Now Reading
European Euphoria
55

European Euphoria

by The MoleApril 17, 2012

Instead of relegating ourselves to headline slaves being whipsawed (and whipped) on a daily basis our small community of stainless steel rats instead has learned (sometimes the hard way) that inflection points are where the rubber meets the road. Yes, yes – Spain managed to sell bills to Spanish banks – did you really need to prepare for that particular event? Not in my universe – I could be doing what I do each and every day here without ever glancing at the news. When it reaches me it’s usually too late to act anyway – and besides, what everyone knows is not worth knowing.

As we rats are not on the inside we have to employ strategies which allow us to determine inflection points at important price levels. Yesterday was such a day and if you stuck to the script you should be sitting on some mighty green at this point. Let’s review – the daily spoos chart above showed us an important inflection point near 1360 in the form of a NLSL plus the 25-day SMA. My view was that breaching both would have profound consequences and lead us lower. Lo and behold – we held the level and are now back at the top of this week’s whipsaw zone.

Even more significant was the weekly SPX chart – showing us a NLSL near 1367. I suggested that this was your last line in the sand if you were long equities. Did I know that we would hold? Of course not – I don’t have a crystal ball. What I did know however was my trigger points and they were never reached – a long position here was absolutely permissible incurring only minimal risk by setting your stops below SPX 1367.

Now that I have told you about the past let me talk about the future. Since I’m in a good mood today I’m throwing it out for the freeloaders. In essence the hourly spoos has reached a point where I would start taking profits. Maybe we’ll see a bit more of a squeeze at the close – however we are traders, not gamblers, thus this is where I suggest you pull the plug. If you are interested in a short trade then I suggest you wait for a red candle – again, sometimes a powerful advance ends in a final f-you squeeze for the bears.

Our volume hole map shows up back above and I think we are okay as long as we remain above ES 1380. That’s really not much of a buffer, so the onus is now on the bulls to lead this thing higher. I do expect a bit of a whipsaw now based on my hourly spoos chart but 1380 should hold or we may see a bit more of this nonsense.

Cocoa finally crossed the Rubicon and I hope you took this setup. I don’t trust it all the way yet as it has pulled back below that 100-day SMA on previous occasions but there are no sure things when it comes to trading. Unless you work for Goldman that is. I am long until the tape tells me otherwise.

Finally, our ZB trade is looking good. We never breached 143, which meant we remained short. It’s in the green but I’m a bit bummed out as the long side would have been the money trade. Well, you can’t have it all – for now there’s nothing to do until either our stop above 143 gets hit or we approach that NLSL near 140.

I don’t see anything on the horizon today that I would want to touch with a ten feet pole. Always remember that you don’t have to trade every day. Poor Mole doesn’t have that luxury as you buggers always expect an update (and sprinkled with humor if possible). But the main lesson learned during my time is that watching a lot and being extremely selective with one’s trades is what separates the boys from the men in this racket.

Cheers,


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!

BTC: 1MwMJifeBU3YziDoLLu8S54Vg4cbnJxvpL
BCH: qqxflhnr0jcfj4nejw75klmpcsfsp68exukcr0a29e
ETH: 0x9D0824b9553346df7EFB6B76DBAd1E2763bE6Ef1
LTC: LUuoD6sDWgbqSgnpo5hceYPnTD9MAvxi6c

  • https://evilspeculator.com molecool

    @Don: How late are you getting those Geronimo signals? Did you add your SMS # to your member profile? I never had any issues with those – in fact I am paying 5 cents per message! Please advise.

  • Anonymous

    He responded in the last post that he’s getting it by email. I told him he should get the SMS msging sorted as that’s the way to go.

  • Anonymous

    To me the /ZB has been looking strong only down 19 ticks on an /ES day up 24.  It has been fading the strength of bullish equity days for a couple of weeks now.  To me it look’s like it want to test those 143’s

  • Anonymous

    If we close above spx 1400, i will eat dogfood
    Even if we are headed higher, expect some pull backs/consolidation, given big move today
     

  • Schwerepunkt

    Hmmm . . . wet or dry? Or dry with water?

  • Anonymous

    Mole – WHEN YOU GET BACK, it might be interesting to see updated stats re Geronimo.  The stuff I see on the Geronimo page is from last year by and large.

  • Anonymous

    I think dry might be better – like a snack 🙂

  • Anonymous

    Yikes…very negative ZL signal on an uptrend day…bailed on longs…neutral for now

  • Schwerepunkt

    I think you’re safe . . . for today. :-[#]

  • Anonymous

    It’s OPEX week…expect the crazy…

  • Anonymous

    Looks like the /ES broke thru the 50 day ma this morning and rallied all the way up to the 78.6% Fibo of the Market meltdown of 2007, 08 & 09 and has now reversed . . .  Thus retesting that Fib line and the recent break below the support for this rally from Oct 2011 . . . 

    That might be it for a while folks

  • Fibz

     Market would be foolish to rally before the Apr 25th Fed meeting if it wants more money.

  • Anonymous

    That’s still a week away…they could easily get this thing to gap fill and sell it for all its worth post OPEX….

  • Anonymous

    Actually OPEX weeks have been especially low on volatility over the past year

  • http://practicalt.blogspot.com/ Darth_Gerb
  • Anonymous

    russell diverged a little at the end

  • Anonymous
  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    yup 1390 breakout or 1360 breakdown….  place your bets gentlemen or don’t….

    I give odds on breakdown.  I assume you are of the same opinion or ….

  • Anonymous

    Too early me thinks for breakdown. I would like a retest of highs before shorting.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    and that 10yr spain auction on thursday might give europe some jitters  or they print since we have not reached peak ink, what about peak wood?  we hit that yet?

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    did you short at 1390?  you sly little rodant…..

  • Anonymous

    yes sir.

  • Anonymous

    well guys Ill be gone for a couple of hours. Im going to a wedding. urgh!

  • Anonymous

    http://en.wikipedia.org/wiki/The_Coal_Question Centuries ago they were talking about running out of coal. Its all garbage. There is no peak anything. Something else will come along. We are still burning plenty of coal.

  • Schwerepunkt

    Poor bastard.

  • http://pulse.yahoo.com/_IF7HINHIP5ITYT6TDHACMWJUXQ Huisok

    humans lost Cement for some centuries.  Maybe we will loose ipad for a couple centuries.  JK, but no peak anything? really?

  • Anonymous

    On a Tuesday?…brutal….

  • Anonymous

    Earth has yet to run out of a Natural Resource, economics wise it’s impossible (Price of last barrel of oil obv) Logically, the market will never let us get to the last of anything…there will always be a replacement or alternative.

  • Schwerepunkt

    I suppose shivering in the cold is an alternative. Walking is an alternative. Horses and buggies are alternatives.

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

    poor Cousin.
    (big grin)

  • Anonymous

    Something better will come along. Dont worry!

  • Schwerepunkt

    Mountain folk?

  • Anonymous

    I see a variety of reasons to fade today’s rally in the S&P.

    1)  S&P broke the uptrend support line on the weekly chart last week for the first time since it started Oct 2011,  today we rallied back to test that break down.  Classic market behavior. 

    2)  It’s too early for weekly volume but the daily candle that made the low had 2.5 million while today was only 1.8 million.

    3)  When you set up a Fibonacci grid on the Market meltdown of 2007, 08 & 09 you will see that today’s rally went all the way back up to the 78.6% Fibo level, always an excellent place for a market to turn.

    4)  When Big Money wants to Sell the first thing they do is Buy to draw in Fresh Money for them to Sell and a higher basis from which to Sell.  See “Reminiscences of a Stock Operator”

    5) Take a look at the IWM on a 10 min chart look at that selling volume on the last  10 min bar.   4.6 million in that time frame.  More than twice the volume of any other bar earlier in the day.

    6) And the bonds seem to fade bullish equities yet again. Bond traders are supposed to be smart money.

    http://www.screencast.com/users/Innovisual/folders/Default/media/4ac6432e-1d1c-41bc-b6e3-9b4dd9e3d204

    Of course in the end you have to watch what actually happens and respond accordingly.

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

    that’s the idea. (S. Carolina)
    😉

  • Anonymous

    Lemons into lemonade… 😉 I prefer a granite tablet to a Tablet PC any day!  Charting really becomes an art…literally.

  • Anonymous

    You may be onto something Sherlock 🙂
    By the way, any astro/cycle pointers?

  • Anonymous

    Actually in the 1800’s marrying your cousin was quite the thing to do all over the US and Europe as well.

    As Robert E Lee said.  “Marry your cousin that way you will not have married above or below your station”

    He followed his own advice

  • Anonymous

    Hey btw to the guy who was talking about buying aapl yesterday – WELL DONE!

  • Anonymous

    Wooboy..conflicting signals on AUD/JPY ZeroFX. 60 mins says buy…5 mins says sell…

    Solution: Stay out. =P

  • Skates

    convict: any takes on the action we have seen over the last week?

  • Joe_Jones
  • Schwerepunkt

    Just be sure to count your fingers and toes.

  • Anonymous

    Nope, while price is embedded in the bollinger this way, there is a significant probability of just a sideways correction working off oversold momo. This fucks with the edge. 

  • Anonymous

    The odds now favor long over short. IMO in order of probability

    1) A substantial deep retest of the highs, to suck in dip buying longs one more time
    2) new highs
    3) plummet from here

  • Anonymous

    Darth, at major market turns there is a statistically outsided probability of a very deep retest… as you say 78% or deeper is quite normal. If you think about it it makes sense, as at a top dip buyers should be at their most incautious.

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

    rats, something to consider.
    if last Summer had a double top before the S&P downgrade.
    the event could echo into this year.

    http://i42.tinypic.com/17vl0y.png 

  • Joe_Jones

    Thanks

  • Anonymous

    Mole, Daily Zero update before you get on the plane please?

  • Skates

    Thank you for your view.  Right now, your list lines up squarely with mine, seems many are now looking for a LH/plummet type of scenario…

  • Fibz

    Some interesting (2011) charts on tourism. Source: http://tourismforum.blogspirit.com/media/02/01/3591535297.pdf

  • Anonymous

    True, Scott the big boys may want more distribution and the dip buyers may still have the enthusiasm.  And this dovetails with Amokta’s question, the Bradley model had a turn date on the 11th which is the day the down trend stopped.  Monday the 23rd is the next Bradley Turn Date

  • Anonymous

    test
    seems to be working now.

  • Schwerepunkt

    Thongs.

  • volar

    NEW POST

  • Anonymous

    Horney is Baaaack!