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Beam Me Up, Scotty!
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Beam Me Up, Scotty!

by The MoleJanuary 2, 2009

UPDATE 2:12pm EST: I’m torn right now – do we turn right here at 923 or will we see 957 before Monday. Have put up a poll – just curious what you rats think. Personally, I am very tempted to grab long term puts right here and double up at 957. But I don’t want to rush it either – we’re two hours away from the closing bell and I have an inkling we’re in a for a fast one before the weekend.

UPDATE 3:02pm EST: Okay, I have a Zero related question for you rats – if you bear with me. During the holiday season I added a feature called ‘restrictive mode’ to the Zero, which simply cancels all VTAs and PTAs which occur on a lower signal than the prior one. Let me show you:

Unrestricted

This is the unrestricted version – see how we would have compounded quite a bit today. But also look at the past history here in that it’s generally pretty quick to start compounding.

Restrictive

Now, this is the same chart in restrictive mode, which is actually what I have running on the feed right now. It only gives you a VTA or PTA if the signal keeps expanding, so it’s more conservative. However, I’m not sure that this is necessary the right thing to do and I would like to gather some input. Take a look at these two charts and then please vote in the poll on your right which one you think would have performed better for you today and also during the holiday tape. Thanks!!!

UPDATE 3:30pm EST: The Yen is not having a good day – it seems the Japanese are busy selling their own currency:

Apparently the inverse correlation is back in full swing – glad to see it. Watch for a breach of the 20 line which could signal a short term top for equities. BTW, in case you guys don’t remember or are new – it doesn’t matter what the Yen does overnight it seems – only how it moves during NYSE hours.

UPDATE 3:43pm EST: VIX below 37, people – this is so awesome! ๐Ÿ™‚


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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  • bergs

    FWIW
    2009-01-02 14:05 ET, [BRIEFING.COM] , There have been no news items to act as catalysts for the advance, just the thirst for better returns in 2009; the stock market plummeted roughly 38% in 2008. Financials have been a laggard this session. Though the sector is up 0.5%, it is trailing every other economic sector. Financials were also the worst performing sector in 2008, falling more than 55% last year.

  • powerpak59

    What do you mean – “a fast one”? Like Wednesday's end of day drop?

  • Tony

    TIP is getting crushed. Can't be good for equities can it?

  • hiker

    Mole,

    here are four data sets I monitor relative to your question..scroll through all the posts I made –

    http://www.traders-talk.com/mb2/index.php?showtopic=99727

    will add that 6083 is the major NYA price horizontal that resides above

    thanks for all!

  • molecool

    Yes, either we bust to 957 or we go back to 903. Just normal paranoia setting in – simply ignore – didn't mean to freak you out.

  • Elton

    think we sell off late in the session…. but I like your idea of adding puts right here and adding later if 957 is reached which personally doubt will happen. Feels like August08 to me. I think Feb is when the big sell off comes!

  • best4now

    am short 92.52spy, per RL's

  • Bartholomy

    Welcome 2009 my evil friends. My first year trade is good in CL N9.
    SP is dominate by $USD moves.
    We are putting huge amount of monetary mass, $USD flowed by 20%.
    No choices since money speed has slow down: (Money Mass) * (Money Speed) = ( Price level ) * (NTransactions == GNP )
    This is huge inflation. I do reduce my holding in $USD cash. I also cashed some partial profit in my bonds in $US an Lb.
    I also hold my short over 900, and I load more at the end today.
    I believe, next year earning will be lower than expected.
    Recessions with financial crisis are longer and deeper.
    As comment to the turtle trading system:
    1- The trend is your friend until it goes to an end.
    2- The turtle wins over the rabbit: small position, perseverance and patience.

  • Eric_in_SFL

    Its time to scale in right here I'm going short about 1/10 of all the shorts I want to have, 4/10's at 950, and the rest at 1000 if we make it to those levels that is.

  • molecool

    I like that chart very much.

  • hiker

    the 5% trend above the 10% trend may give the advantage to the bulls, since at the current NYSI values price can move up more easily

    http://stockcharts.com/charts/indices/McSumNYSE

  • molecool

    Hey, that's MY chart ๐Ÿ˜‰

    Yup, the big boys look at this as it might trigger a bunch of bots on Monday. I'm cautious here… especially since 950 fits nicely into my wave count. Why would it turn around at this point – doesn't make too much sense…

  • http://guidepostings.blogspot.com perspective

    i say the top is around 938.

  • kzhat

    Dow closes up 200 or more in my opinion

  • Rob

    This market is somewhat comical and predictable. The talk (at least what I have heard) for the past month is a strong rally to SP 1050. Everyone thought this was going to happen as part of a Santa Claus rally. Well guess what. Its here and will probably last until the end of January. At that point when earnings season rolls around and we see that things are not getting better, all hell will break loose. From what I have read from many, what is happening now is true to form and spot on. SP to 1050 and then back to retest the lows. Mole and Berk, you guys for one, have been calling for this so why not let it run to at least SP 1000?

  • FranklinBeenz

    there are those who think we ramp into around the presidential handoff & then say fuck you Obama, you’re dead … and we sell off, hard

    who knows !?

    i’m playing many longs against shorts & ultra etf hedges … don’t know any other way right now

  • gagelle

    I know some people in the Palm Beach area where Madof did most of his damage. These people have big bucks and there's almost a panic to get out of the market at the first opportunity.

  • molecool

    Well, as you know I have two scenarios going for now – the orange and the blue pill:

    https://evilspeculator.com/wp-content/uploads/20

    So, it's probably wise to load up fairly soon and see if we get that separation point. Either way – I'll make a bundle in the end – mmwuuuaaaahaahaaaaaaaaahaaaa!!!!

  • http://implicittrading.com Implicit Trader

    Just as a heads up:
    Weekly SPX RL 929.65 with 94.74% odds to go Short.

  • molecool

    Why 938 and not 957?

  • molecool

    Interesting – that almost tells me that we might see 1040 (the blue pill) before we break for good.

  • Rob

    The blue pill will win. To me its obvious with the current sentiment of a good 09 year, the stimulus package and obama. Other than being overbought why will we go down?

  • BalaB

    Yes. My mom has been venting her schpilcus about the Maddof fall out. (She lives in Palm Beach).
    “Oye..it's such a travesty! What are these people gonna do!? The resturants are empty now.” …
    blah blah blah….

  • grednfer

    m, on the puts why don't you just buy a put spread (buy higher, sell lower) and put a stop on the credit piece…….that way you can make money why you wait…..Thats what I'm doing………931 and rising!

    On the TLT, Yeah the BAs suck…….but I've started to load up on its its inverse TBT, and the volume is pretty good….check out that chart bro.

  • Rob

    When the VIX hits the 20's, load up on those OTM calls. You can make some serious money!

  • pricey

    been looking around and lot of favor for the 931 reversal area

  • TroyMcClureRIP

    Other than being overbought, why will we go down…

    See: Next week's data…..

    I know, I know, the market has been discounting the bad news. Let's see if it can discount the hit that the '09 estimates are going to take over the next few weeks as we get pre-announcements and '09 guidance, and then we'll see if S&P earning estimates in the low-mid 60s can bring it down.

    – Troy

  • molecool

    Damn, I forgot about the weeklys. Thanks a bunch.

  • molecool

    Yeah, a bunch of folks here seem to like the inverse – I'm less hot on those…

  • MaxPainMan

    hmmm…. add those weeklys to the Zero?

  • planetelex

    Thoughts on this entry? Just starting out here – appreciate any feedback. I bought March 40 puts. I prefer ITM options most of the time.

    RSI turning over. MACD divergence. Force index divergence, Slow stock turning over

    http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=0&m

    Entry on a test of the 20 EMA and an intraday bear flag

    http://screencast.com/t/wZsQHTTNfr8

    Appreciate any feedback – good or bad. ๐Ÿ™‚

  • DMS425

    If we don't sell off hard next week and break support levels, the Obama “hope rally” will continue up until Jan 20. Either way 09 is going to be great.

  • grednfer

    I hear ya but lately they’re behaving better than the puts I’ve bought.

  • Rob

    How about some puts on FSLR. Up 10% on below average volume. The pre-obama play. Give it a couple of weeks and it will be back to 100. STP also running. I remember their earnings report and outlook. It was pitiful! MA??

  • Eric_in_SFL

    Looks to be a good trade at a manageable level just watch the ZGG9 gold futures I'd exit the trade if they broke above 890.

  • https://evilspeculator.com molecool

    890 is a strong line in the sand, yes.

  • DrMalaka

    In a market like this one I would much rather use out of the money puts. We can't associate this with normal trading, when the market breaks it is going to break big. I use C as an example. When it was trading at $15 I might normally buy the $15 or $12.5 strike but the correct purchase was the $10, the reason being that we normally would think of C moving from $15 to $12.5 as a big move, but in today's market that is nothing, two days. And if you are buying options you are looking for leverage. You can invest less and leverage up more, which also preserves capital. If you were to buy the C $15 options in the example above then if you are wrong you lose a lot of premium, if you are right it is more likely C is at $5 than $13 and the truth is that even at $13 you would probably lose money based on what you paid for an in the money put.

  • molecool

    I'm a bit split on anything Gold related right now. Today was another indication that the correlation between equities and the shiny metal may be in the process of changing as Gold did not partake in the rally. I'm medium term bearish on Gold but also think that it might bust higher one more time on Monday/Tuesday. The MACD is also a bit flat, which is always an iffy signal when it comes to Gold I prefer to go short on a more positive signal, but that's me.

  • http://www.blog.donnaklinenow.com Donna

    Buying a sizable (for me) chunk of DXSSX on the close today. The 930 area from RL and the beautiful scenarios mole/berk have laid out are the convincing points. No time decay on these funds (but again, the LT options would be my ideal in so far as leverage is concerned.)

  • Eric_in_SFL

    Heres something I think is interesting to keep on the radar $VIX-$SPX correlation. <a href=”Go to Yahoo” target=”_blank”>Chart

  • planetelex

    Thanks a lot to everyone for the feedback! Just learning here so only trading itty bitty positions. Responses much appreciated!

  • molecool

    I think FSLR can bust higher – at least according to my stochastics and MACDs.

  • planetelex

    Thanks Mole. Btw, what sort of MACD settings do you use for longer term time frames such as 6 month or 1 year daily? I've been alternating between 12,26,9 and 3,10,16 settings.

  • kzhat

    What did 2Sweets put the 100% on the weeklys? That is a key driver in those odds, don't forget that!

  • BigHouse(Aka Mr Vix)

    I am almost in tears to see the rally we are having. And seeing Mr Vix to 36. I will still wait to short until SPX gets to 945. Then i will be really in tears.

  • molecool

    I'd chalk everything after 12/15 off to X-Mas tape – right now looks about right.

  • molecool

    yeah, I'm actually thinking about that….

  • toad37

    Nibbled on some of those June SPY 65 puts.

  • molecool

    Again, doesn't really matter anymore – at this point we're all just greedy. If I was any wiser I'd load up on a ton of June puts and just walk away for a few months.

    But then it would be very quiet around here, wouldn't it? ๐Ÿ˜‰

  • molecool

    I know – Santa came late but he delivered in the end ๐Ÿ™‚

  • molecool

    One year I use the traditional 14,3,3 (i.e. slow 14,3 chart).

  • Eric_in_SFL

    I'am waiting till Monday to take any major trades just shorted one ES contract at 931 with a stop at 936.

  • Rob

    Take a look at the IYR put interest for today. WoW

  • BigHouse(Aka Mr Vix)

    XLF having a shitty day.

  • molecool

    Probably not the worst idea…

  • BalaB

    Some selling into strength on the SPYs took place at close.

  • http://spnakr007.blogspot.com/ Steve

    I feel the same way, but I rather trade the plan..

  • DrMalaka

    Yes, we have seen this before, the XLF and real estate related companies lead our charges forward and start our moves down. Not sure we can go much higher from here, some of the numbers these banks are trading at are preposterous, but then again I thought the same thing when C went from $12 to $15 and then continued to $20. Then again, anyone who bought it at $12 is crying now even with a rally.

  • Keirsten

    I agree- okay to throw a basketball at the target instead of a dart. ๐Ÿ˜‰

  • green

    Mole Berk what do you think about the vix in AH?

  • gagelle

    Doing well on IYR and O.

  • hankthedog

    Damn, if Mr Market didn't give me a mullet today! Perhaps the worst haircut ever! I'm taking shaved on the sides, and a permed on top and in back. Oh well, hopefully it will have grown out a bit come Monday afternoon.

  • Darwin

    TK featured O as one of his top 5 shorts (puts) last week. MAC aother to go by way of GGP, me believes.

  • Rob
  • molecool

    What happened? You stayed short all day? Didn't you pop by here during trading hours?

  • molecool

    Well, that was to be expected..

  • planetelex

    With TLT filling the gap and with a good chance existing that this is merely a correction of an overbought condition TLT could be a good short term long. Then again there are probably better trades out there.

    http://screencast.com/t/hrSNqsPFc

  • Enfinity

    +1 for making me laugh

    spasiba

  • JWBlack

    I guess because TLT is gone up so much everyone has a long bias on the ticker. Bonds so outperformed stocks last year that some sort of reversion is likely — stocks don't do that badly and bonds do badly; stocks go up a lot and bonds go up less or stay flat. My guess is that bonds will trade in a wide range for a while. Look for TLT to float down to its 50 dma, minimum.

  • JWBlack

    I think I saw somewhere that insiders were starting to buy MAC.

  • toad37

    Did you put any shorts on Mole?

  • Loren1711

    I was actually going to post something related today, but I had to go out. I was about to ask why only an ETA had been printed when the indicator had clearly been above zero, quite far in fact, for far greater than one hour.

    I think using the unrestricted version is the better route. Assuming I am understanding the zero properly, it would allow the user to determine the level of exposure they want to create. For example: You have this mornings tape. You saw an ETA, two VTAs, and a PTA. Depending on one's trading plan, one could open a trade on the VTA only, the most conservative. One could trade off the ETA, with or without a stop, and then add on the VTA, an approach yielding slightly more exposure. And finally the least conservative, if one chooses, they could add a contract of each of the signals.

    In summation, using the unrestricted version, the user is able to determine how conservative they want to play this indicator. Just my opinion.

  • etechpartner

    Mole I am curious how you picked the SPY Jun 65's . There seems to be a lot of vol / open interest in them. Is that a reflection of some overall professional sentiment out there you think? Also, lets say Jun Opex comes around and SPY is at 70 or higher. Would you roll down to the next month? Guess I am interested in your time versus price strategy on this. Lastly “backing up the truck” stands for what percentage of your trading capital ?

  • fakenews

    There are a few items in the list for 2009 that I don't want to believe, like deflation, a somewhat strong dollar, China troubles and metals not being a “safe haven” in 2009. I understand the merit in predicting: commercial reits in trouble, retail failures, corp bond failures and a US Treasury glut.

    However, the one I need to research more is Denninger's statement that is rolled into “The dollar will not collapse” prediction. He states the following –

    “the simple truth is that while we're in bad shape the rest of the world is literally on the precipice of a full-on collapse. European banks are more-levered and less-transparent than our banks as just one example.”

    Is the rest of the world REALLY in as bad of shape as the U.S.? I can't believe owing a shitload of money to everyone on the planet will make your currency worth more. A lot of how I intended to invest my “slow money” in 2009 depends on how this plays out. The dollar surely will tell us who is in the worst shape. And with the dollar's fate, so goes the decision on whether to invest in foreign dividend paying securities. Would be sweet to receive high yields on current low PE foreign stocks, knowing that those high yields will become worth more as the dollar sinks.

  • https://evilspeculator.com molecool

    I don’t think it will take that long but the next available month right now is March and that might be cutting it a bit short. My preference would have been April/May…

  • Winemaker

    Back to the Turtle Trading system for a second….has anyone here gone beyond the books and purchased the course? Was it far more useful than the books?

  • molecool

    Well, good input but you might misunderstand the meaning of the restricted mode. The reason why the VTA and PTA didn't show up on the restricted chart is that the signal did not expand in succession. So, it suppressed them and after the PTA you don't get a signal for a while unless things really explode to the upside. The odds were lower that the signal would continue to the upside – it did in this case but it might not always happen that way. We might see cases where you get a VTA on a decreasing signal and then get whipped out on the next candle. More profit potential always comes with more risk attached to it.

    The question here is – will users of the Zero be able to look at the white Zero signal and pick their alerts accordingly? Understand that I don't want to have to babysit dozens or eventually hundreds of members once I go subscription with this thing. I wouldn't mind putting comments up as we go but based on comments last month many people had a hard time grasping the meaning of green and orange alert lines.

  • molecool

    “I can't believe owing a shitload of money to everyone on the planet will make your currency worth more.”

    Okay, so how do you explain the past few months then ๐Ÿ˜‰

    I'd be careful going up against Denninger – the kid is usually spot on.

  • https://evilspeculator.com molecool

    You don’t need a course, winemaker. Why spent money on a system that is well documented? Just get yourself ‘Complete TurtleTrader’ or ‘ Way of the Turtle’ – it’s all there.

  • molecool

    Too cold for that – I'm wearing my snuggle pants.

  • Dragonsbane

    Ironically, a lot of the world is in worse shape that the US. While the US owes a shitload and needs to borrow even more, there are a number of countries out there that owe a shitload, need to borrow more, but can't. They're a notch or two below the US. Ironically most US states and municipalities fall into this category as well. Another fact you should consider is that historically, currencies tend to strengthen when credit in that currency is contracting. Credit is currently contracting globally (this excludes EM). But can you guess where it's contracting the fastest? So I wouldn't use the dollar as a gauge of who's in the worst shape just yet.

  • Dragonsbane

    8pm on a Friday night… you sir are Hardcore.

  • Dragonsbane

    Good luck if you're waiting for the VIX to hit the 20s. You may have a bit of a wait ahead of you. ;P

  • Dragonsbane

    Two comments on the last 2 updates.

    a) As of the close and even afterwards VIX is no longer below 37. Any idea what caused the spike before the close and afterwards?
    b) The Japanese are not selling their own currency as Jan. 2nd is a holiday in Japan. And at 3:30pm EST, it's the very early Sat. morning in Tokyo ;P

    Cheers,
    dB

  • Enfinity

    Because the bulk of outstanding debts, both domestic and foreign, is denominated in dollars it creates a structural short. As cash flows contract, out of the necessity of servicing obligations/$ denominated trade contracts the relative value of the dollar is driven up via hoarding. The swaps instituted in October were vital to momentarily stabilizing the financial system, there were simply not enough available dollars to service the overwhelming demand due to leveraged-asset liquidation and repatriation of capital.

    It's not over.

    ๐Ÿ™‚

  • molecool

    a) Have no clue actually – maybe an excuse for market makers to profit from the little sell off at the end?
    b) Yes, you are right – holiday in Japan. I forgot and stand corrected.

  • fuzzygreysocks

    >> Santa came late but he delivered in the end <<

    Ick.
    That reads like a cheezy porno tag line.

    :-)#)

    Bought RCL FEB puts today.
    Will double position just on general principle if RCL & SPX advance next week.

  • molecool

    CLEAN CUPS!

  • molecool

    I'm still at it – clean cups!!!

  • fuzzygreysocks

    Agreed.

    If one was inclined towards VIX achieving 20 then ATM calls might as well be bought.
    VIX 20 is still a good hike from here.

  • grednfer

    ?
    Any good thoughts on an etf that I can use to short gold? I have some GLL but the volume is very LOW. Its for my 401K so I can can't SHORT GLD.

    And what about that Oil stuff…….my RIG is up 20% in a week, should've have turtled it large.

    Here's a factoid: From top to bottom SPX 1575 to 741….the first retracement (23.8%) is 937. Today I think we hit 934+……..I wish it could go to 50% at 1150 or so…..what a great short that would be.
    And ….. RLs SPX CCCalc says 3 up equals 83% prob of down on Monday.

    Have a great weekend!

  • fuzzygreysocks
  • Treasurehunter

    Anyone from Iceland?
    Sorry bout' your .gov dudes…………………

  • Treasurehunter

    Anyone from Iceland?
    Sorry bout' your .gov dudes…………………