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Just Because You’re Paranoid
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Just Because You’re Paranoid

by The MoleDecember 17, 2013

I’m sure you’ve heard the saying – just because you’re paranoid doesn’t mean they’re not out to get you. A humorous quip I use from time to time to break the ice at parties but frankly speaking my prime directive when it comes to trading equities these days. If you weren’t busy yesterday wrapping some junk in preparation for your beloved in-laws’ Christmas visit then you may recall the following VIX:VIX ratio chart:

And of course down we went today – not very much I concede but probably enough to shake out a few weak hands. Divergences on this chart have often kept me out of trouble and that’s why I keep it handy. Now – this is where we’re at on the equities side right now:

The S&P cash briefly revisited yesterday’s lows today (see above musings on shaking out weak hands) and unless we punch quite a bit higher we should be the happy owners of a bonafide RTV-L setup – starting tomorrow of course. Once again, you can play this one off the ES futures which should make it easier to catch an entry, especially if it happens overnight. Wouldn’t be the first time. Our stop would be at SPX 1777.05 or use today’s low on the E-Mini at 1770.25 (recall we just rolled over and fair value is wide).

However, my this is not my favorite setup on the equities side today – please grab your secret decoder ring and step into my lair:

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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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  • Rightside_ot_trade

    Ok those setups I can work with. Today’s V reversals in equities I could not bring myself to chase

  • https://evilspeculator.com molecool

    And I wouldn’t blame you.

  • Darkthirty

    here we go…

  • Darkthirty

    Did I get your 9/19/08 question right?

  • nugie

    Following the RUT it appears to be the leader.

  • Darkthirty

    being held up….maybe into the close….

  • Rightside_ot_trade

    There were a couple of very strong divergences of the TICK with price at the 11:30 low on a 10 minute. ZL had one also, but it was a small value and subsequent dull ZL said it was a scalp only, but the hourly confirmed to just let it go

  • https://evilspeculator.com molecool

    I dunno – what’s the answer?

  • Skynard

    /GC daily trigger still holding up hugging that SL.

  • Skynard

    /TF sitting at the 25 daily right now, good trigger point either direction. Could be something to watch, with lower highs/lows:)

  • Skynard

    /ES weekly SL @ 54.25

  • newbfxtrader

    FOMC tom. Dont get caught with pants down…..

  • Skynard

    Could be hammer down:)

  • Skynard

    /ES 75 critical on both 1, 4 hr charts

  • Skynard

    Long /CT small pos, looks like continuation right on the line.

  • Skynard

    Big DB on the Yen.

  • http://www.tomekfranzl.com tomek

    Mole, can you clarify stop placement for protect R rule-set. Example: IP setup triggers and candle closes above 1R mark. From the initial stop, should the next stop be moved to
    1. entry, as you’re advising in this trade:https://evilspeculator.com/?p=39600https://evilspeculator.com/wp-content/uploads/2013/12/2013-12-09_spoos_update2.png
    OR
    2. stop moved to 1R mark as you advise more recently in this trade:https://evilspeculator.com/?p=39581- https://evilspeculator.com/wp-content/uploads/2013/12/2013-12-06_spoos_update.png
    please advise.

  • phylum

    Conjecture

  • phylum

    Mmmmm….. correct daily & weekly

  • phylum

    Not looking to pick a top but there’s some serious divergence happening over multiple timeframes … just saying:)

  • CorporalCarrot

    Chaps my ability to comment is still severely compromised by real life issue but I would seriously advise people that if they truly MUST take these setups then do so with extreme caution in mind.

    Today could be a market makers field day and no one can predict what the reaction will be. And I don’t think it will necessarily be clear either in any direction. I wouldn’t be surprised to see a 200 point plunge that ends with a 200 point gain or vice versa. Lots of people will get stopped out of “good” trades.

    Volatility has ticked up (remember that 250 point Dow uptick in premarket two weeks ago) and the market is coiled like a spring. I’m holding long from much lower levels but not going to attempt to “trade” through this.

  • https://evilspeculator.com molecool

    During the holidays it’s a good idea to reduce risk a little. ESPECIALLY in the tape we’ve seen – this is supposed to be the Santa Rally and instead they’ve turned it into another stop run week. So just take it easy and if you must trade stick with futures (non-index) and of course FX.

  • newbfxtrader

    Yeah. I was looking for a tag of the previous low. Now to see if it can get off the mat. Looking for something similar in gold.

  • CorporalCarrot

    Absolutely I’d normally agree with you but even FX could be impacted tonight. But be under no illusions. IMO anyone holding a position in equities or usd related forex is basically taking a coin flip regardless of how perfect and rules based your entry is.

    I personally prefer to let the dust settle and get positioned afterwards.

  • Darkthirty

    Crapshoot option: Options Puts and Calls 10 points OTM, price vig + 2 pts. Watch the swings sell your positions and bank some coin. Not big $, but amusing to watch……

  • newbfxtrader

    Weekly looks strong overall. Bearish engulfing last week after a couple dojis. Could see weakness to 170 or so but no divergence here.
    https://www.tradingview.com/x/nR9WTMfV/

  • bdoone

    Testing…I see no comments for 5hrs hrs, just checking to see if I not updating or this is just pre-FOMC bore-a-thon tape and nobody has anything to say…

  • Ronebadger

    Sitting on thumbs right now…holding some shorts

  • Ronebadger

    Sitting on thumbs right now…holding some shorts

  • http://ibergamot.blogspot.com/ i Bergamot

    Its sick how the whole world is on hold because of some bold f@#k going to blurb 2 pages of nonsense.
    fed lost control of bond market (at-least long end of it) long ago, and they know it
    It’s just pretend-and-extend, and repeating the same old bs
    Really sad

  • https://evilspeculator.com molecool

    Haaate it!

  • CorporalCarrot

    All that might be true but it is what it is. And surprise surprise we are bang in the middle of support and resistance with the 25 hr and 100 hr converging.

    If I was a betting man, I would say that the tape will move violently in one direction on release of the statement at 2.00, and then Bernanke will talk it completely in the opposite direction at 2.30.

    But its not a bet I’m willing to take right now.

  • Sean

    Speaking of betting… don’t forget that the people listed below both “advise” the Treasury (TBAC) and have Bill Dudley’s personal cell number… they don’t need to bet, they know what the Fed is going to do (I don’t think they are explicitly told, but I’m sure they talk enough not to be surprised with any announcement), and they have likely been getting positioned for weeks or months for what the huddled masses are currently mentally masturbating about…

    TBAC Members:
    CEO, President & Director of Fixed Income – Dodge & Cox
    Vice Chairman, CEO, Invest. Mgmt. – BNY Mellon
    Managing Director – Brevan Howard
    Head of Global Fixed Income – Citadel LLC
    Managing Director, Head of Global Rates – Credit Suisse
    Managing Director, Head of Credit Markets – Citigroup
    Chief Investment Officer – Bank of America
    Executive VP, CFO – Morgan Stanley
    Managing Director – PIMCO
    Managing Director – BlackRock
    Head of North American Sales – RBS
    Managing Director – Goldman, Sachs & Co.
    Co-Chief Investment Officer – Western Asset Mgmt. Co.
    Chief Operating Officer – JP Morgan Chase & Co.

  • CorporalCarrot

    There’s always a chance that this is so unbelievably talked to death that it ends up being a damp squib but I doubt it. Even if its relatively benign from an equities perspective, the unwind of all the protective options positions put in place over the last few days is going to have some sort of waterfall effect.

    And don’t forget triple witching on Friday.

  • Sean

    Interestingly, this seems to be a bigger range than I’m used to seeing before a Fed announcement… anyway, here’s the before picture, pretty well behaved…

  • Darkthirty

    Had to look up the “damp squib”

  • CorporalCarrot

    I take no pleasure in being right here. Bought the initial blood but it was moving so fast I got filled at 15873. Entry indicated. 🙁 Sorry bears.

  • CorporalCarrot

    Out of half 16040.

  • Dyellowflash

    Same here. Even with 600 bucks banked, it feels disgustingly pungent – if you look at the 1m chart, there are pple in the know and pple who ate up those in the know just during that 1m before and 1m after data release. btw, i only trade 1/10 of usual amt on FED days.

  • Sean

    I’m not positioned either way, but all we are seeing right now is noise, and that is all we will see until after the Bernank is done talking… I think you are inferring way too much from 8 minutes of price movement…

  • https://evilspeculator.com molecool

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    ¸„ø¤º°¨ P O S T “°º¤ø„¸

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  • CorporalCarrot

    Um i’m not inferring anything. I said we would have a massive stop run, quite probably in both directions with the first direction being a fake.

    And I don’t care whether its right or wrong. I just made a fortune.