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One Rules Them All
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One Rules Them All

by The MoleSeptember 2, 2010

I am still recovering from a little technical melt down I experienced with ThinkOrSwim this morning. Fortunately their customer support really kicks ass and helped me roll back minutes after posting a slighty angry support request. Alright, it was a really angry request – but who can blame me? We’re talking about dozens of charts here that suddenly disappeared.

Anyway, it’s all fixed now and I’m a happy camper again. Yes, they screwed up their last release but it is clear they are working hard to help everyone roll back to their previous setup. If you have any trouble at all – just email support@thinkorswim.com and they will help you out. Even with all the recent trouble I maintain that they are the best platform for retail traders, period.

Anyway, now back to the markets. I’m posting this chart in the clear as I think everyone should see it after what transpired yesterday while I was on the train South. And I’m not ashamed to admit to this being a plug as this chart continues to keep dominating all others. Some of you subs are familiar with it as it’s a recent edition to the team – the daily Zero.

For the past two months the daily has been pointing upward, much to the chagrin of any bearish subs who have learned to respect it. It’s almost become a daily routine now – after the closing bell I pull up the daily Zero and upload it to the server. And every time I do it I am on the look out for a more negative signal which would be an early harbinger of structural weakness and thus short to medium term downside.

But as you can see – the daily Zero has been stubbornly pointing up. And guess what – thus far it continues to be proven right. I’m not sure what’s making this market tick, and despite the fact that I wrote the damn thing I myself am surprised by the level of reslience that equities have been exhibiting in the face of a relatively firm Dollar, plunging treasury yields, horrible economic reports, etc.

Listen guys – if you’re like me you have been reading hundreds of opinion pieces and studied thousands of charts trying to figure this market out. Yeah, you can do that and maybe you somehow manage to call the wiggles in this tape. Or – you can just follow the Zero 😉

There are three of them now. The daily is the latest edition and it’s really growing on me. The hourly was the original Zero and it shows us nice divergence across daily sessions. If you’re a swing trader or even scalper the Zero Lite is where all the action is. I can’t tell you how often it has kept me and my subs out of trouble – in particular ahead of head fakes. Anyway, if you like what you see and are interested in becoming a Zero sub then don’t waste time and sign up here.

Alright, now after this shameless plug I want to respond to Tim Knight’s post from earlier this morning. I tried to get him on the phone but he seems in bad spirits, so I will address it in an open forum as I actually meant to encourage him. This is what Tim said:

Two important questions I’ve been posing to myself:

Why not just resort to day-trading? It’s tempting. When I read about nummy having something like 28 profitable days in a row, and Market Sniper having – what was it? – something like 50 – – not to mention day traders not having to worry about overnight gaps, it is horribly tempting to throw all the knowledge I’ve built over the past quarter-century into the shredder and just take that approach. But, simply stated, that just isn’t me, and it’s not my style. There’s a reason I approach the markets the way I do; sometimes it works brilliantly; sometimes it seems foolhardy. Lately, it seems to be more of the latter. But throwing my arms up and completely changing styles just because I’m frustrated doesn’t seem prudent to me, although I’m willing to hear other opinions.

Mole: You are worried about throwing away the knowledge you accumulated over the past few decades. That’s understandable. However, you ought to ask yourself what good ‘knowledge’ is when it ceases to serve you? I study martial arts and an aphorism in Aikido – which has only two belts, white and black – is that as you gain more proficiency and work hard you finally are being rewarded with a black belt. Then you keep training and as you do your belt starts to fade and after hundreds or thousands of washing cycles fades back to gray and then almost white again. This is representative of the fact that in martial art you have to learn all these techniques to master an art. And then you have to forget all of them – in a sense, you complete the circle. You have to make them your own – they have to become you. And at some point you don’t think about techniques anymore – you just move when necessary and your instincts will tell you what to do. But those ‘instincts’ is the accumulation of what you have learned and practiced for years and years.

Now, I’m not saying that you should trade via instincts, that is not what I tried to communicate. Rather, I suggest that you should not be afraid of throwing away anything you have learned and that may have served you in the past. I just recently switched from Aikido to Systema, which is a Russian system I am really starting to appreciate. But guess what – many of the things I learned in Aikido I now need to abandon and I again am training with the white belts. Of course I do have a bit of an advantage, but you can’t walk into class and think that you are a hot shot and that you think you know something. That’s a mental block and it will lead you to not learning anything new. Plus it’ll lead to getting your ass kicked – hehe 🙂

Maybe that’s why we are mortals to begin with. We accumulate too much baggage and knowledge that may not be applicable as times change. But even within our times we often find ourselves unwilling to embrace change – despite the fact that change is the only constant in the universe. Now, in terms of trading it is very clear that this market has changed considerably in the past few years. And I’m certain that it will never revert to what it used to be – traditional technical analysis simply is unable to offer the type of edge we were able to enjoy for the past few decades.

Phoenix From The Ashes:

But this is also an opportunity to excel to the next level. I have been spending a lot of time working on new automated trading systems lately and yes – they are all intra-day systems. And not just swing trading strategies – most of the ones that seem to be unaffected by the daily gyrations and gaps of the past two years are running on a 1 minute chart. So there – we can argue with what we think what’s ‘right’ or what we want this market to be – or we can just accept the market ‘as is’ and develop tools that offer an edge. I choose the latter.

What worries you more than anything? It isn’t pre-election shenanigans; it isn’t monthly OPEX silliness; it isn’t the Fed; it isn’t Geithner. What worries me above all is…….what if I’m wrong about the economy? What if all this government intervention, in the end, turns out to be a brilliant stroke, and it really does set the economy on the road to a robust economy complete with healthy, growing earnings, growing employment, and worldwide prosperity? What if my sense of “balance” and “natural” is just misguided, and the modern knowledge of economics has yielded a situation where things simply aren’t going to roll over again? I have no answer. That’s simply my question.

Mole: What we ‘believe’ does not matter. The market is smarter than you, I, Prechter, or anyone else out there touting that they have seen the future. Quite frankly, I can show you some probabilities via my wave counts and many times I nail it spot on. And then there’s that sudden move that nobody anticipated – maybe I was suspicious about what preceded it (i.e. my comments to the Zero subs last Thursday) but did I anticipate a spike like we saw yesterday? Hell no – and neither should anyone for nobody has a crystal ball (except Goldman Sachs). Your sense of balance and natural wave form is very honorable and probably spot on, Tim. But you may be limited by your human perception in that you want it to happen now when you feel a redemption is overdue.

Well, sorry to disappoint you, my friend – but there is no ‘fairness’ in war, love, or the financial markets. If I have learned one thing in my life is that the big dogs get away with pretty much anything while the poor minority group schmuck who’s trying to feed his family via some desperate and act like robbing a gas station for fifty bucks gets thrown in the slammer for over a decade. That’s life – and although you have experienced success in your personal life do not make the mistake to think that any of us are excempt. Life is a bitch and then you die.

The market will do what it wants to do. All we can do is to follow the signs and then do what we have to do to survive and fight another day. Another lesson I have learned is that half of winning the war is to surviving and being able to fight another battle. Thus, instead of complaining I am spending my energy focusing on new tools and systems that are impervious to news, manipulation attempts, FOMC statements, etc. I think I am making great progress and to me it is clear that the future is in automated trading.

Bottom Line:

In the coming months Evil Speculator will slowly shift its focus from traditional technical analysis to automated trading and selected tools that provide a clear edge. The Zero is one of them. Geronimo is another. But there are more to come and I’m just getting started.

Cheers,

Mole


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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  • equity_momo

    Very interested in this automated trading you are working on Mole.. right now im not a subscriber as i dont have the time to follow the markets and your zero system with the close attention they deserve but id be interested in something thats a little less hands on if thats the gist.

  • amokta

    Halleluyah! Am i the only one on this blog?
    May be time to subscribe to zero.

  • K.I.M.

    this post deserves its own place in the universe.

  • https://evilspeculator.com molecool

    I want to make sure it's 100% this time – give me a few weeks to complete what I'm working on. It's coming.

  • https://evilspeculator.com molecool

    Well, I have been quiet – sorry – has been a tough day on my end and I was gone yesterday.

  • raised_by_wolves

    Very well written post, Mole. Artful and helpful.

    The daily zero being up is compatible with my scenario for ($SPX*(SLV/GLD)) . . .

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/b1a8f295-e33c-407c-9796-1cf3fcdcc70c/00002017.png

  • http://channelsandpatterns.blogspot.com/ springheel_jack

    There's an unspoken subtext to this post which is don't cross Mole, he's a martial arts expert. 🙂

  • raised_by_wolves

    Hi Springhell. Have you seen Mole's recent work with $SPX/$VIX?

  • equity_momo

    Sounds fantastic. And if its in a few weeks you're probably going to coincide with the top of the last hurrah in this market (i see 3rd week of Sep as the top , anywhere from 1100 but more likely closer to 1140) and then its Wil E Coyote , meet ground.
    I smell panic at the policy makers level. As imperitive as charts are , dont get lost in them at the expense of not watching how the elite are acting. My greatest fear for the coming sell off is how they react – bank holidays? Counterparty risk is dismissed as 2008 : i remain vigilant…

  • http://channelsandpatterns.blogspot.com/ springheel_jack

    No I haven't mate. I'd be very interested.

    Been a bit busy offline the last few days so my reading's been suffering.

    I've been posting my version fairly regularly in my posts. If you look near the bottom of the chart I thank you for bringing it my attention last year. Great indicator.

  • raised_by_wolves

    Here's his last $SPX/$VIX chart from August 26th.

    https://evilspeculator.com/wp-content/uploads/2010/08/2010-08-26_trend.png

    I imagine it now shows green on the sub study.

  • raised_by_wolves

    I see:

    http://3.bp.blogspot.com/_w_OE7neHnUI/THzmQ13Z2-I/AAAAAAAABHk/dns67PkbMpw/s1600/100830+SPXVIX+Daily+Wedges.png

    Yes, I think it is the correct conclusion that a significant technical low was made in May rather than July because the July SPX low was not accompanied by a SPX/VIX low.

  • Eastbay

    Might have an interest in doing Geronimo if I saw some up to date stats on it.

  • Long_John_Silver

    Thoughtful post Mole – and I'm grateful for your continuing efforts to look beyond your analysis to find deeper levels of understanding of the environment we're in, then developing more powerful tools for trading it..

    Lord knows we need yet more powerful tools – with the automated trading rooms at GS and elsewhere never having a down day, we're playing the wrong side of the table unless we can access something comparable – I'm hoping you'll be the one to lead us out of the wilderness – thx, ljs

  • raised_by_wolves

    Personally, I think the first direction is up. $SPX/$VIX has a good chance of reaching the top of the monthly BB(20,2.0). However, there is lots of room to the downside after that.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/d76f3901-b30b-444c-a091-317792d340b5/00002018.png

  • DudePlunger

    Great post mole. The present is in automated trading, and the future may be as well, but I believe that gives the human trader liquidity opportunities once unavailable. The problem is stops. The day of getting in, risking 5pts on a stop, trying to take 10pts, and thinking you'll win 50-60% of your trades isn't over…..but its very very difficult (automated systems do this, but humans are having a tough time.)

    I traded with a guy over skype last year who has a strategy that helped him account for the volatility, choppiness, and fakeouts. He would get in on the /ES with 2 contracts and a very wide stop (I'm talking 30points.) He would then average his losers, selling 4 /ES at a higher position, and then 6 /ES at an even higher price, keeping his stop price the same for the entire position. If price worked immediately for him, he would secure profits. If he was able to sell more, he would execute the plan, and to be completely honest—I saw him get stopped out twice in 5months.

    But it takes capital. I can't do that with a $10,000 account, I'd want around $50-$100,000. I'm trying something similar with forex, because I can get the leverage as low as $0.10/pip, allowing me to build positions. With the /es and $50 a point, a $30point move going 1-2-3 would cost you $3,000 easily. Ouch, 30% of capital on 1 trade. With forex, you can risk $50 risking 100pips, very attractive.

    With this type of approach, one can have winners as large as 5 or 10x his losers. The guy I traded with would be hurt on his stops, but he would be hit so rarely that it didn't matter, he would move down his stop after the market started working for him and reduce his risk.

    Personally, I have been focusing on an approach where I take very few trades, 1-2 a week at most on the futures. I've been speaking with Convictscott to improve my setups and pick better entry points. My goal is to trade a lot less, manage my risk very well, and make more per trade (20-50pts.)

  • Bob the Horse

    Got filled on my 2730 estoxx right at the close. Getting shorter.

  • Brishort

    Thank you Mole for this great post.

    I can only deal with what I see. My bad trading mood the last few days was because I had an inherent feeling it would not break to the downside, just like the famous previous 2 X waves of P2 where I was caught pants down with a huge rally instead of a bear reward. My trader subcounciousness probably felt the trap before my wide awake eyes.

    Convictscott made such nice post last nigh as well on STU trader mind pollution.

    The unfortunate part is that although I was hedged to survive upside, it was a loss minimizing scheme.

    What is unfortunate, is that the “bad trading mood” and suspicion of another “X” wave P2 dramatic event bounce up was not sufficient to make me go neutral.

    Also being a new Zero sub, I still did not understand all the implications.

    Bottom line:

    Despite my bad trading mood being my intrinsic paranoia Sept 1 and today could have happened, apparently I am not experienced enough with trading pain to go neutral or even profit from it. I, too, never even suspected such a magnitude.

    Re-reading my posts today, I have all the evidence I need to abandon the bear case. You added the zero tonight.

    In addition, I now have the heart a little lighter knowing that if I feel exactly like Tim since a few days, that at least I am not alone. But that's no victory, it's more a symptom that I don't have the trading nimbleness the tape requires. So all in all, this is a conclusion of failure on my part.

    Now identifying a problem is nothing. Its how it's addressed that counts. Unfortunately, automated trading can't work for me (work restrictions) but I always felt as well that it was part of the solution.

    Good luck with the development Mole, and I'll be glad to continue assisting with useful actionable posts as much as I can.

    But clearly, the last two days were probably more painful fro my perception of the trading equilibrium I thought I reached than the last 2 years of bear pain.

    You may be right, not so many of us will be left 2 years from now.

    But at least, I will go to sleep knowing I fought the battle with the best of my brain and integrity, and was a decent retail trader.

    Being a trader is living to see another day. That will happen. But clearly, I will take a little break from trading for a little while. Because I need time to improve to debrief on what just happened with the bear case, EW, etc… and what is wrong with the chances of success, or what is required to be a successful retail trader in today's environment.

  • https://evilspeculator.com molecool

    Yes, you can't trade another man's system – never works. You have to have your own approach that fits your risk tolerance and capital commitment guidelines.

    And yes, you can trade less and wider swings, but it's tougher to do that with options as they are a wasting asset. Really tough to trade options in this market as the swings are so wild and volatility is… well volatile. I think my future is in the futures and FX. So, you're in a good spot.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I dont know if the bear bus has ever felt emptier….

  • https://evilspeculator.com molecool

    Thanks for sharing your POV. But don't get too stressed out about things – life is too short. It's not about ego or being right or wrong – just about money.

    I think the Zero is really helping us to not get too distracted by the noise. And that's good news, right? Imagine we would have to call the wiggles without it – I for one would have a much harder time.

    So, it's not all doom and gloom. Lessons to be learned. Time to step up our game. And for the record: We haven't been doing so badly – I know some bears who got completely wiped out in the past year. We rats stand to fight another day.

  • https://evilspeculator.com molecool

    Hehehehehe – the eternal cynic. But point well taken.

  • DudePlunger

    I should've clarified I'm not trading his exact strategy. But the approach to starting small and legging in, I took that and adopted it to my personality.

    Yes my future is in futures and fx. And when I have the capital, futures only (since all USD pairs are liquid futures.)

  • Bob the Horse

    Just the way I like it

  • amokta

    Like spectral lines converging, you are placing shorts faster and faster!
    BUt what if we have reached escape velocity (big melt-up last 3 days – could take months to work that off, if we even go downwards)
    Are you geting that 'feeling' that you are right re shorting – last time your pre-cognition was very accurate 🙂

  • Brishort

    Thanks your for the kind words. Indeed, have not been doing so bad because I'll live to see another day, health wise and financially speaking.

    Very disappointed, because I know that even if we are in for a choppy uptrend, I just don't feel like buying it. I am not that hungry wanting to trade. I like being short, or feel more comfortable that way for reasons I don't really understand myself.

    Enough for today, alcool is clearly on the menu now… 🙂

  • Bob the Horse

    Not feeling physically ill but that is okay – it doesn't always happen. I am convinced we are going to 920 before end-Oct and I reason that between here and there is down, therefore I must be short.

  • legobear

    The thing that gets me is that we spent something like 14 days working down from ~10300 to just under 10K and it took three days from the current bottom to get back up. It's a really harsh environment for a bear.

  • amokta

    Me too (with long term shorts). However, i m re-evaluating my trading strategy soon, and may reset all positions after the holiday, and 'start again' like Jessie Livermore 🙂

  • http://twitter.com/fapturbouserrev t h

    yeah the gyrations are certainly very frustrating! trust me, it will come right down after the bears have been squeezed out. I will look for levels to sell into.

    check out my FAP turbo review site here:
    http://fapturbouserreviews.blogspot.com/

  • convictscott

    You are so right! During my journey I've tried to trade both my first mentor Ivan Krastins and Linda Radsche's systems, as well as the brilliant Tom DeMark indicators and systems… I was never profitable until I was able to integrate an approach that worked with my personality.

    They both had great approaches and setups, but I could never put my finger on why my trading was not improving, and why my mental state sounded a lot like Tim Knight's does now.

    TK's problems are not with his system (though I believe his system is flawed for this market), they are ALL with his mental state, and his determination to hold onto what he has at all costs. Viewed objectively he is currently motivated by fear, and will not be back to profitability until he takes a short break, reevaluates, and comes back stronger. I know for sure (having been there) that nobody in his current mental state is competent to be in charge of a trading screen, no matter how much he knows about reading charts.

    Krastins in particular knew more about price action that anyone Ive ever met before or since, he was a gifted educator, his systems were profitable across all markets for him, and he had many students getting good results and some were running funds. But intrinsic in his approach was very mechanically taking every setup, both long and short, even counter-trend setups in strong bull markets, and mechanically taking partial profit as soon as return was at 1R. Getting stopped out 3 times (for mostly less than 1R losses) and then taking a quick profit didnt work emotionally for me.

    He also had strong beliefs that XYZ pattern is very reliable, ABC pattern is less reliable… I came to an approach where every bar of price action is viewed in context of every other bar. Sometimes the lowest probability patterns are the highest probability setups, in context of the price action (a hammer candle after a 3 wave pullback in an uptrend, for example)

    It just wasnt a good psychological fit for me. When I took his setups, and a few others I developed myself, away (and took out a few of his I thought were flawed) and started looking for ways I could develop specific trade plans for specific events, for specific markets, etc… then I became profitable.

    Also I've had to do a LOT of work with a psychologist (and with my regular sparring partners actually, I also have done 20+ years of learning and teaching kung fu) on trying to become a better trader and not just to make money. The outcome manipulation aspect, the hidden motivations for trading, using trading to overcome feelings of powerlessness and fears in my outside life… these things are all completely inconsistent with good trading.

    An interesting thing I keep track of is how much resistance I have to making a complete trading journal, when I dont feel like keeping it updated, I know I'm on the verge of bad trading.

    I find it endlessly fascinating that the same defects which affect my trading come out when I'm fighting. I've been doing martial arts since I was a little kid, I've been doing serious martial arts my whole adult life, and I am still affected by the childish desire to “make it happen, right now”, the “need to win”, the struggle against what is.

    Developing a trading strategy around a philosophy of continual self-evaluation and improvement has been an extremely rewarding process for me. I feel like this year so far (with a lot of work) I've gone from a competent trader to a good trader. I'm hoping to make the jump from “good” to “expert” next year.

  • Pitchman

    “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain

    Inflection Point @ http://notionalvalue.blogspot.com/

  • http://channelsandpatterns.blogspot.com/ springheel_jack
  • http://channelsandpatterns.blogspot.com/ springheel_jack

    That is interesting. I haven't looked at it with the BBs.

  • http://channelsandpatterns.blogspot.com/ springheel_jack

    That is an interesting chart.

  • jigdaddy

    my december puts have felt some serious pain in the last 2 days..

  • convictscott

    FWIW todays price action was actually an improvement for the bearish case. For the p3 to be back on again, we need 3 things

    1) Distribution from the longs who got on at 1040. Todays Adv/dec was 2.34, a higher close on lower breadth representing *distribution* Or put another way, the last bull has to have bought already. Therefore according to my rules on the gothicchurchfractal, I prepare to take the next valid short setup, even though it may not occur for a few days from now.

    2) The bearish bus to be nearly empty as it leaves, since shorts booking profits on the way down cause the kind of decreasing momentum decline we had in August, which just leaves the bulls waiting to pick a bottom and keep the trading range intact. I think we pretty much have that here 😉

    3) The price action from here *cannot* cause fresh bulls to want to get involved. If we see a little more strength, particularly another failed stand by the bulls, lets face it, many bears will get out of some or all of their long term positions. This will irrevocably change the game up.

    I can see a potential end in sight to this rally. It all comes down to a single question from here

    “Can any further increase in price from this point bring in fresh bulls from the sidelines, or fresh buyers from shorts capitulating, before the rally exhausts itself?”

    IMO all technical analysis at this point should be directed at the answer to this question, and nothing else. All currency headwinds , vix and copper, etc should be directed at this.

    If we saw a decent pullback last night (like a 38% off the highs) we almost certainly would have brought in fresh bargain hunting bulls from the sidelines. The choppy, but up, action was actually perfect for bulls to distribute their sneakily-gotten profits to weak hands, who will be exit runners as soon as we hit a speedbump.

    Market internals are tipping their hand at this point. Zero is painting divergences (and if you dont think zero is worth 50 bux a month and you trade for real you are *kidding* yourself – its not just “another” prop indicator, Mole doesnt give away his secret sauce but it has to be based on the market internals so it has information you cant get from other indicators which are just derivatives of price mashed into a fancy squiggle)

    Take a look at this chart, see how the market internals which were painting bullish divergences before the run up are painting BEARISH ones now?

    http://www.masterkillers.com/wp-content/uploads/2010/09/market-internals.png

    My experience is that price can and does continue to go up on shitty internals, but when it does so, it weakens the structure of the market and makes it vulnerable to external shock, which is *exactly* the situation bears are looking for.

    Right now we have the 200 DMA just above, price was choppy around the 50 EMA, which was to be expected. Next is the battle for 1100. Win that, and the bearish case is back on like donkey kong since the bulls exhausted a fair amount of ammo over the last few days.

    The inverse is also true. If the bears make a failed stand here, its bulltard time for me, I'm going to place a double sized stop order on my next short position, and get long if stopped out.

    Mole, I'd appreciate your input, there is perhaps a case for another MOAB top picking trade here, perhaps with not such a high chance of success, but a 100:1 payoff if it comes off.. in other words, betting odds 😉

  • OldChicago

    Very interesting chart. Which tool do you use to chart it?

  • OldChicago

    A few observation on further up-side: None of them are about economy, double dips or not. IMO.

    * % of stocks above 50DMA is moving up and not yet to the peak zone.
    * FED done buying treasuries. So spare cash from TLT might flood equity. Where else would the money go?
    * Jap. Gov. fed up with rising yen and has been dumping yen after hours. That I think helped Emini in AH & BH.
    * Beta stocks continue to make new high. No fear. VIX is pathetic.

    There're probably more. More home work. But, Zero saves the day!

  • equity_momo

    Typical of bear markets. The grind is down with shocks to the upside. Inverse is true of bull markets.

  • jigdaddy

    how does the wave count look now?

  • convictscott

    Very interested in your approaches to profit taking, always looking for fresh ideas and perspectives in that area of trading 🙂

  • http://www.mylifemytrade.com MyLifeMyTrade

    Ben just called me. He has ordered a new printing press.. 2x faster… with new faster chips from Intel (which is why INTC bounced hard on bad news last friday).

  • http://www.hervey-bay-holiday.com kea11

    All the one market scenario intact; the only signal missing is Blog Bulls, Bear blog bashing http://tinyurl.com/2e2p7gk.

  • jigdaddy

    great call on rally btw…

  • convictscott

    Sorry I probably didnt make it clear… I believe the odds favour further upside at this point, but I dont think I could give a % chance on whether we make it above 1100 spx or not. I know if we do and close above I want to be long targeting 1130, and I know if we don't make it I think price will be vulnerable for a fast fall.

  • Clint

    Ain't that the truth. Amazing how many of us fall into that trap.

  • http://www.hervey-bay-holiday.com kea11

    Thanks for that link Pitchman, priceless.

  • convictscott

    I just saw an interesting concept from Corey at afraidtotrade.com , its probably worth looking at as to how far markets could rise on weakening internals. I'm not really an advocate of one size fits all solutions (I think that markets rhyme not repeat) but it suggests the bears need to turn it around tonight or we are going up for another week.

    http://www.masterkillers.com/wp-content/uploads/2010/09/corey.png

  • DudePlunger

    Agreed with everything you said, but I don't expect a short setup to come for more than a few days, actually I expect one the week of September 13th, after Labor Day AND the Jewish Holidays.

    Why? Well, I think we're currently in Minute 2 of Minor 3 of Intermediate 1. Minute 3 should take a month in my opinion, have severe volatility, and take us down to 950, maybe lower but let's take it 1 step at a time :D. Minute 1 was weak, it happened in August, but it began and created formidable resistance at 1100, and a double top at 1130, both of which are significant.

    In order for Minute 3 to cause a large, trending, bearish move lower, we needed to see a violent short covering rally (check), an inability to pullback and a higher high on lower internals (check), and a final push into resistance which fails (waiting…..) I believe this final push will occur next week, and we may even see exhaustion and a blow-off top the week of September 13th.

    I remember 2008 very vividly. We did not go down until after labor day. Bears on blogs were pissed that we weren't moving lower in August, and they were pissed when the initial movement encountered numerous short squeezes in September. The bears victory came in the first week of October, with 300 /ES points shed in 6 days. We may see that cut down to 2-3 days in Primary 3, and that may be it, followed by consolidation, short squeezes, and an occasional 2.5% down day.

    So what am I doing? Well, unless an inverted hammer appears on the daily off of the 1095-1100 area with solid downside breadth next week, I am not taking a trade. I see 0 reason to force anything that isn't there.

    If we break through 1100, we will challenge the high of August 11th. Inability to recapture that high will result in a reversal. See May 6th, May 20th, and June 6th (not looking at a chart, that day may be wrong), for examples of inability to recapture the high of a significant down day.

  • 99er

    Chart: ES
    Dark Cloud Cover now forming. Forecast calls for a miserable weekend in the Hamptons but blue skies for bears everywhere.
    http://www.screencast.com/t/MmYzYTJhNDQt

  • raised_by_wolves

    In TOS Prophet, just type in the ratio as shown and add BB(20,2.0) and MA(20) on a weekly chart. Daily and monthly may also be worth looking at. By the way, the numbering does not represent Elliot waves, just peaks that touch the upper BB.

  • raised_by_wolves

    Show me what you come up with if you chart SPX/VIX with MAs and/or BBs. Thanks for showing me your the trend lines.

  • http://channelsandpatterns.blogspot.com/ springheel_jack

    I will. I'll try it with BBs & some MA pairs to see what it looks like.

  • jacksoo

    hi jack – -you still looking at a turn around by 1098?

  • raised_by_wolves

    Although EEM looks like a good leading indicator in its own right, how about trying EEM:$VIX?

  • Tooncez

    You recently asked how I do my GCF's. It's interesting how we come at from different angles, but end up with similar results…

    I take the sum of vix adjusted A/D and vix adjusted -D/A and throw a moving average on it.
    If the average is high enough and the sum isn't too low, and there isn't an insanely large value, then that's a buy signal. The exit is basically the opposite.

    I've recently added a signal for the 'obvious bottom' (ave(sum) crosses an arbitrary threshold) (which seems to be a better entry … position should be increased if that happens at the same time as an entry signal)?

    Notice I didn't say that I have a short strategy. IMHO, it's not symmetrical, so far all I have is obvious bottom, which isn't predictive enough…

    I've been trying to see if I can convert your strategy for shorts into one that makes sense to me using my techniques but I'm a little swamped at the day job…

    http://screencast.com/t/ZDQzY2Nj

  • jacksoo
  • raised_by_wolves

    If I'm reading your indicators correctly, you got a go long, obvious bottom, and a slv/gld rise at about the same time on—what was it?—Wednesday a week ago. Pretty useful signals to get the hell out of short term short positions.

    Now imagine what you could accomplish if you didn't have a job like me, or imagine what I could accomplish if I had mad programming skills like you 😉

  • raised_by_wolves

    Nice chart. Not necessarily a reversal point. May be a pause point. We'll see.

  • http://channelsandpatterns.blogspot.com/ springheel_jack

    I'll try that. Could be interesting, though we might lose something blending two lead indicators together.

  • http://channelsandpatterns.blogspot.com/ springheel_jack

    Probably, have to see what the overnight looks like tomorrow morning but that seems most likely at the moment.

  • raised_by_wolves

    I have some lottery ticket OTM calls on ABK. That's all I bought. Rather than short-buy-reshort-rebuy, my approach has been short-cash-reshort-recash. Nothing wrong with short-hedge-unhedge-hedge-unhedge. Hey, pass the bourbon.

  • Thespookyone

    With the CVI's as overbought as they are-we top Tuesday at the latest. Was looking at the internals on the XLE and ERX tonite. They clearly indicate both will break the early July lows-a long way down Also, the XLE seems to have quarterly puts-end of Sept a great time frame vs premium here. Many sectors are showing signs of internal bottoms forming-in this situation, a down move will usually accelerate. Good trading to you.

  • raised_by_wolves

    Hmm, I wonder if there is a volatility index specific to emerging markets available to chart in TOS or Stockcharts.

  • raised_by_wolves

    Do any Stainless Steel Rats know if there is a volatility index specific to emerging markets that one can chart in TOS or Stockcharts?

  • Tooncez

    Make yer own?

    i bet it'd be something like this:
    def price = $something_good;
    def ln = log(price / price[1]);
    def vol = stdev(ln, 21) * 250;# days in a monthish vs days in a yearish
    def myVIndex= vol;

    Of course that would be like volatility and not like vixatility which fades the upside.

  • raised_by_wolves

    Without vixatility which fades the upside, do you think your home-brewed emerging markets volatility index would be useful as the denominator in a ratio against EEM like VIX is in SPX/VIX?

  • Tooncez

    Nope, pass the moon shine … err… wiskey.

    http://screencast.com/t/ZmVjZTE4

    plot Data = close(“vix”);
    plot imp1 = 100* imp_volatility(“spx”, “DAY”, “LAST”);

  • https://evilspeculator.com molecool

    We seem to have in common mate – LOL – one of these days we got to grab a beer and swap stories.

  • https://evilspeculator.com molecool

    That's exactly what my 'instincts' kept screaming at me lately. I just didn't see this tape getting out of the gate and I actually remember saying that the bulls would be able to revert the little downside we've had in a matter of days.

    A bearish trend is easy to recognize and follow when it happens – it's very clear. Just look back at mid April and into May. The rest of the time it's mostly traders fooling themselves – it's our hopes and desires that stands in the way of trading. If you are desireless and simply reactive trading becomes very easy. But like combat marines that maybe 0.1% of the population – the rest wash out.

  • https://evilspeculator.com molecool

    “The bearish bus to be nearly empty as it leaves, since shorts booking profits on the way down cause the kind of decreasing momentum decline we had in August, which just leaves the bulls waiting to pick a bottom and keep the trading range intact. I think we pretty much have that here ;-)”

    Probably the smartest thing I've seen posted here in a while.

  • ShadowTrader1

    If we were to price everything in true dollar value over the last ten years including the stock market we would realize the correction has already come and gone. As a matter of fact the rally over the last 14 months mostly never happened. Don't believe me? Look at a chart of the markets in true dollar value and you will see the ceiling (market) never went up much. The floor (dollar) went down. Just like the ride in Disney Land. All patterns and charts should be in real dollar value and the truth will be more clear. To know how to fix something we must first know what is wrong.

    The ultimate question: Will the dollar move up in one last fiery gasp before it collapses with treasury bonds? If so, we will probably see a massive correction of things to where they truly should be to reflect or unveil just how bad it all is. Things have a way of going full circle. What comes around goes around. Its the nature of things.

    Buy agriculture, furtilizers and grains. Its going to be the next big bubble. IMHO.

    Sure,

  • chronographics

    I have said this before and I'll say it again, Write the rules, test the system, Follow it. That is the way to bank coin.
    Most Market Participants won't be on the bus, which ever way it goes when we have a Big Surprise move, thats one of the basic rules of the market. Rarely do people pick 'it.' Thats cause of the rule in the previous sentence.

  • Anonymous

    Do you have any short positions in ES spooky? Thank you.

  • https://evilspeculator.com molecool

    I posted that very chart here two weeks back or so – SPX valued in gold.

  • Bob the Horse

    Well I'm feeling pretty lonely if that helps.

  • Bob the Horse

    That is so true – bear markets are almost impossible to ride all the way down, I don't even try to.

  • jacksoo

    looking to add to shorts on ES 1092-1094 area – – u still adding Bob?

  • Bob the Horse

    I am already pretty short, I had a sell order in yday all day on estoxx at 2730 which got filled right on the US close. Oddly, we had hit 2728 earlier with esu0 at 1086 but then made the 2730 with esu0 at 1090. estoxx lagging is normally a decent sign for bears. Personally, I would not like to see it above 1090 as that was a pretty decent resistance level. Payrolls today may take us on a stop run but I am more interested in things like EURCHF not rallying and the 10yr yield still looking feeble. Not sweating too much just yet but it often gets to the point of pain before it turns.

  • jacksoo
  • Bob the Horse

    I look at your chart and think I must be mad to be short. But that is almost always the case – the best place to be short is the point at which no one else would choose to be. Some people like jumping on a trend but I am no good at it – my success has come from picking highs and lows and getting the other side of it. It's a lonely game but that's what you need. Be lonely, be lucky.

  • jacksoo

    good luck to both of us me thinks

  • sloth_bear

    Nice post Mole, really like the Aikido belt analogy!

  • sloth_bear

    Here is a repost of the chart posted in answer to 99er, the yellow channel looks important:
    http://screencast.com/t/OGRlNDVm

  • jacksoo
  • sloth_bear

    Thanks, trying to find a turning point based on longer term charts, this one didn't work anyway 🙂
    So you see 1093.08 (61% fib) as the potential reversal point?

  • Bob the Horse

    just bought some nov 1040 puts, have further offers in mkt at 2746 on estoxx – will be around 1095 on esu0

  • Brishort

    Tried to look around, chou blanc. (means nothing!) Will be on the lookout if I cross something.

  • DarthTrader

    $GOLD:$SILVER with SPX showing this run may be near it's end. Though with similar signal early August took a week before the turn.

    http://stockcharts.com/h-sc/ui?s=%24GOLD:%24SILVER&p=D&b=5&g=0&id=p41828983909&a=202642238&listNum=2

  • jacksoo

    my 1094 still sitting and waiting – expecting some kind of whip-saw first 5mins around emp number – –

  • http://chartsandthat.blogspot.com/ ultra

    haha that's MY chart!

    yeah – looking at the same thing…

  • http://wadecapitalmanagement.typepad.com/blog/ Duuuuuude

    If you are becoming a CTA, I am interested.

  • DarthTrader

    Yes, Thanks for that Chart I like it

  • http://chartsandthat.blogspot.com/ ultra

    You are very welcome. If it helps you bank some then I am more than happy……

  • 99er

    Chart: HG
    Copper futures are at the apex of a rising wedge and look set to drop today. Good luck Bulls.
    http://www.screencast.com/t/YzU4Zjc4Nzct

  • 99er

    Chart: ES
    A follow up to last night's chart. Same forecast.
    http://www.screencast.com/t/OThjZmNj

  • http://chartsandthat.blogspot.com/ ultra

    Guess that'll be another squeeze then.

  • 99er

    Chart: ES
    Ben's Last Erection.
    http://www.screencast.com/t/NjhjZDNkNG

  • http://www.mylifemytrade.com MyLifeMyTrade

    What took the bears a full MONTH to go down.. bulls came back up in less than 3 trading days..

  • fisheggs

    Bob, I'm still on the bus, but I'm right near the exit door. Where are you?

  • sloth_bear

    I'm speachless…

  • Bob the Horse

    Just sold more at 2770, esu0 at 1103

  • randomtrader

    this is sad

  • fisheggs

    How sick do you feel?

  • Bob the Horse

    Not very – sorry

  • sloth_bear

    Top of the channel, ES:
    http://screencast.com/t/NWI1OTkwND

  • http://www.mylifemytrade.com MyLifeMyTrade

    Bob – How high do you see this going?

  • TenYear

    I wonder if they will take it all the way to SPY 113 today?

  • gsavli

    somebody wasn't kidding about DOW 33k. 🙂

    my guess: maybe few days of distribution. max high ES 1130, and then down with thunder.

  • Bob the Horse

    I don't see it going beyond 1090 . . err

  • Bob the Horse

    Just doubled up on my Nov 1040 puts

  • Clint

    True…but back in '08 it took a few months or so for the bears to destroy what took the bulls several years to build when we went from 14,000 to 6500. Goes both ways.

  • DarthTrader

    ES is at MAJOR level here . . .

    The High of April and the High of Aug channel line is what we are hitting now . . .

    The TLT is very close to closing the Gap at 102.45 . . . TLT is now 102.91 premarket.

    That was my original goal for this bond move . . . to close the GAP

    Bulls be careful . . . watch that Zero.

  • Hungry_Joe

    Could be that this up move ends NOW on GOOD news??

  • WTFed

    If you draw a line from the 4/26 top, connect the 8/9 high, you get a max of about 1107. I wonder if it could be that simple.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Gap above 98.5 – stay there for a bit and sell off from open is last hope for bears.. We have some fed dude speaking at 10am..

  • shortcover

    gift entries for re-shorting! finally!

  • WTFed

    Get out your cajones!

  • Bob the Horse

    Yummy, slurp slurp. Tuck in lads!

  • http://chartsandthat.blogspot.com/ ultra
  • gsavli

    I'm starting to think this rally is really getting a bit too wild.

  • legobear

    How very true. I think successful traders need to apply the martial arts mindset you talked about in your post. Be like water, as one famous practitioner said.

  • fuw

    I do not see a good reason why we should not retest 1130 before a possible turn. I'm looking to reverse and short in that area.

  • sloth_bear
  • Brishort

    $xad:$xjy to SPX: none is blinking yet, both hand in hand up.

    http://stockcharts.com/h-sc/ui?s=$XAD:$XJY&p=60&b=5&g=0&id=p41990456381

    Sentiment tidbit: Looks and feels like a bear market rally. Otherwise this would have to be a wave 3 of (1) of something up impulsing up. Why would (1) up be so strong in a new uptrend? typically would have this type of bullish action in a 3 of a 3 of something impulsing up, yet is too early to be in a larger degree other wave than W1 if this was a bullish impulse.

    Hence the bear market rally question with the vicious, violent and nasty behavior components currently observed. IF it's really a new long term bull trend, why is it behaving so violently in W1?

    No solutions or actionable trading comments, just thoughts for the moment. Unable to yet point a turning point in this rally madness, although I like Ultra chart… however doesn't mean the sell point is not a trend reversal.

  • gsavli

    now what, fed guy talking?

  • Brishort

    Mole, if you are around, waiting to see if you see anything on the zero. I am afraid to over-interpret, so a little prudent in acting on what I “think!” I see.

  • gsavli

    this rally is bullshito

  • DarthTrader

    Pre Holiday Low Volume Rally a Great Market to short. Should have a very low volume close as traders head out for the long holiday weekend.

    TLT still has not closed the GAP even though falling we may get bonds selling a bit more and get another small rally today from here . . . maybe

    http://www.screencast.com/t/ZGE1MjM3OD

  • Bob the Horse

    Totally agree, this has been a wonderful day. I have lost a shitload of money but have doubled my position – couldn't of dreamed of that opportunity a week ago.

  • OldChicago

    aud/jpy has lost all the gain since job report. (sorry if this is a repeast. hadn't got time to read all the post yet).

  • http://www.mylifemytrade.com MyLifeMyTrade

    Gap and crap day? like the Yuan 1130?

    Even if we are in intermediate bull move.. bull stops down to 74 area need to be run.. so we will see 74 area sometime

  • Brishort

    Now here comes today's key part. The market will most likely try to aim for 1104 high of this morning once more today.

    Will it fail short of it or exceed it?

  • http://www.mylifemytrade.com MyLifeMyTrade

    We probably dont get past 98.5 IMO

  • http://www.mylifemytrade.com MyLifeMyTrade

    30m close coming up.. lets see where this one closes.. close below 98.5 is very very bearish IMO

  • sloth_bear

    Yes, that's good! I hope it will stay bellow the purple arrow:
    http://screencast.com/t/NzkxZTEyMmI

  • http://www.mylifemytrade.com MyLifeMyTrade

    we may be headed to 1072 today is my read…

  • BobbyLow

    The 4 Wheel Drive on the Bus might be beginning to grab a little better through all this muck and mire Bob.

    I'm getting bruised and battered from this ride but covered 1/2 of my Short October Hedge just before the close yesterday and covered the other half this morning. This has cushioned the blows somewhat.

    Now a Gap and Crap would be nice and be “Much Better Than Expected”. 🙂

  • BobbyLow

    Oil doesn't seem to be buying all this “good news”.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Do you think that the market will be so kind to the bulls that they will be allowed to buy a 10 pt dip after the market gapped up so huge.. Dip buyers get killed today is my read.. We are almost 10 pts from the top. Fake moves are often smaller…

  • gsavli

    looks like bulls are buying these dips and the market doesn't listen.

  • OldChicago

    I think we might have made a near-term hi. Here is what I saw and watching –

    – AUD/USD closed the gap from job report. It looks like it is in either some 2nd wave or 4th.
    – EUR/USD has hitten resistance and has been rising for more than a week. A pull back would make sense.
    – TLT & Gold getting bids, although not recovering completely (~62%).
    – Homies went below open.
    – 1100 breached and retraced with large red bar, and vol. The last 15 min have bids with high vol, but price is not able to move up.

    GS/JPM holding strong. That is one to watch.

  • Bob the Horse

    well, let's look at the facts – there is no ammo in the fiscal gun and Obama has just revealed that in his non-speech a few mins ago. The Fed don;t want to fire the QE gun just yet and the data is not bad enough to force their hand. But equally, the data is not good enough to suggest that the private sector can go it alone. So almost by definition, equities need to go lower. Good news is actually bad news for equities.

    On top of which, cracks are starting to show in the Japanese long end of the curve – I am doing some more work on this right now but this is my best guess of the 'black swan' event.

  • http://www.mylifemytrade.com MyLifeMyTrade

    94.5 is a key support region. This may hold the slide… Need to see the signal on Zero grow…

  • DarthTrader

    I agree the TLT still has not closed the Gap so another rally attempt or 2 today and/or Tuesday seems likely to me . . . I'm watching the TLT for signal to take a scalp from shorts added today

    But I repeat what I added to my post below . . . the TRIN 5 day total is 5.87 and we drop off a 3.8 on Tuesday….A VERY OVERBOUGHT MARKET on Tuesday.

  • sloth_bear

    I don't know what is the basis of your call, but I like it! 🙂
    Here is my support in case of your scenario plays out
    http://screencast.com/t/Y2M0OTFiZTA

  • http://www.mylifemytrade.com MyLifeMyTrade

    If we are in bull move, then bull stops have to be run.. Most of the buying in last 3 days has come in post-ISM-spike.. so even if we are going up for next several weeks.. the bulls who chased will be punished.. and buying post-ISM spike *is* chasing.. in my books..

    We will not get to 107x today.. but sometime next week is highly likely

  • OldChicago

    Wonder if you read the news 🙂 FED said they are not ready for QE2 and Romer said that no stimulus yet, and jobs is recovering! Lockhart said that no QE2,slow down temporary, jobless don't affect recovery. Your pick!

    If we have been rallied because of QE2 or Stimulus, guess the bulls are out of ammo.

  • http://www.mylifemytrade.com MyLifeMyTrade

    ISEE Index & ETF at 25 – can someone tell me what that means?

  • OldChicago

    Wonder if you read the news 🙂 FED said they are not ready for QE2 and Romer said that no stimulus yet, and jobs is recovering! Lockhart said that no QE2,slow down temporary, jobless don't affect recovery. Your pick!

    If we have been rallied because of QE2 or Stimulus, guess the bulls are out of ammo.

  • Brishort

    Micro squiggles SPX:

    5 off the 1104 top. “a” retracement just completed with b most likely starting & c to come.

    To be valid, we don't exceed this morning top and created a nice zig zag here. Seems possible with current zero readings.

    I will be watching the zero behavior once what I think is the “c” to come reveals itself.

  • ricebowl

    Bottom of ^VIX channel was hit this morning when ^SPX daily tagged the upper bollinger (using 7-SMA).

  • OldChicago

    If we retrace and couldn't breach 1104, would that signal i of 3 of 3?

    FTSE & DAX retraced deeper than SPX. Let's see who leads…

  • convictscott

    Weakening market internals on gap up. Zero divergences. Wyckoff signs of weakness (low tick readings on a new price low) on 5 min. 15 min RTV sell pattern breached.

    Upside is stinky here

  • Brishort

    oldChicago, I will try to answer this the best I can.

    Mole correct me if I am wrong.

    Based on this chart from Mole:

    https://evilspeculator.com/wp-content/uploads/2010/08/2010-08-31_count.png

    (i) is now where Mole had put (1) and (ii) the bastard rally we are having is hopefully finishing soon.

    For this bear count to have any life to it, (ii) cannot exceed the start of Mole (i) which is 1129.

    If indeed we are in (ii) once this bitch turns we would be in (using Mole numbering)

    i of (1) of (i) of 3 of 1 of P3.

    That is if the bear case has any life to it.

    Hopefully this helps!

  • bleefis

    Anyone else prefer the zero lite immediately below /ES 1d, 5m? Mole put it below the oscillator. The resolution on my laptop isn't high enough to see the zero lite now without scrolling off the /ES chart. Or maybe if the oscillator's white line was solid, it would be nice seeing the overlay?

  • Brishort

    Oups an error, corrected:

    i of (1) of (iii) of 3 of 1 of P3.

    [(iii) not (i) as above.]

  • OldChicago

    Thanks!

  • raised_by_wolves

    (SLV/GLD) moving up during the last hour suggests the possibility of an equities ramp.

  • http://chartsandthat.blogspot.com/ ultra

    BIG hourly green candle there

  • Brishort

    Weekly SPY options max pain for today based on Bighcharts OI:

    a close between 108 & 109.

    IWM between 62 & 63.

    QQQQ above 45.

  • 99er

    Chart: SPX
    Waiting for a bus?
    http://www.screencast.com/t/Mjg5M2Qz

  • SW6

    Hello Raised by Wolves,

    I noticed something with copper. If you look back over last 3 years every time RSI(14) hits 70 copper rolls over hard, as in 2008 or at least has pull backs, as during the March 2009 rally.

    I have seen it's RSI as high as 69 today. Perhaps now is the time for a drop in equities and commodities. Sorry about not having a chart – I'm scrambling to get to my day job.

    Take a look just over 3 years period and you will see the pattern. Also zero in closer and you will also see that the 70 RSI reading often corresponds with upper penetration of BB. Therefore the penetration of upper BB may not be as ominous as thought. Please let me know if this is useful info or not. —Off to work now!

  • Brishort

    Good day, To help, I tried a chart.

    http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=3&mn=0&dy=0&id=p39157894841

    Unsure about conclusions.

    – 70RSI looked significant during P2 for SPX correlation.

    – In 2008, the correlation to SPX is less clear.

    – Currently RSI only @ 65

  • raised_by_wolves

    Small caps have been underperforming large caps since the HOD, which is probably pretty typical during sideways trending. I'm watching to see if small caps start gaining.

  • http://www.patternstocks.com/ marketlines

    Stock charts of the day – http://bit.ly/cS3fpE

  • BobbyLow

    ES Flat Lined along VWAP for 7 Straight 5 Minute Bars and then broke above. For now today's momentum is back in favor of the Bulls and my October Hedge is back on.

  • raised_by_wolves

    Copper to VIX overlaid on ES has been a kick (bear) ass chart. Just look at these divergences.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/bb810fe1-1d25-49c6-8566-481861ccd126/00002019.png

  • raised_by_wolves

    I wouldn't be surprised if copper rolls over at ~70, but as Brishort points out it is currently ~65 on the daily chart. Sure, it could roll over now—it has been underperforming today—but I wouldn't jump the gun. I would wait for copper to move inside the upper BB(20,2.0) and then make one close lower before I would short copper or consider shorting equities.

  • OldChicago

    RUT & DJT, XHB all lagging. Tech Beta seem to be in distribution, except for APPL playing catch up. Financial out perform.

    Today's retrace seems to be dragged by SPX. AUG/JPY & copper all turn down ahead of SPX and get pulled back up. Vol. is low, but not hasn't stopped the robotic bulls yet.

  • OldChicago

    I guess the tape will keep running until GS hit 160, APPL 260.

  • OldChicago

    I mean GS 150

  • raised_by_wolves

    Although copper fell from the HOD harder and faster than SPX, it has been catching up over the last two hours.

    Look how useful /HG to VIX compared to SPX could be for any day traders (I haven't been trading today).

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/e34a762c-2e42-445a-97b0-904f7bf121ed/00002021.png

  • raised_by_wolves
  • Brishort

    $VIX below this morning LOD.

    So we are back close to HOD on SPX.

    It took so long from LOD to now on SPX that I am not sure any time correlation validates the squiggles: translation, I have no clue what is the count.

    Dan has a nice theory though on his site:

    If this is a P3 up: we just finished a B and a C down to approx 950 is missing.

    If this is a P3 down: we just finished a (ii) up and the next step is down.

    In either cases: bull or bear scenario, the next strong move to a congestion area is identical for both current wave counts of the bulls and bears: it is down to approx 950.

    The unknown: from how much higher does that down move start and when: before sept. opex or after.

  • DarthTrader

    In my opinion this rally will keep going until Bonds have filled the Gap from Friday the 13th high. we went into it today but not closed yet. Bonds selling off provides liquidity to Equities. But once Bonds start rallying again (If they do ) that liquidity will start to flow the other way and Equities will fall in tandem. I wouldn't Doubt another up opening on Tuesday and Bonds down to close the Gap.

    You have to remember that Bond traders are the Big Boys of the Market they move Billions. So when they are bulls and there is a Gap below they take the time to close it. There are a lot of Bond Bulls who think Higher bonds for years to come . . . we'll see.

  • fisheggs

    I think you 'll find that our resident racehorse would agree with a number starting with 9.

    BTW – Disqus is fcuked

  • Brishort

    Ok. I got Bob's disease. I just went short the market holding over the week-end into seasonality weakness usual after labor day. That is weak on TA grounds, but I am not looking for a killing here, just a scalp. Stop at 1105.

    We came within the vincinity of my HOD retest on SPX while failing to exceed it.

  • fisheggs

    Chaps – Don't get tooooooooo bullish !

    http://www.screencast.com/t/MzkyOTg1Yj

  • K.I.M.

    well, i was fucked playing short again, didn't get out when I should. Damage done but still got some ammo. Time to move on.

    I've notice this IVH on daily : http://www.flickr.com/photos/42905134@N08/4954341335/sizes/l/in/photostream/

    hope the red one isn't connected to my previous chart posted a few days ago : http://www.flickr.com/photos/42905134@N08/4947934492/sizes/l/in/photostream/

    anyway , sitting on remaining off “play” money and watching.

  • raised_by_wolves

    I would have already exited longs. I don't know that I would go short unless/until the indicator makes a new 15-minute low.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/b5274913-a779-47be-8423-71c880f280b1/00002025.png

    Got to love that data gap at a critical time.

  • raised_by_wolves

    Okay, I'm going to try to get a fill on some Sept puts for a scalp. I've never traded off of this indicator so this is a little test run.

  • Brishort

    The Resistance is welcoming your support again…heheheh

  • raised_by_wolves

    Okay, I just got filled. This is why I'm doing it.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/7a3af7e1-fe36-4acc-b028-1088a9ecd7b2/00002026.png

    Again, this is what I consider an experiment. If my indicator starts moving up, then I'll close my position.

  • raised_by_wolves

    Everything is going well so far except my indicator is not redrawing. At least I have a readout on the side.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/b4df9b9a-2c56-48a1-918a-e5ac56c30436/00002027.png

  • Tooncez

    Did you ever convert the code I gave you into a chart?

  • raised_by_wolves

    I managed to substitute EEM for SPX like so . . .

    plot imp1 = 100* imp_volatility("EEM", "DAY", "LAST");

    I didn't get it into a ratio yet.

  • OldChicago

    RBW – that is cool. I did see the divergence. But, can you tell me what is this indicator supposed to do?

  • OldChicago

    Anyone holding short into the weekend?

  • fisheggs

    Yup! I'm on the bus with the horse. I have a black eye and a couple of stab wounds but i'll live.

  • Brishort

    On the bus too. You should see my scars though! 😉

    I'll live too (I think…!!!!!)

  • raised_by_wolves

    SPX divided by VIX can be a leading indicator. So can copper. I've replaced SPX with copper to give me copper divided by VIX. I was trading SPY puts. I got stopped out for a 10% profit.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/23b9e8d8-e99c-4b34-8a4a-55f8bf56adba/00002029.png

  • Hungry_Joe

    With so many on the bus, I guess we will be waiting for a while then.

  • fisheggs

    This may be why we live.

    Remember some you win and some you lose and then you die. $VIX

    Da bears about to get some honey! ( or bulls gonna call me honey next week )

    http://www.screencast.com/t/MzkzMmI0Yz

  • Nightwind

    Copper has met the left shoulder height. It is within spitting distance of the previous top and could double top.

  • fisheggs

    To strengthen that view. http://www.screencast.com/t/MjllZmJiNWU

  • Brishort

    “or bulls gonna call me honey next week ”

    ROFLMAO

  • Nightwind

    Don't bend over and pick up any wet soap..

  • raised_by_wolves

    Despite doing a short scalp, my outlook is still cautious or even bullish though not bullish enough to chase the tape higher with a swing trade. This is the same copper to vix indicator overlaid on a 4 hour SPX chart. While the last 4 hours looks flat for equities, it is still slated up for the copper to vix.

    http://content.screencast.com/users/raised_by_wolves/folders/Jing/media/32ccbb60-5919-46b1-a71f-b6713e47db4c/00002032.png

  • fisheggs

    Laugh now, but you may be in the same brothel as me with scars next week.

    I'm learning to fart on demand which may come in handy 🙂

  • Nightwind

    I'm no EW expert but today's spx move looks like a 3 of a 3

  • raised_by_wolves

    How high up until they capitulate? 1130 or 1200?

  • Brishort

    Very interesting. Absolutely no sellers into the close, no profit takers, nothing.

    Maybe a few shorts covering, but I would have thought a few bulltards would have taken profit.

    I don't think the bus is so full (besides a few crazy horses on this site and a few other EW sites).

    1129 is the maximum allowed retracement. So they may make it there. The question is, just as the Hindenburg was all over the news, now that 1130 is everywhere.

    Time to be nimble…

    BTW AUD/JPY which seems to lead SPX has been much less enthousiastic on its retracement towards the high. But it's eraly in the divergence….

    http://stockcharts.com/h-sc/ui?s=$XAD:$XJY&p=60&b=5&g=0&id=p67792614394

  • EvilTrader

    Mr market has no mercy. Will do what he wants to do, and hurting all of us is in his top priority list.

  • OldChicago

    Closed on Monday. No Econ news on Tuesday. We are at the mercy of European. Have a great long weekend, for those of you in America.

  • Tooncez

    I'm maybe getting closer to finding tops as a first step towards a short GCT derivative… yeah, there's a lot of whipsaw, and it would be nice if the signal was a day or two sooner,… but either way, it doesn't look good for Bob… http://screencast.com/t/NGNjNThiZ

  • Tooncez
  • Tooncez

    Clearly, I am doing something wrong here. Ignore this until I figure out what I am doing wrong. http://screencast.com/t/MjE4MzUxOG