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Down But Not Out
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Down But Not Out

by The MoleApril 4, 2017

It seems everything made a u-turn yesterday which of course affected our campaigns across the board. Let’s review the damage but instead of licking our wounds we’re actually going to use this as another valuable lesson in tape reading. That’s right – when sudden events knock you on your ass then learning from the experience is mandatory.

2017-04-04_copper_update

Copper didn’t play ball and I wound up taking the express elevator to the woodshed. But there’s a lot more here to see than just a stop out. If you direct your attention to the daily panel you’ll see that the tape was coiled up to the max after literally months of highly volatile churn. The long setup presented was the single best opportunity for copper to finally escape the trading range and turn all that volatility into something productive.

But it was not to be and although the bullish scenario cannot be completely counted out just yet the odds just decreased quite a bit and leave the door open for even more sideways churn. Buyers as well as sellers are on notice here and that leaves us without a clear direction. So at this point all we have left is highly volatile sideways tape. Which is excellent for nimble range traders of course.

2017-04-04_spoos_update

The E-Mini is in better shape but the weakness we saw yesterday now needs to be recovered pronto or sellers may cease the opportunity to introduce a fast and painful leg to the downside which would most likely bring us to near 2285. Once again we are seeing less direction and increasing intra-day volatility which suggests we may be looking at a medium term top.

2017-04-04_crude_update

Crude also took it on the chin but miraculously yesterday’s sell off missed my trailing stop by a few ticks. And given the current snap back this would have been extra annoying. So far so good however. Clearly this contract has had its own share of volatility which has a tendency of trapping buyers as well as sellers in endless gyrations and then suddenly blast off in the opposite direction. We got a very lucky entry here last week and thus my expectations forward are (and should be) low.

2017-04-04_soybeans

Soybeans is not a contract we have been trading but since this is a tape reading lesson I definitely wanted to present it here. I often mentioned how futures contracts have a knack for picking a direction and never looking back. The daily panel clearly shows this type of behavior throughout its recent history.

For trend traders this is great news because a failure of support (or resistance) can turn into a very juicy contrarian campaign. A great opportunity, which I missed as I was on vacation, presented itself in March when daily support near the lower Bollinger gave way and resulted in a systematic long squeeze which continues to this day. The point of recognition of course was the spike low near 990 which up to this moment had looked like perfect support for staging a long campaign.

When the inverse, i.e. a breach of the SL, happened however the odds pretty much flipped on a dime and the rest is history. I have often presented binary campaigns, meaning a long and short entry at the same time, for this very reason. Some junior reason have sometimes joked that I could not be proven wrong this way. But missed the point for the very reasons explained above. Sometimes price finds itself at an inflection point where a few ticks separate high odds of a short resolution from similar odds of a long resolution. This is a great example of exactly such a binary situation and what transpired when ‘conditions on the ground’ changed in an instant. If you have ever served then I am sure you are familiar with that very phrase.

A few more goodies below the fold – we are looking at a swing trading example and I posted an update on a very important development I covered yesterday:

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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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  • Skidmarkalot

    Mole, How do you expect copper to really go higher?

    Old saying,,, there is a Copper Top to every market.
    No copper in housing anymore, all plastic.
    I remember copper prices 3 times higher then now.
    I used to buy copper bar stock $1.00 over spot pricing.

    I’m no expert, just asking how can copper ever get back to pricing I used to see.

    Fast

  • Tomcat

    Mole, I followed on your CL campaign yesterday but got stopped out because on your chart you had stop @ 49.9. This is why I think for subscribers is important to have a log…

  • Mark Shinnick

    Vol has some support around here. Reversed to short miners, tight stop.

  • Dyellowflash

    Recovered from fatigue. Going to only trade 2 nights per week to see if this works. Just shorted at Dow 20640s.

  • Dyellowflash

    S&P seems to the the weakest. Just cleared out of Dow 50% change to S&P shorts

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

    one word.
    Inflation. copper is priced in dollars. and those can change in value.

    Mole has a pretty good nose. This would be the place for a reversal. (red line support)
    I’d rather play the game down at 2.50 myself. (red arrow) ..with RSI @ 50.

    EDIT. it’s been a crowded trade for all of 2017.
    https://uploads.disquscdn.com/images/fea8d2d25a0548235952cea7b74f5fba2b68401b69fd15545afc8fd6062427d9.png
    -GG

  • Mark Shinnick

    Flat miners for time being.

  • Mark Shinnick

    Long miners tight stop.

  • Mark Shinnick

    Exited.

  • https://evilspeculator.com Sir Mole III

    Smart move. By the way it’s really not the quantity that counts and I’m sure you know that. Biting your time and catching the best formations is key. Now I’m not a stone cold scalper like you of course and I’m aware that the dynamics are different there.

    Have you ever considered automation by the way? I am on the brink of introducing some pertinent series here which hopefully will give people the opportunity to learn some basic automation and quant skills.

  • https://evilspeculator.com Sir Mole III

    BELOW 49.9! Yes, that can easily happen. I usually pick the spike low as my context and then put my stop below it (the < sign is always used in my charts). Maybe I should spell it out but I'm already typing so much every day!

  • https://evilspeculator.com Sir Mole III

    Predicting the future – i wish I was in that racket 😉

  • OJuice

    Bought ES at 2351. Stop at 2339.

  • Tomcat

    Eerily similar to CNBC futures trade…

  • Tomcat

    The question is how much below…which is why would be helpful if its a = price. Mine was 49.89.

  • http://greenlander1.blogspot.com/ Greenlander

    Added AMBA, BOX longs in size. Still sitting on a lot of energy (MRO, APA, DVN, CHK) + SNAP https://uploads.disquscdn.com/images/d4c6290c1d495e70218205899e196ec8482583357dda731e323b815e08884e6b.png

  • http://greenlander1.blogspot.com/ Greenlander
  • http://greenlander1.blogspot.com/ Greenlander

    SNAP consolidating and will need to break above 23 area to get this going. https://uploads.disquscdn.com/images/3048f745786e9ed3788b7a88e81795f5ce7936c2395fc3658d609c1c0e877315.png

  • https://evilspeculator.com Sir Mole III

    Not a bad spot.

  • http://greenlander1.blogspot.com/ Greenlander
  • http://greenlander1.blogspot.com/ Greenlander
  • http://greenlander1.blogspot.com/ Greenlander

    https://uploads.disquscdn.com/images/93e29a781f9207702c3e75eb268dfc5fee3d57a0663281608b7cd8013dd54b4c.png

    some of these things if they clear the lower yellow bar, there is potential for the volume pocket to help things move very quickly up

  • https://evilspeculator.com Sir Mole III

    There is no perfect answer obviously but in general it all depends on intra-day volatility. If it’s a whippy mess of a tape then you always want to add a few more ticks below that spike low. Doesn’t save your ass all the time but it’s the best we can do. Seriously, if I had the perfect formula for initial stops then I would share it.

  • https://evilspeculator.com Sir Mole III

    You’re a busy bee today. How can you see price hiding in between all those indicators?

    Have you ever tried to remove them and just keep perhaps one or two?

  • http://greenlander1.blogspot.com/ Greenlander

    I have been eyeing energy for months. dunno why anyone would want to trade the indexes w this sector acting up now.

    yeh I don’t even use the indicators almost at all anymore. Mainly price, volume, bollingers. I should take them out but its a pain to take them out. Wish there was a master command in stockcharts to customize all yr charts

  • http://greenlander1.blogspot.com/ Greenlander

    I remember the times when I thought moving averages were useful

  • https://evilspeculator.com Sir Mole III

    I hear ya – it’s just if you share them here they would be more accessible. I think there is a way to select a stored setting in stockcharts.

  • OJuice

    They post trades on CNBC?

  • ridingwaves

    after 18 trillion dollars via CBankers around the world, you would think it would show up….War ignites inflation from deflation spirals, the fed ammo is just hollow…

  • ridingwaves

    me thinks silver is extremely bullish with mid term target of 24….

  • ridingwaves

    seems like spx needs to go down to 2278 before earnings season kicks off.. higher moves are just getting sold off again and again

  • BobbyLow

    Been gone all day and speaking of the “Woodshed”, I visited it this morning on NG for a -.75R Loss. Fricken NG has been my shittiest performer and the only negative over the past 5 weeks. It’s getting a “Time Out”.

    In other moves, I re-upped a Long in Silver and went Long Miners. I’ve also been back testing UVXY and SVXY (Short Term Vix). I haven’t finished yet and it looks like it might be like trading Air. But WTF, if I can get some short term MOMO trends out of it, I might try it. It’s all Bull Shit anyway. 🙂

  • https://evilspeculator.com Sir Mole III

    NG is simply volatile as fuck and you need to adjust for that. Meaning WIDE stops and thus smaller position sizing. She makes it up with distance when she gets moving.

  • BobbyLow

    I don’t mind volatility because it can be used to our advantage. I was Short UNG and use very wide stops trading ETF’s. The first hour’s price action in UNG had an apx. 4% rise over Monday’s close. This was a WTF Moment. 🙂

  • http://greenlander1.blogspot.com/ Greenlander

    shorting VIX vehicles is my favorite trade. The leverage + contango decay is fantastic. Only thing is for me the trade is not some RBT that is always churning through the year. Once I closed my VXX short in Jan from pre-election, I haven’t gotten the trigger and might need to wait til mid-summer sell off to reenter

  • http://greenlander1.blogspot.com/ Greenlander

    Am I the only one here trading energy? Lots of potential 10R+ multi mo setups

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

    Of course not.

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

    I can see how this would work and you trade much longer time frames than I do. I’m trading off hourly charts and what I’m looking for is a trade that can last a few days because when they do they are usually good.

    I was also getting tired of running the gaunlet every Thursday AM with NG’s supply numbers. So I might see what happens with the Short Term Vix going forward.

  • https://evilspeculator.com Sir Mole III

    Let’s not forget how tiny of a market NG really is. Easily pinned or banged in a particular direction.

  • BobbyLow

    That’s for sure.

  • http://greenlander1.blogspot.com/ Greenlander

    Good luck Bobby. Curious to see how you run that system. I personally couldn’t deal w the whippiness of a VIX product on short term frame. Would drive me bonkers.