Short Term Chart Roll Call

The onus now is on the bulls to show that they can take this thing higher. Thus far we seem to have switched back into slow up grind mode and a breach of SPX 1341 should take us higher. If you are however looking to the downside then I have quite an interesting setup for you.

Either way, some of you have been clamoring for a short term chart update and since I’m in a good mood you shall receive:
[amprotect=nonmember] Charts and commentary below for anyone donning a secret decoder ring. If you are interested in becoming a Gold member then don’t waste time and sign up here. And if you are a Zero subscriber it includes access to all Gold posts, so you actually get double the bang for your buck.
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Let’s start with the good stuff – the spoos have been churning sideways since Monday’s abbreviated session and as I’m typing this we are actually painting almost 1336. What’s more interesting however is that new NLSL that will be active starting tomorrow – yes, it’s already baked in as we painted three higher wicks. So, if we happen to drop toward 1328.25 at the EOD it may be a great setup to go short for a few bars. Otherwise however it seems to me that we are pushing toward 1360.

Interestingly the EUR/USD dropped through its NLSL this morning – if you happened to catch this one you should be taking profits quickly as my first target range is lurking below. Not much edge here – too much support below. I would prefer to see a long setup first.

Copper is on the run and may aid equities in bubbling higher. I think a target of 4.45 is absolutely possible.

The NLBL on Gold is actually incorrect – nevertheless it seems we are pushing toward 1560 now. The current NLSL is miles away and if you’re in this trade you should be good to go – but I would not chase it if you’re not already positioned.

Silver is in a similar setup but much more compressed as you can see. The target area is looming above and if you’re in this hold to 37.6. Again, I would not chase this one.

Crude also is pushing higher – target area is more generously at the 100 mark. If it drops then bear in mind the new NLSL at 94.75 which should be active tomorrow.
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Now, as recently promised, I do have a little surprise for everyone:

Remember those mysterious charts I used to post in the past few weeks? Well, I labored hard and actually turned it into a blackbox trading strategy which I call Helter.Scalper. There are some similarities with Geronimo – it’s got the same target of 10 ticks and the same stop of 12 ticks but it has a completely different set of rules. Which incidentally is one of the major differences – where Geronimo has four to five entry rules Helter.Scalper currently has nearly 30. But there is one additional and essential difference – those rules constantly change. Let me explain.

See the problem with traditional trading strategies running against the type of tape we have seen in the past few years is that they all break down at some point as the game is constantly changing now. Trading equities against high frequency bots is a bit of an arms race and I literally see how the game is changing from one month to the other. So a major epiphany of mine was that a trading strategy should act a bit like viruses or bacteria – in that they constantly mutate and thus evolve to adapt to a changing environment. Which means the rules that make any trading strategy tick need to be able to adjust quickly enough to respond to environmental changes.

Now, that doesn’t mean that it should trade yesterday’s tape but my observations of the past two years shows that certain rules remain successful while others have off and on periods. This then led me to develop a completely new type of base strategy that is driven by configuration files instead of hard coded rules. Those configuration files are in turn generated via iterative optimization runs that constantly vet various rules against each other within a six month window (which for a 1-min scalper is a sufficient test period). When new rules emerge or old rules fall behind they are being re-ranked as each rule has a success percentage setting. As you can imagine the highest ranking rules have priority – they also happen to be more rare it seems. For instance the highest scoring rules right now are over 85% – but they only triggered around 15 times in the last six months, which is statistically weak. Then there are the worker bees, which are around 70% – those triggered around 50 – 60 times in the past six month, which is statistically stronger. Nevertheless you want to give statistically higher rules their chance and the solution lies not in complex comparison rules but simply in the strength of numbers.

By averaging a large number of rules together we arrive at a situation not dissimilar to what large trading shops are doing these days: Many different strategies (i.e. rules) are run concurrently and this way you wind up averaging out successfully and more consistently over time. When one set of rules starts breaking down odds are that another is starting to bank coin. Now hard coding this is extremely confusing and also difficult to maintain – which is why I spent a lot of time coming up with a way to use a configuration file model which can be updated dynamically.

The one challenge I will be facing of course is performance tracking and my goal now is to write an export function that writes all trades executed to the database. This way I can then use Google charts to produce dynamic and daily updates on Helter.Scalper statistics. Obviously this is going to take me a little while and in the interim I decided to invite everyone to a one-month beta testing period.

Please feel free to sign up for a free one-month evaluation period right now – you will receive email notifications just like with Geronimo, however since it’s a free testing period there won’t be any SMS messaging via my gateway. If you would however like to receive free SMS alerts, and have a Gmail account here’s how:

1. Sign into gmail
2. Go to settings top right
3. Click on filters
4. Create a new filter
5. Add from address: alerts@evilspeculator.com (where all alerts come from)
6. Click next step
7. Check forward to and add your SMS (e.g. 1234567890@txt.att.net for AT&T).
   You can find a mappings of most popular mobile providers here.
8. Click create filter and your done.

If you are switching from an existing email account to Gmail then you also need to do this:

1. Log into your EvilSpeculator membership profile.
2. Change your old email address to your new Gmail address.
3. Done – you should now receive all alerts at your Gmail address which will automatically be forwarded to your SMS number.

Finally, during this evaluation period I strongly recommend that you use Helter.Scalper only with your paper trading account – there may still be bugs after all.

Enjoy!

Mole