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The Day The IV Short Trade Died
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The Day The IV Short Trade Died

by The MoleFebruary 6, 2018

Effectively yesterday’s wipe out in equities will be remembered as the day the IV short trade died. As you all recall I have been rather prolific on the subject of implied volatility over the years and I’m not averse to admitting that it has become a bit of a professional obsession of mine. Thus it was just natural that I would be raising red flags when seeing (repeated) signs of a possible market dislocation on the horizon. Which I then did right here, cautiously and as productively as possible, given the fact that many a bears species have come extinct over the course of the past decade.

Let me set the stage, especially for some of you noobs who had the misfortune of not being a long time visitor to our digital den of market domination. To put it bluntly: What transpired in equities and to that extension in implied volatility indices over course of the past year has been completely unprecedented and there’s a very good chance that you will not see anything like it again for the remainder of your life.Β 

Well regarding the latter I may end up proven wrong but I’ll for sure will be dead by then, so who cares? To truly appreciate what is going on and what will most likely transpire over the course of today’s session, it is essential to understand this: The VIX has spent as much time below its 11 mark over the past year than it has combined over the past twenty years. And that ladies and leeches of course includes the period preceding the 2007/2008 financial crisis.

How we got here and how irrational exuberance in both equities as well as crypto currencies could could develop once again, only a decade after an economic crisis causing shock waves still felt up to this day, is a topic for another day. But I can dumb it down for you and just give you the short answer: human nature.

Early Red Flags

Now in my introduction I mentioned red flags and if you’re not a subscriber you may have missed my repeated warnings that something was very amiss and that a serious market dislocation was becoming increasingly possible. I posted quite a few over the past two months but here are the top two contenders:

CBOE SKEW vs the VIX – one of my favorite ratios when it comes to assessing buying opportunities. And it’s not surprising it would be flagging one right now based on historical precedence. After all IV across the board has exploded with more to come today judging by the pre-market tape. Although the SKEW was designed on a good premise in reality it’s actually pretty useless and didn’t disappoint in that regard once again over the past week. But in ratio with the VIX it’s extremely useful when it comes to picking dips at least.

So imagine my confusion when it was flagging well over a week ago despite the fact that equities were trading at record highs. That was one of the first signs that market makers at least were getting a bit antsy. While the VIX was creeping higher steadily along with rising equities (also a bad sign) SKEW held steady and didn’t flinch.

The second red flag, as so often since I started this trading blog almost a decade ago, was the VXV:VIX ratio. Both short and long term IV was pushing higher but the VXV was clearly lagging the VIX (causing a drop in the ratio). Once again this is a phenomenon usually observed after a market correction and not ahead of one. In 20 years of looking at charts I have seen occasional aberrations which however quickly resolved itself in a day or two. I have never seen a divergence like this go on for a week or two.

Given an effervescent bull market across the board with the USD tumbling to ever lower levels my recommendation was to proceed cautiously and consider scaling out of long equities position. And I’m glad I did as this may just be the first leg of more pain to come.

The Day The Short IV Trade Died (Literally)

As a result of yesterday’s IV explosion the inversely running XIV as well as the SVXY dropped over 80% in after-market trading yesterday and eventually had to be halted. Which basically has wiped out almost all of the NAV in both ETPs and there actually is a pretty decent chance this event will end up wiping them both out. UPDATE: I just learned that the Credit Suisse declared an acceleration event and is shutting down the XIV on February 20th.Β The shares will likely be zeroed out after closing at $99 yesterday. The move wipes out $1.5B in an instant.

The longer term implications of this generation’s Black Monday will most likely be felt for years to come. For one trading IV products will not be same again for a long time as popular risk models effectively went up in smoke yesterday. If nothing else you won’t bee seeing a VIX trading in single digits anytime this year again and most likely quite a bit longer. If I’m wrong on that end I would actually be ecstatic and the first to bet long implied volatility.

Shameless Plug

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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.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

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

    Nothing more attractive than a bounce and a wiggle.
    [SPX]
    http://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=1&mn=0&dy=0&id=p24122633636

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

    The bad news: holders of the inverse ETPs lost $3.4bn as the products went nearly bankrupt and this removes a steady source of volatility supply over the last year.

    Corizined.
    “same as it ever was”

    https://en.wikipedia.org/wiki/Jon_Corzine

  • HD

    80 point ripper right out of the gate! It’s get rich or die trying time.

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

    You’ve got just over an hour before the Europe Markets close.

    Go Get them Tiger.
    πŸ˜‰

  • HD

    30 handles in 5 minutes!

  • HD

    2678 was HWB the crash

  • BobbyLow

    Stopped on UGLD (Long Gold) – Opened Short on Gold /MGC Futures

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

    Make hay while it shines!!!

  • HD

    2637 HWB the ripper.

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

    DUST crossed my line. must be legit.
    too bad Fidelity is shut DOWN.
    thank god my DUST is safety netting my UGLD.
    LOL. I’m Market Neutral.

    http://stockcharts.com/h-sc/ui?s=DUST&p=D&yr=0&mn=6&dy=0&id=p38722350521

  • Tomcat

    Closed my short GC for now…standing on the sideline

  • Tomcat

    Where is everybody…??? I

  • HD

    In my experience the sustained low does not happen in globex. I guess the election limit down is an exception. Maybe someone has some conviction either way?

  • Mark Shinnick

    Walking around a retail area last night everybody seemed very stunned and quiet.

  • Tomcat

    This is getting ri-donkulous. last night took a hail mary ES position at 2550 and just for kicks put a limit sell at 2600 without thinking it would be executed overnight…

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

    discreditation of the entire financial Market.
    Check.

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

    Either making coin hand over fist, or Zombified naked with the tide out.

  • BobbyLow

    What happened to Fidelity?

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

    rush to the exits?

    https://www.zerohedge.com/news/2018-02-06/fidelitycom-down

    at least I have my precious physical.

  • BobbyLow

    Se ve mucho mejor ahora.

    Lookin much better now. πŸ™‚

  • Mark Shinnick

    Bottom line, there needs to be a retest of some kind. There is still no sign this should appear to most as any grave threat to the bull; plenty of reserve for severe fear sooner of later.

  • BobbyLow

    We’ll be back soon? WTF it’s like they’ve gone fishin. . .

    That’s gotta suck for people needing to use the platform. How about phone orders?

  • Tomcat

    Sounds like their mobile platform is accessible

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

    sure. Phone – brilliant! what do you think the queue wait time is?
    ;-D

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

    that’s a sneaky, but good idea.

  • Tomcat

    Ha, I didnt think he meant phone orders meaning actual calling. But I remember, BL is an old timer…;)

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

    Russian roulette? I have a sell at HOD on $ES.

  • BobbyLow

    Jesse and I had some hard times back then. πŸ™‚

    BTW, if you decide to call in and get music playing on the phone while you’re waiting it helps if you scream obscenities into the phone as loud as you can.

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

    thanks.
    Fidelity was up for me. UGLD & DUST unwound/liquidated. paid the vig.
    Life is Good.
    Lesson learned.

  • Mark Shinnick

    May want to back off the selling a bit.

  • Tomcat

    Have to be connected at all times!!! No excuses.

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

    for a second, my eyes saw HODL.
    yes, HODL the Spoos.

  • Tomcat

    Not good with acronyms. I meant sell limit at 2681.

  • Lugman

    Doubt we will see continuation of selling for at least couple days seeing how extended the indices are.

  • Tomcat

    You mean extended to the upside?

  • Mark Shinnick
  • https://evilspeculator.com Sir Mole III

    I just learned that a good friend of mine got completely wiped out yesterday courtesy of SVXY. Years of hard work and investment destroyed overnight. Hitting me pretty hard actually as I really like him and he’s one of the smartest people I know.

    Nobody is immune – never forget that!

  • TerpFan

    Mole,

    I use to subscribe to the Zero. Curious to how it looked through all this yesterday?

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

    OUch. I would like to hear more when the dust settles.

    https://i.pinimg.com/originals/8d/b1/91/8db191cbfe69993d9e9a59bdd2efd41e.jpg

  • Tomcat

    When you say “wiped out” I see last quote for SVXY is 71.82 from google finance. If this is true, how could he have been wiped out? Or is this part of the VIX liquidations from CS???

  • BobbyLow

    Sorry about your friend Mole.

    The markets have the power to make us all humble.

  • BobbyLow

    There have been no shares traded today according to my TOS.

    It’s showing a close of 71.82 but the bid and ask are 14.60/15 with 0 Trades.

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

    Amen brother
    Gold. 2011-2015 RIP

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

    BPSPX,
    full BEAR. sub 60.
    They broke the Internet Market.

    http://stockcharts.com/h-sc/ui?s=%24BPSPX&p=D&yr=2&mn=0&dy=0&id=p90084499456

    a cursory glance at the PnF shows support around 48.

  • BKXtoZERO

    as one of the dumbest people you knew…. my game was TVIX. My “system” was layering in near MKT highs and waiting for spikes….. the market just went on too long for me. I was still actually adding in the 5s. In the past, I have been really good about swinging in and out on corrections. On one, I nailed more TVIX points than the total of the move because I caught every single move leaving very little of each move missed. While this extinction move was my wet dream, this time, I never expected they would let it drop straight down with no pauses.

  • BobbyLow

    Hey BKX, good to see you back. πŸ™‚

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

    I was there and can attest to your stupidity.
    πŸ˜‰

    Love ‘ya man.
    he he.

  • BobbyLow

    LMAO

  • Mark Shinnick

    House coming along ok?

  • Lugman

    No. With extreme readings like these, a bottom is often in or very close. Followed by a sharp rally, with a likely retest of bottom a few days (say week or more) later.

    That’s the usual pattern. Better keep your head cool in these situations.

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

    https://evilspeculator.com/what-goes-up/#comment-2515990865

    “code of conduct” – he was trying…

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

    and my quote of the week..
    (to BKX)
    “I’m unsure how you can trade 3X funds, with the current situation. It wouldn’t be too hard to imagine a situation where you are left holding the Market bag. Is it possible you are trying to get results too fast with unmeasured risk?”

  • BobbyLow

    I’m beginning to wonder if you are a Gerbil Bot. How in the world can you have so many things at your finger tips and be able to post them in a matter of seconds? LOL

  • Darkthirty

    No action in ES options……….MMs spooked?

  • Tomcat

    Thanks for the advice.

  • Tomcat

    Evil WIKI

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

    Thanks,
    I am the next generation. Generation X.
    I surfed the PC Revolution, I built the F’in Internet.
    I trust no one.
    Fear us.
    Muwahaha.

  • BKXtoZERO

    Thanks. House is 90% done! 3 years of back breaking work but I didn’t want it hanging over me every day into my mid to late 50s.

  • BobbyLow

    Seriously, how in the world could he pull up a post from BKX months ago? He’s has to be a Gerbil Bot. πŸ™‚

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

    ya think?

  • Mary

    I remember several years ago there was a big story about a newscaster and a gerbil.

  • Darkthirty

    paybacks are a bitch ! : )

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

    hey now, let’s not go there.
    It’s over, and PTSD is in the past. mostly.
    πŸ˜‰

  • BKXtoZERO

    You guys wanna know what killed me? My wife! I was actually doing really well trading with my framework of rules, taking set ups, having stops…. Crude oil made me a lot…. 3X metals trades… I was up everyday at the computer with trading software going. She absolutely hated it and fought with me over it so I stopped. Then I fell back into my old lazy ways.

  • Mark Shinnick

    Yeah, that’s the best kind of equity. ENS project doing ok?

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

    Red pill. google it.
    Don’t be a Beta blue pill Hubby.
    you’ll thank me later.

    Men are Iron, Women are oxygen. Rust is inevitable.

  • BKXtoZERO

    Thanks Bobby. I won’t be posting here though. I don’t want to stink the place up. I will work on getting back to form with other instruments, plans, stops before I leave in the AM. (things that worked) Oh… Bobby, did I tell you that I was from Philly and was a serious Eagles fan??

  • Darkthirty

    My house burned in December, I’m still in demo mode……..

  • BKXtoZERO

    dang… so sorry.

  • Mark Shinnick

    Thomas Fire?

  • BKXtoZERO

    well I just had the same doctor RE-DO those again using donor rib cartilage so the should stay in there this time rather than resorb like that Alloderm tissue did. It is better but ENS is still a really sucky life any way you cut it.

  • HD

    Dang! FWIW that product is trading on TOS at $11.30

  • Darkthirty

    it’s good, enough from insurance to overbuild. Framing is a lot easier than roofing.

  • BobbyLow

    You won’t stink the place up. Everyone contributes something in their own way and so did you. Wish you the best going forward. . .

  • https://evilspeculator.com Sir Mole III
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • BobbyLow

    Yep it must have reopened a little while ago. 10 and 1/2 million shares traded already.

  • BobbyLow

    Sorry about that DT.

  • BobbyLow

    When ES options first came out the spread was terrible. Any improvement?

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

    I’m actually quite crushed emotionally about what happened to that guy. We were working on a few projects together and he’s pretty much the last person I had expected to get wiped out like this.

    This kind of brought me back to Sept. 19, 2008, which was my day. Chris Cox(ucker) at the SEC bans short selling and I’m sitting up to my ass in puts. Which an hour or so later cut my principal by about 75% by the time I was done desperately dumping positions. Took me quite a bit of time to bounce back from that psychologically:

    https://evilspeculator.com/heading-for-the-hills/

    Although I was a big unhinged there for a while (which shows just reading the ensuing posts) I was back in the saddle about a week later:

    https://evilspeculator.com/moving-on/

    Quite frankly I couldn’t have done it without this community, which back then was very supportive and convinced me to continue in my quest.

    Anyway, I was employing quite a bit of Schadenfreude there yesterday reg. crypto and how a lot of HUDL monkeys had been losing their asses. Maybe this was a bit of inverse karma as I’m feeling really bad about it now. No worries, not getting soft on you guys πŸ˜‰

    Just fucking watch your asses in this tape guys. I don’t want anyone to get hurt.

  • https://evilspeculator.com Sir Mole III

    Jeezes – California?

  • Edgy

    Looks like it said “sell.”
    Mole, you have a Patreon for half-leeches?

  • https://evilspeculator.com Sir Mole III

    I should never fucking complain about having a rough day.

  • TerpFan

    Thanks Mole. Was just curious. As I mentioned to you, I just never could make it work for me.

  • https://evilspeculator.com Sir Mole III

    Yeah, I feel pretty humble right now AND IT DIDN’T EVEN FUCKING HAPPEN TO ME!

  • https://evilspeculator.com Sir Mole III

    Similar to SVXY – about 80% down when they halted trading I think.

  • Edgy

    Nice! Mary was looking out for you; Hail Mary.

  • Tomcat

    One thing I have learned in life, better lucky than good

  • Mary

    spreads are reasonable..

    I trade the weeklies deep enough in the money so there is minimal time value …

    I use them as a suitable proxy for ES futures as there is no margin, just premium, and a built in catastrophic stop.

    They trade the same hours as the futures and get the same tax treatment.

    Use limit orders at the mid and you should (usually) get filled fairly quickly .

  • Julie

    SPX Yesteday a bounce off the lower cloud boundary. Today down to the 144 ema. I stated yesterday to watch for a possible consolidation on the intraday charts which as I am typing is occurring https://uploads.disquscdn.com/images/d5ea0faea89ba9a8c2a8ceee4b48a3b1b4184419cbb64426e2fea9eccf15088b.png JULIE

  • https://evilspeculator.com Sir Mole III

    It’s a shame but I understand.

  • https://evilspeculator.com Sir Mole III

    This man gets it πŸ˜‰

  • https://evilspeculator.com Sir Mole III

    Hey there Julie – see below… having a bit of an emotional day as a friend got wiped out yesterday πŸ™

  • Julie

    Oh No Chief will scroll down. Let’s all try to get him back.
    JULIE

  • CandleStickEmUpper

    I feel for your friend. I have been there and it completely sucks the life out of you.

  • Mark Shinnick

    That’s right Mole, for the most part I think this group here is pretty darn well centered and prepared against outlier risks becuse of all you’ve done. Long tna, BTW.

  • BobbyLow

    Thanks for the info.

  • Julie

    SPX Another chart Today;s bounce exactly off the weekly 34 ema. IMO not over esp with the possible consolidation on the intraday charts suggesting another leg down. If so target the weekly 55 ema which closely matches the daily 233 https://uploads.disquscdn.com/images/6b85251be6325036376b069b7ba7dd866e2a4b8c5673beecea4bd4a99a607b4e.png ema. If a drop continues below the weekly 55 ema then watch the upper weekly cloud boundary matching the rising weekly 89 ema (89 ema not shown) Shown weekly chart SPX JULIE

  • HD

    Going back to the old school from yesterday. We saw SPX 50 DMA 2717. That is now exact midpoint of 2873 and the 200 DMA at 2534. That is approximately HWB the Trump rally.

  • HD

    BTW. That is the best I could do to frame my POV without any wave wanky.

  • https://evilspeculator.com Sir Mole III

    I don’t think so. He decided to take the rest of the year off and try to put himself back together. I hope he won’t do anything stupid…

  • https://evilspeculator.com Sir Mole III

    I’ve said it before: The Gerb is an evil trading robot from the future.

  • Julie

    Understood chief Thanks for letting us know and commenting on it. It is something that all must be aware because it can happen to anyone. Again my heart goes out to him and for you too chief as you are indeed a great friend of his
    JULIE

  • https://evilspeculator.com Sir Mole III

    Okay guys. So what’s probably going to happen today and the rest of the week is that we bounce back. Just like in 2007, when the underlying breakage happened in the spring, and yet it was a year plus later before it all went to shit. There will be a delay this time as well because we won’t be told what truly happened and why. In my mind what triggered this was some big fund shorting the market up hill and eventually getting a margin call. Then they just started dumping but there weren’t any buyers because – well who would want to be looking at a monthly candle like January?

    For now odds have it a ramp will develop and It will continue until it can’t, but trust me on this – it can’t forever, just like it didn’t last time. And this time the Fed will not have the same ammunition as last time to stop it.

  • Julie

    I have stated how important 8 ema’s are SPX a possible shooting star developing at the 8 ema and conversion line (8) on the 60 min chart retracing approx. 30 % from 2835 — 2593. I am still looking for another leg down per post below Shown SPX 60 min chart https://uploads.disquscdn.com/images/d7e19affed1cf1e06852fc90f30adad91ffb07c0c7523447a8cd4a5d3ad8a07a.png JULIE

  • Darkthirty

    I’ve learned it’s good to get lucky! : P

  • BobbyLow

    From Moles story down below:

    “. . .This kind of brought me back to Sept. 19, 2008, which was my day. Chris Cox(ucker) at the SEC bans short selling and I’m sitting up to my ass in puts. . .”

    I have a similar story from back on that day. At the time, I was trading helter skelter and sharing trading ideas with a friend of mine on the phone everyday. (This was a bad idea BTW). Anyhow, he had built up an extremely large short position in Banks. He had a big set of Bls. and was UP deep into 6 figures. Then that announcement came from the SEC and the Banks skyrocketed. My friend was stunned and kind of like a deer in the headlights. Then on top of this, shortly after the banks regained their strength, he had all of his shares called in so not only did he lose all of his supersized gain, he lost a few thousand as well. He then added insult to injury and put all of his cash into gold which I think was trading in the high $1,500s to $1,800 per oz at the time. I’ve since lost contact and have no idea what he’s doing now but he can’t be a happy camper about the markets.

    OBTW, if my memory serves me correctly, that day cost me about 3 K. This was back during the time when I had no idea what “R” meant.

  • Darkthirty

    Nope, woodstove. Been heating with wood for 40 years…….. first problem.

  • Darkthirty

    I do the same as you, scalping 5 point moves is a lot of work!

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

    I concur.
    Look at that plunge in 2007.

    I will be watching the unemployment rate with a keen eye.

    http://www.stockcharts.com/h-sc/ui?s=%24NYA&p=D&yr=20&mn=0&dy=0&id=p46880709107&a=442365228

  • ridingwaves

    interesting that market can’t hold the gains, I wonder if the in crowd knows something about trend and is free to play some L VIX for a bit to recoup from their XIV losses?

  • BobbyLow

    Yes it is. How we close might tell us a little more.

  • ridingwaves

    the sell algo is so strong for this out of the blue event…..an unreal flip of switch

  • Julie

    RW MRTX A pullback to the rising daily 34 ema which has acted as support or a pullback to lower channel JULIE

  • Julie
  • HD

    Interesting commentary Mole. I like the historical context.

    2679 was HWB the crash. I am going to stay w a continuation move as the chart coils unless HOD is taken.

  • ridingwaves

    I added to my PIRS here, looking at other entries…

  • BobbyLow

    I imagine that with this latest scare in the equity market we probably won’t see a single digit VIX for awhile.

  • Mark Shinnick

    At least XIV is trading again.

  • ridingwaves

    interesting dynamic is do the other bankers like CSuiss or not, ala Lehman-Bear Sterns. They can keep short trade on metal to pedal and possibly take them under just on their symbol alone..or help their debtpusher buddies

  • HD

    Time to find out triangle direction.

  • https://evilspeculator.com Sir Mole III

    Yeah a snap back to that is definitely in the cards.

  • https://evilspeculator.com Sir Mole III

    In my case it was a few digits more… sigh… well, to my credit I learned from it.

  • Julie

    Hi HD SPX A consolidation is what I have been saying. So far a failure ate the 60 min 8 ema
    JULIE

  • Julie

    GG I One of the targets I posted GE was 14.84 Today’s low 14.71 and a green candle. GE must close above it’s 5 ema approx. 15.39
    JULIE

  • BobbyLow

    Yikes!

    The funny thing is that it was a few months after that fiasco when I found a good place to hang out called the Evil Speculator. πŸ™‚

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

    and the volume? anything indicative?

  • HD

    U r kicking some butt Julie. Kudos.

    Triangle are notoriously unpredictable.

  • ridingwaves

    bulls need to run here to keep from swimming in arrows

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

    right on the boundary.
    and we’ve got the 2015 April high to prove it.
    [GE]
    http://stockcharts.com/h-sc/ui?s=GE&p=D&yr=3&mn=2&dy=0&id=p38784983815

  • Julie

    Volume today on par with previous bounces but I would like to see the close in upper third of today’s range
    JULIE

  • BobbyLow

    Covered my /MGC Short for only about +.25 R. These Futures are going to trade differently than an ETF/ETN so I’m going to do another back test to see if I have to adjust my rules and stops to allow for overnight price action.

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

    it was ‘fun and games’ last week.
    I think you would agree, something significant has occurred.

  • Mark Shinnick

    Seems to me, very subjectively, the volatility thing is way overblown. The volume was truly fantastic and its now half that, its hard to imagine so much participation can be sustained.

  • Julie

    GG Mole and everyone here (myself included probably more so) has basically a bearish bias. We knew what was coming but timing is very difficult. Proud of everyone having stops and staying vigilant. No one here fell into the complacent trap. Good traders here GG and if someone is wrong which we all our at times then not wrong long.
    JULIE

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

    agree with everything you say. What I meant was that something significant has occurred outside our realm (forum) as in the larger F’ing Market. somebody’s model blew up, and everything that was fine, Isn’t.

  • BobbyLow

    You should have been here in 2009 and 2010. I hope Mole takes this the right way but ES was a pretty strong bear camp back then. I was a perma bear and the bearish tone at that time is one of the things that attracted me. But over the years I think we’ve all evolved and for me it has been one hell of an extended learning curve. πŸ™‚

  • Julie

    Excellent point GG Mole commented on that earlier. IMO had to be a hedge fund

  • Mark Shinnick

    Appears close to some resolution.

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

    I think I was here in 2010, but then there was a mutiny and I left for a year. and Now I the rest of the story. eight figures….dam!!

  • Tomcat

    BL, may I ask why you trade ETFs and especially ETNs when you get go straight for the source aka futures?

    PS. Nice job on gold, at the end we both closed profitable trades.

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

    every one has their favorite chart.
    this one saved my metaphorical ass.

    not that I trade over my 2% head.
    of course, everyone here helps too.

    https://uploads.disquscdn.com/images/17477c0161879dd427a01a022daa33eeea7e36d85f3325ad16289c3dd6ba6084.png

  • BobbyLow

    I left twice and came back. You can never really leave. LOL

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

    ROFL.

  • Julie

    GG You have great charts and I have learned extensively from you. My husband has volumes of notes and chart patterns that I have studied.
    JULIE

  • Yoda

    Treasuries’ rates need to come down.

  • BobbyLow

    Thanks. I was a little premature on my exit but I was getting itchy trading without a back test using my new time frame.

    I just switched to /MGC so I didn’t have to trade UGLD which is an ETN. /MGC is an affordable contract. I can even do multiple contracts without the bigger numbers that go along with /GC. Now when it comes to Oil, UCO and SCO are ETFs and they don’t carry the same risks as an ETN. I’ve traded /QM Futures but even they scare me a little when managing my R and allowing for the amount slack I need for my stops. /CL has the same problem for me that /GC has. OIH is something I’ve traded for years and feel comfortable with it. I stick with energy and gold. Equities suck for me.

    The bottom line is that it comes down to account size. When I first began trading I would have had no problem handling the amount of R that can comes with /GC and /CL. But reckless trading eventually took it’s toll so I have to work with what I can afford to work with. It takes a long time to make a shit load of money back unless you roll the dice. But I got to the point where one or two more bad rolls of the dice and I would have been taken out of the game altogether. So I’m primarily a singles hitter now. πŸ™‚

  • Julie

    USO taking 3/4 off short some things here I do not like … intuition of sorts. Never go wrong taking a profit there is a support 12.68 down to that now and I see two equal legs down from 13.30 with positive divergences 30 min chart Stop on remaining 1/4 will be the daily 5 ema which was today’s high Original targets 12.54 (34 ema) and 12.34
    JULIE

  • HD

    30 handle candles 60 min. Me likey

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

    I’m with you there Julie. I covered my OIH short for +1R and have a trail at + 1R on SCO that will be gone before the COB today. I should have held out for more on my short gold but it is what it is.

    I am plum tuckered out!

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

    That’s perfect! πŸ™‚

  • Wave_surfer

    Well said!
    I hope that I am near the end of my “Re-Education” training.
    I think I might be.

  • Wave_surfer

    eight figures?

  • HD

    Mole called for a test of HOD. Some sellers there. GL

  • Julie

    https://uploads.disquscdn.com/images/e99423c3d60e6e57bf338613deeb38738da474aacef2e2ff9a27d1475aea82b9.png BL We are all tired I believe. Good trade BL Watching GDX sliced thru the 61.8% retracement. Looking for a place to go long. If you noticed BL GDX went up into the weekly 233 ema and weekly upper cloud boundary and failed I will show a weekly chart GDX JULIE

  • Mary

    so how do you adapt your trading method when above, inside, or below the bands?

  • Yoda

    USD is looking weak . Today “should” have been a strong bull day for DX.

    https://uploads.disquscdn.com/images/569d66ac33cd6e1f8d6d4e293b76a27fe3f79cc734c72265db1c6a407b44798f.png

  • Darkthirty

    Target

  • ridingwaves

    arrow dog paddle now called off

  • HD

    Dude that triangle broke at 2650 and rallied 42 points in 20 minutes. I’m having a good month today.

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

    chews up in the prey in the chummy blood waters.
    πŸ˜‰

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

    rake it all in. you’re going to need it when Elliot let’s you down.
    πŸ˜‰

  • Wave_surfer

    I thought you were here before 2010. It is hard to remember my life before GG πŸ™‚

  • BobbyLow

    Hey Tomcat, look at Gold now. Falling like a rock. Damn.

  • https://evilspeculator.com Sir Mole III
  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • Julie

    BL and GG GDX slicing down thru the 61.8% retracement
    JULIE

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

    you sound surprised.
    πŸ˜‰
    http://stockcharts.com/h-sc/ui?s=GDX&p=D&yr=1&mn=2&dy=0&id=p92669758357

    edit: Range, range, RANGE trade babeeee.

  • Yoda

    This is the move that I was looking for.

  • HD

    you guys need counseling. Seriously. Triangle is an EW pattern!?.”@:&;!/?

    I’m out.

  • Tomcat

    BL, we took our profits remember. A profit is a profit. at one point I used to play the what if game, not anymore. next trade please

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

    oh come on, I’m sorry.
    you said your were having a good day.
    let’s finish it on a good note.

    Get pissed another day.

  • CandleStickEmUpper

    On the Zero I noticed that there were no up/down arrow signals generated yesterday or today. Does the zero program calibrate itself for the volume vs. price movements, and whatever other factors its drawing from?

  • Julie

    LOL GG I was looking for a bounce to a lower high to short . Now it may possibly be a trading range trade 21 — 25
    JULIE

  • BobbyLow

    You are absolutely right. It’s just that this was my first experimental /MGC trade under my current time frame and I forced positive results which is not necessarily a bad thing but I left a lot on the table. After my SCO get’s closed out today, I’ll be back to all cash again. I’ll also wait to see what the price action in oil looks like around the EIA report tomorrow before I reenter anything energy related.

  • Yoda

    Adding more PM miners.

  • Yoda

    Tomorrow, bears may get another go at shorting the tape.

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

    SPX looks corrective . Going up into the 60 min 21 ema and 60 min baseline (21) Watching closely for a failure here I would like to see a positive divergence 60 min MACD 5,34,5 and a 60 min RSI positive divergence. I still believe SPX one more leg down
    JULIE

  • BobbyLow

    Hey HD, he’s just busting your chops. We know you are a good trader and are able to make trades that not too many people can make.

  • Tomcat

    Did anybody pay attention to the biggest and greatest [contrarian] indicator of all???

  • ridingwaves

    tvix seems like it’s in backwardation price vs. vix price

  • Tomcat

    Of-course I am talking about none other than Gartman. I will leave this here for your entertainment:
    https://www.marketwatch.com/story/this-is-just-the-start-of-a-substantive-bear-market-warns-dennis-gartman-2018-02-06

  • Julie

    SPX See the upper cloud boundary It matches the 60 min 21 ema. IMO gonna fail here and another leg down. See post directly below JULIE https://uploads.disquscdn.com/images/a4ed9a154083adfe094a3510a7d812ffb11d25298520ec880f13ad2129f05e35.png

  • BobbyLow

    Well there goes the Bear Market.

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

    I caught this topic on ZeroHedge yesterday.
    aaaaaaaand there it is.
    Long, Sell your Mother Long and BTFD.
    πŸ˜‰

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

    Time. Check.

    last one. This ain’t a preschool.

  • BobbyLow

    How long have you been trading? It must be awhile if you know how bad this guy’s calls are.

  • Julie

    TC What … You mean I am not the biggest and greatest contrarian ! !
    JULIE

  • Tomcat

    There is a scene in the Bronx tale where Sonny and his buddies destroy their tickets even though their horse was winning after finding that the fat guy was betting with them. The horse lost…

  • Tomcat

    Cutest? maybe….biggest? NO

  • ridingwaves

    they might just be ending all VIX related instruments in this vicious round of who’s got my VIX?

  • BobbyLow

    Almost similar to who really owned all the debt exposure in the mortgage derivatives back during the banking disaster.

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

    destroy Capitalism through fraud, dam you Socialists.

  • Julie

    GG Down with Wall St ! ! Up with guaranteed income for all ! !
    JULIE

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

    you get a pass πŸ˜‰

  • https://evilspeculator.com Sir Mole III

    I think he even beats Prechter.

  • https://evilspeculator.com Sir Mole III

    “I hope Mole takes this the right way but ES was a pretty strong bear camp back then. ”

    Moi?? Where’s that ban forever button again…

  • BobbyLow

    LOL

  • BKXtoZERO

    “Okay guys. So what’s probably going to happen today and the rest of the week is that we bounce back” Was that a prediction Mole? Trade the plan Stan…………..

  • ridingwaves

    yep, notes and such…..
    but I did grab some TVIX at 7.90, while VIX was at 29.90 still, seemed heavy bwdtn….about to sell, recoup 1/3 R back from XIV loss

  • Julie

    Guys IMO we have not seen the low in bond yields. TLT 61.8% retracement ; support zone and lower Keltner channel Oversold Looks corrective down from the late August https://uploads.disquscdn.com/images/20d5c72628fcf8fae2875f5f9ad847ad98857d56574d46cbcc312f2654329141.png high. Shown TLT weekly chart JULIE

  • Ronebadger
  • Ronebadger

    I stink at posting charts, but you get the idea. Waiting for Wave 5 around here…sorry for Wave Wanking…can’t help it πŸ™

  • Wave_surfer

    hm… looking at that chart, to me
    1) The last quarter of 2016 looks impulsive
    2) 2017 looks corrective. overlapping price where it takes 4x as long to erase 2/3 of the loss.
    3) The last 6 weeks look impulsive to me. Larger bars with less overlapping.

    On the other hand, you are right. This is definitely a place where a bottom may be painted and it may climb to new highs from here.
    I can see either path being taken.

  • Wave_surfer

    Of course, I may just see what I want to see.
    I have intermediate term short on TLT.
    I am trying to figure out when to get out my TLT short and waiting for a nice bottom to this dip, so I can jump in on a long index.

  • Julie

    Hi wave surfer SPX possibly down to the weekly 55 ema closely matching the daily 233 ema. Perhaps a little above or below. You know the game i.e. below to induce the shorts then a ramp with short covering.A little above to catch everyone off guard expecting the 233 ema or weekly 55 ema. The 233 ema is very close to the 200 sma
    JULIE

  • daverg

    $ES, $BTC There is a connection here. Could some financial institutions be long Bitcoin and in danger of collapse?
    LikeShow more reactionsComment

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

    there is always a possibility. EDIT – mom and pop aren’t buyers at 20K.
    hot money was looking for an alternative, just like CDO’s & metals, etc.

    but how are you going to prove it?

    pitch it to me.
    https://statcdn.fandango.com/MPX/image/NBCU_Fandango/818/767/TheBigShort_FeaturetteMeetJaredVennett.jpg

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

    DB doesn’t look too good.
    {grin}
    http://stockcharts.com/freecharts/pnf.php?c=DB,P&listNum=

    a quadΒ·rennial is a very long time.

  • daverg

    old smoke and mirrors trick , “hey look over there”!

    i like the last photo

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

    I’m brushing up on my ancient history as we speak.
    πŸ˜‰

    https://www.youtube.com/watch?v=ltNv9Mx-VE4

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

    one reason the market is going down is due to high rates.

  • https://evilspeculator.com Sir Mole III

    Correlation does not equal causation. Take the two signals and throw it into a scatter chart. You’ll quickly see what’s up.

  • https://evilspeculator.com Sir Mole III
  • http://www.captainboom.com/ captainboom

    Damn, house fire happened to me in 2010. It will take you three years to start to feel back to normal, and two more years to really be back to normal. You’ll never get the lost time back. If you haven’t figured it out already, the insurance companies are not your friends. Here’s a good site if you need it:

    http://www.unitedpolicyholders.org

    When we rebuilt, we put in a Heat Kit masonry heater. Doesn’t have the dangers of a regular wood stove, and love the heat from it. Check out the Masonry Heater Association.

    http://www.mha-net.org

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

    What trading time frame works for you?

  • Mary

    I use 30 minute bars, no overnight data, try to catch reversals at extremes.

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

    Thanks.

  • Darkthirty

    I’m actually working on a radiant heat system combining a rocket stove mass heater and a http://www.dlsc.ca/ . Been kicking it around for years………… Pekin insurance has been exceptional, I’d bitch if I had the right.

  • Edgy

    “I’d rather have money than fame.” —Fun Lovin’ Criminals

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

    Thank you. I started looking at ES options for educational purposes.
    What do you use as a data source? Charting?
    Do you hold them overnight or over the weekend?
    How about stop size? Wild swings today, 2/14.