I Am Not Amused

Easy time and crappy time – a trivial concept in trading but it has held true over the ages. As traders we’ve usually seen plenty of both and we all instinctively know which one we’re in. If your Spidey sense fails you for some reason just pop by here and look at my posts or the comment stream. Is Mole putting up posts with cat themes? Is it crickets in the comment section? Guess what – it’s crappy market time.

Now if I was to define ‘crappy time’ technically then I’d point straight at either medium and/or short term volatility. And the absolute pinnacle of crappy time is when we got a mixture of both. Cue the equities, forex, futures, bonds markets – and pretty much everything else, crypto included.

We’ve got one more quarter ahead of us, but I think at this point the votes are in. And 2018 will most likely not be remembered fondly by the majority of traders. It’s been one big crap fest and everyone was already sick of it six months ago.

Now on the surface the current correction on the E-Mini looks just like another shake out attempt. But my trusted realized volatility (RV) signal has triggered three low volatility alerts in succession which usually occurs near medium term tops.

I’ve actually browsed around this morning and although I can’t give you a hint as to how these usually resolve I can confidently say that the tape usually becomes more complicated. Which of course means more RV.

And let’s remember that we have about three weeks of rough terrain ahead of us, statistically speaking. Come mid-October the bulls usually start getting their groove on.

Okay, now that we’re on topic, let’s review the damage of the past few sessions. I don’t think that I need to say much more than what I pinned on this chart. Suffice to say that I am not amused, especially given…

… a similar stop swipe on my gold campaign. At least on the E-Mini I got touched at break/even but this one is a 1R loss.

Could have been worse though, fortunately crude somehow survived the onslaught of stop runners and thus it’s still in the running and somewhat in the green.

Okay now before we move on just take a step back and look at the previous three charts. Do you see anything salient here? Any common characteristic? Exactly – short term RV galore and if that’s the new normal then we are in for a long winter, folks.

AUD/USD was an untimely exit for me when I started to see clear signs of a possible floor pattern. I actually missed that recent spike low which looked like a nice buying opportunity. If we get another one I’m most definitely game.

EUR/USD almost got taken out as well but my campaign survived by the skin of its teeth, i.e. a pip or two. I hate this pair and want it to die, which is why it most likely is getting coiled up for a massive run higher. That inverted H&S on the daily panel just is too juicy to pass up.

Now before we get to our new campaigns let’s talk about the Dollar. Clearly this chart speaks for itself and most of us can probably agree that a stab down to 94 is definitely possible. I think this is where the monkey business ends and we may see another run higher.

But if this one fails and the 100-day SMA goes to the woodshed then we may see a more more pronounced Dollar sell-off extending all the way down to 89. I think the odds of that are about 35% right now and I will continue to monitor the situation and report back if that changes.

Okay now, if you excuse me, it’s time to feed my intrepid subs:

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