Long Term Update

I have been coding almost non-stop since Friday night and am happy to report that I have made quite a bit of progress. The (really) good news is that the NinjaTrader version of the Mole scalp signals is nearing completion. I’m seeing slightly different entries based on the intrinsic differences between the ThinkOrSwim and DTN data feeds. Obviously the latter has a lot more detail, but IMO requires a bit more finesse. More data is better but if managed improperly can also throw your strategy in a spin. As I have been around the blog a few times I however think it will yield better and more timely signals in the long term. See the end of this post for a little more details on that front. On to our charts:

First things first – Friday evening I’ve came across some confusion in the comment section regarding the VIX buy signal. To be crystal clear: Yes, we did indeed fulfill all three conditions: We closed outside the 2.0 BB, we closed back inside and of course lower, and finally we miraculously managed to close below Thursday’s close. This represents a bonafide VIX buy signal (relative to equities) and the rule states that you usually see a reversal within a week’s time.

I may want to throw this one into the mix. The VIX P&F is running into resistance but currently gives us a price objective of 30. Bear in mind that these two charts are not necessarily mutually exclusive. We may see a short term bounce after which we see continuation of the current direction on both the volatility and equities side.

The same obviously applies to our P&F price objective on the SPX – it’s possible we get a bounce here after which we could continue downward. That would actually be the optimum scenario as we could play both sides. We are currently touching an SMA on the P&F as well, but I’m more interested in the one on the daily panel:

Here’s are hourly and the daily E-Mini panels – let’s work ourselves all the way up to the monthly. As you can see the spoos have been stuck below the 100-hour SMA for days on end now. Unless that changes, and this currently means 1410 we’re probably destined to drop into our P&F target – VIX buy signal be damned (then again, the rules give it a week to produce a bounce).

The long term panel shows us nothing but air until 1380 – interestingly the 25-week SMA lines up with your P&F price objective. I think this gives us a pretty clear setup for this week: We have a bonafide VIX buy signal in place and I am sure you recall last week’s ISEE reading. So there’s a decent possibility for a bounce and it will be the hourly panel that provides us with an entry. You can be long here with a stop below last week’s lows but I personally would prefer to pyramid up a little.

If you think these charts are interesting then wait until we get to gold, silver, and crude, as those are the ones you really don’t want to miss this weekend:
[amprotect=nonmember] More charts and non-biased commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero or Geronimo subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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Gold has continued to drop like a rock and now have a preliminary bearish PO of – wait for it – 1600! How crazy is that? You can call me skeptical, so let’s consult our interval charts for a bit more meat:

The hourly is looking like it contracted the Hanta virus. Once again the 100-hour appears to be the decider of where we head next. The daily only shows air below – I see no support.

The weekly has a freshly expired NLSL – that’s it. What’s rather interesting is that the 100-week SMA roughly lines up with our bearish PO on the P&F. So unless a bounce here materializes soon the gold bugs may find themselves in a world of hurt.

Silver – basically the same idea but it doesn’t look as weak as gold. Price objective of 28.5 and less pronounced reversal pattern and less acceleration.

The short term panel shows signs of life and the 100-hour bears watching tonight. Notice that there is a NLBL on the daily, possibly something to hang our hats on should we get a little bounce.

The weekly breached a NLSL on Friday, which is now expired. That means it can’t be reversed officially but as we barely dipped below I would be more skeptical here. The monthly however is on its way to reverse September’s breach of the monthly NLBL. With only three trading sessions to go we don’t have much time to pull this one out of the mud.

Crude – oh boy. Well, it’s not that I didn’t warn you, right?

Nothing much on the daily but the weekly and the monthly have been a great guide now since the end of August. I hope none of you guys got caught with your pants down on this one as I have been warning you since we reversed that 100-week SMA. It’s been nothing but pain since.

As promised a few highlights from the Mole recoding front. Here’s the 1-min ThinkOrSwim version I have been running at my evil lair for a few weeks now. What you are seeing is the Friday session which was running like a hare.

And here’s the NinjaTrader version – despite the same settings the signals differ a little bit. There seem to be less false positive, but the NT version also missed out on one pretty nice low. Obviously the difference is in the data feeds and that’s to be expected. DTN is a semi-professional data feed while ThinkOrSwim mostly caters to retail clients – the former is supposed to be most accurate. We shall see if that’ll result in good signals as I push ahead.

Right now my ‘strategy’ does not trigger entries just yet, I have basically implemented the Mole as an indicator and am only painting the arrows in a separate strategy I call Molester. This was in order to make sure the code is clean and that I can use the indicator separately – it also reduces code replication and possible bugs. The skeleton for adding the actual entries is already in the code but before I add that final part I will have to decide on the stop and target logic. This is something that may take me a few weekends to narrow down. But we’re getting close and I hope sometime in November we can start beta testing this beast.

Cheers,