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Bear Trap Tuesday Wrap Up
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Bear Trap Tuesday Wrap Up

by The MoleJune 14, 2011

Yesterday’s session was highly suspicious and in particular I am referring to that rope-a-dope the MMs played toward the end. So seeing today’s follow through and clearly bullish session was not a big surprise to me:

I hope you guys heeded my multiple warnings and took profits while Mr. VIX was tickling the 20 mark.

Geronimo nailed one today – that’s how we like it. I’m glad it got out of there before they tried to scare the children at the EOD.

Helter Skalper painted some nice signals as well. I strongly believe that this could provide a clear edge in combination with your favorite ES swing trading or scalping system.

Cheers,

Mole


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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  • Anonymous

    Hi there!  SLV/GLD is trying to ramp up after hour, while /DX up, Euro down. See which forces win out when Europe opens in wee hours.

  • http://practicalt.blogspot.com/ Gold_Gerb

    2nd.
    dang, distracted by Life.

  • Anonymous

    Don’t forget folks, quadruple witching this week. Divergences abound, correlations will seem to break down and I am seeing them…but am not trading them.

  • http://thebhbgroup.com TheBHBgroup

    today was pretty quiet for such a big ramp job…the wed before expiration usually tells the tale for the rest of the week…should be a fun day tomorrow.

  • Anonymous

    Anyone using VSA or VRA (volume spread/range analysis)? I cam across a custom study that can be plugged into TOS and have found it interesting. I don’t yet understand how it works and how its variables can be tweaked and am learning more everyday.

    Fundamentally, it analyzes the spread or the range of a bar/candle, it then displays indicators showing what it has detected. But don’t think doji or shooting stars is what it’s looking for as price and volume is used in the bar analysis, not just price.

    Certainly, price is the most important, but without “commitment”, the price can be shallow or false.

  • Anonymous

    hello mole

  • Anonymous

    Mole, this is reference to your previous post on Net Line levels indicator. Sorry if I have missed it somewhere, but can you share the concept behind it. Can’t find it on the net. I would be interested for the currencies part.

  • https://evilspeculator.com molecool

    You can almost set a clock to those jumps in the EUR/USD.

  • https://evilspeculator.com molecool

    I plagiarized it from Chris Carolan. Just look at the chart and it’ll make sense to you – three new consecutive highs produce a sell signal at the first candle’s low – the inverse for the buy signal.

  • https://evilspeculator.com molecool

    AUD/JPY breaching NLBL on 60min chart.

  • https://evilspeculator.com molecool

    While you guys are sleeping EUR/CHF is running fast…

  • https://evilspeculator.com molecool

    Watch the EUR/USD.

  • Anonymous

    usd/chf is right there too, go figure. All day (tuesday), it was strengthening. Eur weak across the board.

    I now go to bed, got to get up for the open tomorrow. Do you sleep much mole?

  • Anonymous

    Breaking out to downside. About to breach daily shooting star candle low and trigger retest variation sell. 

    I suspect this is quite important

  • Anonymous

    And its broken through the daily low, interesting to see what happens here

  • Zero % forever

    Scott
    will you take Euro short at the daily low break ? if so stop will be daily high ?
    Observing Your candle rules does help all of us to trade better with out over thinking where the price should be!

  • Anonymous

    Daily RTV sell could also trigger on NZDUSD. Would also be a break of the Inside Bar.

  • Anonymous

    you think Tue was a headfake?

  • Anonymous

    Weekly Euro short triggered.

  • Anonymous

    Dont say this often but take care in EUR today, this is not over by any means……

  • Anonymous

    Yes, I am currently short on break of the daily low with a stop at the daily high.

    Lets examine the evidence of the price action since the top. We have 3 days of strong downmove, and 2 days of weak upmove, retracing 50% before painting a shooting star candle.

    The break of the daily low triggers the rtv sell, and since this *should* be a 3rd wave to the downside of some degree, the high of the shooting star should NEVER be revisited if the bearish thesis is still in play.

    The logical place to have your stop is where you are proven wrong, and this is a perfect trade, not because its sure to work (its not) but because there is a very clear black and white decision point where you know you are wrong.

    Its this easy decision making that makes trading easy. I dont watch the market all day, its counter productive. I know when I should get short or long, and when I am wrong. I just stand back, turn the machine off, and let the market do its thing.

  • Anonymous

    Agree completely. This is the trade right here 

  • Anonymous

    Not a headfake, a retest. Its axiomatic that virtually every major high is retested. 

    Pull up some charts of anything you like at major turning points. I guarantee in over 90% of major tops you will see a retest of the high before the fall starts.

  • Anonymous

    Zero its not that my patterns are the last word in trading strategy, they ARENT. They are a medium edge, averaging just over 70% in backtesting and around 65% wins in the real world. There are better edges out there, some over 85%… but I’m not emotionally suited to them. 

    Personally I’m less inclined to hang onto a bad trade or make emotional mistakes when I’m trading a system with a lower win loss percentage.

    The most profitable systems of all are unquestionably trend following methods, like Mole and BobbyLow use… but you have to be emotionally comfortable with 30-40% wins and then huge scores making up for it… and it doesnt fit quite right with me, it makes me want to jump too early from the big winners. I’m better suited to what I call “steady stacking R”My actual long term results over 1000s of trades are an average win of 1.1R and an average loss of .8R Therefore out of every hundred trades I make I should expect to win 65 x 1.1R = 71.5R and offset that with losses totalling 35 x .8R = 29.2R

    Therefore on every hundred trades I can expect to bank 42 R in profit. Therefore for every trade I can expect to bank .42R in profit.

    In that I have a real metric to judge the results of my trading by.

  • volar

     maybe inside day on Emini 😉

  • Anonymous

    Would you be getting long on the break of the inside bar, I remember you mentioning in a post recently?

  • volar

    maybe I have been waiting for a panic day. So maybe sell on break of low for a quick trade and then if the market panics go long for a swing trade

  • Anonymous

    I don’t trust the opening gap down. It looks to me that we completed wave A yesterday. Wave B is done at the opening (if we don’t go down further), and probably, we are just starting wave C. 

  • Anonymous

    Is it me or ZL reloads very slowly this morning?

  • Anonymous

    I’m seeing the ES-Zero channel sloping down.  And, the 1HR-Zero channel sloping up.  What are you guys seeing?  Meaningful?

  • Anonymous

    just got slow for me

  • Anonymous

    Mole is always saying to look at the size of the signal first. The zero 5 min and the unsmoothed 60 min are negative, but not a strong signal.

    That makes me cautious of some kind of gap fill effect, while I wouldnt quite get long yet, I wouldnt chase this move down

  • volar
  • Anonymous

    VSA is rocking for me. It clearly works better on non-Tick based charts (and sadly, I’ve started to favor tick based charts recently).

  • Anonymous

    Im intrigued, can you explain a little bit about it please… its plotting volume traded at the bid vs volume traded at the ask, right? Kinda what the emini-watch guy does

  • Anonymous

    Market is a sneaky SOB.  

    I promised myself not to make any moves until after 10:30 to 10:45 AM. (If I’m going to make any at all)  I don’t want to add to my Long Hedge until I see the Internals go above the 0 Line.  

    Financials are weak and the Oilers are kind of weak.    DX Strong.  

    Of course things can change in a heartbeat.    🙂 

  • volar

    +10

    Moves before 10:30 and 10:45 are very low probability moves

  • Anonymous

    Hey Matt – I’ve been interested in testing out VSA. Could you share where you found the TOS study? Thanks.

  • volar

    I have had trouble with that… not that I dont like emini-watch stuff (I do use sinewaves and I do use average tradesize), but not sure about the RSI based on B-A volume levels

    I mean only Tradestation has the best B & A data IMO, BUT 90% of large traders show 1 contract trade 1000. Hell I know a guy who shows 10K cars in corn just to skrew with brokers….

    I have been looking into volume bars, however

  • Anonymous

    It boils down to closing price and the “spread” (high,low) of the price of a bar relative to a preceding bar or two.

    I do not pretend to know enough about it to explain it well. Right now I am just following the indicators and have other custom indicators to help make decisions (custom DMI-ADX and a custom Williams%R and StochasticMomentumIndex). I am using the DMI-ADX for trend analysis, and when in a strong trend (ADX >20), I will only take trades with the trend. Outside of a trend or in a trend, I use SMI to entry/exit (as well as support/resistance).

    I will provide some links to some of my online resources and, somehow, I will supply the TOS custom study to those that want it. In the interim, do a search for “Volume Spread Analysis”.

    Here’s a link to the TOS study for those interested: http://www.mediafire.com/file/g1ak22zvd081792/VolumeSpread_CustomSTUDY.ts

    I recommend enabling the color bars, trend text, volume defs and optionally alerts (I have then all enabled). the “Trend text” explains the indicator that pop up.

    Lastly, here is a word doc that I created as “key” to the indicators: http://www.mediafire.com/?fzfpa1th5kvih1a

    Enjoy.

  • Anonymous

    Noted myself that 10:3-45 is a reversal time. I think another push here to see if it gathers momentum.

  • Anonymous

    I got the study from the yahoo TOS custom studies group (on yahoo). I will upload to a share site and post back.

    Sorry for the link mole (but this may help my fellow rats):

    http://www.mediafire.com/file/g1ak22zvd081792/VolumeSpread_CustomSTUDY.ts

  • Anonymous

    Sold FXE puts from Monday / Tuesday. The daily looks crap but need to bank coins. 🙂

  • Anonymous

    I agree. I see those “flash” sizes all the time, typically the price then moves towards the flash size! I see this more commonly AR simply because things move slower then and the attempted manipulation is more apparent.

    I’ve learned to ignore the size on the price ladders, it’s entirely useless. All that matters is price and volume.

  • Anonymous

    So far it looks like Today’s Energy Report isn’t saving the day.

    Results were mixed with Crude Down 3.4 Million BBL’s and Distillates Down 100,000 BBL’s.   But Gasoline Inventory was Up 600,000 BBL’s While Refinery Utilization was Down 1.1%.  

    As of 10:47 AM Oil Prices are close to flat.

    http://energy-reporter.org/

  • Anonymous

    Thanks Matt – I’ll check it out.

  • Anonymous

    I’ve got no particular feel for todays price action, standing aside 🙂

  • Anonymous

    Here’s a link to a page with “live” video trading with VSA (in the videos they are selling some trading software, but he mostly talks about VSA and how it’s works on the spoos).

    Still learning, only taking the high prob setups for now (with the trend).

    http://www.informedtrades.com/blogs/magic/684-review-volume-spread-analysis-videos.html

  • Anonymous

    We are now ranging in the nq and es. Oscillators time to shine!

  • Anonymous

    Gold short trade off the table? Scott?

  • Anonymous

    Its early days in the session but this smells like low participation tape to me. Unless we really start to break to the downside I believe its setting up for a retest variation buy setup tomorrow

  • Anonymous

    Nope, on a weekly trade I only adjust the stop once a week, no matter what.

    My personal pet hate is getting wiggled out of a position on a bounce before watching it plummet. 

    My stop is at the weekly high on gc q1 1551. If this week ends up painting a hammer candle I will exit part of the position on break of the weekly high by lowering my stop.

  • http://thefxspeculator.blogspot.com Onorio

    If USDJPY closes this 4H candle this way i`m gonna short it big time!

  • nyse

    Thanks dude

  • Anonymous

    Downward sloping wedge formed in the nq.

    But jeez, the volume is truly abysmal, I mean really really low.

  • Kudos

    Just be careful, USDJPY is up even when yields are down and the euro is falling. If this is a turn in the dollar it may gain against all currencies.

  • tradingmom

    Anyone else see a really big triangle on the zero 5 min?  The bottom line is basically flat, the top connects all the peaks (nice series of lower highs.)

  • nyse

    I do 😉

  • tradingmom

    if we’re going to bounce, now’s the time (11:37 eastern)

  • Anonymous

    huh,huh, ZL breaks down

  • Anonymous

    Volume showed up to sell…

  • Anonymous

    thx

  • Anonymous

    Volar, what is your lowest TICK reading in the last 10 min?

  • Anonymous

    Who is chasing the down move?

  • Anonymous

    And I thought the tape was going to be boring…I go to the bathroom and by the time I get back, missed the break.

  • Anonymous

    wear a diaper next time
    😉

  • volar

    -1113 Lowest since japan was -1283

  • Anonymous

    I was thinking along those lines too, perhaps just a bladder hooked up direct. A diaper would make it too easy to never get up. Put in a mini fridge, and the Homer setup would be complete.

  • Anonymous

    Ok.   It’s now official with a 1271.24 Print on the SPX, Yesterday’s Rally Didn’t Happen.   

    That is the way of the Casino.    🙂

  • Anonymous

    Thanks

  • Anonymous

    Damn, and I thought I was a Stock Junkie!    🙂

  • Anonymous

    Ok, so how to get an entry on the trend? VSA says to look for a low volume bar that finishes at the mid to low point in the bar with a essentially a low spread (inside) bar.

    ON the 2 min NQ chart, I am starting to see a target bar for entry. “Pseudo up thrust”.

  • http://thefxspeculator.blogspot.com Onorio

    USDCAD is on steroids…if we break 0.98 we might get 0.9850, we travel from the daily lower BB to the upper in a few hours 🙂

    I went long this morning at 0.9690 and i might take profits at the upper BB 0.9830, either way i`ve locked 3R.

  • Anonymous

    The day ain’t over yet. I would not be surprised at a gap fill…MM’s would clean up.

  • Anonymous

    Any thoughts on copper’s moves today? Mole?

  • Anonymous

    hehehe…

  • http://thefxspeculator.blogspot.com Onorio

    It was a nasty candle, but i will way to see if we get a retest.

  • http://thefxspeculator.blogspot.com Onorio

    Bulls might need diapers too…

  • Anonymous

    That sounds like it is evil enough to be probable.

  • Kudos

    Hasn’t been able to close above its 50 day in quite some time. Got rejected a few times. Yesterdays move was very quick to get back to the 50 day. I’m sorry I can’t tell you more besides to see if it can close above the 50 day. Right now I don’t think there is a clear signal.

  • Anonymous

    There goes the inside day 🙂

  • raised_by_wolves
  • volar

    yup… and still not enough panic for my likings… guess we will see at EOD when I get put volume etc etc etc

  • Anonymous

    I have seen you guys post ratios before.  Can someone (RBW?) please edify me as to the significance of the chart you just posted, and what it means to SPX or Gold, past, trend, etc

  • Anonymous

    Thks. It looks so far as a failed retest of the May 27th high.

  • nyse

    Fuk yeah, Zero!

  • Anonymous

    dont chase it

  • Anonymous

    I guess you just got a lower reading in the last 10 min.

  • Anonymous

    Internals at worse Levels of the day.   Uncle Bernie has already had one time at bat today and is looking for number 2.  🙂

  • Anonymous

    Thank you Scott. Do you have a downside target?

  • Anonymous

    May have the buyers now to pump this up now. Long SPY calls.

  • Anonymous

    this had some capitulation qualities. flush on a big volume. 🙂

  • volar

    if we do over 3.5MM in volume on the ES I have to go for a swing long by my rules (50 point stop) 

    This would be a swing long looking for 2.5-4R

  • Anonymous

    wow

  • jigdaddy

    50 point stop? trading YM 😉

  • omelette

    how did you decide on that volume level?

  • http://thefxspeculator.blogspot.com Onorio

    We`re stalling again in the 9790-9820 range, a clear break above this area could provide some fireworks, right now we might need some consolidation :/

  • omelette

    still going strong on /tf

  • Anonymous

    Targets are limited use IMO and cause as many problems as they solve. I prefer to get out “when the odds of continuation are less than the odds of reversal” 

    I often leave money on the table for the next trader, i just take the easy money and move on to the next thing. Trying to squeeze every last tick out of a trade is doable in the short term, but in the long term it fucks with my head.

    I have a very mechanical set in stone set of rules, and any variations from them must be written down before the trade is placed.

    For instance if I was trading the 5 min es chart (I’m not) I would be out of the short a few bars ago as the top bollinger turned down, but I would not be long as there has not been a substantial retest of the low yet.

  • nyse

    Thanks for this

  • Anonymous

    Id like you to note that the time of your post was almost the bottom tick 😉 It often happens that the subconscious is drawn to a move right when the herd is feeling the same way, immediately preceeding reversal

  • Anonymous

    I am really glad that I sat on my hands on that move. Lawn mowing strategy seems quite appropriate to avoid blunders.

  • Anonymous

    shorting gold is the widow maker. it’s the only thing that won’t drop.

  • raised_by_wolves

    Mole explained the gold to silver (I like viewing it the other way around) ratio here:

    https://evilspeculator.com/?p=12146

    Basically, silver is a risk asset while gold is a safety asset. Other risk to safety ratios include transportation stocks to utilities and junk bonds to treasuries.

    Anytime you see me mixing more than two variables, I’m practicing alchemy.

  • volar

    I have found if the emini active does about 3.5-4MM in volume we are close enough for a swing trade.  Just simply looking at the daily charts and total Emini volume

  • Anonymous

    Please keep us posted, ’cause I can’t keep track of that, THANKS!

  • Anonymous

    Mole, what’s your take on ZL’s move today?

  • Anonymous

    I tend to not trade between 10am and 11:30, unless I get some strong indications…usually a chop fest. Today’s close will be interesting.

  • Anonymous

    Folks, I don’t know what you are seeing but what I’m seeing is that over the last hour and a half, the rate of Down Volume increase is at a similar pace that Up Volume was yesterday.   

  • raised_by_wolves
  • Anonymous

    Jez, old bucky is on a tear.

  • Anonymous

    WTF was that!

    :-((

  • Kudos

    hardest thing to do is just to sit and wait. Been long /dx for almost a month. 

  • raised_by_wolves

    They jammed it, shit!

  • Kudos

    2:30 margin call should be fun to watch

  • Anonymous

    Circuit breakers on evilspec now?

  • https://evilspeculator.com molecool

    Sorry guys – the server went down. Seems to always happen at the worst time – I got to give it to my hosting company.

  • Anonymous

    VIX above BB.

    Zero is back, thanks Mole.  I was flying VFR for a while there….

  • Anonymous

    Nice play, not easy taken the opposite position of the herd.

  • raised_by_wolves

    Wild ride, this one.

  • Anonymous

    Ya, booty call 🙂

  • Anonymous

    this tape is about to go medieval on bears.

  • http://thefxspeculator.blogspot.com Onorio

    naaaah, bulls better cover their asses.

  • Zero % forever

    Thanks Scott
    Your reply with statistical win :loss ratio and the “R” gain/loss was quite
    useful.
    Since I have a short time frame trading habit,your method is some what
    useful to get on board or jump out after reviewing the situation afresh
    every time instead of thinking where it should be.
    Thanks once again.