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Picking Over The Survivors
173

Picking Over The Survivors

by The MoleFebruary 7, 2018

Long term survival in the financial market is just that, surviving the myriads of traps and tribulations you will invariably encounter during your trading career. Although the risk of a complete wipe out on a day to day basis is pretty small it only has to happen once in order to dissolve years of hard work and compounded assets, sometimes in mere minutes. Of course what spells disaster for those unfortunate or dumb enough to have gotten a tad to greedy near a market peak or those attempting to catch a falling sword, means exciting opportunities for the patient and more seasoned survivors.

Lest we become victims of explosive market volatility ourselves, lets however review a bit of technical evidence and then decide if the time has come to strike. Shown above is the VXV:VIX ratio I mentioned yesterday and of course many times over the past few years. This particular chart is more of a long term version with a slower BB in combination with a slightly smoothed SMA of the VXV:VIX. ย  What that does for me is to cancel out some of the noise and appreciate the big picture.

But as always we are not taking trades courtesy of indicators alone – all we are doing here is to assess the momentum in implied volatility. Based on prior observation there seems to be a decent possibility that we’ll see a snap back, meaning that IV is ready to revert to its mean. But you can also see that the smoothed signal has not yet pushed > the lower BB. So we don’t have confirmation yet and any entries taken here would be speculative.

The SPX:VIX ratio shows me a little divergence near the close that could possibly drag prices lower again. On its own it’s not a signal but if it subsists we should definitely take note.

The SPX on its own shows us a volume hole between 2700 and 2735ish. That one may be difficult to cross and there may be push back.

UVOL vs. DVOL. The bears were putting up a haphazard fight yesterday morning but then simply walked away in the afternoon. That looks pretty bullish to me and alleviates some of the concerns mentioned above, but it does not outweigh them obviously.

What pushes me back towards equilibrium in my outlook is the Zero signal which looked rather supportive yesterday. There were clear attempts by deep pockets (+2 and +3 signal spikes on the Zero in the right panel) to bang the tape higher and pin a positive close.

I have decided to take out an early exploratory entry near 2680 with a stop < 2610. We are talking a tiny 0.2% position and if it survives the day I’ll add more meat to it. The odds here are probably < 50:50 as it’s equally possible that we’ll see one more retest of the lows. Please don’t make big BTFD bets here, I don’t think we’ll return to business as usual anytime soon.

Update on the EUR/USD campaign. I’m taking profits here at about 1.2R much to my chagrin. To be frank I was quite disappointed by the lousy performance of the USD on Monday and Tuesday. Not sure where all the money went but it’s not going into Dollars or bonds.

Speaking of which my trail on the DX campaign now advances to about 0.5R. Better than a loss but come on – this thing should have exploded higher but the old greenback seemed completely unimpressed and barely pushed higher.

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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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  • Mary

    Thanks for this Mole.

    Whenever I see ratio charts I immediately think of pair trades.

    In this case, when the ratio closes back inside the lower BB, sell front month VIX futures, buy mid term VIX futures.

    Just my thoughts.

  • Tomcat

    I am taking the other side of $ES Mole. But my stop is much tighter than yours…

  • HD

    Great write up. The hardest working man in the biz.

  • HD

    BTC entry was early Monday and immediately stopped out. Noted the RSI profile was where we have seen tradeable lows. Then we all got distracted with the SPX. This bounce, now $2300+ still fits the structure. Would need several days of holding above $10,000 to change view. Someone pointed me to a very interesting fractal. https://uploads.disquscdn.com/images/29cbe1cb7fc345b3750a6e2548ea20513350457baf8f651c6c9a9dcedec2d0c5.png

  • Tomcat

    $NG is coming close to a very interesting price where a long appears to have very good odds

  • yudhisthira

    Zero reboot?

  • ridingwaves

    first slug of volume wall, tough chin….

  • Yoda

    Mole, please fix the zero

  • Lugman

    yeah looking pretty blue to me

  • CandleStickEmUpper

    Looks sad today

  • Floyd

    Interesting that one of the very few vehicles to invest in BTC on the stock market, GBTC, is trading at about a 70% premium right now. Supposedly, it historically has been trading at 52% premium. That’s a pretty high premium to pay.

  • evilasevildoes

    blue day

  • HD

    2717 is the midpoint. 50DMA area. I’m a seller.

  • Edgy

    I see 2733 as the next resistance, but I bet it’ll be a grind to get there. 2717 is also the midpoint of yesterday’s peak (~2700) and 2733, so it’s looking pretty strong!
    (Talking ES, btw)

  • BobbyLow

    This is what I was talking about yesterday on why I can’t do /GC and /CL Futures unless I was going for a scalp. For example a 70 point stop on /ES at $50 per point is a $3,500 R and if I have a $3,500 R, this is what I have to be prepared to lose on a single trade. At a 2% R Limit on Risk it takes a $175,000 Account to be within normal limits of risk. And without this size of an account, this kind of risk is untenable IMO.

    FWIW, I opened a small Gold Short in /MGC a little while ago. I’m waiting on energy to see price action after EIA report.

  • HD

    Edgy, I like the way you are thinking. We got the reaction. I locked some in and have a free trade on. GL
    Sometimes we see a full retrace in 1/2 time from chop like we have 2675-2717 SPX

  • Tomcat

    Crude build was less than exp but Gasoline a lot higher

  • ridingwaves

    http://www.businessinsider.com/vix-mystery-trader-rolls-over-massive-bet-stock-market-volatility-by-december-2017-9

    so the word is a trader lost about 75 million in last 3 months betting on big VIX move, rolled it over this month again with 25 million bet and banked 750 million on Monday….

  • Mark Shinnick

    Whale

  • BobbyLow

    Yep I see /RB “tanking”. Do you have a position?

  • Tomcat

    No, closed on Monday.

  • Mary

    Rumor is Peter Thiel.

  • BobbyLow

    Now that’s a Playa! ๐Ÿ™‚

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

    meh. stabs in the dark.
    We are the best.

  • Tomcat

    Is that 1R? ๐Ÿ˜‰

  • ridingwaves

    there is a trader called 50 cent whom also banked coin…

  • BobbyLow

    LOL

  • Edgy

    Same as venture capital: make 10 bets worth 500,000 and 9 lose it all. But that last one nets a lottery ticket and 4.5 mil lost becomes chump change.
    Same as what the best traders (Mole) preach, make a lot of little bets to control losses (or cut those damn losses!!!), and eventually that lottery ticket will pay off. You have to be able (willing, patient…) to ride it, of course.

  • BobbyLow

    Reopened Crude and OIH Shorts.

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

    should I throw out my TVIX ETN chart?
    http://stockcharts.com/h-sc/ui?s=TVIX&p=D&yr=1&mn=0&dy=0&id=p72042888370

    I mean, game over right? VIX is dead, long live the Queen?

  • Yoda

    Trading without zero is like flying a plane without GPS
    ๐Ÿ™

  • Richard Adler

    Is something wrong with Zero Indicator page? All I”m getting is a blue blank now

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

    This starts to smell like reversal territory

  • evilasevildoes

    you dont know what you got till its gone lol

  • Yoda

    yes. it is out of commission today

  • Mark Shinnick

    GPS pretty damm handy ๐Ÿ™‚

  • ridingwaves

    seems concerted effort to take out Credit Suisse, A/H shenanigans might take them under, I trip out on no circuit breakers or why it was trading at all if the fun was wiped out during the day…

  • Richard Adler

    Thanks

  • CandleStickEmUpper

    Zero still down. I dont think Mole has read any of these messages yet. Someone have his 1995 pager number?

  • evilasevildoes

    it always happens on crucial days lol

  • ridingwaves

    271.15-30 SPY on hourly is resistance, retest of breakdown

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

    Some days more crucial than others.. tomorrow late or Friday.

  • BobbyLow

    Out of Gold Short +.82R.

  • Yoda

    That was quick

  • Mark Shinnick

    That “set-it-and-forget-it” sh has retraced 50% from the sh low, and the trade about 65%+-. I may be taking the trade around 70% retracement.

  • ridingwaves

    sweet..USD could see 91, maybe overthrow to 91.80

  • Tomcat

    Nice one Bobby.

  • Mark Shinnick

    Its usually a little more torturous.

  • Tomcat

    I like those looong candles

  • BobbyLow

    I had an OCO order at +1R and I was looking at it while waiting to hit my target and decided to pull the trigger a little light. ๐Ÿ™‚

  • BobbyLow

    Thanks TC

  • https://evilspeculator.com Sir Mole III

    Actually no, that is NOT what I teach here. Lottery tickets are low probability high payoff bets, yes. But the majority of my trading is pretty boring stuff. The reason why we’ve seen more of those lottery tickets in the past few months is due to the current volatile market behavior and general lack of technical context due to an effervescent market.

  • BobbyLow

    Tks. Yep it’s probably a lot about ole bucky today. Probably helping my energy shorts a little too.

    How bout those equity indices? Between yesterday and today it’s almost like Monday never happened. This BTW is one of the reasons that I stopped trading them. They drove me nuts most of the time and nothing has changed.

  • Mark Shinnick

    Maybe so…but what amazing fuckups compared to Profunds/shares.

  • Mary

    for your consumption ….

    I got stopped out at 118.85 … there is indeed a God …

    The Astonishing Story Behind What Really Happened to XIV

    http://www.cmlviz.com/cmld3b/index.php?number=11932&app=news&cml_article_id=20180206_the-astonishing-story-behind-what-really-happened-to-xiv

  • Mark Shinnick

    Pretty important here is not only that real estate continues holding in the face of multi-generational % change, but has made no new range low. It continues the same narrative of the equity bull.

  • BobbyLow

    That’s a good read. Thanks.

  • Mark Shinnick

    There was indeed a reasonable stop.

  • ridingwaves

    CS is done, they will get hit with massive lawsuit is my take, too many big holders were wiped out….mom and pops too…whomever bought them up yesterday and this AM might be offloading

  • http://www.linkedin.com/in/sharondsessions/ Sharon

    Thank You so much. It felt like there was a flash crash out there somewhere, but I didn’t see where it was.

  • ridingwaves

    could be some deleveraging left to come, $ not helping bulls, XLF is saving grace…

  • BobbyLow

    Gold is still defecating the bed. I’m not going to do a “shoulda, coulda, woulda,” about my “premature” exit but perhaps I could have “thought about baseball” for just a little while longer.

    Only kidding. ๐Ÿ™‚

  • Benson Burns

    You have to wonder how many more months of that he had left in him.

  • HD

    From my POV overlapping 2681 will be significant

  • BobbyLow

    Ruh, Roh. Is this equity rally breaking down or is this most recent price action just a little digestion or indigestion?

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

    TLT daily.
    if RSI gets below 30, that boundary is going to have to rupture…and go septic.

    http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=1&mn=0&dy=0&id=p90170257958

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

    depends on High yield. digestion at this point.

    http://stockcharts.com/h-sc/ui?s=HYG&p=D&yr=1&mn=0&dy=0&id=p26165655637

  • Mark Shinnick

    “volatility” nothing compared to this.

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

    just trying to round you guys out.
    =P

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

    the ratio has turned. the island has voted.
    $dollar$ has a foot hold.

    http://stockcharts.com/h-sc/ui?s=GLD%3AUUP&p=D&yr=1&mn=6&dy=0&id=p52933840024

  • Edgy

    My bad, Sir Mole, I tend to leave off parts of my internal thinking when I communicate. The part of “make a lot of little bets to control losses” is where I was thinking of the boring stuff, and just assumed it was understood that we shouldn’t be only looking for those big moves.

    Let me try again: Small gains day by day are the meat & potatoes of “stable” trading, the big payoffs are gravy.

    I may be repeating what everyone else here already knows. So I ask y’all to pardon my drunken ramblings and occasional trolling.

  • Edgy

    Interesting… And it appears to be playing out as such.

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

    BTC, an interesting level if you ask me.

    I have no bias, just that this level is where something could or could not happen.

    moving averages lag, but notice price reacting to levels as it proceeds downward.

    https://uploads.disquscdn.com/images/1f55c1e70697a2ae96dab2ada0c8bc77538785f2b37ebde3d5d6710a44bfb940.png
    -GG

  • ridingwaves

    no pardons needed, no egos here..
    there are some small gains to be had with this volatility

  • Edgy

    You talking about overlapping back down from the high?

  • Tomcat

    Had to cover my short on $ES for -0.2R. No clarity here for me…so standing aside

  • HD

    Buyers defended it. Just from HOD

  • Yoda
  • Tomcat

    Why chose to play with fire…For me the shenanigans from the last couple of days confirmed that I should continue to not touch these chitty instruments.

  • evilasevildoes
  • CandleStickEmUpper

    I guess we are going to finish this trading day with no Zero help. I want a refund!

  • HD

    2 prices from the algo
    2555, 2446. Jmho

  • Yoda

    Just when it is the most needed. Grrrr.

  • Julie

    SPX The decline to the daily 144ema now the bounce stopping at the Ichi Cloud conversion line (8) and baseline (21) at 2732 JULIE https://uploads.disquscdn.com/images/2ec6882da0574c9ce5a20fc044c8adac78a6f64fe6ff06d4bc7514e9c8f679f6.png

  • HD

    There was ST -D at 2717 and 2727 fwiw

  • Julie

    XHB re shorting the lower high off it’s bounce off the daily 233 ema
    JULIE

  • ridingwaves

    SNAP- laying wood on the shorts today

  • Julie
  • Julie

    Covering remaining 1/4 short position USO It came within 6 cents below (12.28) of my second target 12.34
    JULIE

  • evilasevildoes

    nice Julie!

  • Julie

    Thanks EAVD
    JULIE

  • Yoda

    Market’s going to need a bigger crash for the treasuries’ rates to tumble.

    https://uploads.disquscdn.com/images/241230a3a16e0aea63de46ad71989fccab410eaf3166274cd19b0e015f2a9213.png

  • ridingwaves
  • Julie

    BAC A 76% retracement looks corrective and will short below 30.91
    JULIE

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

    pounce on the week, not the strong.
    [DB]
    http://stockcharts.com/h-sc/ui?s=DB&p=D&yr=0&mn=6&dy=0&id=p44381276511
    are you a cougar, or what?

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

    man, hope Mole is okay.
    he plays with knives ya’know.

  • yudhisthira

    Yeh. We are all vulnerable.

  • ridingwaves

    XLF – 28.30 needs to hold or danger area a bit below

  • HD

    Any other time this 50 point hit would be a talking point. Today itโ€™s not impressing some.

  • Mary

    he posted down below about 3 hours ago …

  • Julie

    GG I know DB I believe I posted a chart. BAC mirrors $BKX Thanks for your chart GG
    JULIE

  • ridingwaves

    i like it, been playing with TVIX in 5 min. time frames…been a long time since vix was active might as well play the dice now. Almost recouped the 1R XIV
    8.34 will buy again…

  • https://evilspeculator.com Sir Mole III

    Zero – sorry guys, I was having dinner (Spain and all)

  • https://evilspeculator.com Sir Mole III

    No idea what happened – seems like TOS just crashed or something.

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

    ah, there he is.

  • Julie

    GG A cougar with kittens
    JULIE

  • https://evilspeculator.com Sir Mole III

    He didn’t read the fineprint…

    Seriously tho – sorry, I cannot constantly watch that screen. It very rarely goes down so please give the Mole a break.

  • CandleStickEmUpper

    I was just kidding about the refund part. I was actually worried something happened to you! Didnt hear from you all trading day. Hope you had some good paella.

  • HD

    Nice! Agree. This may be the best action we get all year.

  • Mary
  • Julie

    GG GDX still dropping trading range as you have pointed out 25 – 21
    JULIE

  • Mary

    8.43

  • https://evilspeculator.com Sir Mole III

    So everyone hates me now or what? ๐Ÿ˜‰

  • BKXtoZERO

    RW… do you see a scenario where TVIX busts? I mean we all know about long term decay, reverse splits etc…. is there a mechanism where this thing stops being offered or goes to zero like XIV? Thanks.

  • randomuser6789

    Judging by the market activity lately, you are supposed to be on vacation! The market thinks you are on an airplane, so maybe you should go ahead and take some R&R.

  • https://evilspeculator.com Sir Mole III

    I was thinking of taking Friday off – to work on another project! LOL

  • Julie

    XHB I possibly may be a little early short XHB on the bounce. Could go up to approx. 44.52 which is the daily 21 ema ; upper cloud boundary and 61.8% retracement
    JULIE

  • Mary
  • Edgy

    If you know TraderStewie, he was actually off in Oregon hunting bears when it all went down. Better, as he put it, “shooting bears”. Ha!

  • Julie

    Mary A Great One Yakety Yak Don’t Talk Back ! Love it !
    JULIE

  • ridingwaves

    I want in at 271 spy….waiting on it right now..back to ya

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

    my charts are solid gold.
    Muwahaha.

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

    2675 target

  • https://evilspeculator.com Sir Mole III

    Hey did you catch my comment in the previous post this morning?

  • HD

    Thursday: weekly jobless claims

  • Darkthirty

    Algo 2555-2446 numbers came from what study?

  • ridingwaves

    got a little greedy on 271 should have taken the spike to 7.90 and a 14% 20 minutes….oh welll..
    auction tomorrow could cause some more liquidity bumbs.

  • Darkthirty

    Never did like you…………….

  • HD

    Sky net ๐Ÿ™‚
    Actually My own little bean counter. 2734 defines

  • Tomcat

    wow, you are good

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

    That’s what she said……… ; P

  • HD

    Who was saying 2681 was a key price today. Man those bots are reading the comments.

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

    Just a little. but I have my priorities..

  • BobbyLow

    That was quite a turn around in Equities. OIH closed at the LOD down 3% with 21 Million Shares changing hands. Crude took a big hit, Gold took a hit, and Bonds took a hit.

    Could it be the beginning of ? I can’t say it. ๐Ÿ™‚

  • Darkthirty

    Interesting

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

    don’t.

    DON’T!!

  • Julie

    HD IMO SPX corrective bounce off 2593

  • Julie

    HD I had 2732
    JULIE

  • HD

    Yes! I recall. Muey importante

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

    welcome back.

    *now* you can get pissed.
    LOL.

  • HD

    Ha. Dude. I wasnโ€™t pissed at all. Just thirsty.

  • BobbyLow

    I was in Junior High when this song came out. ๐Ÿ™‚

  • HD

    Youโ€™re on a great streak! Edgy did too this morning. I think this volatility helps most systems.

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

    Youโ€™re due for an epiphany on this wave stuff. Wait for it.

  • Julie

    HD 2732 from a chart posted earlier below SPX
    JULIE

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

    ..only if you tell me the right way too do it. objectively.

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

    crap! my mother was in HS.

  • Darkthirty

    Rules
    1# Prechter is a hack
    2# Read the book
    3# It’s a Zen thing, either you get it or you don’t
    4# ALWAYS have 2 counts- 1 up and 1 down
    5# DON’T mention that shit on this site
    6# FOLLOW the rules

  • ridingwaves

    2 days in a row of backwardation on TVIX into the close, these things are having trouble rebalancing each afternoon and someone is making big money off it….

  • BobbyLow

    I’ll bet she would say the same thing that I will say and that is time fly’s by so fast without realizing it and that we should enjoy every day of our lives.

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

    Yep.
    she’s from flyover country, and guilts me about she could die ‘any day’.
    ๐Ÿ˜‰

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

    Just calling the setup how I saw it. I sat aside today, though, too many distractions.
    I’m usually right when I don’t pull the trigger…

  • Edgy

    No sure which one you mean. So maybe not.

  • Darkthirty

    2663 it was……….

  • ridingwaves

    XIV crashed on same date as Tulip bubble, lasted same amount of time and started in December…..

  • Yoda

    pee tree
    [Yoda crawls back in his hole]

  • Darkthirty

    Actually, today hit a 61.8 retrace of the previous wave down. I prefer to see 78.6 for a 2 retrace, but it’ll work if confirmed. That leaves us with targets of 2426 – 2314 – 2279 – 2245 Don’t say it, just BTFD….Right?

  • Ian Naugler

    Don’t Panic?

  • https://scottphillipstrading.com/trade-setup Scott Phillips

    Rules
    1# Extraordinary claims require extraordinary proof
    2# NONE of the fake ass wave bitches produce that proof
    3# Darkthirty you’ve been coming here for years spewing that shit, and YOU aren’t a profitable trader. Why not?
    4# FFS Wave theory is a fraud.

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

    Exactly what I’m doing. Ski trip to Breckenridge, CO this week. Spent some time yesterday playing around in the Devil’s Crotch ๐Ÿ™‚ Double black diamond, feels like straight f’n down. Moguls were bigger than in this picture.

    https://uploads.disquscdn.com/images/a59154ca9f6528fdc12715a6d9fdad6d21c92429d6392bbb292ce62e5ffa5f73.jpg

  • BobbyLow

    Good for you Captain! ๐Ÿ™‚

  • Wave_surfer

    You feel like falling bond prices and rising rates will become a bigger issue?
    Bonds were quite a bit lower than now, less than a year ago. It didn’t seem like that big of an issue then.
    I am just curious, in case you want to share more of your thoughts.

  • HD

    1# like claiming 34:34 on the cryptos?
    Dude I don’t know who you are but you bring a lot of negative energy when you show up.

    Have a good day all.

  • Darkthirty

    Read 3# and 4# till it soaks in.

  • Mark Shinnick

    Yes, the debt hook is set so awaiting the shock. Liquidity is drying up.