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Prepare For A Bit Of Turbulence
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Prepare For A Bit Of Turbulence

by The MoleAugust 6, 2018

Statistically speaking summer is the least fun and least profitable period of the year. Great time to take time off and forget about trading until the end of August. Given that I propose that the recent advance, short of pushing us into new all time highs, should be accompanied with a healthy dose of skepticism and vigilance.

Today’s story peels a bit like an onion, with several layers to be taken into account. Let’s start with simply the LT view on the E-Mini which shows us a little over 40 handles below all time highs (assuming the September contract).

The recent push most definitely has returned us back into bullish territory but I have my reservations on it continuing much higher without at least an attempt to shake out a few of the weak hands.

And just for the record, this is coming from someone who continues to hold a long position, so we’re not talking my own book by a long shot. And with a stop I am just now advancing to about 0.3R instead of leaving it at break/even. My reasoning for locking in a wee bit more profit is explained below.

For one we continue to be in the doldrums for another two weeks. #34 only briefly interrupts what is usually bearish season in equities.

Here’s the mean weekly % positive and we’re somewhere near the median from what I can see. So yes, an up week is absolutely a possibility, which means no reason to cut out and head of the hills.

The 12 quantiles suggest that August is one of the worst statistically speaking. No big surprise there unless you’ve just started trading last Tuesday.

Accompanied by the way by June and September as indicated by this quartiles chart. I should just do everyone a favor and take the entire summer off next year.

Alright Mole – August and September have long inspired bearish aspirations. Tell us something we don’t know!

So let’s talk about volatility then – the implied kind that is. Please step into my lair:

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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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  • HD

    GM Mole, all. $BTC, not getting any love these days. Was stalking the termination of B a few weeks back. https://uploads.disquscdn.com/images/fef572ed40a4dbcc3e7e91093220a8688d5c63829ee566818f0d6c2ffaf8a643.png Anticipated the 50% level but squeezed higher to .618.
    https://uploads.disquscdn.com/images/ecbc4bb96cebaa7f340bbbd810beae2e0c06fd225c95064049f0188ee335fe1b.png
    <6600 .618 back opens potential for new LL, all that is needed in this count.

  • Mark Shinnick

    Great stuff Mole, thanks.

  • Yoda

    You can add this indicator for going short
    https://www.zerohedge.com/news/2018-08-06/gartman-we-were-clearly-wrong-being-short-us-market
    It just doesn’t get old

  • Darkthirty

    ES getting pumped INDU not following

  • https://evilspeculator.com Sir Mole III

    Oh damn it – SELL SELL SELL

  • https://evilspeculator.com Sir Mole III

    Always happy to please 🙂

  • https://evilspeculator.com Sir Mole III

    Cryptos are a tough trade these days, plus there is much manipulation by whales going on.

  • ridingwaves

    throw in some Auctions and you might get a little down move, energy is there for all time high, tough to get on first try….so a little pullback?

  • ridingwaves

    sure would be interested in going long if it had a capitulation type event to 3-4K…..

  • Darkthirty

    5=1 @ 2900

  • HD

    New 2018 low for the VIX, not good.

  • HD

    From June low or?

  • HD

    The rally that started last August rallied in VIX 10 for months. Fine if you are a buy and HODL’r I guess, not so much if you are a day trader.

  • Richard Adler
  • https://evilspeculator.com Sir Mole III

    It’s a slight divergence but it’s too weak to really receive much credence given the current advance.

  • https://evilspeculator.com Sir Mole III

    Okay, divergence more pronounced now. If you’re long then tighten your trail a bit.

    https://uploads.disquscdn.com/images/534bf9f90c957652ae8979b282098bef59b9c816456808d6b6471773c49b461f.png

  • BKXtoZERO

    Trying some TVIX for the day 33.2. I had a 1R that I left on from Friday at 36 area that I woke up and took a hit on. Gave back my fun from that Thursday VIX rip. Bulls are looking crazy tough…. Back to scalping only (if that).

  • Darkthirty

    6/27….still looks corrective to me

  • HD

    ZW, last August was a doozie, Something to keep an eye on if SPX sucks https://uploads.disquscdn.com/images/4b863d9b94cabab766cfbe3cbcd1d5a07b91acc32cfc9b38ff52daf970835b6f.png

  • HD

    Back to the scene of the crime? Jan hit started at 2853.

  • Ronebadger

    Looks like the 1HR panels are making perfect wedges. Lower and lower peaks and rising valleys. I’m thinking that situation will resolve soon…one way or the other. My guess is that the rally since 2795 will poop out…definitely divergent…but I’m just a permabear. We’ll see…

  • BKXtoZERO

    pretty quiet round these parts today….. no one besides Mole likes the slow grind up mkt.

  • BKXtoZERO

    well….. Dying Ain’t much of a living…. https://www.youtube.com/watch?v=zLRlY46ttfE

  • https://evilspeculator.com Sir Mole III

    I’m the slow grind master. Just ask my wife.

  • BKXtoZERO

    jeeez….

  • Mark Shinnick

    Another slo is short miners…but near acceleration.

  • https://evilspeculator.com Sir Mole III
  • BKXtoZERO

    too much….. you can do another 10 years I am sure

  • https://evilspeculator.com Sir Mole III

    So where is everyone today? I may just take a day or two off…

  • M E

    im here lurking in the shadows

  • WavRider

    Congrats on 10 years!! Time flys. I think I’ve seen you around that many years but don’t follow as much as I should. Hopefully this w5 will end in 2853-62 area. Diveg looks better

  • https://evilspeculator.com Sir Mole III

    Hey mate – you’re still counting waves?

  • Ronebadger

    I’ve been out…did anyone mention yesterday’s VIX Sell Signal Step One? VIX closed just 0.01 under the lower BB

  • Ronebadger

    How about this opening candle…we’ll see what the EOD looks like. https://uploads.disquscdn.com/images/ab595d033a1f1e73514a5cedf66f6c6edeb77c8d24c50256865e862554329104.png

  • ridingwaves

    if it holds here, it could see blue skies…
    same with the other long forgotten commodity-NG

  • HD

    I know all the sellers are a little trigger shy but SPX is +10 exhaustion gap potential. See how it behaves next 15 min.

  • Darkthirty

    The open was kinda scary…..3 pt drop

  • ridingwaves

    ridingwaves Julie 35 – 25 – 36 20 days ago
    I wouldn’t bet against XLF right now, it might be the lead horse in this summer doldrums rally

    I didn’t……

  • HD

    The beauty of trading SPX is it moves in its own algo, independent of other indexes. I’m sure there are correlations but you can choose to tune them out too. SPX did not gt a sell program in that time frame, no trade.

  • Darkthirty

    11-12 years ago indexes moved in lockstep. 100 dji = 10 sp. Watched dji and traded sp, 10 X magnifier………

  • HD
  • Darkthirty

    Top of the channel from 4/2. look like 3 waves to a line hit, E wave coming or breakout maybe?

  • ridingwaves

    financials is the heaviest weighted component for SPX…
    ridingwaves StockTalker 8 days ago
    wall of worry, money flows says the opposite, too many bears thinking the top is past us….these little dips are like looking in your pan at fools gold…..

  • ridingwaves

    mid term election years are very good for indexes until the voting month…

  • HD

    Kudos! good read. Just a different POV as I see XLF as a lagger, LL in June, SPX not, and way behind the index YTD, 6 month, 3 month. But that is not to say it does not work to correlate. https://uploads.disquscdn.com/images/32ddf755848fff65524eef1190e0d3fc1656536b4e0567412119f9349899f529.png

  • HD

    SP-Big dog! nice

  • Kishore Kumar

    After trading everything else, I now trade only weekly options on SPX on their expiry day. Nothing like it! You only have to be right about the intra-day directions. Market internals are the most helpful edge. Personally, I find any other corelations to be quite useless.

  • Darkthirty

    Used a lot of correlations, iffy at best now. Algos have everything fractured. Caught a few that worked for 2-3 weeks, then diverged. Musta reprogrammed one or the other……………

  • ridingwaves

    actually you said it better, it was lagging and ready to catch up, thus my worry about the market staying in a zone while XLF was building energy for a move..it was uncanny for spx to stay elevated with the whipsawing of XLF….

  • Darkthirty

    Been doing the same, straddles work even if you can’t discern the direction………

  • Kishore Kumar

    Can you get 1 to 10 on straddles?

  • Darkthirty

    5 point move on options is 2X, after that is profit

  • Darkthirty

    100 ES points down to hit the bottom line………………..

  • ridingwaves

    maybe the 10 yr tomorrow along with 30 yr auction on thursday will give bears some food….could start this afternoon….but you know about could have beens, they lie on the floor until you sweep them away….

  • Mark Shinnick

    Yeah….seems to be the default situation defying a more normal sort of sanity.

  • https://evilspeculator.com Sir Mole III

    Alright everyone still on vacation?

  • Mark Shinnick

    Its a state of market mind. Pretty important…its not like trends stop or anything…and often a time when they resume or reverse…yet many participants don’t seem to be noticing. So…been hanging long NAS and short miners.

  • BKXtoZERO

    Hi Mole…. Can you tell me how much of this VIX pounding Vixen was able to capture? It seemed she was out there often entering and exiting each day with the same kind of end target. That target is near so….. we got there. Just curious how much she managed to skim from such a pounding.

  • Julie 35 – 25 – 36

    This is where the Big Dog BAC rubber meets the road. Gap and price resistance. Volume declining JULIE https://uploads.disquscdn.com/images/4131d6fdb532a33c837382218edb17ca621b5c7fc8297c9919894cbadaffffb7.png

  • Julie 35 – 25 – 36

    SPX They gapped it up https://uploads.disquscdn.com/images/30b59573dbb37261c1efec940bd4786efcf490606dae59ebc4d2c98a97b73197.png this a.m. over the upper gap window. Going to be very interesting now at price and upper trend line resistance JULIE

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

    https://uploads.disquscdn.com/images/f5309627ef6058f304e7a3f5c6c7b4ad4cc79a09856773d56e82889f7c8f5e47.png
    High Yield pump is still on.
    watching for extremes. Off to lunch!
    -GG

  • https://evilspeculator.com Sir Mole III
  • HD

    TSLA got halted?

  • Ronebadger

    5min chart – 3 or 4 knocks on 2863 today. SPY volume drying up. VIX is just below the lower BB. BB width starting to open up. January’s gap fill yesterday, gap up today. What else?

    https://uploads.disquscdn.com/images/19724d2f6cbb6c83808f559531c661b0715dc9117d96253658387da08a15de83.png

  • Julie 35 – 25 – 36

    Hi HD Something about Musk in a tweet taking TSLA private.He had better shut his mouth as he can be sued
    JULIE

  • HD

    That’s a whole new level
    of scalping. Even for scalpers.

  • HD

    420. I laughed. What a pot head. He does have a sense of humor.

  • randomuser6789

    I sold my shares this morning…
    D’oh! Oh well.

  • HD

    Dang. Look at it go.

  • ridingwaves

    tsla shorts were sitting on 2 billion loss before all of this….yikes…

  • randomuser6789

    Hopefully Musk isn’t stupid enough for this to be a joke.
    If it is a joke, I am glad I am out. If not, I was losing patience for his childish antics anyway.
    I think electric cars are the future and that TSLA will succeed.
    But I also think the VIX has fallen 4 days in a row and outside the lower BB for the 2nd day in a row. That is the first step to a VIX equity sell signal. We may see a correction soon. After that, I am still a longer term bull on the overall market.

  • Darkthirty

    too tight to stack with

  • BKXtoZERO

    Nice trade for you. Congrats.

  • Tomcat

    I have been MIA for a while but couldn’t resist posting this, which may be the first huge nail in the coffin for short hedge funds:
    https://www.tesla.com/en_GB/blog/taking-tesla-private?redirect=no

  • Tomcat

    I posted his message to his employees below. Just realized you guys had started a thread… fckin crazy…

  • Tomcat

    Not much, seems like you covered it all. Looks like a blow off top next???

  • Tomcat

    I fckin love the all his followers/cool aid drinkers are comparing it to when Dell took his company private right after the crisis but they are missing a very “small” important detail, that Dell had earnings and was profitable. Tesla hasn’t a single cent ever if I am not mistaken!!!

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

    I am pretty sure TA doesn’t apply here…

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

    hence the wink.
    it’s all about the wink.

  • ridingwaves

    he has to do it now as he could be sued by shorts for manipulation…its a done deal, I would take the 420 as its debt overhang makes that a premium in my view….. Shorts have to mount a massive attack tomorrow, it will be epic….

  • ridingwaves

    its done, he couldn’t put that in print and not do it without getting sued for a lot by hedge funds….I would take the $420 all day long..

  • ridingwaves

    This symbol is going to be interesting tomorrow also…19 million shares, gap close and possible inverse h&s, 7-13 short count was 11 million shares….over 51pps and it could get real ugly for shorts..
    https://uploads.disquscdn.com/images/16f2491f598d982df9fe25afaebc81335493a11dd0513a99b2c9f861100a450b.png