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Don’t Take It Personally
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Don’t Take It Personally

by The MoleApril 9, 2018

If I have learned anything over the past two decades of trading for a living, it is that the market is an equal opportunity serial offender. Meaning it enjoys screwing with everyone all the time, especially near important inflection points, and the more the merrier.

Last Friday’s shake out of the bulls became a high probability scenario as soon as an attempt to breach above VWAP on the E-Mini was instantly thwarted at around 1:00pm Eastern. The spike high retest that followed was a great short scalping opportunity.

Knowing that, a case could be made for pulling any remaining long exposure but once you breach that line of no return life as a trader becomes a tangled mess of subjective decision making followed by a feedback loop of avoidable losses.

You just don’t go there. Period. Once a campaign has been entered it is followed through no matter what, otherwise it never had a leg to stand on in the first place.

Now if you think I’m pissed about being slapped behind the ear by Ms. Market: well, nothing could be further from the truth. Given the formation and technical evidence present on Friday morning it’s the type of entry I would take every single time without thinking twice.

What I lost was a small lottery ticket within a churn range – this was to be expected and thus proper position sizing had been employed. We are not running a sideshow here at Evil Speculator.

What we all gained on the other hand was a ton of new information that will prove to be beneficial moving forward. So let’s talk about that:

While equities were selling off last Friday bonds bounced right where I actually had anticipated it – near its 25-day SMA which is currently leading it higher.

The USD has been working quietly but diligently on producing a possible medium to long term floor pattern. While a sudden rip higher is possible we haven’t seen a retest yet thus more monkey business and frustration may be laying head for any Dollar bulls.

Now the possibility of a bouncing Dollar as well as strengthening bonds is bound to produce some headwind for equities, right? Yes, and if anything bearish should happen then it better happen this week as it happens to be the third bearish week of the year, statistically speaking.

Which happens to be followed by the most bullish week for equities, again in historical terms.

Here’s a similar view of the same information but in percentage points based on the number of positive weeks vs. the number of negative weeks. Week #15 is only positive 32% of the time.

Here’s weekly SKEW which is slightly negative and that means the mean sits to the left of the median, producing a long tail to the left. And that in turn means that the few times week #15 is positive, it is REALLY positive.

Gold has been through hell and back over the past five years but has managed to slowly produce an extensive floor pattern. Moving averages across all my intervals (daily, weekly, monthly) are now all pointing upward.

Should the proverbial excrement hit the fan then liquidity may elect precious metals as a temporary sector of shelter. This is not crucial to our current considerations but worth remembering as it could serve as a nice hedging tool.

All that taken together translated into the following package of pain™:

  • The market is clearly coiling up and will relieve itself all over our faces in the near future.
  • Bullish and bearish sentiment are taking rapid almost daily turns now.
  • Momo indicators are starting to support the bullish case (we covered that on Friday).
  • Medium term the bearish door leading to nirvana remains open, thus threatening a sudden wipeout scenario.
  • The ES 2550 to 2600 range is the bullish line in the sand. Below it the bears are out of hibernation and in control of the tape.
  • The Dollar is attempting a medium term bounce, per the USD/JPY, the AUD/USD, and the DX futures – not so much via the EUR/USD. Which is why I am still very skeptical as all four musketeers need to be present to ensure a short squeeze higher.
  • Historically speaking week #15 is net negative but with large positive outliers. Week #16 (next week) is normally distributed plus it’s one the most bullish week of the year.
  • As a side note – Fridays are usually shake out days, followed by reversals before NYSE opens on Monday morning. I shouldn’t get positioned mid range right now and most definitely not on Fridays.

 

Bottom Line:

The bears have a small but real chance to take down the market this week. If they waste this opportunity then they better stock up on lube as they are bound to receive a complimentary prostate exam of biblical proportions the following week.

If equity longs survive this week intact then odds support a massive long squeeze starting next week. Either scenario should entail profitable opportunities if we are nimble and don’t fall prey to directional bias.

Whatever we do – getting positioned in the center of the churn range has low odds of succeeding. Use the ranges for swing trading as well as break out entries after a retest.


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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  • BKXtoZERO

    Thanks for the post Mole! long TVIX from 10.05

  • ridingwaves

    heads up, fuel for fire
    Treasury’s enlarged coupon auctions remain front and center
    April 9: $48 billion of three-month bills; $42 billion of six-month bills
    April 10: Four-week bill sale (size to be announced Monday); $30 billion of three-year notes
    April 11: $21 billion of 10-year notes
    April 12: $13 billion of 30-year bonds

  • HD

    2629 HWB

  • BKXtoZERO

    can you please hip me to your acronym list? HWB etc

  • HD

    half way back, 50% retrace

  • Yoda

    Thanks for the guidance Mole. That was a straightforward read.

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

    HIgh Yield,
    I talked about this last week.

    http://stockcharts.com/h-sc/ui?s=HYG&p=D&yr=1&mn=0&dy=0&id=p22875146102

    -GG

  • StockTalker

    WOB, SHORT

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

    stopped out of TVIX 10.05 to 9.88,

  • StockTalker

    -3 /YM, 24.2 is the ceiling.

  • StockTalker

    Short /6E

  • Julie

    Hi BKZtoZERO Power outage this weekend unable to post. Been very busy too and will show you the momentum trade when time allows. USO very strong resistance 12.77 and wait for the close
    JULIE

  • BKXtoZERO

    well you have me curious. thanks. Good luck getting power back. We are in a wooded area and get a few outages per year during the windy season.

  • HD

    OPP!

  • Dyellowflash

    I have TP-ed my longs from Fri and hedged the rest with some shorts. Might go down then up today

  • StockTalker

    DXY testing support @ 90

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

    BTC 6724?
    whoops there goes gravity again.

  • BobbyLow

    MLGSF

  • https://evilspeculator.com Sir Mole III

    This is pretty damn good stuff:

    https://www.youtube.com/watch?v=yY7iGa4t9-I

    How’s my crew today?

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

    previous chart has a little gap at 86.20 needs to be addressed…..

  • BKXtoZERO

    you guys are pretty cryptic…

  • ridingwaves

    going short COMP at 7070 or there abouts

  • StockTalker

    Very likely to fail based from sequence of lower highs

  • Julie

    USO as stated in reply below to BKXtoZERO 12.77 is very strong resistance JULIE https://uploads.disquscdn.com/images/1267475ef82b7049858dc9a41f92e7fab65309c46b9543f175a78e21f3a7d333.png

  • https://evilspeculator.com Sir Mole III

    Nobody? Alright catch you guys at the close!

  • BobbyLow

    I figured that seeing as how we have people speaking in acronyms that not everyone could understand that I would join in.

    MLGSF stands for Monday Looking Good So Far. That’s an acronym that nobody has a clue what it means but didn’t want to ask what it meant. I mean everyone should know what MLGSF means. Right? 🙂

  • Richard Adler

    Current zero looks like divergence, no?

  • HD

    That music… I’ll have the Mongolian beef, lo mein and wok shrimp. To go.

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

    No not really. It’s marginally supportive on the way up. And we don’t call divergences between sessions on the 5-min panel, especially sessions separated by weekends.

  • HD

    Obviously stopped on the HWB entry. Will scale into 2650

  • HD

    this trade may require a presidential trade war tweet…

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

    it’s not on the 11th is it??

    I just glanced at the clock at it was 9:11AM.
    How come I keep seeing 9/11? I never see 9:08 or 9:21!

  • BobbyLow

    Love the deep blue ocean. It’s funny we don’t hear much about Greece and the EURO anymore. Will mark my calendar to be short in September. 🙂

  • ridingwaves

    filled, S 7080

  • ridingwaves

    where you staying? Oia?

  • ridingwaves

    u should set aside 2 days in Crete since so close….

  • StockTalker

    Sellers coming in

  • Mary

    short /ES 2644.00
    stop 2649.50
    target 2635.00

  • Mark Shinnick

    Adding to long miners.

  • ridingwaves

    The misses and I stayed on beach side of island..the only beach it seemed…if you take donkey’s up from water, stay away from the walls and the other donkeys if in shorts….
    https://uploads.disquscdn.com/images/ccc800c967e9915b92dd61ce368ca348b0d710ef2337f599f68fb111fe48fdd1.jpg

  • Trouzzer_Snake

    I’m seeing the divergence as well… I know if the signal is weak it’s not to be taken too seriously but would love some further commentary.

  • ridingwaves

    vix is just stubborn right now

  • Mary

    I just got stopped out.

  • Mark Shinnick

    Do you have a low power type backup trading setup?

  • StockTalker

    Inside day today, -4 /YM

  • ridingwaves

    XLF strong today, $ easing helping with push on indexes

  • Trouzzer_Snake

    Nice! I went there for my honeymoon. Amazing experience. If you go to other islands, my advice is to take the big ferries… We took a fast one and got caught in some weather that resulted in 90% of the boat getting sea sick!

  • ridingwaves

    BTC again near important inflection area…

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

    if it’s going to run to 6800, now would be the time IMHO. (15m chart)

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

    me and wife took hydrofoil from Crete to Santorini and she helped feed the fish as I expected a smoother ride but it might have been worse than a ferry….side to side action was crazy…Crete worked out as favorite island..

  • Trouzzer_Snake

    LOL – It was literally almost this bad!

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

    By the way today is yet ANOTHER holiday in Spain.

    https://media0.giphy.com/media/Rhhr8D5mKSX7O/giphy.gif

  • https://evilspeculator.com Sir Mole III

    Actually that’s exactly where I’m staying 🙂

  • Trouzzer_Snake

    I’m talking 20 foot seas… Took us 3 hrs to go no where, ended up docking in Paros and getting stuck there for the night without hotel reservations. Was quite the adventure!

  • https://evilspeculator.com Sir Mole III

    Oh I can do better than that:

    https://www.youtube.com/watch?v=qxRmzq3Azs4

  • https://evilspeculator.com Sir Mole III

    We have friends & family there so we get to stay and eat for free 🙂

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

    See – just keeps climbing.

  • CandleStickEmUpper

    Wonder if Japan has more or less

  • ridingwaves
  • ridingwaves

    CBO just said treasury auctions are going to be pretty big over next couple years….

  • BKXtoZERO

    unreal….

  • HD

    the VWAP and HWB are very close again. 2634

  • StockTalker

    Can bulls hold today’s gains? Juicy

  • Tomcat

    Mary, looks like you are making the right calls, but seems like your stop loss is too tight. May want to re look that.

  • ridingwaves

    surprised gold didn’t take off on that deficit news, coiling up and ready

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

    I’m short via QID since 7070, Zuckerberg in front of congress tomm. and some auctions to boot….

  • Julie

    GG Very interesting inverted H & S pattern on the 60 min chart
    JULIE

  • Mary

    I recently read that Zuckerberg and Eric Snowden are cousins. That is very weird if true.

  • BKXtoZERO

    Mole thanks for views on gold and dollar. It is a rad confusing though if the dollar is supposed to be putting in a floor for a rally, AND Gold looks OK….. that seems contradictory Sir.

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

    had no idea…the markets are not letting bulls or bears hold overnight….but all this volatility signals change in trend over long haul….

  • Tomcat

    I agree. The usual correlation is negative. Even though at times, they can move in one direction.

  • ridingwaves

    CBO forecast today is extremely bullish for Gold…

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

    ok, I’m going to clean up the barf down below.

    serves me right, I just came back from lunch {gulp}

  • StockTalker

    Lol

  • StockTalker

    TVIX showing strength

  • HD

    Flat from 2650. VWAP test

  • StockTalker

    Next stop 24k

  • StockTalker

    Cmon $, WTF

  • ridingwaves

    ummmm see the CBO comment below…..were phu$%D

  • HD

    Some buyers at fibs

  • StockTalker

    Big move is coming, bullish for now.

  • Julie
  • HD

    nervous buyers….

  • StockTalker

    Those are bears

  • Darkthirty

    .Gov buyers

  • Darkthirty

    Suppose this is b – targets 2705

  • randomuser6789

    …And we are selling into the close, folks!
    This is still NOT trading like a bull market.

  • Mary

    The SPX daily bar is ugly …

  • https://evilspeculator.com Sir Mole III

    Whaddayaknow – I come back from dinner and you guys have let the market fall apart again. Didn’t we talk about this?

  • https://evilspeculator.com Sir Mole III

    Hasn’t been for a long time now.

  • Brishort

    Whoa, this was quite a “close the morning gap” detour!

  • HD

    impulse up, impulse down. I have no count. 50% fib was doing ok until today. 2 stops. Bulls are trying to be in W 3 up off 2554. Only a HH or LL will clear it up for me.

  • ridingwaves

    go team go

  • Mary

    but we did make 100 posts … again …

  • Darkthirty

    zoomed out to 30 day / 2 hour chart

  • BKXtoZERO

    Try as I might, at least short term charts I can’t get past at least looking at EW, I noticed they seem to screw with EW people, by going past obvious points, wave overlaps etc. I would think if they get above “X” then they will go further and be a while, then…. they screw you with a nice reversal after I screwed myself out of the trade. Tough MKT.

  • Darkthirty

    EW is a lot clearer on DJI market hours only, always has been. EW is based on human psychology, algos fuck it up. Afterhours is a crapshoot/clusterfuck for ANY system

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

    Rejection of 2653.
    http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p28077419605

    11 trading days in a traffic cluster.

  • kudra

    Hello. Still holding some vintage TZA and QID. Trying to get a little healthier on these leveraged short ETF’s, before taking the lumps. Have been using $35K this year to make small mindful trades and have $3k in profits to date. Having only a small amt. to work with has helped greatly. Position size is key. Not going to attempt to recoup the 100’s of thousands of $’s lost over the years of faking it and trading like an egotistical addict who never wanted to be wrong. Speaking of, recently quit alcohol cold turkey; now living the purely sober life. Was up to 4 tallboys of IPA (6-9% abv.) per day. Heavy drinking is no way to manage stress, in fact, it adds to it and takes its toll on heart, brain, liver, and digestive system. withdrawal was a bitch and need at least 3 months sober to truly feel centered, clear, and healthy again. Blood pressure is now high, even though bmi is healthy (6ft/ 171 lbs). Bacon, cheese, and red meat weren’t helping. Plant based diet and daily exercise/yoga for the win.

    keep track of your health; it’s worth more than gold. Best of luck to you all, and thank you, Mole for the sanity in this insane world.

    P.S. have a small stake in AVEO @ 3.42. watched that one plummet below $2 last week. had a huge bounce today. worth a look.

  • BKXtoZERO

    TSLA another good example of extreme phuckery… closed gap at 300 AND…. went a bit further first before reversing. I need to be more patient and expect more bullshit.

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

    Bravo.
    plant based is the way to go. Be careful, Kale and other potassium/nitric oxide plants can drop you pretty fast IMHO.
    -GG

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

    Glad to hear you’re off the sauce. I was never much of a drinker. After two sips of brandy I usually feel I had about enough. Wish I would have been that smart about women in my youth – but everyone’s got to have a vice I guess.

  • Yoda

    Spain should switch to celebrate working days rather than holidays. The former seldom occur.

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

    The sulfur stench out of D.C. is becoming unbearable. What a fucked-up world we’re living in.

  • Darkthirty

    Gotta eat meat, you need the amino acids.

  • http://www.captainboom.com/ captainboom

    I only have one vice…

    Lying about all the others 😉

  • Darkthirty

    Way to go if you’re a ruminant

  • Darkthirty

    Keep backtesting/searching for applicable TA. Found a few that work…..until they don’t. Seems to switch with the algo programming

  • Tomcat

    hear hear

  • TA.Stockman H

    Targets 2770 on the S&P500.

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

    Mooooo

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

    Turn off the TV, the revolution will not be televised.

  • kudra

    by plant based, meant mainly plants. had some steamed chicken with quinoa, avocado, and tomatoes for lunch.

  • kudra

    CNBC crediting the FBI’s raid of Trump’s personal lawyer’s office for the market roll over at the end of the session. Like Mole mentioned in an earlier post, these connections the media loves to make are becoming more and more spurious.

  • kudra

    a weakness for women sounds far healthier than drinking.

  • Darkthirty

    Find a substance you don’t really like for a substitute for the alcohol. You’ll need it when you start going batshit. You’ll discover that the addiction was just to altered states of consciousness. I used a hit of pot to knock the edge off til I made it. Been dry for 27 years, NOBODY would ever say I was sober though! Hang tough, man.

  • ridingwaves
  • ridingwaves

    put QID in there and see how long its been since it has a cluster of candles above you envelope….3 yrs….

  • ridingwaves

    it started on release of CBO report…don’t watch that stuff, Continuous Negative Brain Connectivity. ……..

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

    tea and brisk walks. familiar with the sweet leaf, but set that aside as well for the time being.

  • Darkthirty

    As long as it works! Kinda like killing your best friend, with a knife, slowly. Never cared for smoke much, hard to kick ass while stoned!

  • kudra

    don’t smoke it; bad for the lungs.

  • Dyellowflash

    Am not able to watch the mkt after about 11pm SG time which is sadly 1-2 hrs after it opens. But hedge went well, managed to clear off all the short hedges this morning SGT at the lows and now clearing the rest of my longs at this crazy 1 hr spike.

  • grednfer

    Bull sneak attack!
    But if that’s a 2 wave 3 is going to be painful.

  • grednfer

    Nope….higher high….

  • HD

    News matters. It sucks but that’s the market we currently have.

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

    some of you may remember grumpy cat. Grumpy cat is happy, but pissed.
    (4hr candles)
    https://uploads.disquscdn.com/images/719fd2bbf627598ed6496509cd21892fc0f87837744a1a3d6fd4390d25db5bcb.png
    The Big Boys are playing..hard.

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

    while the SnP closed lower at the end of the day, did anyone notice High Yield?
    that’s right.. it closed strong.

    http://stockcharts.com/h-sc/ui?s=HYG&p=D&yr=0&mn=6&dy=0&id=p91093278708

  • Darkthirty

    Ok was the spike on the WW III threat, or XI blowing smoke?

  • https://evilspeculator.com Sir Mole III

    It’s all misinformation aimed at the sheeple who need easy explanations to get them through life.

  • StockTalker

    This is getting old now, short again.

  • StockTalker

    Time to fill that gap on DXY

  • TA.Stockman H

    True, but it’s probably more the 24hr news cycle.
    Imagine any news anchor or CNBC for that matter, saying. “Well, the market went down the second half of the day, but we don’t know why. We think it’s Smart Money jerking everyone off.”

    They have to say something convincing. Hookers have to touch something; anchors have to say something. It’s the occupation.

  • Mark Shinnick

    Holy shit that’s mainly all the best friggin news possible, explains a whole lot. Don’t worry about the meat and fats compared to the alcohol. Just Huge man, glad to hear this 🙂