Bear Trap 6.0 Tuesday Rub Down

Okay, I have good and bad news for you. The good news first:

The daily Zero was spot on.

The bad news?

The daily Zero was spot on.

Wish I would have listened – but as this tool only goes back about six months now I could not justify adjusting my positions until I had confirmation that the current EWT count had been disqualified. It could have been wrong and yesterday’s push might have been reversed – but (un)fortunately the DZ turned out to be right on the money. Which however gave me added confidence in my decision to unwind my positions and go back into cash during today’s intra-day descend. If now both the DZ and the new EWT count are wrong then I am basically SOL and might need to find another racket 😉

Today’s tape was one big freak show. The highlight of the day from a Zero Lite perspective was a beautiful divergence which allowed me to get rid of my puts at slightly better premiums (and bid/ask spreads). After that we’re talking woodchipper and the only trade I took was a Geronimo alert which concluded successfully. It’s good to see that this thing is ticking again, after it had a bad day or two last week.

Program Trading Update:

geronimo/ES: +2.5

There was actually a second alert that coincided with the close of the first one and thus didn’t trigger. Eric and I talked about this and we have some ideas on increasing the profit margin on geronimo. We’ll test a modified version of it on our end and will report back if we find that the release of a new version is justified and does not impair the current performance ratio.

As a final nail in the sarcophagus of the bears Mr. VIX confirmed the buy signal in equities today. Yet another reason why I decided to go back into cash. Yes, something really strange could be going on and we might be dropping down down down right from here. But I am a technical trader at heart and thus can/should not rely on hope and personal opinions for my trading – as far as I am concerned today was a huge slap in the face for the bears as they did not manage to resolve the highest probability wave count as of yesterday night. Thus, holding long/medium term short positions, at least in my trading universe, cannot be justified. This is not about ‘capitulation’ – it’s about looking at one’s chart and having to admit that your current plan and position is wrong, thus you move to the sidelines. There will be another day, and for that I will preserve my resources. In the interim there is geronimo – I’m going to continue scalping this tape until I see an opportunity which leads me to think that the odds are in my favor. As of right now I can not assume that they are.

Cheers,

Mole