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Let’s Get This Show On The Road
97

Let’s Get This Show On The Road

by The MoleJanuary 2, 2019

Welcome back everyone. 2018 is finally behind us and our explicit focus going forward is to milk 2019 for all it’s going to be worth. Anywhere I look I see pessimism and doomsday scenarios, people are losing their collective sh..t over things they in reality have little control over. Not on my watch if I can help it. And to prove just that let me share a little goodie I whipped up for us over the holidays:

Say hello to our brand spanking new ‘system quality number’ indicator which I implemented for both Ninja7 and Ninja8. If you don’t know what SQN is then head over to our basic concepts page where you can find the formula and a comprehensive description of its purpose.

Originally defined by Van Tharp SQN was originally designed in the context of tracking system performance. However Van quickly figured out that it also does a very good job of visualizing relative market performance and in particular expressing market cycles.

All that’s needed is to replace the expectancy calculation with the percentage based return of the time window and Bob’s your uncle. Although I came across this approach many years ago I had never bothered to actually implement SQN as an indicator. And boy am I glad that I finally did as I got pretty excited by what I’m seeing.

If you know Van’s work on defining market cycles then you’ll quickly realize that I’m using this indicator somewhat differently. For one Van uses an SQN(100) setting as his primary focus are market cycles. My perspective is somewhat different in that I am using a much shorter SQN(14) seamed by a Bollinger(2.0, 100).

The exact settings however really do not matter and various configurations offer very valuable perspectives. What does matter to me is the fact that a short setting turns SQN into sort of a market oscillator with clearly defined max and min ranges for each instrument. What’s even better is that this phenomenon appears to hold up across all time intervals, going as low as 1-min charts.

The SPX panel shown above offers us a multitude of long term buy/sell opportunities, and if nothing else show us ranges in which profit taking would be optimal. At my current setting it does not express market cycles very well as the window is too small (only 14 days), but both buy and sell exhaustion clearly happens in thresholds that only shift slowly over time.

What I’m seeing right now is a bit outside of the regular swing cycle in that the recent dip lower exceeds all other sell exhaustion signals on the SQN panel. Those are harder to time perfectly (general problem with Bollinger bands during excursions > 2.0 std. deviations) but in conjunction with price based entry systems can still be exploited.

Instead of boring you with theory I prefer to lead by example. Although we are still in a high volatility market phase I looked at the E-Mini this morning and saw a pretty juicy looking buying opportunity which is valid until about ES 2400 – I’ve set my ISL below that.

Otherwise I don’t have too much to offer just yet as we need first need to gauge market sentiment and participation after the opening bell. But no worries, we’re just getting warmed up here at Evil Speculator, a lot more goodies to come this year 😉


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!

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  • TimeToPanic

    https://www.rte.ie/news/business/2019/0102/1019927-ecb-appoints-administrators-to-italian-bank-carige/

    You and Mario Draghi are both ‘getting this show on the road’ early in 2019. Gosh, there will be carnage in the EU banking sector in the next couple of years.

  • https://evilspeculator.com Sir Mole III

    Should be fun 😉

  • HD

    GM Mole, all. 2019 SPX open 2470

  • TimeToPanic

    Shall we do year-end guesses?
    I’ll guess…..1777.

  • Mark Shinnick

    OMG Mole, excellent that you friggin did this SQN project. I was doing a version of this in 89 but lacked the tools to keep it organized. You’ve got something of a Holy Grail potential in all this.

  • randomuser6789

    Let’s guess OLHC. This is utter foolishness, but I will play along:
    Open 2470 (Duh!)
    Low 1970
    High 3160
    Close 3110

  • HD

    Mole, EOM rally trade,,,, SQN 4.01 FWIW

  • HD

    20% hit and 35% rally- BOLD!

  • HD

    So the tricky part about defining expectancy, 1 – 70 handle ISL or 10- 7 handle ISL. Same result.

  • mSquare

    End of Jan 2019 – not a prediction, you can take it to the bank ):

    Low 2340s (bit above 2328 Apr-17 lows)
    High 2660s (bit below 50day)
    Close 2500s (the midpoint of the 320 point range above)

  • HD

    1st trade S roundy 2500

  • Mark Shinnick

    I’m in longside mode myself.

  • http://iberianviews.blogspot.com/ catracho

    Looks like machines in charge for first day of trading – watching today –

  • zzezzezz

    Happy New Year! Starting off shorting gold… Watching ES and will short around 2525…

  • Jason13

    I’m with you…been building position since 2468. Would like to hold til Fri.

  • Jason13

    High- maybe 2720ish (early, then bye-bye)
    Low- around 1760

  • Sp00nman

    Looking at monthly charts the interesting thing is more likely than not we tend to spend 2 consecutive months basing before taking off to the upside. Either we make a bit of a lower low or lower high on the monthly. So I’d expect us to test lower say ~2380? We’ll see..

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Good Morning rats.
    still a ramp and camp.

    Daily support at 2475.
    https://uploads.disquscdn.com/images/16c7e999142a8d0a2fa8aaba9cc461e4db9f9dc727fb19b11b12faa8d9b21271.png
    -GG

  • Julie 35 – 25 – 36

    SPX Per previous post. … Must get above 13 ema
    JULIE

  • Jason13

    Or what? You’ll spank it?

  • Julie 35 – 25 – 36

    If anyone noticed The open and subsequent bounce was off the lower channel trend line today
    JULIE

  • Julie 35 – 25 – 36

    No Jason I will short it
    JULIE

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    what is this fascination with shorts?
    😉
    https://i.dailymail.co.uk/i/pix/2015/11/04/18/2E18ECC400000578-0-image-a-2_1446661145181.jpg

    Off to lunch!

  • TimeToPanic
  • zzezzezz

    Covered gold. Waiting to pull the trigger on ES short.

  • http://iberianviews.blogspot.com/ catracho

    Is that comparable to recent action? i.e. have you got a chart? tks

  • https://evilspeculator.com Sir Mole III

    25 comments? Okay I see you all in February!

  • https://evilspeculator.com Sir Mole III

    Okay one person gets it. Everyone else phoning it in today?

  • Julie 35 – 25 – 36

    Hi Chief Great post … SQN .. Thanks Chief !
    JULIE

  • http://iberianviews.blogspot.com/ catracho

    still a holiday week here – school not back till tomorrow and Friday – lots take the week off and start again on Monday !

  • https://evilspeculator.com Sir Mole III

    I know – just walked through the center of Valencia and it’s PACKED!!

  • https://evilspeculator.com Sir Mole III

    Of course you are on deck. Julie doesn’t mess around!

  • Julie 35 – 25 – 36

    SPY Volume not showing me much .. Be careful Bulls
    JULIE

  • Sp00nman

    I wish I had something intelligent or insightful to share but I don’t. Looks very interesting (regarding SQN).

  • Sp00nman

    Ya looks like the bulls are getting tired and may be running out of steam.

  • Julie 35 – 25 – 36

    Nibbling short against 2520.27 … Just a probe
    JULIE

  • maxcherry
  • TomW4

    I counted the number of trading days since the 2940 peak on 9/21/18. 34 trading days was 11/8/18 which was somehow of a lower peak. Then we dropped big in december.

    What is your post suggesting? That we drop from here or rally from here?

    To me, your charts are suggesting the 2346 low on 12/26/18 is the low and we rally from here…

    Please clarify – thnx

  • Julie 35 – 25 – 36

    SPX Back testing a broken lower trend line Make or Break
    JULIE

  • TimeToPanic

    I think ’29 looks similar to today. https://www.tradingview.com/x/XvJV9i8G/

  • Julie 35 – 25 – 36

    Them Bulls are struggling Love being the lone Cougar
    JULIE

  • TimeToPanic

    Julie, you’re not lone.

    I added the rest of my NQ shorts this morning, underwater at present, but my first lot is just in the black. Plus I bought some QQQ 144 puts. I think the H&S pattern takes us a lot lower in the next 2-3 weeks, just going to sit tight til 18th.

  • Julie 35 – 25 – 36

    Watch for a possible bounce off lower channel
    JULIE

  • TimeToPanic

    Love to see this rising wedge give way soon. Today or tomorrow, it’ll be out of time.

  • Julie 35 – 25 – 36

    TTP I knew the 13 ema was going to be tough i.e. short term overbought and declining SPY volume on bounce
    JULIE

  • http://iberianviews.blogspot.com/ catracho

    shorting NDX on strength – small..will add if levels break to downside; tomorrow and Friday should give more idea of the mood of the market

  • Julie 35 – 25 – 36

    SPX A most feeble attempt now by the bulls at lower channel and VWAP … Love it !
    JULIE

  • TomW4

    Thank you for sharing your thoughts as always Julie!

  • Julie 35 – 25 – 36

    Your welcome Tom Have A Great New Year Tom
    JULIE

  • HD

    Worst year in a decade and buyers show up in full force day 1, 2019. Let’s see how that plays out.

  • Julie 35 – 25 – 36

    HD Two bounces off the lower channel trend line (1) on the open (2) At close .. Which I was watching for in post below.
    JULIE

  • TomW4

    Happy New year too Julie!

  • HD

    we had to time the EOM rally termination last month too. A few missed entries but then….

  • mSquare

    Respectfully I disagree – and strongly so.

    I have seen many compare this period to 1929 but there is absolutely nothing comparable between the economies and finances of 1929s to now (other than that is the only index that goes back that far).

    Next we will try to compare today’s 100 Trillion economy in how many Tulips from 1600s?

  • https://evilspeculator.com Sir Mole III
  • Julie 35 – 25 – 36

    SPY more volume on Christmas eve 1/2 day than today
    JULIE

  • Julie 35 – 25 – 36

    SPX The final 10 min a stick save. Won’t be able to do that much longer
    JULIE

  • Ted

    Look what the futures have done since the close. Aud/Jpy going down hard as well. The final ramp is gone.

  • HD

    look like it touched that lower BB 9-10 times during Decembers 16% crash

  • maxcherry
  • TimeToPanic

    Ah, I was just looking at the chart patterns to be honest.

    As you mentioned it, 1929 was just like today, the peak (or near peak) of a huge QE driven debt bubble, stock market bubble. Very similar. Did you know there was a Great Depression after WW1, but the fianciers persuaded the pols to print their way out of it. Never works. The denouement will be slightly different this time, as we have much more debt, and we have a bubble in sovereign bonds too. Much fun ahead.

  • TimeToPanic

    WTF happened in after hours? GG takes the afternoon off and everything gets crashy. (I’m not complaining). Was there some *news*?

  • TimeToPanic

    Apple, just checked ZH.

  • Darkthirty

    EWT worked in 29

  • Darkthirty

    Buyers? LOL Don’t be surprised if/when you learn the truth…………..

  • Darkthirty

    Appears to be a leading indicator ………….

  • TimeToPanic

    Good to hear.

  • TimeToPanic

    Recognition gap tomorrow?

  • Darkthirty

    See if the pattern is the same

  • Ted

    Drinks on You! Nice trade!

  • TimeToPanic

    Not yet, anything is possible.

  • Darkthirty

    IF this is 5 of 3, symmetry says 2300 or so………..

  • TimeToPanic

    Sorry, I don’t really fully understand EW, just the basics.

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    Went to the movies, they didn’t have good seats so delayed.
    sorry mate.

    End/begin of year, this ain’t Nuthin.

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    it was the YEN that freaked out.

    https://finviz.com/futures_charts.ashx?t=6J&p=d1

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    thanks Evil!

    Happy New Year.

  • HD

    you don’t think people (Mole) were buying today? What’s the truth?

  • TimeToPanic

    Is this a well-drawn neckline, or not? Getting a bit overbought methinks. How was lunch, or did you skive off all afternoon? Playing on your little wheel.

    https://www.tradingview.com/x/xSTKddkE/

  • Ted

    Sorry HD, I couldn’t help myself.
    https://www.youtube.com/watch?v=9FnO3igOkOk

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    lunch was great, lots of kale. Avoided the wheel all day.

  • Julie 35 – 25 – 36

    They finally showed a little intelligence gaping it down instead of up like Monday. It gaped down to the lower channel trend line and a support at 2468.
    JULIE

  • Darkthirty

    Got a “waterfall” that shows bid/ask quantity. When the bots are running, they will jump over contracts and then come back to pick them up…….you figger it out

  • HD

    roger that! you know me, big believer in BOTs

  • HD

    WTF is a wave pattern 🙂

  • Julie 35 – 25 – 36
  • HD

    The bulls the past 12 months…..
    https://www.youtube.com/watch?v=BvdXh5BQaIs

  • Darkthirty

    OK and you’re familiar with NBBO? How is that possible…………?

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    something man made
    =P

    https://vimeo.com/273481736

  • Darkthirty

    It’s based on human psychological response, not algos

  • http://gerb-reloaded.blogspot.com Gold_Gerb

    What did the blonde say after glimpsing a box of Cheerios?
    “OMG! Donut seeds!”

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • evilasevildoes

    Japanese financial markets are still closed for Bank holiday until Friday

  • Julie 35 – 25 – 36

    Hey all ye bargain hunters IBM On Sale CHEAP ! You Buy I Short ! JULIE https://uploads.disquscdn.com/images/6b173c7df4e56694b599f60815bc6a4bc2c90e50da8dbc299ac5189ad444b9fa.png

  • http://iberianviews.blogspot.com/ catracho

    as it’s the beginning https://uploads.disquscdn.com/images/c96b475f4d1e01e857b9af02c5e1ae411315b6e14f54b9154ee2e15b507eb372.png of the year some longer term charts https://uploads.disquscdn.com/images/2ce1360975360b2c3c9ee08cdeab7954193e5827816cf861eb603faad620438b.png
    DOW and DAX
    path of least resistance seems down – watch for Trump/China deal but shouldn’t be a trend changer..

  • evilasevildoes

    IYR green