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More Ammo For Swing Traders And Scalpers
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More Ammo For Swing Traders And Scalpers

by The MoleFebruary 13, 2019

This is going to be a short post as I my new temporary crown started to come off last night – whilst eating soup no less – and I had to go back to the dentist this morning. I’m seriously considering renting out a room in her building at this point as I’ve been dealing with one dental problem after another since late last year. And that’s coming from a guy who’s been flossing religiously for the past twenty years or so.

Anyway, on to business. The E-Mini mostly pushed sideways yesterday but managed to crawl its way above the daily NLBL at ES 2736.5. So far so good although we need to see some progress today/tomorrow or I fear gravity will once again start to kick in.

Since the campaign has scraped the 1R mark my stop has now moved from ISL to break/even. Not much else to do now but wait.

Let’s Talk PREM

I mentioned the PREM in the comment section the other day and thought I should share a few more details for the rest of the crew. After all I know how much many of you guys love to play the swings during the session, so the PREM may just be a welcome addition to your trading arsenal.

The PREM is mostly used by equity index arbitrage programs, and it’s simply the difference between the futures and the cash index:

PREM = ES – $SPX

Since not all stocks in the $SPX open at the same time, the first few minutes will be inaccurate. As such the PREM will also be inaccurate (and usually produces large spikes), which is why I simply clip the first 30 minutes of the session.

Also, since the futures close at 4:15 EST while the cash index closes at 4:00 EST any PREM delivered after 4:00pm EST is wrong as well. It’s usually best to start closing out open positions past 3:50pm EST.

Now you can calculate the PREM yourself but I wouldn’t recommend it as the formula is a bit more complex and there are a few subtleties that need to be accounted for.

Instead I recommend getting your hands on an actual pre-calculated feed – with IQFeed/Kinetick I use PREM.Z (there is also PRYM.Z but it’s for the large S&P contract, not the E-Mini). It’s part of their core data feed and you don’t pay anything extra.

There are many ways to use the signal and we’re going to dig a bit deeper in the near future. A very simple but effective approach is to wrap a 2.0 Bollinger around the PREM and look out for pushes > the upper BB and declines < the lower BB.

Pro tip: Do not use actual PREM values for buy/sell levelsย as they change on a daily basis along with the S&P’s fair value. Both are somewhat related but you can completely ignore fair value and simply focus on the PREM’s relative range.

As you can tell from the 1-min panel above this works pretty well, even in sideways tape. Or perhaps especially in sideways tape. Strongly trending tape may overwhelm the sell/buy ranges so be more careful on those days.

Anyway, I plan to dig a lot deeper here with some of my analytical tools and will report back once I find out more. In the meantime try out the ‘PREM for Dummies’ approach shown above and let me know how it’s working out for you.

 


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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  • zzezzezz

    Small short position @ ES 2760…. tight stop…

  • https://evilspeculator.com Sir Mole III

    Why?

  • zzezzezz

    personal rule: if 200 DMA is above the 50 DMA, then i short the first pop above the 200 DMA (with a tight stop)

  • Ronebadger

    SPX and VIX…Both UP

  • Darkthirty
  • sutluc

    What is a tight stop?

  • Darkthirty
  • BobbyLow

    Finally got stopped out for a small net loss (-.12 R) on my short Crude trade this morning. Entered this trade about a week ago and it just couldn’t find any sustained legs. As Ed Seykota says “One good trend pays for them all” so I put my line back in the water to see if I can catch a trend on the long side.

    https://www.youtube.com/watch?v=LiE1VgWdcQM

  • zzezzezz

    my stop is @ 2763
    timeframe is intraday UNLESS the 4pm close is below VWAP and 200 DMA, then i will hold overnight and lower my stop

  • Jason13

    Out Platinum, break even….not ready yet. More downside I feel.

  • BKXtoZERO

    I grabbed some TVIX earlier 34.8 area and have been reading, looks like it may be heading back up

  • HD

    Nice trade

  • sutluc

    Thanks.

  • zzezzezz

    Thanks. I’d say “nice opening trade” ๐Ÿ™‚
    Let’s see what happens after I close it…. What could POSSIBLY go wrong???????? ๐Ÿ™‚ ๐Ÿ™‚ ๐Ÿ™‚

  • HD

    But the VIX? 15

  • HD

    Mole, appreciate the PREM info. Honestly, I donโ€™t see an edge.

  • zzezzezz

    LOL

  • HD

    So SPX closed 2744, rallied 17 and sold of 10…. mind those BOTs

  • ridingwaves

    its all about the benjamins…

    Breaking news….
    Stanley Fischer, appointed to the Fed by Obama in 2014, joins BlackRock

  • Julie 35 – 25 – 36
  • BKXtoZERO

    Short Crude 1R via DWT at 9.04

  • Julie 35 – 25 – 36

    Guys IMO watch TLT A bullish close above 121.24 is … Well Bullish
    JULIE

  • evilasevildoes

    spx 2748.11 if below 2738

  • HD

    Very sad news. Tony Caldaro, The Elliott Wave lives on, passed away. Maybe the best market technician of our time. Great teacher, better person. He will be missed.

  • evilasevildoes

    oops maginot line 2753.85 then a pop

  • evilasevildoes

    oh no he wasa pal

  • HD

    He taught me it all. He was a pal!

  • evilasevildoes

    2748.60 my support

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

    pick your targets Kitty.

    HYG, unsustainable climb rate.
    88 day cycle, or 30 day sub-cycle https://uploads.disquscdn.com/images/78fb58f9f57fd396283c8be075178dfab088b442bd1bbf0521d4b98770c79de2.png (60).
    Off to Lunch!
    -GG

  • Mark Shinnick

    Damm, Brain Trust, wherever to be found, thus lost to us all.

  • Mark Shinnick

    I’m getting equity short-signalling. Volatility is at / holding support. Would naturally be quite phenomenal to break that, but for the time being that’s my positioning.

  • Jason13

    Wow. I did follow him a bit. So weird, I was reading his blog on the weekend. Doing it til the day he passed.

  • ridingwaves

    Thursday in opex makes sense for move down…seems to be good odds lately

  • BKXtoZERO

    pattern is soft/rounding out a possible bottom

  • zzezzezz

    Current max pain points for 2/15:
    SPY @ 263
    SPX @ 2650

  • Julie 35 – 25 – 36

    Let’s put a fork in this rally
    JULIE

  • evilasevildoes

    tomorrow night 7 pm

  • evilasevildoes

    its a valentime massacre date

  • Julie 35 – 25 – 36

    EV Breaks 2748 support and below VWAP selling should increase
    JULIE

  • Mark Shinnick

    You like the Hokey-Pokey ๐Ÿ™‚

  • Julie 35 – 25 – 36

    Guys Do not forget your sweeties tomorrow.We like nice cards and flowers but also surprise “Presents” It’s the thought that counts!
    JULIE

  • Ted

    Max – one more week followed by 2 to 4 months of pain.

  • ridingwaves

    Come on Julie, your fork is so buried in bull steak, you need pliers to pull it out….

  • buyemsellem2000

    Sorry to hear that. There were 3 blogs I’ve read for over 10 yrs. This one, Tony’s and Ted Burge P&F blog. Now Ted and Tony are gone. Careful out there Mole.

  • Julie 35 – 25 – 36

    Hi RW Actually I am looking for a pullback to approx 2643 or 2554 to go long
    JULIE

  • BKXtoZERO

    LOL

  • Ted

    I’m speechless after spewing all those dyer warnings to the bulls you are planning to go long on a Mickey Mouse pullback??? The easy money is gone.

  • evilasevildoes

    2755.36 new target spx

  • Julie 35 – 25 – 36

    Hi Ted 2554 is not a Mickey Mouse pullback.
    JULIE

  • Sp00nman
  • Ted

    Sorry I had 2754 in my head for some reason. i’m going out to take a break and take care of my honey. Again sorry for the mix up – my bad.

  • Darkthirty

    He had been ill for a while, peace

  • Jason13

    Some buying here on Zero but the BBs are squeezing on the 60min…which way, I say. No position in SPX right now. Still holding long bonds and Palladium short.

  • https://evilspeculator.com Sir Mole III

    Unlike your Elliott Wave stuff the PREM is a simple alpha factor that can actually be tested algorithmically.

  • ridingwaves

    well, nothing is written stone….so it could happen but it’s not looking good, especially if china trade talks end in deal and Trump signs bill on budget than declares emergency on border to fund wall…those are 2 very hot irons….

  • https://evilspeculator.com Sir Mole III

    Hey Bobby – well played mate. You held it for a week and although you probably knew what’s up within a day or two BUT you stuck with the system. I consider this a solid win. Puts a smile on my face.

  • https://evilspeculator.com Sir Mole III

    Hey guys – sorry for being largely absent but I started to feel like shit after I came back from the dentist and had to lay down a little. Then I had a 2 hour conference call, and then it was already dinner time. There goes the day!

  • Julie 35 – 25 – 36

    Jason You have a target $PALL on a pullback … 1214 – 1225 ? Weekly RSI @ 79
    JULIE

  • https://evilspeculator.com Sir Mole III

    Okay, some promotions are in order. The following members now have moderator privileges:

    Julie – our resident trading babe
    BKXtoZero – the upcoming kid – A for effort and he has a humble perspective.
    BobbyLow – the one and only!
    HD – who is a real pain in the ass with his EWT crap but he’s a solid contributor.

    Wield your new super powers with care!

  • https://evilspeculator.com Sir Mole III

    You look vaguely familiar… mmmh….

  • https://evilspeculator.com Sir Mole III

    And the market didn’t melt down?? With both of us at the dentist??

  • https://evilspeculator.com Sir Mole III

    The revolving door lives on…

  • BKXtoZERO

    Boring stuff from me… TVIX is actually treating me OK miraculously. I took a sizable loss buying crude oil in December on the break under 50. AVG was 47 but got wigged out. Excluding that, my account is up trading mostly TVIX. My holds are few and most often small (but not always) he he he But largely boring stuff…. 1) wake up 2) pick a mid day peak and buy TVIX. I took half off from today for a 0.40 loss, holding small…. Looks like bulls could win it all here finally. I am amazed I survived. I used to go from up big to damn near zero for years before I started “TRADING”… Since then, (last 3 years) I am doing well. In my previous life I never would have survived a rally like this so to be here, in one piece at major inflection point is worth a trip to the Indian Buffet for me today. Cheers!

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

    Itโ€™s just my lens. A lot of these types of things can be seen in hindsight and thus backtested etc. I need to see it in real time and it has to have a look. Iโ€™ve found price action to be the ultimate set up. Jmho

  • Julie 35 – 25 – 36

    Thanks Chief
    JULIE

  • https://evilspeculator.com Sir Mole III

    I post updates here as soon as I have time to run a few basic tests.

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

    Wow! That is pretty cool and totally unexpected. THANKS! I kind of figured I was one big pain in the balls…. I will try to post more charts. So now I can delete other peoples posts??? he he he

  • Julie 35 – 25 – 36

    Hi GG Welcome Back !
    JULIE

  • Julie 35 – 25 – 36

    SPX Today’s bounce Yup The 60 min 8 ema
    JULIE

  • Darkthirty

    Been watching a lot of short signals fail, stay sharp

  • Julie 35 – 25 – 36

    GG Can I practice deleting your posts ? LOL!
    JULIE

  • Darkthirty

    soft, round bottoms are nice

  • Darkthirty

    Only get 1 down opex a year, if I remember correctly

  • randomuser6789

    I see posts from Monetary Perspectives are no longer present. That was an appropriate use of Mod authority.

  • https://evilspeculator.com Sir Mole III

    Be nice!!! And yes – you can if it’s appropriate. You can also edit comments if you feel that they violate policy. I usually appreciate an email if you do so that I’m in the loop but I am not going to interfere with moderator decisions.

  • https://evilspeculator.com Sir Mole III

    Holy kamoley – what have I done?

  • https://evilspeculator.com Sir Mole III

    I would agree.

  • Julie 35 – 25 – 36

    Hi Chief .. Just kidding .. Again Thanks for your confidence in us.
    JULIE

  • Jason13

    Julie for now Iโ€™m gonna shoot for equal leg pullback at 1280 area (nearest futures).

  • Jason13

    You mean TTP….heโ€™s blown up his account surely.

  • BobbyLow

    Thanks Mole.

  • randomuser6789

    That sounded like him.

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

    only if you send me pics =P

  • BobbyLow

    Thanks. Lets hope the trolls stay away and we don’t have to use them. LOL

  • bankwalker
  • Darkthirty

    He was pushing a blog, I think. Bizarre thought patterns…โ€ฆ..

  • Darkthirty

    Been watching that loss accelerate…..young people don’t want to learn either. They think they can google the answers without having to learn critical thinking.

  • Darkthirty

    All rats look alike

  • Mark Shinnick
  • BKXtoZERO

    Nutty Gas may be coming in for a landing at next low…. Watching UGAZ. Glad I took the cash and ran the other day

  • evilasevildoes
  • Mark Shinnick

    Now…appears to my models something is more likely-than-not danger-close to happening.

  • Jason13

    Oh, do tell.

  • BKXtoZERO

    What does the magic 8 ball say when you shake it? I always ask it.. ARE YOU SURE? To make sure I get good answers.

  • evilasevildoes
  • evilasevildoes
  • BobbyLow

    Boring is good. We have different styles and methods but I know you can be very effective doing what you do. I think we’re on opposite sides of crude right now and I think we can both be right (or wrong) because different methods can send opposing signals and different time frames can have opposing signals as well.

    But speaking of crude, my system is probably a lot more boring than yours. It had a decent return for most of January up until January 25th for a little over +3R but since then it’s been a real snooze fest with closed trades of -.09 R, -.14 R +.07 R and -.12 R. But this is the way it trades for me. However, one of my rules is that I must take every trade signal as it comes because I have no way of knowing which one is going to have a decent trend. Ironically some of my best trades have been the worst looking setups so picking and choosing which one looks best doesn’t work for me either. I just try to keep my head down and go with the flow.

    Glad to see you doing well. Congrats BKX!

  • HD

    Ha. Did you see the 17-10 trade today?

  • ridingwaves

    money losing thought patterns, if you looked his comment string you saw a lot of hope on world crashing over last 4 years and then betting on it with gold etc…..if folks want to invest with him, I’m starting an investment company…..

  • Darkthirty

    I’m tuned to con men, but the real tell is when someone tries to force their perspective on you when YOUR outcome is of absolutely no consequence to them at all…โ€ฆ..WTF

  • Mark Shinnick

    LOL, roger that. As all things, its our VR of probabilities; that’s all we ever get.

  • BKXtoZERO

    Can you please post a link to the site that gives that info? Thanks!

  • BKXtoZERO

    sheeez….

  • evilasevildoes

    stockcharts…point and figure

  • bankwalker

    That is the new moderator welcome party.

  • Crofx

    So Sad, I did his course, I think he was the only one that could trade elliot wave RIP Tony

  • evilasevildoes

    es about to sneeze

  • BKXtoZERO

    I mean the options max pain with the nice graphs…

  • evilasevildoes

    sweet man R I P

  • Jason13

    There may be evidence to supporting that despite the fact that everyone keeps predicting that…
    https://twitter.com/stockboardasset/status/1095786828001619975?s=21

  • Jason13
  • evilasevildoes

    i follow him

  • BKXtoZERO

    For all the “Moon Traders”. There will be a “Super Snow Moon” (brightest of 2019) next Tuesday Feb 19th so trade accordingly. Full Bull or Bear Tard.
    https://www.travelandleisure.com/trip-ideas/space-astronomy/biggest-super-snow-moon-2019

  • https://evilspeculator.com Sir Mole III

    No – why?

  • Jason13

    Bonds busted up this morning…something is up

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

    Retail sales numbers

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

    covered and went long at ES 2738, for just a quick scalp