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Great Place To Be Short
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Great Place To Be Short

by The MoleJune 10, 2015

I know what you’re thinking – this is it, the Mole finally has lost his mind completely. Well, that may be so but let me assure you there is in fact method to my madness (mugabu – how the heck do you say that in Spanish?). Let me attempt to explain this in simple terms as to not overstrain your sleep and caffeine deprived rodent brains:

2015-06-10_spoos_briefing

Just so happens that the spoos have managed to crawl higher overnight and are now back at the 100-hour SMA where a seller appears to be lurking. Admittedly we haven’t seen many touches in the past few days but that again also speaks to the fervor of the sell off that preceded the ongoing correction.

I actually think this has a fair chance to push higher – about 60%. So why am I trying a short here? Because this is the last best short opportunity with very limited risk. Looky here – I’m taking out a few shorts with a stop near 2090. Quite a lot of leverage given you use our futures risk calculator. And you’ll risk at most 1R but if it drops from here it’ll bank quite a bit more. On the flip side a stop out will most likely lead to a run higher – and that means I’d would flip for a long and put my stop below 2081 – a bit wider that stop but still tiny compared with the type of short squeezes we have seen in the past few years.

So in summary: the risk to reward ratio is pretty tiny here – and that means it is my patriotic duty as a card carrying market megalomaniac to get positioned. And so should you but I’m not your daddy (unless you’re cute and under 140 pounds).

And while we’re talking light math, let’s clarify this one once and for all: It’s called an exponentialĀ curve and not a parabolic one. Have a big sip of Java and try to follow along here:
Exponential vs. quadratic functions:

Quadratic functions are actually more related to linear functions and are of the form:

y = a x^2 + b x + c,

Let’s take that example:

2x^2 – 3x +1

See the graph below.
2015-06-10_1310
If you change the quadratic coefficient from 2 to 3 then see how the curve widens (looks the same but it reaches higher, Einstein).
2015-06-10_1311
Compare that with an exponential function which is simply periodic in x. E.g. 2 with period 2 = 2, 4, 8, 16, 32, 64, etc.

Quite a difference. Human crowd behavior is a lot more akin to exponential moves than to a quadratic function (i.e. forming parabolas). Yes smart ass, the fall always follows the rise but it doesn’t return to its origin šŸ˜‰

2015-06-10_ZB_LT

Bonds are in the process of diving through both weekly and monthly support. This is actually quite a big deal and there’s nothing but air below. I’m still looking to play a bounce here but it’s equally possible we’re going to see a big slide. If I see a possibility to play either side I’ll let you know.

2015-06-10_gold_update

Gold seems to be rather happy to see me. Picture perfect entry there yesterday and I’m moving my stop to break/even.

Alright, I’ll dig around for more charts and add them here if I find anything juicy.

 

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.

Cheers,

mr-burns-evil-laugh


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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  • Skynard

    /CL time to take partial, top of the range.

  • https://evilspeculator.com molecool

    Bonds may actually turn to the dark side….

  • saltwaterdog

    Monthly dose of Ag vol – 12pm EST WASDE

  • HeadNShoulder

    I shamelessly took your cl studies and found out that a good short opportunity is brewing under the surface if the MACD starts to turn dark green and would be a confirmation if the 4hrs close below 61.10, kindly enlighten if that’s not what you are seeing.

  • https://evilspeculator.com molecool

    Gold seems to be happy to see me this morning.

  • https://evilspeculator.com molecool
  • https://evilspeculator.com molecool

    Every time I saw an article about crude expected to fall in the past few weeks it bolted higher the next day. Suckers!!! I’m holding it all the way.

  • https://evilspeculator.com molecool

    Where is everyone?

  • Skynard

    Lol, good time to have:) Do you ever take partial profits?

  • https://evilspeculator.com molecool

    Nope – which part of holding it all the way was unclear? Seriously now – this is a rare LT trade for me, don’t really care about grabbing every R.

  • Skynard

    LT? What is that?:)

  • Skynard

    Tagged the upped BB, you will likely see a pullback.. Unlike Mole, Skynard takes every R he can:)

  • Skynard

    ya, empty today. Beach?

  • Skynard

    Dollac can easily move up here for C. Never know:)

  • BobbyLow

    I lost respect for oil ANALysts years ago. Most of them don’t know their ass from their elbow.

  • Bill

    The lack of interest here might bode well for some big moves one way or the other.

  • Bill

    “Skynard does not compute”

  • Skynard

    Rot Roe

  • Skynard

    See the power of the ZL divergence?:)

  • Skynard

    Hehehe

  • HeadNShoulder

    the 5min divergence since yesterday 3pm?…( yes I am still a newbie, please don’t mind my gazillions of questions)

  • Skynard

    Yep, sure is:)

  • https://evilspeculator.com molecool

    LONG with a vengeance.

  • https://evilspeculator.com molecool

    It was a long time coming though…

  • Skynard

    Took a few days to mature.

  • https://evilspeculator.com molecool

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