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Easy Now!

by The MoleDecember 17, 2010

Let me begin this post by ripping your bear suit off after which I’ll hose you down with ice cold water and chase your naked ass around the block a little. There – feeling better now? Yes, I know equities feel like they’re about to tilt over and die. But we have been fooled in the past plenty of times with extreme measures abound. So let me be the broken record that keeps rubbing your dirty nose into this nasty chart:

Yes, there was a tiny drop off in the 20-day rolling total of floating POMO cash, but we remain firmly in record territory. Boy that’s a lot of outstanding cash. And even a fat drop would really matter anyway – as long as we are not approaching the zero mark the tape can either push higher or churn your put positions into a slow and agonizing death. So remember that  when you hear the usual suspects suggest an impending and massive drop. Don’t get me wrong – I have little doubt we’ll see some type of correction fairly soon – I mean things are really getting a bit out of hand at this point. I might even dip my toe into a few select short symbols here and there. But if I manage to catch a fast reversal I’ll be sure to take profits and run for the hills. If P3 ever happens there will be time to get positioned after an initial drop and a snap back, and until we see that I don’t care about bullish exuberance. For it can feed on itself for a long time.

Nothing bearish is going to happen anyway until the Dollar seriously gets out of the gate. Thus far we remain stuck in 2nd wave hell. Meaning this could be the beginning of a third wave down – or we just painted yet another a-b-c correction after which it’s the express elevator into the abyss of all currencies.

We won’t know until we either take out 78 or 81 – nothing that happens in between should affect your trading as those FX bastards are teasing the heck out of you. They want you to see what you want to see – and they love these types of setups and will stretch it out all the way. I don’t expect much of a resolution here until after the holidays.

My exotic NYMO:BPYNYA ratio signal turned exactly where I thought it would, thus continuing a divergence that has been unfolding for months now. The one question that remains of course is when equities will finally follow suit. The way I see it is this: At some point we’ll see some wild snap back that we will all miss out on – it’ll happen suddenly out of nowhere and without warning. No, we will not be positioned for it and if you buy puts today you will most likely guarantee that it’ll happen just when they expire. So we are doomed to watch that first red candle in complete exasperation wishing we had been smart enough to get positioned. Sorry rats – trading is not for the faint-hearted.

The only consolation I can offer is actually that very first POMO chart. Chances are our primary bankster POMO sucking friends will take advantage of such a dip to drive the tape higher after having run the stops of legions of retail trading schmucks. Yes, that would be you – well, if you weren’t a stainless steel rat that is of course. Because we’ll watch all that in bemusement because we won’t be ones getting their asses handed to them. NO, instead we’ll be the ones selling the rip that will undoubtedly ensue. Well, that’s the theory at least – it’ll get a lot uglier and will probably take a lot more time to unfold then we all care to imagine.

NYSE volume ratio is telling a similar story. I’m not going to sugar coat it and don’t let my POMO chart fool you – I’m definitely not bullish here. Medium term I see two phenomenon here:

One, we keep painting divergences which refuse to resolve in any red candles on the equities side. Why? Kindly refer to my POMO chart which serves as the ultimate floor painting utility. Back in the days tape like what we have been forced to watch in the past few months would have resulted in a several hundred handle down candle on the SPX. These days we keep racking up those ISEE equities points as if they were frequent flyer miles on a black squid AMEX card. Go figure – but I’m not about to start arguing with ‘the man’ – I eat the crums I’m being handed and live to trade another day.

Anyway, two – those blue lines I painted seem to be some be some momentum coil that at some point will resolve in a fast and dirty move to the downside. Again, my best bet right now is that that moment will occur in January. But again – I don’t think it’ll be anything like a P3 situation – maybe a hundred handles on the SPX, maybe a bit more – but it will be bought either the same day or the next. So, if you catch it – be nimble.

Yes, yes – the smoothed daily Zero is still hovering below the mark and is also suggesting that a reversal may be near. There’s definitely a lot more volatility as of late and the picking is not as easy as it’s been since early summer.

But that’s not why I’m posting this chart this time around. Rather, now with 2010 drawing to a close I want to use this chart as prime example of what a dreadfully horrible trading year this has actually been. Just humor me and take a step to the back wall of your prison cell, squint a little, adjust your package and relax – yes, that’s good – don’t overdo it now. Alright, just look at the smoothed signal and tell me if you see anything bullish here. Look again.

No – not really. I mean quite the opposite, right? It’s actually a miracle that we are where we are and it’s also a testament how long a Fed induced sucker rally can torture those righteous souls who dared to short what should rightfully be an S&P 500 trading somewhere around 400 by now. But it was not meant to be and it may never be  thanks to an endless supply of phantom digits in the Fed’s virtual printing machine.

Bottom Line:

There’s something nasty brewing out there but they will most likely try to paper it over just like they did in 2009 and 2010. So, don’t get your panties in a bunch about P3 again. I think it’s not unreasonable to start thinking about short positions once the holidays are over and done with. But personally I’ll go easy on myself and go after the laggards – then, when a dip occurs I’ll head for the hills as soon as I get the chance.

After that I’ll just watch for a while and then decide what’s in store for 2011. At this point any attempt at plotting a long term path is mental masturbation. Doesn’t matter anyway – the meat is in the daily grind – like it or not. I know – not as sexy as that crash scenario – but waiting for Godot is not a trading strategy

Public Service Announcement:

Quadruple witching tomorrow. It will get ugly. You have been warned.

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.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

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  • 99er

    After seeing the last post's charts just now (no decoder ring here), all I can say is “Man…this dude can do charts!” Thank you.

  • Bob the Horse

    The POMO schedule for the 20th/21st of Dec is pretty terrifying.

  • convictscott

    Great post mate

  • http://chartsandthat.blogspot.com/ ultra

    Aye, seconded.

  • http://chartsandthat.blogspot.com/ ultra

    Do go on..

  • Bob the Horse

    It's about $25bn over the two days.

  • fuw

    Yeah, POMO and December scares me. I used to lean short and do shorter scalps long, but have now shifted to leaning long for the time being, with small short trades and hedges.

  • amokta

    My ewi subscription finally expired – what will happen now?

  • volar

    you wont count every intraday 5 ways up as P3 🙂

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

    nice opening.
    where's Fearless?

    http://www.youjustmademylist.c

  • volar

    speaking of useless extremes in sentiment…

    http://www.optionsclearing.com

    Here is the total OCC P/C and Call volume (22MM)

    http://content.screencast.com/

    http://content.screencast.com/

  • amokta

    Lets see if there is life after Prechter!

  • Schwerepunkt

    Anyone know why PHLX options clearing is so ridiculously lopsided in favor of calls, compared to the other exchanges?

  • volar

    honestly dont know why PHLX is so high- if someone does- please let me and Schwerepunkt know.

    But the CBOE is kind of inline with the ISEE (though different math)

    http://www.screencast.com/user

  • gsavli

    eff me, that's a lot of money even according to today's standards.

  • ds2

    GREAT POST! Thanks Mole and Happy Holidays.

  • stuped
  • Bob the Horse

    Given that volumes will be around 50% of average, having a POMO of 200% of average looks like overkill. Hard to believe it is not deliberate.

  • ds2

    Why is TOS' price for ES that I see on the zero lower than what I see on Barchart.com? There's about a $4 diff.

  • ds2

    There's going to be a LOT of support / resistance once this makes a move!

  • fuw

    We've had a 15min bull flag breakout in copper. Might be a sign of future daily action.

  • skynard

    Interesting that the Euro just dumped in that same time frame. Your guess is as good as mine.

  • skynard

    Wow! WTF look at VIX as well.

  • https://evilspeculator.com molecool

    Contract rollover.

  • fuw

    Yeah, the dollar spike is definitely scary for the long case. Really mixed messages now.

  • https://evilspeculator.com molecool

    Now you can afford ES 😉

  • volar

    VIX and $ very interesting here…

    and the AUDJPY has just been grinding lower

    http://content.screencast.com/

  • 99er

    SPX
    Newbie count.
    http://99ercharts.blogspot.com
    Good luck, folks.

    Hey RBW…Five-foot Douglas Firs are going for $30 around here. Got a truck?

  • fuw

    I would say that aud/jpy has been surprisingly resilient, considering the dollar action. This could just be a retest of support in the 82.5-83 zone, before going higher.

  • volar

    ya it is just weird seeing risk plays go different directions.. copper higher- dollar higher- VIX (all over), AUDJPY – nothing

    odd- but it is OPEX i guess

  • 99er

    ES-ZB
    Big Bad “Swinging Dick” Ben is going to need that double POMO to save the bond market. He's fucked.
    http://99ercharts.blogspot.com

  • Clint

    Just thinking out loud here,but I'm wondering if the big short opportunities here may be limited to some select stocks.-I'm really starting to wonder about the S&P downside potential from this 1240 level being very small. Mastercard (MC) yesterday losing 25 points in one second would be a good example of what I'm saying.-Guess we'll have to see what happens next week after this OpEx is over…but I have a feeling this 1240 area may be very difficult to crack with any velocity anytime soon.Today it's Oracle and Rimm helping keep things at bay..as well ITMN being up 150% (+20 points),but everyday it's “something”.

  • https://evilspeculator.com molecool

    Ha! Everyone Christmas shopping? :-))

  • https://evilspeculator.com molecool

    Ouch!

  • rg64

    Went long right here with tight stop good risk reward will let ride with santa over the next two weeks.

  • 99er
  • 99er

    Can't get in touch with Paris so I'm packing up for San D. If I can get away from the folks for awhile, you'll find my naked ass at Black's Beach. Merry Christmas!

  • bluprint

    Was short a bit on eur, covered and waiting for something else right now.

    Thinking of going long but its almost lunchtime (in about 40 mins) and I get nervous having a position if I'm not in front of my computer. Also I want to see /es get a good move above 1238 before I do.

  • volar

    well if the VIX goes to 15 again.. i am going gamma shopping for FEB and MAR

    That being said.. bonds have closed inside the bollinger bands- interesting trade here maybe

    http://content.screencast.com/

  • Bob the Horse

    Today's just smells of everyone in Europe getting their nuts ripped off. Market down heavily with US flat. Italian Banks smacked, EFG (Greek Bank) up 7%. Basically – things people are short of are up big (Gartmore +6% and they are in pieces). All very end-of-year position unwind. Which makes sense as this is effectively the last proper day of trading.

  • volar

    ehhh seen that- this is better

    http://content.screencast.com/

    http://content.screencast.com/…–
    a162-7c9dec716c54/2010-12-17_0947.png

    http://content.screencast.com/

  • 99er

    Thanks. So it's going to take a fucking world war?

  • volar

    No im just saying that the data is all over the board when you look at recoveries… and in all honesty- not sure any of them matter as we are in uncharted waters IMO

  • 99er

    You betcha!

  • gsavli

    I can think of hundred reasons why this market should/could/would go down, but solely this one POMO is enough to sweep all those reasons away.

  • amokta

    Maybe! or Maybe i can remain an Evil Spectator (not trading as much currently)

  • rg64

    Long today for a ride above 1260

  • amokta

    Hope springs eternal, but dissapointment reigns supreme

  • 99er

    (Reuters) – Regulators have opened a new line of inquiry in their mortgage foreclosure probe and are asking big Wall Street banks about the beginning stages of mortgage securitization, two sources familiar with the probe said.

    Merry Christmas, you fuckers.

  • SW6

    Mole,

    have you covered reverse ratio spreads a.k.a. backspreads in any of your options lessons? If so, could you give me the URL(s).

  • rg64

    we have had a sideways consolidation period that should result in a continuation of the trend UP

  • amokta

    lets hope so – i have some longs too!

  • volar

    not sure if this is what u r talking about? And limited data here.. looking at VIX vs VXV (3M IV). Interesting….

    http://content.screencast.com/

  • rg64

    You will be happy then over the next couple weeks.

  • 99er

    ES
    Three touches does a trend make.
    http://99ercharts.blogspot.com

  • 99er

    SPX
    Newbie count.
    http://99ercharts.blogspot.com

    Thanks, Mole, and all the posters here: it's been fun. Enjoy the holidays with friends and family. Merry Christmas!

  • http://profiles.yahoo.com/u/6NFOSGRXKB4LMGOAXV3ZY6IWZA Grainman

    No manipulation…in the Euro.?

    Who got the phone call to come take a trip to Europe for the holiday?

    Random walk….. yeah right.

  • amokta
  • bshah

    Interesting.. mere -1 point .. Hover around 11500 won't even budge.. and it's not manipulation.. So all technical funda's are saying that now we gonna have to stay flat until big fuc..ers decide that it's time to have some fun.

  • ricebowl

    Nobody has commented at all on the fact that ^TNX and ^TYX are down almost 3% each today? They're down 14 and 16 basis points respectively. That's nuts.

  • ricebowl

    ^VIX is down 10% today. Huh? It's sitting at 15.56. End-of-the-year special…

  • volar

    Love this headline 😉

    http://content.screencast.com/

  • rg64

    Tech at new 52 week highs will continue and DOW and S&P are coming along for the santa ride. Get ready.

  • convictscott

    I've been short the euro overnight, pyramiding up again.

    Take a look at the price action, there is *nothing* which reeks of manipulation at all. In fact, whatever TA you use looks kind of textbook right now. Particularly the wave counts.

    On the patterns I use the rally clearly had the character of counter trend movement bounded by a nice clear trendline.

    When a retest of that high failed, and crossed that trendline it would have triggered trailing stops on some long positions, which would have emboldened higher timeframe shorts to come in and get on board for the next downleg.

    No manipulation, just textbook easy trading. Now spx, thats a hard game to play atm, euro is childs play in comparison 🙂

    http://www.masterkillers.com/w

  • rg64

    I know the saying is to do the opposite of this but it can cost you money trading that way in a strong uptrend that go on longer than thought possible. It a wonder so many people lose when trading. You are told to go against the herd but that the trend is your friend. I say long is right for next week and the following.

  • volar

    I am just placing and article, as a warning- just like every other sentiment indicator ever made.

    that being said- I have no position in ES….

    I have some long gamma in FEB/MAR(small) and i have some short EUR/USD (small)

    I dont fight trends- ever.

  • captainboom

    Could you explain “long gamma”? How would one take a long gamma position? Thanks.

  • rg64

    Anytime you see something in the non-financial media that is talking about financial prices (gold, stocks, real estate, agricultural, oil) it is always worth taking note of and should in general be faded. Thanks for the post.

  • EvilTrader

    did you expect market to make sense ?

    that´s nuts !

  • convictscott

    just shorted es h1 on the 5 min chart (double inside bar at 50 ema support) short 1239.00, stop 1240.25, 50 contracts

  • convictscott

    And heres the chart for that 5 min trade – rationale is that the hammer candle at 50 ema should have induced more fresh buying if we were going to get to new highs. It didnt, and then followed up with 2 inside bar dojis, making a mini-range. Shorted at the breakdown of the double inside bars, stop 1 tick above the highs

    http://www.masterkillers.com/w

  • convictscott

    Exited half the position for quick profit 1237.50

  • ricebowl

    I don't try to make sense out of the market, but I do watch for patterns. Dropping 3% in a day is extremely unusual. One day does not a trend make, yet ^TYX almost completed a mean reversion from the upper BB to the 20-day SMA in a single day.

    One of the interesting things that I have noted lately is that everyone *knows* that bonds are in a bubble — it's all over CNBC and op-ed pieces in Bloomberg and the WSJ. (Heh, I remember talking about the bond bubble a year ago!) Everybody also *knows* that stocks are headed to the moon. That doesn't mean that now is the time to buy, but factor in that equities are going to have a reckoning soon, and the conditions are ripe for a short-term bottom.

    I don't think we've yet put in a top in stocks, though I do believe there will be some weakness into the New Year. I'm expecting that the first half of 2011 will look a bit like 2010 (weakness early in the year followed by a major top in Q2 and then carnage).

  • convictscott

    And I suspect vwap is working. thinking about jumping out of the rest

  • convictscott

    set stop at breakeven on the other half position

  • convictscott

    Stopped out for breakeven on 2nd half of trade for .6R profit overall. In retrospect I should have exited at vwap on the whole position for a scalp. Mea culpa.

  • ronebadger

    Can someone please explain VWAP and how it applies to anything?

  • x5x5x5x5x5

    Thanks for taking the time to spell out the entire trade. It's very helpful.

  • volar

    It is a little complicated. In general if one “owns” VOL they are long Gamma- or they bet realized VOL will be greater than implied VOL. But recently, given Santa and uncle Ben, I have been SHORT VOL, LONG GAMMA,DELTA NEUTRAL
    – this is done buy buying an ATM put 1-3 months out (low vega, high gamma), sell a 1yr plus OTM PUT (negative vega, +gamma), and long the SPY (delta neutral).
    Ok but now since the VIX<15 but the carry is high- usually summer and holiday thing- but it also implies VOL will rise. When you trade options there is risk/reward of gamma vs theta. Or if you just own a put or a vix call, you will eat theta decay, AND EAT the CURVE (which is steep as piss right now). To wit, the JAN VIX is at 20.05 and the index is at 15.8 or so.
    So those that just buy puts bc the VIX is low may eat shit bc a spike in VOL is priced in (somewhat).
    *** MOLE mentioned this in one of the recent posts “to look far out.”
    Believe it or not there is less decay- and less gamma- in a further out option than one in say JAN.
    I suggest reading “Dynamic Hedging” by Nassim Taleb (yes the black swan guy- but he wrote this a long time before then)
    http://content.screencast.com/
    So after all that- use my short VOL, long Gamma, delta neutral as a base.
    The most simple way is to buy a deep OTM put like 7 months out… little Theta, but if things work out, it has great convexity (exponential payoffs).
    But given the steepness of the VOL curve (vol expectations), I am LONG a small JAN and FEB VIX Futures (carry is priced in/no theta)-think realized VOL will be higher than implied VOL. Then I short APR VIX futures- aka a bull spread in the VIX. Or I am long the VOL curve. But I want to be to be partially delta neural and collect theta- so I have a large bull put spread to collect premium in APR. So the payoff is skewed- aka the JAN VIX wont go to say 12 even if the market takes off, and I have a max loss position in the spread if sh** hits the van and my bull spread VIX futures makes a ton of money..

    oh I wrote this fast- so hope there are no mistakes 🙂

  • http://www.stringmandalas.com LosGatosCA

    ES indicators – 6 timeframes at End of Day, End of Week, End of OpX:
    http://www.screencast.com/t/0S
    A good weekend to all!

  • amokta

    vwap chwistmas pwesents wiv vwapping paper?

    hey i need to learn this too
    Volume Weighted Average Price is, as defined by the Handbook of World Stock, Derivative & Commodity Exchanges:Represents the total value of shares traded in a particular stock on a given day, divided by the total volume of shares traded in that stock on that day. Calculation techniques vary: some will use data from all markets or just the primary market, and may or may not adjust for resubmits and other error corrections. VWAP is a method of pricing transactions and also a benchmark to measure the efficiency of institutional trading or the performance of traders themselves.

    use: ?? http://www.trade-ideas.com/Glo

  • BobbyLow

    Great trade CS. That's some heavy hitting and way to go!

    On a much, much, smaller scale, I only had a net +.75 R for the entire week. But I'm happy with that because as you have stated, as long as I've traded the way I was supposed to then I have had a good week regardless of the results. Stats for the week were 2 Wins and 4 Losses on Closed Trades so only batting .333 but total net results were Positive so I have no complaints.

    I still have 1 Open Long (PRU) and 1 Open Short (MCD) and I don't expect much happening over the next few days but I guess you never know.

    Anyhow congrats again, and have a great weekend. 🙂

  • captainboom

    Thanks. Makes sense, but I'm going to have to grok this for a while to really wrap my head around it.

  • Clint

    I believe you're right. And…it's going to take a hell of a lot more stocks trading in the 'red'…to get the market down…..than it will stocks trading in the 'green'..to get it to go up from here. The way this thing is set now…I'd say it would take at least 90% of all stock..in all sectors across the board,trading down on the same day(s),just to get a 2 to 3% pullback from this 11,500/SPX1240 area. A tall order right now.

  • volar

    OK have fun, and i recommend 1.5/1 ratio on the VIX futures bull spread. And i usually try to make the premium or net premium from the bull put spread = the loss im willing to take on the VIX bull spread..

    at the end of the day- u lose money if stocks just grind lower (unlikely).

  • amokta
  • AudioTactics

    Awesome book!

  • http://www.portfoliotilt.com PortfolioTilt

    Not a horrible week for the bulls, both the NASDAQ and S&P 500 closed in positive territory. Lets see if the Santa Clause rally has another week left in it.

  • http://zstock7.com/ zstock7

    i guess nobody wanted to hold their shorts over the weekend, So, Vix down todayxxx..10%

  • http://www.hervey-bay-holiday.com kea11

    Looking forward to currencies in 2011.

  • convictscott

    My friends in the real broking business, when they evaluate whether they did their broking well, define good broking execution as beating vwap (volume weighted average price), in other words, defining the market as an auction process, where the majority of the people thought was the value zone.

    This has an effect because big funds and instos use vwap to work out whether their black box excution algos are efficient, their superiors when checking their executions on human done trades check them against vwap.

    It has an effect because if there is a buy program running to accumulate S&P futures, if the price drops below vwap, it can accumulate them at a better average price.

  • convictscott

    Not really mate, .6R when I let 1.5R slip through my fingers. Thats sub-optimal by any standards.

    5 min es trading is one of 2 current projects(the other is the open gap), developing my method is still a work in progress, and its quite fascinating. I'm only just nearly approaching competence now, its a radically different game to the other trading I do, and I'm finding that scalping you need to be around 75% accurate to play, which is no small thing

  • convictscott

    Bobby, I am so pleased you took the time to work out how much R you made this week, and how many wins and losses. It sounds like such a small thing, but I bet 90% of traders reading this blog havent done it this week. This one small thing, is the biggest difference between winners and losers in the market. Livermore said exactly that, I forget the exact words, but the gist of it is that your success will be in direct proportion to the records you keep.

    Personally I didnt trade much this week, I had a -1 R loss in nat gas, a .67R win in the euro, a .6R win on the 5 min es, and 2 currently open trades (too early to say) a long in silver and a short in the euro, both of which are in profit.

  • rg64

    boom up next week am long from the dip today

  • Pingback: CARLOS()

  • convictscott

    Me too!

    Heres a Christmas present for you – aud monthly chart showing a potentially sweet short setup. The patterns I trade are 6/6 trades on the monthly AUD charts over the last few years

    http://www.masterkillers.com/w

    Long signals on break of the highs of the yellow bars (stops at the low of same bar)
    Short signals on break of the lows of the blue bars (stops at the highs of the same bar)

    http://www.masterkillers.com/w

    http://www.masterkillers.com/w

  • amokta

    Looks like your cycling in the safe zone 🙂

    http://www.sonnyradio.com/helm

  • convictscott

    I like what TK said about this page – “if this is does not signal a top, there will never be a top”

  • Thunder44

    Swing trade city with this market.I'm moving through trades like a horse runs through barrels,never know when the next spike or selloff is coming, it seems the selling is pretty controlled right now.

  • convictscott

    As a public service, I'm republishing Prechters STU on my blog, tracking the accuracy of his calls. If he wants to sue me, he is more than welcome to come to Australia and do it.

    Fuck you EWI, if you subscribe, stop.

  • amokta

    Take it easy CS 🙂
    Dont want you BloodPressure going sky high
    Mind you they say getting ones discontent out is better than holding it in !

  • amokta

    To be honest, the STU i realised could not be used as a short-term trading-advisory (in which case they shouldnt produce it or charge for it), but his bigger-trend calls (EWFF, EWT) have been more dissapointing (or perhaps he is 'too early' in his trades!)

  • convictscott

    I'm not angry or upset at them, if you google my name you will find out for sure I've done a hundred worse things than them to make a dollar.

    There is just no way to end the leeches preying off beginner traders except for exposing thier bullshit to the light of day.

    When I unsubed from STU nearly 2 years ago, every day was calling for a dollar rally, a stocks top, and a precious metals top.

    What a surprise, when I resubscribed again to hear Hochberg calling, sur-prise, a dollar rally (which I agree with, but its not unqeuivocal), an equities top (which I believe is close but most likely not yet) and a precious metals top (which finally looks close, if not here already)

  • amokta

    I agree – i was drawn in as they seemed to offer the 'holy grail' to the market.

    I dont have anything against elliott wave analysis, its just the way ewi folks draw in subscribers by touting a 'sure' thing, when really they shouldnt mislead folks (esp newbies, or people expecting high-probability calls) by calling tops/bottoms/trends that dont happen.

  • amokta

    I need access to vwap, pvp, sd – which platform is best?
    -optionsxpress dont seem to have pvp(peak vol price)
    -ninja (free download) – only has vwma, and some crude volume zones re pvp
    -ihubinvestor has vwap? but no pvp

    i know im out of my depth here!

  • http://www.hervey-bay-holiday.com kea11

    Thanks CS; luv Xmas presents. Look forward to giving it a run.

  • http://www.hervey-bay-holiday.com kea11

    Thanks CS

  • SW6

    “i know im out of my depth here!”

    No you're not. Jump in with both feet.

  • Clint

    Ha…Prechter is the one that should be sued.

  • yudhisthira

    What about the crash of 1554?

    “…the last time an eclipse and the winter solstice happened simultaneously was just under five centuries years ago, Cooper said she wasn't familiar with any superstitions or mythologies associated with it.”

    http://www.montrealgazette.com

  • volar

    the said part is i count waves… this has been an impulsive move and 5 can be as big as 3. WHY every F***** day EWI calls for P3 makes no sense to me.

    I have never subscribed to EWI-ever- as the bastard is biased- which is never a trading strategy. I have studied EW and Gann- as much of the retracement and trend thoughts are similar.

    EWI has quite respecting the market- which is why “top calling” every day is worthless. The top will happen when it happens- unit then, draw a line from 1 to 3 and 2-4 and respect the market.

  • http://oahutrading.blogspot.com/ steveo77

    The upper ratio is what I jokingly call the Holy Grail.

    It is one of my systems, it forces me into a short position.

    Now has anyone been paying attention to what this Holy Grail Is? Check it out, I wish I had 40 years of data on this, as 2 years of data can mislead, especially since this has been an very curious 2 years in the markets.

    http://oahutrading.blogspot.co

  • convictscott

    I'm taking a small short position on the open in es h1. Entry looks like 1238.50 and stop will be 1 tick above the daily high at 1241.25 Rationale is that it seems likely that the market will at least attempt to go down today. Based on what has been happening to tasty short setups since the POMO started again, I think the odds favour an attempt at downside which will fail. (not a prediction, just an observation that tasty short setups which would previously have slammed the market, have only affected it for 1 day lately, before a short squeeze)

    Trade plan is to exit at Thursdays low (which would be a bounce point if we are in some kind of wave 4 type slop) on 1227.50, which would be a 4R win if target hit.

    This seems to me like at least a 40% proposition of playing out, with a 4:1 payoff. Betting odds. V Small position, 15 contracts.

  • convictscott

    Actual entry on open was 1240.00, giving me an updated risk per contract of $62.50 for a target payoff of $625 per contract. Win or lose, betting odds.

  • skynard

    Eur getting taken to the shed it seems.

  • volar

    is that the VIX/VXV ratio?

  • http://zstock7.com/ zstock7

    I'm in at 85.5.
    There goes my salvage! NBL short is totally out of whack. ( I forgot that triple top shorts, never work) That sucker might reach 92.

  • https://evilspeculator.com molecool

    Just FYI – since this was a pretty in depth post with a very low comment count I decided to kick back this Sunday. Seems many are gone and obviously this is going to be a quiet week. I'll do an update either Monday or Tuesday.

    Cheers!

    Mole

  • http://oahutrading.blogspot.com/ steveo77

    Yeah unless she had a real good memory.

    Actually the last one (Eclipse and Solstice) was 1 year prior to the Dutch Tulip Frenzy (DTF), no joke, I do believe I am the first person to have noticed that.

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

    (GG peers past the do not cross leech line.)
    http://us.123rf.com/400wm/400/

  • yudhisthira

    Wiki has Tulip Frenzy between 1634 and 1637 (peak).
    I see that a NASA article lists the last solstice lunar eclipse 372 years ago, Dec. 21, 1638.
    http://science.nasa.gov/scienc…/

    “Finally, this raises the question — prior to 2010, when was the last time that we had a total lunar eclipse occur on the same calendar date as the winter solstice? The answer, incredibly, takes us back nearly four centuries.

    On Dec. 21, 1638, the full moon was in total eclipse from 1:12 to 2:47 UT. And the solstice occurred later in the day at 16:05 UT. [Amazing photos of a total lunar eclipse]

    “Once again, it's important to note that this occurred at the Greenwich meridian. For the Americas, this eclipse actually occurred during the evening of Dec. 20, while the solstice occurred on the following day.” http://tinyurl.com/2vx4zgw

  • cherio

    Don't day Trade!!
    http://online.wsj.com/video/do

  • http://oahutrading.blogspot.com/ steveo77

    http://oahutrading.blogspot.co
    check this other weird correlation, between the use of the word eclipse in books, and financial manias and busts…..really weird.

  • http://oahutrading.blogspot.com/ steveo77

    TOS has alot of good stuff, but trade execution is getting lousy, service getting lousy, they still have new “features” coming out.

    They are useful for charting, but best to trade on another system.

  • http://oahutrading.blogspot.com/ steveo77

    thats a boatload o contracts!

  • Joe_Jones
  • Joe_Jones

    Altucher is a moron…

  • convictscott

    Tight stop only 3K at risk.. not so big

  • Bob the Horse

    Good idea. Today I have the first of two '1980's lunches' this week with brokers. I'm leaving the portfolio in Bernanke's hands.

  • jacksoo

    good work again CS – – you think break of 42.75 on the upside is worth a long play?

  • Bob the Horse

    You know what the difference is between early and wrong? Nothing.

  • SW6

    bear food, huh?
    that's the only thing they serve over at market oracle.

  • convictscott

    If I'm honest I'm probably affected by bias now that I'm short, and you never really get smarter once you are into a trade.

    Objectively, this market looks toppy, like it wants to fall over, but I'm very dubious about how much power the shorts have in them. There is massive disconnects with currencies and bonds which have to come home to roost at some point. There are candlestick pattern short setups which have been triggered. However, also objectively, this rally has been a slow motion short squeeze caused, I hypothesise by POMO liquidity. Short setups that look tasty, simply havent worked for more than a day or so, as the POMO liquidity stomps all over it, shorts are forced to cover, and the market assaults the next level up.

    My working hypothesis at present is that the best long trades are happening after failed short setups.

    If its going to be a long trade worth taking it should be some kind of trend day type action.

    I'd be inclined to take it long only once NYSE opens, and I think the more it pushes down before breaking to the upside the better the long trade is. If it is going to be a good trade it should show evidence that its going to be a massive winner, right from the get go. That is, it should not fill any gap up in the first 45 mins. $tick should spend most of the time in the first 30 mins above zero.

    To me, this looks like a lower probability event. By my reckoning the higher probability event if the market is going to go up is for shorts to have a crack, drive it down, and then have buying in from a lower price.

    Who knows, perhaps the shorts could actually win one this time and drive it more than a few points.

    If you were looking to get long I'd be considering watching how spx behaves on its way down, particularly at the 50 EMA. If you get some zero divergence on the way down, or internals divergences that would be my trigger to think about the long side

  • allonblack

    Homework and hypotheses for ES tomorrow. I usually update aftern O/N and before open. Good luck

    http://allonblack.weebly.com/d

    http://allonblack.weebly.com/

  • convictscott

    🙂

  • convictscott

    Had a fun afternoon trading euro on 15 min charts, chatting to dudeplunger on skype who was doing exactly the same thing. Overcame the natural bias I feel from being short on the daily charts to scalp both long and short on the 15 min charts in my short term account.

    Dudeplunger outperformed me on the exits taking the same trades, banking a total of 2.05 R to my own 1.5 R.

    That kid sure has lifted his game the last few months, I was seriously impressed by his discipline and insight

  • jacksoo

    thx CS – – food for thought.

  • http://oahutrading.blogspot.com/ steveo77

    Still in or knocked out on Friday afternoon?

  • volar

    cheers- hard to do (to say the least).

  • ds2

    Big double POMO today – 13 to 17 billion.
    http://www.newyorkfed.org/mark

  • gsavli

    So, do we have a starting point to go POMO?

  • https://evilspeculator.com molecool

    That's one nasty schedule – sheeesshh…

  • volar

    wow… santa has a large sack this year.

  • gsavli

    let's go all POMO now, shall we.

  • rg64

    Still long not stopped out should see much higher prices than the open.

  • gsavli

    with all this POMO money, I can only agree with you.

  • https://evilspeculator.com molecool

    Back at VWAP as expected.

  • https://evilspeculator.com molecool

    Yes, it's a printing press!

  • Joe_Jones

    Not if PD are selling to bagholders: http://www.zerohedge.com/artic

  • amokta

    My feet are freezing – its colder than Alaska right now in UK

    Anyway, we are going no where fast right now
    (p.s. Mole, anyone, which platform is best for VWAP, and volume/price profile aka PVP histo etc)

  • rg64

    Keep reading that zero hedge stuff and you will go broke. The market is always right.

  • Joe_Jones

    And you buy stocks when USA Today tells you to do so. Latecomer.

  • rg64

    Either you make money or you dont…..Nothing else matters. The right play is with the trend up and santa. Read Mole's post they are very clear.

  • amokta

    Any view on silver?

  • Joe_Jones

    This place is getting infested with trolls. When ppl recommend trades based on CNBC or WSJ's articles, I have no reason to be here anymore. So long y'all and thank you for all the fishes…

  • Joe_Jones

    Follows copper.

  • amokta

    There are one or two with a perma-bull position (and also perma-bearish), but they provide a counter point to each other. I dont think this place is so troll-infected as you make out.

  • volar

    I doubt this group actually believes that prices are “rational,” but that has nothing to do with trading profits.

    You are either in this game to win or lose.

    I am in this game to win- which means until the trend changes- until copper, stocks, aussie/yen, and even bond yields change trend- I am not going to get churned.

    These Quotes sit next to me every day:

    “I knew of course, there must be a limit to the advances and an end to the crazy buying of A.O.T.-Any Old Thing-and I got bearish. But every time I sold I lost money, and if it hadn’t been that I ran darn quick I would have lost a lot more.

    Remember that stocks are never too high for you to begin buying or too low to begin selling

    A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations. Again, I never argue with the tape.

    The game does not change and neither does human nature.”

    -Reminiscences of a Stock Operator

  • EvilTrader

    who got pomo'ed ?

  • gsavli

    http://finviz.com/quote.ashx?t

    amazing amazon, with PE 72 and sfPE 48. and ascending wedge.

  • https://evilspeculator.com molecool

    Achtung, Achtung Evil-Mart shoppers: Nice divergence on the ZL.

  • BobbyLow

    Wow. What a coincidence. I just replied to a question on another blog that is primarily a Bearish Blog.

    This was the “Question” from “Retired 99”.

    “If a person has been brain-washed so badly by one-sided opinions from some sites, and this person is so convinced that he/she even writes the same messages trying to convince (actually unknowingly brain-wash) others, and in the process, reinforcing his/her own one-sided opinions – will this person ever know it? Will this person, suddenly wake up one day, and question those one-sided opinions as to why they don’t seem to affect the market for so long?”

    This was my reply:

    I can't speak for anyone else but I traded with a Bearish Bias for almost long enough to blow up my account. Throughout the past two years, I've constantly looked for information to reinforce my bias. That information is readily available at many places including here. I think the worst thing that happened to my account is applying the logic of “longer term investing” to “shorter term trading” while looking for and finding constant reinforcement of my bearish bias.

    It has only been in recent weeks that I've applied a certain set of rules that I have back tested and that fit my personality. All of the stuff from ZH etc, provide great reading and might even come true. But these thought provoking pieces are not going to make me a dime on tomorrow's short term trade.

    Regarding Trading Rules, I now believe (and hopefully not too late) as Livermore said:

    “I believe that having the discipline to follow your rules is essential. Without specific, clear, and tested rules, speculators do not have any real chance of success. Why? Because speculators
    without a plan are like a general without a strategy, and therefore without an actionable battle plan. Speculators without a single clear plan can only act and react, act and react, to the slings and
    arrows of stock market misfortune, until they are defeated.”

    Another Livermore Beauty:

    “Remember, it [the market] is designed to fool most of the people most of the time.”

    And this one:

    ” Remember that stocks are never too high for you to begin buying or too low to begin selling. “

    So this all begs the question is the market way overbought and eventually going to crash? And my answer is maybe. But maybe could mean next week? Next month? Next year? I'm done picking a top because I can't afford to do it anymore and picking tops have proven to be a “fools errand” for me.

    So going into year end, I'm not expecting a whole lot of action and I'm down to two small stock positions. I'm Long PRU and Short MCD. I will stop them out when my rules tell me to do so and not based on what I read in some blog. There will come a time for me to be Bearish again but only if and when my rules say so.

    I don't know if this answers your question or not but it certainly answers mine. 🙂

  • Brishort

    Thanks Mole,
    Between two meetings after seeing your message was able to take the signal 😉
    The POMO schedule is… well it is what is it but as you mentioned, sometime effects can lag a little bit. We will see. For today, scalp hat is in…

    BTW wish I could post more, but time is still missing because of work overload for year-end. Still around though.

  • https://evilspeculator.com molecool

    Probably good to take partial profits now and keep a contract or two running hoping we touch VWAP.

  • Eva S

    Celtic33 : I put WNR when you mentioned it a couple of weeks ago. I finally bought it this morning for just under $9. Hopefully it's on its way to $12.50 now.

  • https://evilspeculator.com molecool

    Nice divergences on the ZL today 🙂

  • convictscott

    Certainly was 🙂

  • convictscott

    And more importantly, its a sign that the market is starting to behave “normally” in the sense that signals are working on a short timeframe anyway.

    What I am seeing on the 60 min chart is that there were bullish internal divergences at the lows, 2 touches of the 20 EMA which held both times, and weakening internals at the highs. (and zero lite nailed all this much better and easier BTW)

    http://www.masterkillers.com/w
    http://www.masterkillers.com/w

  • convictscott

    “A speculator must concern himself with making money out of the market and not with insisting that the tape must agree with him. Never argue with it or ask for reasons or explanations.”

    Great quote, and thanks for sharing. There are a few people who post here simply to
    talk their own position” as though its going to make a difference to the market. Its a sign of mental weakness thats a killer to long term profitability.

  • convictscott

    I find very short term trading more challenging because of the statistically large nuumber of outlier (above 3R) wins, and the lower win loss ratio (signal to noise ratio), it makes the temptation to bag quick profits and move on quite hard to ignore, which hurts long term profitability. Also, trading 15 min charts on the currencies you have to be constantly aware of approaching higher timeframe (30 and 60 min) support and resistance of whatever kind (mov av, bollinger, old spike highs/lows) and also aware of lower timeframe (5 min) signs of capitulation.

    It certainly requires total concentration, and I found yesterday it was quite a lot easier doing it chatting to someone else doing the same as me, kept me on the lookout for things I might have missed, and vice versa.

  • volar

    To me understanding market psychology is about 40% tying to understand the market's psychology and about 60% trying to understand your OWN psychology of the market. The later is F*** hard.

  • psycho_puppies

    Is it time to buy one of those t-shirts and head for the bunker?

  • amokta

    Seems to go up and down like a yo-yo. Anyway, ive been watching it too – may buy tomorrow. Also what do you think of POR (some divi coming up)

    I must stop trading silver etfs – every day i lose $100 – if i traded randomly i would have more success!

  • https://evilspeculator.com molecool

    Scott – I think it's time you got yourself an avatar, mate 😉

  • convictscott

    I grudgingly concede your point 😉

  • https://evilspeculator.com molecool

    So, how long do you think you'll get away with fucking with EWI?

  • convictscott

    The Prechter STU republished on my blog. Get it for free kids.

  • amokta

    Hi CS, i wouldnt want you to be harrased like Julian Assange – they might close your website, which we all like to browse. wouldnt they be able to invoke some copyright law within ANZ that would mean you can't show the STU etc (unless it is a 'in the public interest' to do so)?

    anyway, goodluck!

  • convictscott

    I reckon it will be a while. In my real business background I did a fair bit of copyright “infringement” and the lawsuit process for it it torturous to say the least. I'm not too worried, its the stuff of thosand dollar an hour lawyers to sue someone internationally, and the remedies for breach in Australia are generally very small.

  • http://pulse.yahoo.com/_3DX7OGHXLVJ2VNO5C5N6KHAFFQ Alex

    CS where is your website?

  • volar

    whats ur blog?

  • amokta

    Reading this is making me feel like buying puts on silver 'immediately'
    -Which proved premature (on gold) when they declared a top in the past
    -of course they might be right this time (a top may be close at hand anyway)
    I no longer like to read the STU, free or otherwise (i prefer uncertainty rather than relying on predictions that dont come to pass within a trading context)

  • amokta

    Replying in case CS is busy elsewhere:

    go to http://disqus.com/convictscott/
    its the second site listed
    (not spelling it out here, as Mole might not like direct URL listed)

  • rg64

    Makes me want to load up long on any pullbacks. These guys are a gold mine when faded.

  • amokta

    I hear you. Of course, if the market dictates, you should be capable of being bearish too if required (i.e. i hope your not a perma-bull!). Markets can turn on a dime, i suppose

  • rg64

    At the right time you can turn bearish….this is not it at all. The market will give you confirmation until then it is all noise and these jokers have been clearly wrong on metals for a very long time. I do not think it is different now. By the way I don't think the stock market will top until at least March next year and maybe June.

  • amokta

    You could well be right (certainly you havent been wrong being bullish since March 2009, pullbacks aside). Have a read of Leap2020.eu Now the market may continue to rise, despite 'bad news' accruing, but if the news is as bad as it could be then, we will have a severe crash at some point?

  • amokta

    p.s. what confirmation would you be looking for for a top?
    (personally, ive moved away from top calling)

  • DudePlunger

    Thanks man. Working with Ivan 3x a week and doing his homework 2 other days a week, and reading his and your blog posts on MasterKillers everyday since August has completely changed and revolutionized my approach to trading.

  • DudePlunger

    I actually have been taking another approach scott, and that's ignoring larger time frames once I'm actually in the trade. Less is more, there is a decision every 15min, just stay focused on your timeframe and don't veer away, MAYBE going to a lower timeframe to secure some profits on “exhausting” moves.

    Also, trading fundamental releases is a multi-R whore on 15min timeframe. Just look at today, from 9am-1030am, there were 2 trades, the long was a .5R loser and the short was a 3-4R banger (banger is my new word for a trade that works instantly, doesn't violate any previous candle's high/low, and produces multi-R returns.) But one can get into trouble forcing trades on 15min during sideways movement, so I think that's when the larger timeframes message comes into play in a big way.

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