullback on (2) and then (3).

    hit the top within 20 pts of ring center estimation.

    AND notice the whisker bottom in FEB.

    Let them eat cake!

    https://uploads.disquscdn.com/images/c71b5483f2aaa35cc05831dfd10701b0db1dd33687d4893142776c0908973376.png

    March will be choppy, IMHO.
    -GG

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

    my problem, is I spot them after the fact.
    not really good for speculating.
    good for confirmation.

    a massive weekly chart..
    https://uploads.disquscdn.com/images/62beef676f80ffc7a93f6be82fff382704d0fd1c7f31a8c05767f4393151bb2e.png

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

    Hi GG MCD Selling climax on the gap down? Could be. Down to the daily 377 ema and a support zone Positve divergences RSI – MACD and CCI JULIE https://uploads.disquscdn.com/images/5a25f369c8e6bbab934fff6b4a65c0bf1152677a0b9358ff54f672df0b4e5d49.png

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

    Fibonacci extensions, who needs them?
    ๐Ÿ˜‰

    I used to have a lot more levels but now the main ones I have are the 127, 161, 261, 423, 685, 1109, 1794, and 2903. There are higher levels than those but those are the main ones I use.

    https://uploads.disquscdn.com/images/32ff9228c4fdb07992800ebaa34d0eb80a171badbf3b34ef04586c4c9c049392.png

  • Julie

    GG 1.414 is a good extension also
    JULIE

  • Dyellowflash

    Tough to read what is going on for Fri… maybe just short covering… I am with a slightly bearish view on Monday…

    Shorted the dax from 11970-90. SL 11990 and 12030.