Let’s not beat about the bush and call what happened during yesterday’s session as what it represents: a possible game changer. I’ve slipped in that weasly adjective as nothing in the world of trading is ever guaranteed.
However that said: Unless some miracle occurs today and the bulls drive the E-Mini back > 2750 the gist pretty much is up for the foreseeable future. Let me how you where it all went horribly wrong:
I mentioned just yesterday that a breach below the line in the sand (LITS) at 2652 would be very bad news for equity traders and exactly here we are just one day later.
No of course the bulls still have a faint chance here to pull off a backward flip and somehow turn this formation into an ugly correction the wave wankers will no doubt spend weeks debating over.
But we here at Evil Speculator don’t really care about academics, do we? All that matters to us is what lays ahead and how we can exploit it for maximum ill-gotten gain.
So here is how I see it: Going forward any long campaigns should be considered lottery tickets, which is basically the inverse of our approach for the past two years or so.
We are basically transitioning from BTDF to STFR (sell the f…g rip). You can do both of course but in either case keep your position sizing small and your stops as wide as humanly possible. Got it? GOOD!
Now gold has been gyrating its way higher and the recent gyrations suggested that it was coiling up for a move higher. Don’t beat yourself up – this was a tough entry to catch.
But what’s a lot more important here is the medium to long term perspective, which is starting to look quite bullish. So until further notice the inverse strategy applies: BTFD instead of STFR for gold and other precious metals.
Alright, now let’s get to the good stuff – volatility. You’re going to love this:
The bad news is that you probably missed the countless opportunities when I told you to load up on long term SPY puts. You only have yourself to blame as you thought 49 bucks a month is too much for high quality market analysis.
If you’re paying a steep price today then make sure you cover your six in the future and sign up for a Gold or better yet a Zero sub right now for less than a single E-Mini handle. Don’t wait – do it now! I mean it – though times are ahead and you don’t want the Mole and his crew to be trading against you, do you? 😉
Now the good news is…. well …. there are none really. But there are even worse news as my IV charts are all flashing bright red now:
I’ll throw one freebie to you leeches but then I’ll have to hand it to the pros: VIX vs. VXV – a.k.a. the IV term structure. If you don’t know what it is then don’t fret – it simply shows us a ratio of near term IV vs. more medium term IV. This is a representation of short term vs. medium risk perception.
I know – right? Your brain just froze over. Look just look at that chart and you’ll see how the Mole (which is me) is using the ratio very effectively to plot medium term turning points.
Except that it stopped working on the short side over the past year or so. And like with anything in life in the end there is always a price to be paid. And guess what – we’re all about to pay it.
What is happening right now is a yet another breach > the center line at 0.9 – which isn’t arbitrary, it delineates the approx. median of our current IVTS range (just stick with me here).
Apparently pushes > that center seem to precede downside corrections. And we just had one a month or so ago. What usually happens is a correction followed by a visit to the lower threshold in red.
And guess what – we didn’t get one. The signal dropped below the center and punched right back up.
But we are just getting warmed up – it gets even worse. If you’re not a sub then now is a good time to remedy your personal failings quickly and efficiently. No we don’t throw in a free set of steak knives, sorry 😉
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