Now Reading
Mole’s Market Momo Musings 2/2019
168

Mole’s Market Momo Musings 2/2019

by The MoleFebruary 5, 2019

I promised you a comprehensive momo update and just like a Lannister the market mole always pays his debts. Except here at the lair you won’t have to wait almost two years for new episodes. Come rain or shine, I deliver daily and I’m known to spoil my intrepid subs in particular. That said, if the GOT producers get away with taking an 18 months break, all the power to them!

Okay let’s dive right in. I’m pretty elated to see the Implied Volatility Term Structure continue dropping toward the 0.9 mark. Which incidentally is the separation line between bullish and bearish MT cycles and thus a critical threshold for VIXEN, my IV trading strategy.

VIXEN had been [intentionally] pretty quiet over the past quarter in order to stay out of bad campaigns, which of course was driving some of my subs crazy. But as a whole they exhibited amazing patience and quietly stuck with it.

If SPX 2730 can be conquered then I think we are on the road toward ‘normalization’ – an admittedly vague term I use to describe a situation when the bullish side once again starts to have the highest odds.

But there is method to my madness as markets go up or push sideways 80% to 90% of the time. Also they produce 87% of price moves in only 11% of the time.

So range bound markets are actually the most common condition that traders will see throughout their trading career but it is there where price discovery takes place. Tough racket for financial bloggers!!

A major misconception shared by many retail traders, and one that seems to be nearly impossible to cure, is that markets MUST correct downward after a certain threshold has been passed.

I have probably forgotten about more predictive measures feeding this flawed assumption than the few (equally flawed ones) I care to remember, e.g. retracement levels, pivot points, RSI, MACD, and even simple Bollinger bubbles.

Fact is that markets can and will continue to run way beyond your wildest imaginations. They could turn on a dime tomorrow (right after I wrote this) or they could turn six months from now. We just don’t know, which is why we don’t spend time projecting and simply follow the tape.

I often use correlations in order to gauge investor sentiment and the FAGIX by Fidelity lines up particularly well with what’s happening in equities. And what it’s telling us is that appetite for high performance income funds has almost returned to its all time highs.

YES, once could make the assumption that this is ‘too high’ and that it’s doomed to fall off the plate soon. Then again, one could have made the same prediction all the way from ~summer of 2016 into late 2017.

Fact is that the SPX is actually lagging the FAGIX and once the latter is starting to turn lower (divergent to the SPX) THEN it’s time to get nervous. Thus far it continues to point up.

SKEW:VIX has decidedly cleared two layers of overhead resistance and is now hovering across cloud cover. One more retest of the 100-day SMA cannot be ruled out but I expect the bulls to put up a fight this time.

Alright now that we’re sufficiently warmed up, let’s jump into the really interesting stuff…

evil_separator

It's not too late - learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.


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!

BTC: 1MwMJifeBU3YziDoLLu8S54Vg4cbnJxvpL
BCH: qqxflhnr0jcfj4nejw75klmpcsfsp68exukcr0a29e
ETH: 0x9D0824b9553346df7EFB6B76DBAd1E2763bE6Ef1
LTC: LUuoD6sDWgbqSgnpo5hceYPnTD9MAvxi6c

  • Yoda
  • zzezzezz

    Per my plan, shorted 25% at /ES 2030.
    Will short another 25% @ 2040, and again at 2050.

  • maxcherry

    2030?

  • Sp00nman

    Not much to comment on but we still have an inverted yield curve on the 5yr and 1 yr treasuries. The lower rates on the long end are hurting the banks but the market wants to keep continuing higher for now.

  • zzezzezz

    LOL sorry, corrected. thank you!

  • maxcherry

    that would be some deep pockets

  • zzezzezz

    i wish…

  • maxcherry

    going short via 2675 puts

  • HD
  • HD

    2734 is a fib pivot

  • HD

    $23T market cap vs an $11B fund? Hmmm.

  • zzezzezz

    chart please?

  • Ted

    Watch IWM it should be the first to crack.

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson
  • randomuser6789

    If the VIX closes below the lower BB that is the first step of a VIX sell signal. Yesterday it closed right on the BB.
    HOWEVER
    You can have multiple closes below the BB.
    The first close *back inside* the BB issues the signal.
    Then the following close being higher than the 2nd one confirms the signal.

  • HD

    Yesterday’s close 21, +17, 38, 10 handle hit. Same ole.

  • maxcherry

    i count as many as 6 trading days below the lower band in a row

    16 times it was 3 trading days below

  • randomuser6789

    And the bigger they are, the harder they fall, right?

  • maxcherry

    haven’t gotten that far. yet

  • maxcherry

    using Elliot wave fib numbers projects a high is 2738.71

  • HD

    Hey Max. You nailed this impulse early on under 2600. Kudos!

  • HD

    The market makes the pivots, not me.

  • maxcherry

    thanks but it was all ZBT, thank Marty Z.

  • https://evilspeculator.com Sir Mole III

    DAMN IT!!

  • Mark Shinnick

    Did some equity shorting this morning….tenuous, tight stops.

  • Ted

    IWM is in the red and after a brief battle has lost the 100day sma.

  • Yoda

    After a strong start the tape is not looking so hot anymore. Currently retesting VWAP’s underbelly.
    https://uploads.disquscdn.com/images/053f838131ebcea384d56178c9e04f18b2d3f9e27162fd06613e08deeaf7416d.png

  • randomuser6789

    Mole,
    Thanks for another awesome Momo update. I appreciate your work educating us rats. It is always helpful to see the view from 10,000 feet (3000 meters for you non-US folks)

  • Yoda

    Bears: it is your turn to play

  • Julie 35 – 25 – 36

    I know Yoda
    JULIE

  • Yoda

    Fail, it rarely does.

  • Julie 35 – 25 – 36

    If there is a bounce intraday shortly and goes above 2731 it’s corrective
    JULIE

  • Ted

    plus or minus a few pennies? All together now “Red Pig Down”

  • TomW4

    red pig down!

  • HD

    There’s the 10 handle hit.

  • Ted

    Transports in the red as well now, SPX on deck.

  • https://evilspeculator.com Sir Mole III

    You’re most welcome.

  • http://www.captainboom.com/ captainboom

    Does the same trick work in a downtrend? For example -17 then +10?

  • BKXtoZERO

    It always nice to identify all the places in your post that remind me how dumb I am!

  • Julie 35 – 25 – 36

    Hi Tom I hope you are doing OK I am down with a small short position. The rally from December 26 looks impulsive. We must gauge the pullback .. there will be one.Patience whenever short. A reasonable target on a pullback 2542 — 2530
    JULIE

  • Julie 35 – 25 – 36

    Hi Ted The Banks $BKX were showing weakness last week and were rolling over. NOW some profit taking
    JULIE

  • HD

    60% of the time it works every time.

  • Julie 35 – 25 – 36

    Thanks Chief for the MOMO update.
    JULIE

  • Julie 35 – 25 – 36

    Very interesting what bonds are doing (bond market 7 times larger than equity market) TLT in an uptrend since early November
    JULIE

  • Ted

    Perhaps a blowoff top in the SOXX as well. Need the VIX to finish in the green today.

  • Julie 35 – 25 – 36

    There is buying in Bonds today too
    JULIE

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    Probably not, a little pullback, two weeks sideways and test 2700 or maybe even 2650 again, something like that. Holding 2700 to 2755 is bullish, same as 2620 to 2700 before.

  • Julie 35 – 25 – 36

    IMO At a minimum a 38.2% pullback to approx 2590
    JULIE

  • evilasevildoes
  • evilasevildoes

    bonds been great today see sawing

  • evilasevildoes

    new moon however Merrimen has a big say about the coming stellium

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    I will get more bearish when I see bearish intraday action. Now feels like bull market.

  • https://evilspeculator.com Sir Mole III
  • https://evilspeculator.com Sir Mole III

    That’s the idea. I lift myself up by intellectually subjugating my lesser contemporaries into submission.

  • TomW4

    Hi Julie! Hope you’re doing good!

    Can’t wait! Been waiting for a while now.

  • BKXtoZERO

    Trying TVIX 35.97 today…..

  • Julie 35 – 25 – 36

    Anybody shorting the bounce today from 2724.03 against today’s high ?
    JULIE

  • Darkthirty

    Set your goals low……… you’ll never be dissapointed

  • BKXtoZERO

    Moi…

  • Julie 35 – 25 – 36

    IMO low risk BK .. 3 points
    JULIE

  • Darkthirty

    Waiting on confirmation…….

  • Julie 35 – 25 – 36

    Me too D 30 below 2731.25 on the 10 min
    JULIE

  • BKXtoZERO

    Julie I have seen this movie before…. Bulls seem in complete control, daily chart looks like unlimited upside scenario. They are just messing with bears. Anything can happen of course and I take shots intraday but I am almost ready to take my ball and go home.

  • TomW4

    I feel the same way

  • Jason13

    Jumping in now with a short position

  • HD

    I got my 10 handles and a little gravy on the bounce. BOTs still running 17-10

  • TomW4

    It just feels that every down move has been slow and overlapping but move ups have been strong and impulsive. Just a little worrisome for the bears… Whatcha think Julie?

  • Darkthirty

    SPX or ES? 786 retrace currently on es… @ 2733.7

  • HD

    Is the SOTU a market mover?

  • Julie 35 – 25 – 36

    BK I have seen it too many times… It’s a bullish move off the December low but losing momentum .There will be profit taking Bulls stupid not too IMO. I am looking for a pullback to go long. Banks showing weakness along with declining SPY volume.
    JULIE

  • Darkthirty

    LOL kim kardasians ass getting bigger can move the “market”

  • Darkthirty

    Algos / Fed banks don’t lose……….

  • HD

    Is she still around? Gotta be like 60 by now.

  • Julie 35 – 25 – 36

    Tom It is definitely an impulsive move off the December 26 low as per reply to BK below. There will be profit taking. There is a ton of overhead resistance and has not taken out the November and December highs. Momentum is slowing and SPY volume decreasing
    JULIE

  • Darkthirty

    Dunno, mudshark anyway…….

  • HD

    Some of those crazy wave dudes are maybe watching this 2-4 TL to sell. https://uploads.disquscdn.com/images/ac1c51e55ed931056aefac5ac7c6984bb7fc2910e4072273d991fbed66dad72f.png

  • zzezzezz

    Just FYI… State of the Union address is tonight….

  • Julie 35 – 25 – 36

    SPX cash
    JULIE

  • zzezzezz

    I shorted 25% @ 2730, and will short another 25% at 2740 (I think we’ll hit it today/tonight), then more at 2750

  • Julie 35 – 25 – 36

    HD There should be some news on topic … Always a leak on SOTU. If so market should be reacting now if deemed pertinent ?
    JULIE

  • HD

    The last SOTU was 2/28/17. I’d look at chart, then plug copious amounts of nonrelevant data into a math formula, back test for weeks and then build a system. Or just take a trade 🙂

  • Ted

    Trump could deviate from the script.

  • HD

    lol

  • Jason13
  • Julie 35 – 25 – 36

    Thanks Jason. IMO .. SOTU is a brief rally around the flag/ Pep Talk
    JULIE

  • Jason13

    Not tradeable info but FYI…
    “Predictions for a pattern that didn’t happen from FT 71 this morning (selling scenario) 2721, consolidation and back into the overnight range. However, if it turns into a down trend day which is unlikely , 2717 then possibly 2706.
    The grind up to tag 2735 was not expected to turn into this level of selling.
    But his very fancy software that tracks transaction ID numbers showed that yesterday lots of 100 or more contracts were selling all day while the buyers were mostly 10 and smaller lots. So yea, distribution to retail at the 200 day.

    If you haven’t read the fictional Bio of Jesse Livermore, the greatest trader of all time, then you don’t know this sort of thing has been going on for a very long time.”

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    Dunno why my youtube link below got detected as spam, so I post a screenshot here:
    https://uploads.disquscdn.com/images/91b28ae520b72a592c7c7eb178dea5d44f8480ea22aa8e770a331eb8a17d0731.png
    Recent balance VPOC was 2636.50

  • HD

    Nice find! Basically they sold the rally last time. I did not know there was just one a week ago though. I don’t watch much TV

  • Julie 35 – 25 – 36

    Jason 2717 – 2705 — 2735 are all levels that I have computed.I believe that I have even posted them at one time or another
    JULIE

  • HD

    I used to follow FT71 a lot. Huge lots for little points is a great way to do it!

  • Yoda

    It would qualify as news, and we don’t trade news over here

  • Ted

    Anybody have a live VIX number for me? I’ve got a 15 min. lag.

  • Mark Shinnick

    Not right now….but in general I suspect we have a bit more volatility downside yet to go.

  • BKXtoZERO

    For Ted 15.48 right………………………………………NOW!!!!!!!!!

  • Ted

    Thanks – crap

  • maxcherry

    15.46 3:25 pm

  • Ted

    Cool chart

  • Sp00nman

    What’s interesting about the VPOC is that on a RTH chart the VPOC for ES is at ~2716. But with AH’s included 2736 is the VPOC. It’s a pretty substantial difference the RTH only vs including AH trading.

  • https://evilspeculator.com Sir Mole III

    Interesting.

  • nirav777

    Divergence on the Long Panel….

  • nirav777
  • Yoda

    PM Miners are quite bullish today. A warning shot?

  • Julie 35 – 25 – 36

    Yoda oil possibly pulling back
    JULIE

  • maxcherry
  • TomW4

    So much for that bear opportunity…

  • Ted

    IWM – ho hum

  • Sp00nman

    xenoson mentioned the VPOC at 2736. What’s interesting is how the AH and RTH profiles are quite different. We spent a good amount of time in this range which also means more volume AH’s. AH: https://uploads.disquscdn.com/images/8b2c3c294ff690fd759f746206fc6a70db10f76f7a9b9bfcd625487118958ea2.png
    RTH:
    https://uploads.disquscdn.com/images/5a5ced27daad2ad909ad40060f92e5e7ff59962b13f192d88fc3a2cbb664a775.png

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    FT71 uses RTH and strips half session holidays.

  • evilasevildoes

    soybeans..

  • Jason13

    ??

  • Ronebadger

    I’m thinking of buying a 1996 Cadillac Fleetwood Brougham, 100K miles, mint, lots of new parts and maintenance. What do you all think? It’s my dream car…last of the big Caddys. (years ago, I had a 1973 Lincoln Continental Town Car…this Caddy is “slightly” smaller/lighter)

  • BKXtoZERO

    Sounds good to me. Do it now… live. I had a lot of classic cars earlier in life that I wish I had now. BTW…. did you hear the story about the Chinese guy that went to the eye doctor? When he was told that he had a Cataract, he said NO!, I drive a Rinkin!

  • ridingwaves

    man, so many shorting during earnings season….its just not been a good trade over last 8 years…..took a trade on NG again…..lets see what old man winter has to say…..Groundhogs are dumb, so my take is late winter….it snowed in Portland, hills around the bay area. I’m in portland and they are getting 4 days of snow next week…..calculated trade, stop at 2.50 NG…keeping it wide now…that last rollover blew all the longs out….empty green fields are great for cows….

  • evilasevildoes

    classic cars great investment..and no tracking

  • Sp00nman

    Ya I wouldn’t bet on a short winter personally. I’ve been watching NG also and am close to pulling the trigger long. Everyone thinking cold weather might help the price of NG and it does the opposite.

  • Ronebadger
  • Ronebadger

    What do you mean, “no tracking”?

  • Jason13

    Don’t like drops with no Zero activity…tells me I need to be shorter term with this short

  • ridingwaves

    seasonality should begin to favor NG in about a week or so, hopefully thursday

  • ridingwaves

    most new cars have sensors and OBD tools that would allow for tracking by either OEM or law enforcement…heck you can schedule an appointment via dashboard on most new cars now

  • Jason13

    Where is everyone?

  • BobbyLow

    If that’s what you’ve always wanted then go for it. Besides your going to get a nice solid comfortable ride in a car that will always stand out while almost every other newer car has the same look.

  • Sp00nman

    I think this is only the case RW for much newer cars, and even then, it tends to be on the fancier/nicer models. Even most pre-2010 cars have no means to communicate externally. OBD is just a protocol/standard but requires a hardwire connection to pull data (around here it’s used for emissions tests).

  • Sp00nman

    Yup looks like the bots just pushing things around.

  • Sp00nman

    I think they’ll be great till the current generation dies out that likes them. Around the milennial generation and onward people generally tend to not really care about cars. If/when self driving cars become the norm, I think car aficianados will be like equestrians, a much smaller “market.”

  • Darkthirty
  • Darkthirty

    All in ER, fully immobilized, with whiplash

  • ridingwaves

    high line OEMs built wifi into vehicles to pull OBD data via satellite, BMW-Mercedes-Audi come to mind, we worked with them on grabbing that data and pushing it into dealer management systems to auto schedule service visit..your right on 2010 back….we started doing this with BMW in 2008

  • https://evilspeculator.com Sir Mole III

    Sorry guys, couldn’t do a post today. Will try to do one tomorrow but I’m getting dental surgery in the morning and may not be up to a full post afterward. Perhaps I put one up tonight if anything interesting transpires.

  • https://evilspeculator.com Sir Mole III

    I’m with you when it comes to the tracking.

  • https://evilspeculator.com Sir Mole III

    Give it a generation or two more and they’re all going to start resembling the Eloi:

    https://www.youtube.com/watch?v=X1ve7p4Kqfg

  • BKXtoZERO

    Hey! Didn’t the market drop last time you went to the dentist? Loading up…. I like my odds!

  • https://evilspeculator.com Sir Mole III

    All modern cars can be tracked, and it may be done without your consent.

  • Darkthirty

    Have fun with that………..

  • https://evilspeculator.com Sir Mole III

    Believe it or not I really like going to the dentist. Beats the alternative.

  • Darkthirty

    Vacations have a better success rate

  • Julie 35 – 25 – 36

    Chief Thinking about you … Our dentist apps approx the same February 11 for me
    JULIE

  • Sp00nman

    Ya I don’t mind the dentist either. Cleans all the crud off my teeth, don’t have to brush my teeth for a week after going. 😉

  • Darkthirty

    It’s like a good bar fight…feel good the day of, next day wonder who actually won!

  • Darkthirty

    London market close, but something else is in the works..

  • Julie 35 – 25 – 36

    Jason this corroborates what you posted yesterday about possible distribution occurring Courtesy AG Coyote JULIE https://uploads.disquscdn.com/images/197e79c5397672ad5b30a16b5be667417e5e3d4f1765fb29813149f2b51a9b81.png

  • Jason13

    You think they want to use 200MA as a sucker punch?

  • Julie 35 – 25 – 36

    Guys $SOX Let’s see what happens next top of channel with RSI very close to 70. $BKX still below daily 5 ema with MACD rolling over below signal line JULIE https://uploads.disquscdn.com/images/9f0026d88f73dfd5cb8d08a1955acc0cc9261edaced622bbaddc5fe4457245c2.png

  • Julie 35 – 25 – 36

    I know Jason $RUT stalling also .. The declining SPY volume foretells distribution. A waiting game it is. Semis IMO holding up the market
    JULIE

  • Mark Shinnick

    I was doing 1970’s Sevilles for a while in the 80’s. They were plagued with FI problems and electronics. 1990’s also saw a bunch of electrical and harness problems with various manufactures, even MB. One thing to look into to explain the lower mileage is its possibly being a garage queen due to electrical faulting.

  • randomuser6789

    I learned to drive in a 1986 Fleetwood Brougham. My parents had a red one and a blue one.

  • Julie 35 – 25 – 36

    Guys A waiting game for the Banks ($BKX) too … What a week ! JULIE https://uploads.disquscdn.com/images/31d6abb82668644df33b4e44fc2654b0726eec9366828835d6b087f79faca75e.png

  • Ronebadger

    I learned to drive on a 1965 Rambler Classic. 199CU-6cyl Standard shift on the column.

  • Darkthirty
  • https://evilspeculator.com Sir Mole III

    You and I need to start a club!

  • Julie 35 – 25 – 36

    $SPXA200R 60% has held in bear markets now 53%
    JULIE

  • Julie 35 – 25 – 36

    $VIX 16 – 17 a floor the previous two bear markets .. Unreal how close this is
    JULIE

  • Darkthirty

    Problem is that if it’s obvious, it generally doesn’t work……

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    Look at the chart is it going up or down?

  • TomW4

    snoozefest today @disqus_qkFlPoMLUZ:disqus . Wish the selling pressure would come sooner.

  • Darkthirty

    Bucket of mud…

  • BobbyLow

    I owned a 1984 Eldorado back in the day. It was kind of a “Pimp” Mobile but it was a really nice car. 🙂

    It was white like the one in the upper left corner of this picture.

    https://www.google.com/search?q=84+eldorado&tbm=isch&source=iu&ictx=1&fir=0cJ1DYBGdiNTqM%253A%252C-6Bnuw5-AGuTDM%252C_&usg=AI4_-kSN4y1W62hcw1wP5MRSFZhke3P8hg&sa=X&ved=2ahUKEwi8tazx26fgAhXxY98KHba2BQkQ9QEwCnoECAQQGA#imgrc=0cJ1DYBGdiNTqM:

  • Darkthirty

    It’s a daily, when it turns nobody will notice for a day or two

  • Jason13

    The 50 MA on the hourly is one to watch…seems to bounce off it….need a break

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    I was talking about the minute chart going up again after testing near a previous low. Opportunity to interact with the market into the direction of the higher timeframe trend.

  • BobbyLow

    Not crazy about it but just flipped over to short crude via SCO.

  • Ted

    I’m not sure but I think we have according to the VIX a confirmed equity sell signal. Cancel that.

  • Darkthirty

    Do they have cameras and microphones like the “Smart” TVs?

  • Darkthirty

    What I’ve seen all day on minute charts is programmed buying to offset ANY sells.When the system is paused is when you get whipsaws as seen from 8:15-10:30. Same timeframe that LSE is closing up their books…… Plenty of abnormal divergences on MA / oscillators

  • https://evilspeculator.com Sir Mole III
  • randomuser6789

    Mole is right, we have not closed outside the 2.0 BB yet. It is just sliding down the descending BB as implied volatility fades away.

  • Mark Shinnick

    Yeah…its all consistent so far….kinda like the days of former outright QE.

  • Ronebadger

    It’s a “poor man’s” sell signal. Step 1 closed ON the BB, and Steps 2&3 closed inside the BBs, but were not VIX-UP days.