Return Of The Mole

Alright, I just called up the NYSE and told them that Mole is back and they finally could start trading again.

Seriously now – equities have not gone anywhere since I left – quite amazing! So, I’m going to look at a few charts to get a better temperature of the tape and report back. However, here’s a quick update on the GTC fractal situation on the NYSE A/D ratio as well as a few other charts of interest:

Quite apparently bullish momentum is depleting on a daily basis and we unless we see a strong push higher we’re may just drop off here and paint a triple top. Now trading folklore has it that triple tops are harbingers of big corrections to the downside – however as scott already pointed out that is not necessarily the case and I recommend placing a stop fairly close to here if you are scaling into short/put positions.

The fractal pattern on the NYSE A/D ratio appears to be repeating itself – thus proposing at least a one/two week correction down.

Unless they can push the buck even lower and maybe even through this year’s 80.08 DXY reading I think there is a decent chance that we may have settled at the 78.6% fib line. We don’t want to drop below that line, otherwise a much stronger push lower is becoming a real possibility.

While equities have been holding higher the VIX has been creeping a big higher as well. May not mean much but I’m keeping my eye on this. Seems put sellers are anticipating a bit more risk here.

Of course I remain paranoid about the possibility of a surprise gap higher here. Maybe this is nothing but sideways correction before the final break out higher. I’m sure you remember my long term sideways channel chart:

A push beyond the upper channel line would create a feedback loop that would be lethal to the bears and lead to unrecoverable losses. Maybe that is the ‘end sieg’ scenario the forces bent on destroying the Dollar have in mind. Push the tape beyond the reach of any remaining bears by destroying the Dollar – thus buying more time beyond the November elections and maybe into early next year.

Bottom Line:

There is a chance of a reversal right now and here – but thus far the bears are not taking it. Maybe 1130 will be a strong line in the sand but if you want to play this one set a stop not further than 1140, which IMNSHO would be an acceleration mark for the longs.

Caveat ursi.

UPDATE 4:17pm EDT: I wanted to post a little update on my new ES futures scalper I call HelterSkalper:

This goes back to 1/1/2008 and goes through today – what I find particularly important here is that it seems to have kept ticking unscathed during the 2008 crash. In case you care – here are the stats:

What surprised me was the rather moderate Sharpe ratio, especially given the high success rate of almost 67%. The profit factor (an NT measure I never really fully grasped) is 1.21 – which is good. There is a 30 tick stop which however is almost never hit – as a scalper the strategy does not stick around very long. Bear in mind that this does not consider commission, which is definitely something to bear in mind with a strategy executing 5.5 times per day on average. That means 11 legs and it probably would be wise to use a low cost broker like IB – here are the ones supported by Collective2:

So, trading HelterSkelter would involve getting signed up with one of these brokers and opening an account via C2. Once I get closer to making this happen I will post instructions here. Until then any input regarding any of those brokers would be appreciated – my main focus will be on service, executions, and of course commission cost. Any other thoughts appreciated.

Cheers,

Mole

P.S.: Good to be back – I missed you guys.