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by The MoleNovember 8, 2013

I am watching the ongoing equities squeeze with deep satisfaction knowing that the confusion and pain of others brings about opportunities for us stainless steel rats. Yes, that’s right – we abide by a strict politically incorrect policy here at Evil Speculator. Unlike in the Disney inspired fairy tale world they indoctrinated into your feeble minds in Kindergarten things out here in the real world work a wee bit differently. In order for you and I to bank some coin someone else will have to give it up – the market is and will always remain a zero sum game. And that’s exactly why I enjoy trading it so much – there is no room for half truths and subjective interpretations. It’s black and white. You either win or you lose!

As you know the fat lady sings at 3:30pm today and what’ll happen then is anyone’s guess. However, that said let’s lean back and review the current situation and then consider our options. I already made it clear that yesterday’s session represented significant technical damage that would take quite some bullish action to counter. Now, perhaps that is in the works but let’s currently approach this from a perspective that excludes this possibility. I think the Zero chart offers us a reasonable gauge of recent market activity:

Up until the push into 1775 price action and participation reflects clear bot activity that managed to squeeze price higher in a tight channel. What followed was rather frustrating sideways activity reeking of distribution that may or may not have terminated with a drop to yesterday’s lows. Now I’m looking at yesterday’s Zero Lite signal and comparing it to today’s it’s clear that there is a lot less meat in this move higher. So it may be a fake out – of course in this QE news driven world one can never know.

What we DO know however is that we’re dangerously close to revisiting all time highs. Eexcelleeent!! The closer we push the better this gets as I want to be short here until the spoos breach the NLBL at 1773.25. Once that expires tonight you can use the prior high of 1774.50. A breach would reinvigorate the bullish case – at least temporarily. I do still maintain that the bulls have breached Bernanke’s Rubicon yesterday (well, it was Draghi’s but you get my point), and at this point the effectiveness of further quantitative easing will need to be proven.

I think that last point bears repeating as I don’t like to jump to conclusions and neither should you. The price action we witnessed yesterday confirms recent suspicions that quantitative easing as pursued by the Federal Reserve as well as the ECB over here in Europe is losing its effectiveness. In order to negate this point of view price action would have to strongly respond to an event involving further premise of quantitative easing. Perhaps Bernanke’s speech today at 3:30pm EST will accomplish just that – but it needs to happen. Until it does the bulls are now on notice.

Quick bonds update – our two entries are proceeding nicely as the 25-week SMA continues to hold up as expected. I maintain that we shouldn’t touch this one right now – simply let ‘er ride.

I actually have very nice setups for tonight across FX and the futures – please step into my Mediterranean lair:


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Franziskaner time for the Mole! I think what’s looming ahead is going to be a lot of fun, so relax and enjoy your weekend. For next week we dine in hell!! 🙂


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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  • CorporalCarrot

    Mole I tend to agree that a retest of all time highs is a pretty low risk/reward scenario short.

    However I would be wary about interpreting yesterday as any kind of judgement on QE. For a while now, a number of more astute fund managers have been scaling into Europe “under the radar” but it’s only now I’m seeing this idea gain traction in the mainstream. Until further notice therefore I’m currently viewing yesterday as indicative of possible asset allocation shift which might be disruptive in the short term for US equities but over time this is more likely to mean that US equities simply underperform on a relative basis rather than anything more sinister.

    I do like the idea of getting short on the retest though.

  • molecool

    Good input – let me mull over this over the weekend.

  • Heisen_Gerb
  • jmoney3000

    Jesus Christ—what relentless squeeze higher

  • Heisen_Gerb

    1765.50 next fib level. no surprise. move along.

  • SilverEagle

    Have a great weekend everyone. Treat yourselves to a nice dinner on the 25 handles I gave to one of your long bets today. ;( Looks like I’ve got some reading to do over the weekend.

  • amokta

    Bear Market my bear foot 🙂
    Has market gone down 23 handles and come back 23 handles the next day?

  • Skynard

    That was the squeeze from hell, see what Mon brings. Good weekend!

  • SS_JJ

    I guess I have an idea where today’s POMO went

  • Wave_Surfer

    So many things have been in a saw tooth pattern. Bonds have been having a bit more a trend behavior though.

  • Heisen_Gerb
  • Skynard

    AUD div fail hourly, long 58

  • Skynard

    More justification:)

  • phylum

    Had the same view however this coil will resolve very soon … upside TP .948 area, downside TP unknown.

  • molecool


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