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Monday Setups
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Monday Setups

by ScottAugust 31, 2014

There really isn’t anything to add about the equity market. I’m long ES U4, and hating it because it is way overdue for a pullback, but long is the direction for now. These are the setups I will be taking tomorrow if they trigger. Personally I think copper and 5 year note are the pick of the litter, but what would I know ๐Ÿ˜‰

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Enjoy

Scott Phillips


About The Author
Scott

  • dragan ilic

    THX Scott. Copper is interesting.
    I miss those old good days when SPX/ Copper and EUR/USD was working as a team. Remember when i started following this blog in 2008, copper was the shit. In recent years / months all that has changed. I guess we have to adapt to survive.
    All of a sudden USD/ SPX have “paired up”. Isnt that strange ? usually market considers a strong USD as riskoff. Will a strong USD be Yellenยดs next excuse to keep low rate policy ? I have only been trading for about 3-4 years.
    Who knows whats what will happen, but when things change we have to adapt or get eaten by the market.

    Looking at the weekly EUR/USD chart i have noticed that this pair has already 7 negative candle closes. That has happen before. Like 3-4 times last 10 years. I am only able to track this pair back to 1993. If EUR/USD produces another negative close this week then this is the first time it happens since 1994. Price is already enbeded in lower BB, there could be another panic selling, but that should be followed up in panic buying.
    EMA 50 has started to drop, even if this pair is longterm bearish we should see a retest of 1.35300.

    What will happen next. Will these pairs get back to normal. If we “asume” that EUR/USD starts to rally, will this be that needed fuel to bring SPX towards 2100 ? Will the market consider a rally in EUR/USD as risk on. ??

  • dragan ilic

    8 weekly losses. Record since 1994.

  • dragan ilic

    8 weekly losses. Record since 1994.

  • BobbyLow

    “I guess we have to adapt to survive. All of a sudden USD/ SPX have
    “paired up”. Isnt that strange ? usually market considers a strong USD
    as riskoff. Will a strong USD be Yellenยดs next excuse to keep low rate
    policy ?”

    Dragan, this particular comment really hit home with me because I used to think the same way. Over the years, I’ve seen Strong Dollar/Weak Equity Prices, Weak/Dollar Strong Equity Prices, Weak Dollar/Strong Equity Prices and Weak Dollar/Weak Equity Prices. Then in Individual Sectors such Oil, – Strong Dollar/Weak Oil Prices, Weak Dollar/Strong Oil Prices, Weak Dollar/Weak Oil Prices and Weak Dollar/Strong Oil Prices.

    I think what has happened is that I believe the media must have an explanation for everything. Subsequently, we’ve been conditioned to believe that some of these correlations are logical and make perfect sense.

    However, I now believe that as a trader over the shorter term, none of the above correlations are valid. That’s not to say that there isn’t “some” form of perception becoming it’s own reality. But no IMO, none of this shit really matters.

    OTOH, in the most simplest term, I believe that extra low interest rates have driven equity prices to where they are mostly because of a lack of return on fixed dollar investments. But after all of the “noise” has been explained away, I believe that all directional runs come to an end and new directional runs begin simply because of the wars eventually won between buyers and sellers. All other explanations can be left to one’s imagination.

    You also mentioned, “I guess we have to adapt to survive.” This is very true. One way I try to “adapt” is to only pay attention to the price action on my charts while avoiding as much outside noise and explanations for cause and effect as I can. ๐Ÿ™‚

    JMNSHO

  • mugabe

    WTS: major breakout on high volume:

    http://scharts.co/1rHyMPp

  • dragan ilic

    I agree Bobby. We dont care about the media, so we can rule em out. Dominant force wins, we just have to find out which side it is. (Buyer /seller) I have been trading for a couple of years, i have a lot to learn. Hopefully i am just about to leave that beginner cycle.

    Anyway, still this market always have surprices. Its not makin it easy on us. During SPX last decline to 1890, those who were very observant noticed in early moves that the drop in SPX was mostly because of drop in DJIA. NASDAQ never confirmed lost any ground to sellers. The selloff was never synced.

    I really dont know how to explain it. But bulls have their ways to benefit of every move to their advantege. Seen this happen time after time. I guess thats why it is a bullmarket. I wouldnยดt be surpriced if EUR/USD, if it becomes bullish all of a sudden would pair up with SPX.

    Just an exemple.. Hennes& Maurits is a giant stock at OMX30. I think that H&M is about 10-15 % of Stockholm stock value. Maybe even moore. Does not matter.
    But every time Sweidsh index bulls need H&M to bring that Stockholm main index higher ( thru sellers closters ) H&M is there to do the dirty work.

    Then when main restince is broken H&M becomes a sleepin cell, while other sectors keep the OMX30 up and higher. What i want to say is every time giant stocks are needed to support main index they are there to rescue the bulls. In some crazy way they just sync up.

    I dont know, market is always telling us something. I guess all we need is time and weekly/monthly reviews and in end it will all make perfect sence. Afterall we learn by mistakes.

    Yellen will not give up that low rate policy, thats for sure. This currency war has been going on for years and its here to stay.

    Thank you for your responce ๐Ÿ™‚

  • mugabe

    Update on the incredibly bullish breakout in Asia ex-Japan:

    http://scharts.co/1rHz2hd

    Summary: it’s still breaking out

  • mugabe

    ‘I really dont know how to explain it.’

    Why do you feel you need to explain it?

  • dragan ilic

    There could actually be an explanation. ๐Ÿ™‚

  • BobbyLow

    Are you in Sweden? One of the most interesting things about the Evil Speculator is that we have people here from all over the world. It’s great to share in such a wide perspective.

  • Scott Phillips
  • Scott Phillips

    Dragan, I would be very wary of “this is the record” type thinking, since the nature of markets is to move further/longer than anyone thinks is possible. At a deep level, looking at a chart for a reversal is, over time, a sucker play and a poor way to think. The fact that we are looking like record moves indicates that the market is changing type, therefore previous references are by definition invalid.

    Show 100 beginner traders that chart and 90 of them will be looking for a reversal signal. Show 100 expert traders and most of them will be looking for a pulllback to get short again. You are not a beginner trader ๐Ÿ™‚

    In this situation we have a market which is in a powerful trend. It gapped down at the start of last week, and instead of reversing (as gaps are inclined to do) it gapped and went. We have a market which went sideways in a range 4 days of last week and broke to the downside on Friday. In this instance continuation is a higher probability.

  • dragan ilic

    ๐Ÿ™‚ Ok. I know i am telling you, its a progress and i learn everyday. ๐Ÿ™‚

    When EUR/USD started this big leg down most of us at EvilS. kind of knew what was comming ahead. I dont disagree that this case is bearish. Very bearish.
    I dont trade Forex, most of you do.

    If i took those bearish positions when this down move started, i would at this point be very pleased with the gain. its not just about makin a winning trade, when u got there we try to optimize our wins. ( let em winners galore )

    Also the banks, do you think they will just let those with short postions keep makin money. Been a long run down. I agree, a last panic sell would not surprice. But dipp buyers , bull traps ? just to good to be true .
    New month, new week, new day. All possible double bottoms.

  • dragan ilic

    yeah sweden ๐Ÿ™‚ global rat force ๐Ÿ™‚

  • Scott Phillips

    The EURUSD is different from stock market in that is it virtually immune to manipulation. Soros said “God himself couldn’t move the eurusd alone”

    Also since currencies are a much larger boat than equities, like a supertanker to a cargo ship, they take longer to turn around. Also bigger players in the market means they leave bigger footprints, and our job as technical analysts is not to predict the future but to see the footprints in the sand of the big players.

    You are correct in that if you sold higher up, you would be looking for the exits now. We are ready for a reversal attempt, whether or not that attempt fails or succeeds, nobody knows. Over time, trading with the trend as opposed to trying to time reversals is a better strategy. This is because our natural instincts are to get a powerful emotional high for being right or being validated.

    Having our opinions validated explains why facebook is so successful and why we post on this site. It is a weakness in the human psyche which you can exploit in your trading. Look at really good chartists like Tim Knight, who would rather be right than make money

  • dragan ilic

    Thank you Scott. I learn alot from your advice and comments.
    I dropped facebook a couple of years ago. Actually when they got listed at stock exchange.

    Sometimes i overthink the market. Since this EUR/USD is already bearish, i am thinkin of scenarios that could make this case even moore bearish but still statisfy all rules. Reverse, those who had good short positions get screwed, marketmakers get even bigger profits and down trend continues.
    Ok how would this be possible ?

    This is Montly chart. Blueline is EMA50. Often EMA50 gets retested, no matter if its down or up.
    So if we get a restest of EMA 50 this month and it fails and drops down again then we have a shootingstar formation. Outlook will be even moore bearsih next month.
    Those with good bearish positions get shaked out and marketmakers and banks get their money. Still all will be happy?
    Do you think my thinkin is totally wierd ? lol

  • Scott Phillips

    Dragan, as a general comment I think your technical analysis is probably too good at present. You see the possibilities very well and you analysis is usually on point. I’m sorry to say, that this plus $2 will buy you a cup of coffee ๐Ÿ˜‰ You seem, from the outside to be “looking for a setup” which is an emotionally difficult way to sustain high performance.

    In your situation what I would be doing is find ONE SPECIFIC SETUP which is repeatable and behaves the same way most times. This is what BobbyLow has done, and his results are now exceeding mine!

    For example, my core daily chart setup is Hammer candles in an uptrend where the candle touches the 8EMA, uptrend defined as 8EMA> 21EMA. Setup is activated on a break of the high, and I have a condition that if the upper bollinger is falling there needs to be 1.2R to the upper bollinger to take the trade.

    This will look nothing like your setup, but because my setup looks exactly the same all the time, I can design an exit algo which is perfectly suited to it. That optimization of exit routine is going to double my performance.

    My intraday setup is looking for an uptrend on 3 out of 4 of daily weekly 240 and 60m charts, then a horizontal support area on the 15m and a false break below it.

    Take a look, for example, of my recent trades in Silver which happens to be the chart I have open. According to my exit algo I have 3.9R win, breakeven trade, 1.28R win, 1.8R win, -1R loss, and one trade currently open approximately breakeven.

    When you get SPECIFIC on your system design you will improve your results

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

    Good to see you charting on the real price ๐Ÿ™‚ IMO spot price is even better than front month futures.

    Agree – that is certainly not an uptrend

  • phylum

    One of the motifs on my wall is “don’t fight the trend until it breaks” ….
    If we draw similarities to “human relationships” …. have you ever seen one than has not been”traumatic”?

  • BobbyLow

    Interesting little spike on ole bucky after 9PM EDT and got stopped on my Short USD/CAD that I put on today for -1R. However, this spike was favorable to my Long USD/JPY carried over from Friday and I just closed this position for +3.29R.

    I probably could have tried to let the JPY run but it being a holiday eve and all who knows what kind of evil will be lurking tonight. If it continues to run without me, so be it.

    Catch up to y’all in the AM

  • phylum

    “Last week, volume in gold futures dropped to their lowest levels of non-holiday trade since August 2010. Like the broader financial markets, these are circumstances that look โ€˜too quietโ€™.”

  • phylum

    RBA in 66 mins

  • DollarChaser

    thanks mate. currently short AUD/USD.

  • phylum

    Be nimble

  • DollarChaser

    yeah ive got a bit of wriggle room. in almost 3R profit now, stop set to +.5R. if they announce anything unexpected ill just GTFO at market.

  • phylum

    So, where does the universe end?

  • phylum

    BobbyLow, have u looked at the calendar for this week?

  • Scott Phillips

    After Gold blew through my stoplimit order this morning without filling, I tried for a cheeky fill on a retrace.

    Top ticked it! Very satisfying

  • mugabe

    detroit

  • Scott Phillips

    All positions in profit. Everything right with the world

  • Scott Phillips

    nice trade, looks like a runner

  • phylum

    cool:)

  • phylum

    …and

  • DollarChaser

    held the trade and followed CM rules. my trailing stop closed me out at .92967 for a 3.54R winner. short and sweet trade.

  • phylum

    v.good … is a mongrel atm

  • DollarChaser

    of course not all my trades turn out this well. last weeks total profit was just .5R. and b/e the week before. slowly getting there

  • Scott Phillips

    outstanding work. following the rules for a big winner ๐Ÿ™‚

  • phylum

    a winner is a winner:) well done

  • https://evilspeculator.com molecool
  • https://evilspeculator.com molecool

    Indeed….

  • https://evilspeculator.com molecool

    Yeah, but they’re still the wrong color.

  • mugabe

    exactly: should be brown if it’s copper

  • Skynard

    /SB breaking out, nice above 16:)

  • dragan ilic

    nice work scott ๐Ÿ™‚