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by The MoleFebruary 2, 2015

After six years of pain the bears are used to rejection near inflection points. Which is why we keep seeing those bounces just when it looks like the tape is about to fall off the plate. But in the past few weeks I keep thinking the same thing over and over: How many stick saves are we going to see before this thing falls off the plate?


However, that said – the bears are starting to wear our their welcome. Yes, medium and long term tops take a while to form, but there comes the point when it becomes clear that there’s not sufficient selling pressure to take this dog any lower. That time is approaching fast now – if you project forward a few days: Let’s assume we get two or three more closes near the diagonal I painted on the daily (left panel) and we’ve effectively produced a bullish defense line. Odds for a bounce higher will increase rapidly now every day we remain above 1980.

I’m still short here from ES 2040 and won’t touch those until we fall off the plate or I get stopped out at break/even. It’s make or break time for the bears – let’s see if they blow it once again.


The VIX also at the line of scrimmage  – that 23/24 mark has been holding thus far and supports the notion that we are at a technical inflection point.


On the setup side I’m actually taking my cues from the short term panels in expectations of turning them into daily campaigns. Here’s the USD/CAD which currently looks like an experimental long until about 1.256 – I want to be short below that.

More futures and forex setups below the fold:


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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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  • M E

    Those arrows today were really helpful!
    Got me out of my shorts just in time, although I was skeptical. Still in bonds and bought a chunk of DIG today at 49.37

  • BobbyLow

    I had a fantastic morning and a pretty good day. After flipping one of my positions from Short to long and opening a new Forex Position this morning, the markets were gyrating all over the place and self doubt tried to rear its ugly head.

    What was fantastic about this morning was that after thinking this self doubt through, I realized that this was simply the market doing its thing while I did mine. My self doubt was quickly elimated because no matter what the outcome would eventually be, I had traded correctly.

    By the closing bell of the NYSE, all of these postions that were in question this morning are green.

    Not bragging here but it was nice to be able to kick self doubt to the curb. 🙂

  • molecool

    Divergence and reversal signal on the Zero today:

  • Gold_Gerb

    spectacular swings.
    Back to the S&P ’80’ median$SPX&p=D&yr=0&mn=3&dy=0&id=p00416650253


  • M E

    I think I’m gonna get XIV tomorrow, had a wicked swing on that in October. It’s hit the yearly lows, and Mole mentioned the VIX signaling an inflection point.

  • Ivan K

    Risk-taking (and Life) is all about ‘detachment’ from the outcome … and not seeking approval … all about ‘self’ … any RBT is secondary.

  • newbfxtrader

    Damn Ivan. Definitely more detached than say three years ago but I am not sure I will get to the place you are at.

  • HJS

    Well maybe the bear case can take heart in the fact that the Patriots are an original AFL team won the Super Bowl last night. That is supposed to predict a bear market for some.

  • molecool
  • Ivan K

    N’trader … all of Life is a WIP … and progress comes in many forms … so forge on … to Destination Unknown.

  • Gold_Gerb
  • ridingwaves

    today would have been better entry…but I hear ya, made some nice change in October also….

  • M E

    can’t always get the perfect entry. Will analyze tomorrow, for all I know the market can have another 300 point swing – or more!

  • ridingwaves

    no doubt about perfect entry. I looked at it today also and noticed the touch of october low…and still didn’t make a trade…I’m stalking another symbol so I didnt give it a fair take….

  • Gold_Gerb
  • Billabong

    After reviewing the “Alea Lacta Est” piece a number of times and looking at the charts, it reminded me of the piece Scott wrote in March 2013. He discussed knowing your market and the different kinds of markets a trader would encounter. This looks like a a sideways volatile market. For me, it would require a switch in trading systems from a swing to a day trading system while it stayed in the sideways channel. After today’s upside move, I see a number of individual equities showing buy signals EOD … 2060?

  • Billabong

    I noticed this important discussion piece by Sean didn’t have any responses. I revived it for another review.

    “To provide some perspective from a “programmer” and why it gets in the way of creating a profitable system… it’s not that people think that programming is a way to avoid dealing with data, on the contrary, they prefer to deal with data, all day every day, data is what they are comfortable with… rather, they think programming is a way to shortcut dealing with their own emotional issues. They are smart, so they have read all the books and know that a trader is their own worst enemy, so they decide to build a system that takes that variable out of the equation… problem solved, right? … But what they don’t realize is that emotions (beliefs) don’t just interfere with execution, but can also totally ruin a system even at the development phase, tainting all downstream decisions… If I put myself in my own shoes two years ago and read this, I would call this all esoteric bullshit and go on trying (and failing) to program something… but today, I would say that beliefs matter, more than science can explain, and I don’t try to fight it anymore, I just try to find helpful beliefs and get rid of unhelpful ones, in all aspects of life…”

    The psychological aspects of trading can’t be underestimated. I make a point of taking time down when reaching a point where mental exhaustion will cause me to see and do things that are detrimental to my financial health. Often times, negative beliefs start creeping in. In the last part of Sean’s piece, he talks about adding helpful beliefs and getting rid of unhelpful ones. Discussions on beliefs takes various forms. A good example is Mark Douglas in his book “Trading in the Zone”, taking a different approach by discussing beliefs as negative and positive energy. By taking the negative energy out (unhelpful beliefs), you give yourself more / higher energy to visualize the market as it is with clarity.

  • Billabong

    @BobbyLow:disqus, makings of an excellent trader … able to reverse DUG to DIG on a dime with minimal pain.

  • Gold_Gerb

    Hey now, don’t cry.
    They You had the opportunity.



  • ridingwaves

    Japanese central bankers are trying to figure out how much more to print to keep their currency from appreciating against the rest of pan pacific countries…beggar thy neighbor

  • phylum

    They’re all “buggered”, even the RBA has chimed in

  • phylum

    BUT…. as a wise man told me, “the market is the market”

  • molecool

    It’s funny how how the same people who rail against automatic systems never have written a single line of code in their life, and in fact would be unable to do so. Over 90% of all trading is done via automated rule based, data driven systems – much of it being statistical. The benefit of automation is that you can test your beliefs years and years into the past. So no matter what you produce (emotionally tainted or not) you have the ability to test your assumptions/beliefs very effectively. The risk of form fitting exists – yes – but that’s why you always forward test a system, back testing is only the first step in an iterative process.

    In the end however I must point out that trading isn’t really difficult and that too many people spout too many opinions on the matter. Just find an edge, define the rules, and then trade it. Bill Dunn has traded the very same system since the 1970s – during 60% drawdowns and all. Could YOU do that? Year after year, accepting long series of consecutive losers? That is really the question – it has nothing to do with programming systems vs. manual execution.

  • mugabe

    australia has struck the latest blow

  • mugabe

    as a matter of fact, I read Dunn have adjusted their systems in the last couple of years to reduce the volatility /drawdowns

  • BobbyLow

    Billabong, I remember the piece by Scott. One problem that I had with it was that I had difficulty recognizing what kind of volatility market I was in at any given time. Then I had a crazy thought about one of the only helpful things that has ever happened for me from Elliot Wave. And this was the realization that a series of Waves 1,2,3,4,5 along with Corrective A,B,C’s occur on every single time frame from Tick to Yearly. From this perspective and IMO, different forms of volatility occur in every wave as well regardless of the time frame.

    So what I did was adapt my lens to what is happening right now. And I’m probably going to get flamed for saying this, but I don’t give a shit about what the Daily is doing. However, by bringing my charts down to 2 Hours or less, and focusing on the most the most recent candles, it was a big help to me. I work different sets of charts for /CL and DJUSEN than I do for Forex. I also use multiples of ATR as my initial stops for both. ATR might be considered “old fashioned” but an Average True Range is an Average True Range. At any given time If the range is tight then it is in a low volatility range. If the ATR is wider than the norm than it’s experiencing higher volatility. My Stops and Size are adjusted accordingly.

    What I do isn’t for everyone because we might not be able to see things the same way. But for me, I have to keep it simple because when things get too complicated, my trading goes right down the poop shoot. 🙂

  • DarthTrader

    Sun Mercury Conjunction on Friday along Full Moon tonight indicates the period of retracing gains should be over for the time being if market does not break down over the next 36 hours.

  • BobbyLow

    Mornin Folks, Quiet in here this morning.

    I remain Long Crude via UCO and Long DJUSEN via DIG. My GBP/JPY Short hit its target last night and was closed automatically by an OCO order.

    This morning I reversed and went long the GBP/JPY. Don’t know how the day will end up but so far so good. 🙂

  • captainboom

    New post.