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Nice Little Bear Squeeze
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Nice Little Bear Squeeze

by The MoleJanuary 30, 2012

Well, that was a nice little bear squeeze we got ourselves today – almost textbook I may add, featuring the early morning wipeout followed by a systematic run higher. If you paid attention to the charts I posted last week then this morning’s support zone should have come to no surprise to you:

Those two Net-Line Sell Levels (NLSLs) at the psychologically important 1300 mark proved too much to overcome, which frankly was not a big surprise to me. There is simply no confidence in the tape – one way or the other! For the entire month of January I have maybe seen one or two quick spikes beyond the Zero’s +/- 1.0 signal range. A twenty handle drop at the open usually comes with a bit more juice to the downside and lack of participation/momentum simply means that the tape can turn at any moment – and that’s exactly what we got.

If you are wearing your bear hat then please don’t get your panties in a bunch until we see a breach below 1285 – or even better 1280. Now that could open the door for a more pronounced correction, but until I see that happen let seasonality, momentum, sentiment, etc. be damned! 😉

But I really don’t care that much for equities right now – not until we get a strong move in one direction or the other. The FX side is a lot more juicy IMNSHO – very very nice setups today:

AUD/JPY – similar pattern as the spoos but there is a whole cluster of support sitting below plus we have a rising and fast encroaching 25-day SMA which should be good for some support. I would watch out for a breach of the 81 mark – if we get that plus a push above the 25-hour SMA then say hello to 81.80.

Alright the best ones below for my intrepid subs:
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More charts and cynical 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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USD/JPY has fallen from grace in a huge way and is now scraping support. I would love to see a touch of the 76 mark at which point I’d want to be long. Either that or a breach above that 76.42 hourly NLBL – not sure we’re going to get that one that one though as we’re running out of time.

Next runner up – USD/CHF – excellent excellent setup. Because either this is a last kiss goodbye (i.e. shorting opportunity before a drop) or we make it above those hourly buy Net-Lines plus that 100-hour SMA and we are golden to the upside. Play this sucker either way but be disciplined with not jumping the gun too early.

EUR/AUD also at an inflection point – it’s been taking its merry time but we do have a bonafide floor pattern here. I’d be long above 1.25 – assuming it can overcome that 25-day SMA plus the NLBL it’s pushing its head against right now. For your stops consider the support on the hourly I have highlighted.

And there is more! EUR/JPY – sitting right at the 100 mark – psychologically important and it’s a NLSL – you know what to do. If this thing turns to the downside then consider that there’s a bunch of support below – I personally would only be interested in a long trade here into 102.5.

And last but not least – the NZD/USD, which bounced against a bit of resistance. I told you guys last week that this thing has the potential to keep running – the force is strong in this one! Hey – I get one Star Wars reference a month, okay? The short side is tough to trade right here unless we get some kind of RTV Sell or an inside candle. But I would be long again on a breach of today’s high with a stop below yesterday’s lows (for the lack of a better stop point – sorry, the best I can offer right now).

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There you go – tons of good setups on the FX side. Did I promise too much? Happy unbiased trading (to quote Volar).

Cheers,


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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  • Anonymous

    maybe someone here knows answer to this:

    Is there a way to calculate probability of stock prices to be at a certain range the next day ? say probability of SPX to be at 1300-1305 or 1330-1335 etc ?

  • http://practicalt.blogspot.com/ Gold_Gerb

    knock yerself out kid.

    (this was a random GOOG search)

    http://25yearsofprogramming.com/blog/20070412d-probabilities.htm 

  • Anonymous

    Nice retest

  • Anonymous

    That trend line sure is pretty!

  • Anonymous

    Hmm. Interesting. thx for the link kid..

  • https://evilspeculator.com molecool

    How about pivots?

  • https://evilspeculator.com molecool

    Yeah, interesting like many things – but is it useful to your trading? I took a look and it’s completely academic. Sorry to say but to use historic volatility to calculate your trading range in this market is going to give you very little edge. Go ahead – prove me wrong. I would rather use pivot points or VWAP (as featured on the Zero) – heck, even a simple Bollinger on a daily (or longer) period would get the job done.

    I like it simple stupid when it comes to structuring my trades. A lot of people think that the key to winning is to delve into complexity – but I have come to the opinion that the opposite is in fact the case.

  • https://evilspeculator.com molecool

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    D   A   I    L   Y      Z   E   R   O     H   A   S      B   E    E   N      U   P   D   A   T   E   D

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  • Anonymous

    ladies and gentlemen..I have been loading up at .90 on this symbol..(Mole, I digress and apologize)might be some pullback but it looks ready to rocket…

    NGSX- reasons- low float, 1.56 cash per share, fda decision next week
    big boys are all in after taking it down..
    http://www.dailyfinance.com/quote/nasdaq/neurogesx-inc/ngsx/ownership 

    shorts are on some new Somalian freighter
    http://www.nasdaq.com/symbol/ngsx/short-interest

  • Anonymous

    well, I was also having doubts of this. It just has historic volatility as input. Not caring about trend also. and yeah trendline supp/resis.

    pivot points based on supp/resis lines and high probability of price reversing there?

  • Anonymous

    just replace historical with future, and you are set.

  • Anonymous
  • https://evilspeculator.com molecool

    Indeed! LOL

  • Anonymous

    good humour?

  • Anonymous

    pump n  dump?

  • Anonymous

    Hum, yes sir it is!

  • Anonymous

    🙂

  • Anonymous

    Great timing on AUDJPY, was going to wait for 81.

  • Anonymous

    Be nice if AUD/JPY will drag /ES down overnight. Holding short one unit.

  • Anonymous

    That failed gap fill along with this signal if it holds up is good evidence. Was wondering the same thing and it would be more likely.

  • Anonymous

    looks like that happened already….pretty hard to dump from .90 after being at $6..obviously you didn’t look at the links….cheers…the last 2 symbols I posted were 30% gains..but 2 out of 3 will work…cheers and good trading…

  • Anonymous

    Thanks for posting your analysis and encourage you to continue:)

  • Anonymous

    Will buy it after a golden cross. That would give me 3 go symbols.

  • http://practicalt.blogspot.com/ Gold_Gerb

    BPSPX just in.

    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=2&dy=0&id=p89206455257 

    A dip.  3 red SPX candles just to get a dip? Frak.
    however, it has not crossed the median on the bollinger.

    For the investor, now would be the time to get neutral and buoyant.
    For the trader, maybe some good volatility surprises, both ways!
    After all, it is month end.
    -GG

  • Anonymous

    Hehehehe! Check out the latest for /HG. A move is definitely coming:)

  • https://evilspeculator.com molecool

    You guys and your golden crosses…. sheesh – Volar, didn’t you put up a post about that not having any statistical value?

  • https://evilspeculator.com molecool

    Told you guys to get out last Friday 😉

  • Anonymous

    Not sure if I’m referring to the same thing. Prophet will give a green light upon crossing the 30 day.

  • https://evilspeculator.com molecool
  • http://practicalt.blogspot.com/ Gold_Gerb

    T time on the aussie mates.
    (let’s see if it rolls, next few days)

    http://i44.tinypic.com/25pk86h.png

  • Anonymous

    OK, guess we are talking the same. Do you use Prophet at all for symbols? The symbol does look good though.

  • Anonymous

    That’s a heck of a diji on the hourly.

  • Fibz

    GERN is another interesting biotech. They’re the only ones with the type of cancer treatment they’re working on (deactivation of telomerase enzyme in tumors) and it’s not specific to any type of cancer. The 2009 nobel prize in physiology was awarded to some of their researchers for their work which is related to the development of this treatment.

    http://www.nobelprize.org/nobel_prizes/medicine/laureates/2009/speedread.html
    http://www.geron.com/telomerase

  • https://evilspeculator.com molecool

    Biotech is a tough sector – always filled with surprises (see their chart). I usually stay away – plus I don’t care about fundamentals or company related news. I have seen hundreds of companies announce ‘break throughs’ in cancer research. But if you get it we’re all still stuck with getting the usual chemo treatment. This stuff takes years and sometimes decades to turn into a real approved treatment. In essence – trading announcements like this is a crap shoot. 

    That said – I would have liked the symbol as a short two days ago.

  • http://practicalt.blogspot.com/ Gold_Gerb
  • Anonymous

    I haven’t looked at the numbers yet but I wonder how much bullish sentiment (AAII, Hulbert, NYSE put/call) has been worked off the last week just moving sideways? Enough to come off overbought and set up for another move up? And with minimal to know damage to SPX price? Well played by “them”

  • Fibz

    I agree, but I think it’s worth keeping an eye on considering where the stock price is. I actually found the company by accident when I was reading about the telomerase stuff for its anti-aging potential.

    http://www.scientificamerican.com/article.cfm?id=anti-aging-pill-targets-telomeres

  • Anonymous

    Has the vix held up better than spx rebound would suggest?

  • Anonymous

    yeah looks already dumped. but question is how much one wud be willing to bet on this company ? I don’t trade anything under $ 5 as a    rule.

  • Anonymous

    Woot fx setups galore! thx mole.

  • Anonymous

    AUD/JPY above 81.

  • ian naugler

    81 and flying up…

  • Anonymous

    /ES filled the gap, WTH? Creates a hell of a div though.

  • Anonymous

    you dont need my encouragement now do ya…

  • Anonymous

    Nope!

  • Anonymous

    For the moment /HG failed at gap resistance.

  • Anonymous

    The doctor needs some medicine now.

  • Anonymous

    Just reloaded:)

  • http://practicalt.blogspot.com/ Gold_Gerb

    Copper.
    I swear. he’s so smart. PhD. smart.
    http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=0&mn=9&dy=0&id=p93079656458 
    200 day.

  • Anonymous

    Guess where that doji is at?

  • Anonymous

    Waiting for /GC to fill the gap @ 1741 as well.

  • Anonymous

    I am with ya on the aussie, copper etc but I would stay away from shorting gold. If things get ugly in europe that could trigger a rush into gold.

  • Anonymous

    Gold is in a correction and will fall hard. LT will be looking for a good entry because you are right.

  • Anonymous

    http://www.etf-corner.com/.a/6a010535da87f8970c016300544625970d-pi

    Dont get too excited now! I thought you might like this chart.

  • Anonymous

    Nice!

  • Anonymous

    Speculative until we see a reversal.

  • Anonymous

    With /DX down shouldn’t /GC be going to the moon?

  • Anonymous

    Mega div on both AUDJPY panels, see how it will resolve.

  • https://evilspeculator.com molecool

    I think a VWAP breach could be golden.

  • https://evilspeculator.com molecool

    I like tape like this as we get an expanded VWAP bubble early in the session – plenty of opportunities for swing trading.

  • https://evilspeculator.com molecool

    Glad you enjoyed them – very few comments about them here which is a bit puzzling. I think I need to draw more FX traders to this blog.

  • Anonymous

    Yes, good point!

  • Anonymous

    I definitely find it easier than trading equities. I guess people worry about leverage but you can trade in small increments. Less fees and if you are long you get paid interest.

  • Anonymous

    Patiently (not really!) waiting for your brokers review.

  • Anonymous

    New Post!!!

  • https://evilspeculator.com molecool

    Sad to see you go btw – I sent you an email…