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The Mother Of All Setups
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The Mother Of All Setups

by The MoleMay 12, 2010

Confusion quickly gave way to a realization of opportunity. Although the market is by no means clear and despite the fact that everyone is confused right now we are now approaching a technical setup you can not miss. It’s one of those rare moments where the risk is tiny and the rewards are huge. I am happy to present to you the mother of all setups ๐Ÿ™‚

Alright – here it is in all its glory. So, what is the hoopla all about you ask? I’m paying you for this, you say? Well, it’s quite elementary Holmes. We of course took the elevator up as suggested a few days ago (I left the line in place – even the angle was spot on). Now we are nearing the 1179 mark at which I would suggest you go heavily short with long term index puts or any other short vehicle of your choosing. Your risk exposure? A whopping 2.75 handles – on the SPX at least. Or if you can stand a bit more pain (snicker) then wait until 1187.

So what’s the big deal here? Quite simply – the first stop is where we would violate Soylent Orange. The second stop marks the 78.6 line after which Soylent Blue is still technically valid but frankly becomes very questionable. There you have it – just because the market is being a bitch it doesn’t mean we can’t have a little fun here and there. If it works out you will be thanking me for years and I wouldn’t expect having to pay for a drink ever again. If not, well – your risk in playing this setup is extremely limited.

Before I run off – a final pointer. How can I put this in easy language so that everyone gets it….

GET THE FUCK OUT OF GOLD – NOW! Even better – short it!

Why? Alright let me show you:

You might want to size this one up by clicking on the image unless you got eagle eyes. This is the results of my ‘extremely overbought scan’ over on finviz.com. I did not look for gold, mind you – but out of 13 matches (my query is very picky) 8 were gold related. Also, according to trade-futures.com the Daily Sentiment Indexโ€™s percentage of bullish gold traders hit 97% today. Time to get out, folks – or time to get short.

Stay frosty! ๐Ÿ˜‰

Mole


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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  • nugie

    I like the set up. This is something I will have a compulsion to play. Thanks Mole. By the way if you haven't looked at this web site yet you should.
    http://www.gamingthemarket.com/financial-armage
    This is a web site that Tim Knight put up today and everyone should read it that is playing in this market.

  • https://evilspeculator.com molecool

    I go to GTM all the time – that guy is extremely sharp – love his work.

  • psycho_puppies

    I love the slow motion shot.

  • Rightside_ot_trade

    Mole
    What a sweet r/r set-up! This is another one of countless valuable posts.
    Thanks for keeping your eye on the other important data. The past month there has been lots more for traders to watch and consider in worldwide equities, currencies, bonds, gold, energy etc. Bandwidth sometimes get limited.
    This along with the trade recommendations really help us keep or make more capital.

  • Reeves5333

    Ok…anyone reading these comments that are wondering if it worth a tiny little $30 a month for these post….this post alone could pay for a number of years….so stop holding out and get your subscription people! (Mole did not in any way compensate me for this, I am just stating a fact).

    On a side note…Mole, your comment on gold made me laugh so loud I woke up my 3 year old! You rock! Thanks for all you do!

  • https://evilspeculator.com molecool

    Check's in the mail ๐Ÿ˜‰

    BTW, don't blame your infant abuse on me…

  • https://evilspeculator.com molecool

    I hope Stainless Steel Hamster sees it ๐Ÿ™‚

  • convictscott

    Mole,

    Sorry to be a fat lazy fuck, could you post the equivalent senty and stop on the es futures ๐Ÿ™‚

  • https://evilspeculator.com molecool

    PREM is -2.02 – you do the math.

  • dullmind

    I agree, was thinking of dumping my inverse ETF's near the close today, glad I did not.
    If this works, and I suspect it will, then it will pay for my Zero subscription for years!

  • The_Grim_Reaper

    A rogue fed assassin took down the market. The cause:

    http://www.cnbc.com/id/37106083

    The effect:

    http://www.cnbc.com/id/37116759

  • psycho_puppies

    If I pay the $30.00 I will miss all the really cool shit and have to look at charts. When is your free week?

  • https://evilspeculator.com molecool

    Just come back tomorrow sometime. All sub only posts become free the day after (look backward – there is tons of good stuff).

  • https://evilspeculator.com molecool

    Well, chances are 50/50 – but in this particular case the limited risk involved outweighs the gamble.

  • https://evilspeculator.com molecool

    Okay, I didn't read that link but if you really want to know what took down the market here's a hint for ya: Take a Euro futures chart and overlay the ES futures. Let me know what you see, because it's quite clear. The answers are staring us in the face – unfortunately everyone is busy looking for scapegoats.

  • yudhisthira

    I'm in attendance, Mole.
    This is the kind of stuff I sign up for.
    Down up tomorrow. Then…..

  • psycho_puppies

    I look daily. Iโ€™ve gone to thinking weโ€™re going into another great depression to we're going into Mad Max. The crazy thing is if Mad Max would have known to buy some callsโ€ฆ anywayโ€ฆ. nothing makes sense… brother can you spare 300 dimes?

  • https://evilspeculator.com molecool

    I'm sure the info above will still be valid by tomorrow when it becomes free.

  • https://evilspeculator.com molecool

    Again – the odds here are not great in terms of the outcome. But the risk/reward ratio is very high. Hope this is clear to everyone.

  • raised_by_wolves

    I finally bought a fucking subscription. You're talking to a guy you doesn't even buy groceries.

  • alessiov

    had this on my mind b4, greatly appreciate feedback on this subject.

    does the max pain theory really work? and if it does when does the pinning commence (week/days to expiration). Im assuming pinning is more likely during quadruple witching than every month?

    alessio

  • https://evilspeculator.com molecool

    In theory – yes. In practice – no – theoretically.

  • https://evilspeculator.com molecool

    I alert the media…

  • chronographics

    Mole another timely and insightful post.
    Interesting to note that the Euro I think may have a little run up tonight and then to new lows for the year (we may not even get a move up first) think this may tie in nicely with Soylent Orange and Blue. Certainly worth the risk reward.I will try to stay up tonight for sure…

  • https://evilspeculator.com molecool

    My regards to all you stainless steel vampires out there.

  • chronographics

    When the going gets tough the Stainless Steel Vampires come out to play. Can be a bugger sitting through Asia waiting for the real moves to start. However often we get the running of the stops out this way and the opportunity to get in at good levels in the FX market. Asia so often push the market the wrong (counter trend) way first, maybe not as bad as 10 or 20 years ago but often enough to be aware of it. Just keep those Stakes away from me ๐Ÿ™‚

  • convictscott

    I'm violating two long held personal rules.

    1) Never trade off tips
    2) Never take a trade that doesnt coincide with one of my setups

    But the logic of this trade is so clear I'm compelled to take it. Just got filled 1174.24 in ES stop 1177.00 (1 tick above where mole had it)

    Thanks Mole, its sizing up nicely as entry on a touch of the 60 min bollinger band

  • Bob the Horse

    I am probably going to have a small go on the short side today. Looking for 2805 on Estoxx which will be around 1180/85 on ESM0. I think this is probably going up but can't rule out a retest and if we are going to get one, it should come back from there.

  • chronographics

    Bob, think your trade to short the Estoxx is a better one technically than the ESMO. Good Luck ๐Ÿ™‚

  • jacksoo

    Why is that chrono ; entering ES too soon?

  • raised_by_wolves
  • jacksoo

    short RbW or you think up and away?

  • chronographics

    Hi Mate, Well there is good resistance overhead at 2800 odd and its close to what would be (1) down. But more in favour (as ES has similar setup) is the fact that overall the Eurostoxx has some of its components in a far weaker technical state – ie I am more confident – that they have still significant downside. This I think will be a drag on the STOXX eg DAX looks stronger to upside but FTSE, IBEX and such dont look as convincing. Hope that makes sense.
    Guess I just think it may be the smarter of the two trades.

  • jacksoo

    Thx – – are you seeing weakness in ES or more upside, perhaps new high?

  • chronographics

    Well to be honest there are a number of viable counts here so I am sitting on the sidelines and will go with the break. If it gets above 1181 then it could well look to close the gap at 1205. As I said a few days ago after the big down day until the SPX and or Dow take out their X wave lows, this still has the potential to make new highs. If you think about it and think what will screw most people the worst this would be it ๐Ÿ™ And DOWN from there. However I just look for levels and when I see a “set up” ONLY then do I decide to BUY or SELL.

  • jacksoo

    Patience on entry is a weakness, I need to improve my entry planning. What
    price on ES downside wld you consider an entry for further downside – -break
    of yesterdays low ~1140 or do you think breaking 1160 will signal potential
    closure of the 11pt gap?

  • raised_by_wolves

    Three weekly tops and two weekly bottoms have happened on this here line. Last week, the bears scuttled her. Now, the bulls wants to give it to her up the rasher. Balls an' all. But I don't know if they'll get anywhere with her, those feckin' knobjockeys.

    All I'm sayin' is watch for scenario one or two:

    http://content.screencast.com/users/raised_by_w

  • chronographics

    Must say I am not a great fan of selling the break, first you can get bad fills and second I hate chasing the market – continue this shortly EUR going down

  • Onorio

    Hey rats! Disqus here at work is all fucked up!

    Shorting AUD @ 0.9005

    BB hourly reversal and major fail to take resistance at 0.9020, stop @ 0.9030

  • http://iberianviews.blogspot.com/ catracho

    yep in there as well…if it takes 9030 then prob 9125 9150..for next short, while the ..dax defying gravity weird

  • kanur

    Not at all weird. There's strong rumors floating about a possible return of the D.Mark, while in Germany the only gold and silver to be found right now is a few measly pieces selling at a huge premium in ebay.

  • amokta

    so far ftse up, then down rbs up, then down
    early in the day, but maybe a reversal is not out of the question??
    Us futures – down a bit
    overnight – asia & Australia up

    (do you not think i am doing a better summary than GMAK, not !!)

  • Onorio

    DAX is at less than 200pts from the highs….scary.

  • fisheggs

    What did STFU have to say yesterday?

  • http://iberianviews.blogspot.com/ catracho

    yes 10 % rally from recent lows at 5650..

  • katzo7
  • amokta

    i think i put a comment in yesterdays posts.
    they are saying this is 'as expected' bounce wave up small '2', it should end max up 1219-ish, but if it went higher then primary 2 up wasnt yet ended (i.e. we havent started P3)

  • Bob the Horse

    so mkt will either collapse or it won't. genius.

  • http://iberianviews.blogspot.com/ catracho

    http://www.screencast.com/t/OGVlOGM3YWIt

    bullish scenario ..we are in wave 1 of a larger 5 up..

    bullish then bearish scenario we are in wave 5 final move up

    bearish scenario we are in a wave 2 up

    and so on…either way it “feels” like we should have a correction of this 10% soon ?

  • chronographics

    Yup and scary thing is there is a good chance it makes new highs too

  • Onorio

    I can give you a more bulish cenario…we`ve placed a 1,2,i,ii, and now we`re headed for bull paradise.

  • Onorio

    If Germany anounces the return to DM tomorrow, this market is due for a hell of a ride! And the EURUSD is due to a ride bellow parity.

  • http://wadecapitalmanagement.typepad.com/blog/ Duuuuuude

    Mole, I am curious about the post left on Slope yesterday by someone warning that if a black swan happens, ETF trades would be halted because they are derivatives. Would any of your stellar readers be able to set up some sort of synthetic spread that would mimic these ETF's? I am beginning to feel more comfortable with the idea of placing a trade on a futures exchange which is CFTC regulated, rather than in the equities market which is SEC regulated.

  • http://chartsandthat.blogspot.com/ ultra

    Why on earth would they do that? The plan for the new Soviet proceeds apace, non?

  • Onorio

    Because they have a strong economy, and they donยดt wanna pay the bullshit of other contries like mine do, i supose.

  • http://chartsandthat.blogspot.com/ ultra

    Things appear to be moving in the opposite direction tho..

    http://dn.sapo.pt/inicio/economia/interior.aspx

    [h/t ZH]

    and lots more on Google news… http://tinyurl.com/35kwprx

    1000 years ago, Romano Prodi let slip that this was the plan all along – that the EU knew full well the Euro would never survive without economic integration, an EU government – and the way to do that would be to wait for the inevitable “beneficial crisis” and then take the necessary emergency measures.

    [As Ambrose Evans-Pritchard notes here – http://tinyurl.com/5xaqlr%5D

    Another big step on this road happened last Sunday with the creation of the “debt union”. Now they say that you can't take on EU countries' debts without much tighter control on their budgets and spending. Lather, rinse, repeat…

    Really, people talk dismissively about tinfoil-hattery – but the so-called cranks do seem to have been worryingly spot-on so far.

  • Onorio

    NWO…one world government.

  • http://chartsandthat.blogspot.com/ ultra

    Well, quite.

    Everyone in the UK wetting their pants at the dawn of a glorious new era of coalition government. When 85% of the laws still get made by unelected commissars in Brussels.

    Do me a favour.

    Never mind – the world cup will be on soon – the next instalment of bread and circuses – let's just hope the bread doesn't run out before then, eh?

  • Onorio

    Once we take 1168 ES, selling should acelerate.

  • AlohaBear

    Can some explain to me how claims rise and also initial claim rise also yet we are creating 100ks of jobs? Oh yea living in Springfield MO now to be with my fiance” till the wedding traded the Tsunami sirens for the Tornado sirens sound the same though.

  • chronographics

    Hi Onorio, Wud love to see this Es slide but my Osc have move down to about 50% with not a lot of movement in price, so at this point can't get too excited. Oh yes but I want too Just want to see the price move more in line with the Osc on the downside

    Been selling EUR if all else fails its a way of banking coin ๐Ÿ™‚

  • Onorio

    Im not excited cause i don`t trade ES now, im just sharing my view ๐Ÿ™‚

    Im selling the AUD.

  • chronographics

    Actually if I had sold Cable instead of EUR I probably would be able to afford a new set of tyres for the GTR

  • chronographics

    Agree there, I don't do Aussie much but think we sud get one more leg down.

  • Bob the Horse

    it's magic

  • Bob the Horse

    i'm still looking for a last move up to 2805 on estoxx, would be a bit annoying if it melted from here but i have no banks so limited risk really to me really as they will lead. am still hearing that a lot of eu debt is bid only so this stimulus package is really pumping money into the system – i'd rather wait for a great level to short than chase it down here.

  • raised_by_wolves

    With today's red candle open, the probability increases for repeating something like scenario one instead of two. I'm not calling it for good, and I'm still mostly cash, but I did buy a few SPX May 950 puts just in case.

    http://content.screencast.com/users/raised_by_w

    “We'll just do a little instrumental jam at the beginning, you know, just to check our tuning, alright?”
    http://www.youtube.com/watch?v=qDggu5LFylc&fmt=18

  • http://chartsandthat.blogspot.com/ ultra

    Right first time, I reckon.

    http://tinyurl.com/3747n22

  • https://evilspeculator.com molecool

    Guys – why the mental masturbation about scenarios that have almost zero probability?

  • Tyler_K

    loved the graphic mole

  • https://evilspeculator.com molecool

    Interesting – I got to check out the BB once I roll out of bed.

  • https://evilspeculator.com molecool

    Thanks ๐Ÿ™‚

  • bshah

    Bidu having back to back gaps and more than 5% run from the split each day… Is it going to $1000 level compared to before split.?

  • I_got_Prechterized

    Someone provide an alternative explanation to this and I'll paypal you $100. There's never been a bank that's had a perfect quarter or in other words a whole quarter trading without a losing day. Until last quarter that is, when GS, JPM, BAC, and C all had perfect quarters trading.

    Let's assume these banks have such good traders that they have a 90% success probability on a given day. It still makes a perfect quarter for 4 banks virtually impossible. Remember, this has nothing to do with fees from other businesses like investment banking. This is purely trading which is risk/reward, right? Or perhaps there is no risk for some entities.

    The market has to be rigged. If someone has a different explanation that makes any sense, $100 paypaled to you. This should be easy money for all those here who ridicule the conspiracy theorists who claim a fixed market.

  • dingos

    They are they market – which ever direction they decide is the way it goes.

  • ricebowl

    It's not that hard to make money when 80+% of all days close up *and* you get inside news from the Fed *and* you get to see order flow and figure out what's going on. You grab as many futures as possible to ramp it, wait until bids start to dry up, and sell into that. Also, if material news comes out from the Fed or anyone else, you adjust your position accordingly 12 hours before the market finds out. Simple.

  • https://evilspeculator.com molecool

    Such a winning streak across several 'market participants' is statistically impossible – period. Even winning 80% of the time is almost unthinkable. Bottomline is that they can't lose because they are the house. Or do you really think they got suddenly so good a year ago? You combine free access to cash with zero risk and HFT and you get a rigged zombie market.

  • http://chartsandthat.blogspot.com/ ultra

    If you think, like me, that GBP is toast, then you could do worse than this pair – somehow, I seem to keep missing the entry when I'm at work!

    http://tinyurl.com/3xdqo59

  • chronographics

    yes saw that, got to ask though was this on all of their desks ie prop desk, corp desk, equities, bond, derivatives and fx or as a complete unit?

  • I_got_Prechterized

    exactly, unfortunately none of you thus far qualify for the $100. I need an explanation other than the market being rigged. It's actually tougher to make money as a market maker the last few years as spreads have tightened to fractions of a penny. None of them were able to achieve a perfect quarter in the past and, all of a sudden, 4 of them do it. 3 up days, followed by a huge down day— it doesn't matter- they were all on the right side of the trade.

    I feel bad for Morgan Stanley, they had 4 losing days last quarter. They must have done something to piss of Bernanke.

  • http://chartsandthat.blogspot.com/ ultra
  • I_got_Prechterized

    all trading operations combined.

  • AlohaBear

    looking at 10th on seeing a nice wedge forming and also a nice flag pattern entering its third flag would enjoy see a break down through both should find a little momentum IWm seems to have some support at 71

  • chronographics

    Spreads have got tighter but there is less competition especially in the last year or so. Think we wil only know the answer to this if one gets to look at which division is making the loot. Wonder if they are marking to market some of their stuff LOL Think so much so entangled hard to tell if really a profit or loss. Interesting though I shall make a few call over the next couple of days to see if some of my old contacts at Goldman Sux can shed any light on who is making the money there.

  • Bob the Horse

    If you can borrow unlimited short-term funds from the Fed at 15bps and use it to buy government guaranteed Fannie and Freddie 10yr bonds yielding 5%, it's pretty difficult to lose money. Even if you lose money trading, the amount of money you are getting by borrowing from one arm of the government and lending to another arm overwhelms it.

    It's not really trading, it's just positive carry – i.e. it accrues every day hence the apparent lack of volatility

  • chronographics

    Well enjoy the rest of the session I am off to bed with stops in place and short the Euro. Luck to you all.

  • http://chartsandthat.blogspot.com/ ultra

    Mother of all set-ups going to the wire – looks pretty cut-and-dried, even if we do spike through 1180.1……

    http://tinyurl.com/39lyax4

  • raised_by_wolves

    While $INDU has moved above my purple line (temporarily?), Mole's setup is still in play and so is this short $SPX as close to the blue fib fan as possible play.

    http://content.screencast.com/users/raised_by_w

    “And dedicate to other people who might be fighting wars too but within themselves. Not facing up to realities.”

    http://www.youtube.com/watch?v=u4BHK1LNGOA&fmt=18

    (Sorry, YouTube truncates the last couple minutes of this Hendrix masterpiece).

  • raised_by_wolves

    Meanwhile, is (SLV/GLD) showing signs of a breakout?

    http://content.screencast.com/users/raised_by_w

  • Bob the Horse

    Do I get the $100?

  • gsavli

    SPX?

    (lame bear joke)

  • skynard

    OK, gana play the neckline as mentioned before. Will short again @ 1182 SPX.

  • FranceHasTheBomb

    I think it's because they watch Mad Money.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    hamster says: go short on next spike circa 1174 spx

  • raised_by_wolves

    Do you think your explanation is in the rigged or not rigged category? If you think it's in the rigged category, then no $100 for you. If you think it's in the not rigged category, then you'll have to convince Prechtcerized that borrowing unlimited short-term funds is not rigged and you'll get your $100.

  • skynard

    IMO Mr/Mrs Market is showing her cards at the moment or faking out with the VIX. Dropping hard!

  • raised_by_wolves

    Personally, I like your detailed explanation best, but I don't whether it qualifies for the $100. You're saying it's not really trading; so, it's not rigged trading, right? But isn't it still rigged?

  • I_got_Prechterized

    these results are from day to day trading. also, we've been at ZIRP for quite a while. how come they didn't have perfect quarters in the past? your answer is incomplete.

  • roscoe_casita

    Breaking the day's channel?

    I call BS! Markets only go down on Asian & European Indexes!

  • AlohaBear

    cross fingers hope wedge breaks

  • Bob the Horse

    Well it is trading, they are buying one thing and selling another. But it's basically just playing the yield curve – record steepness means record profits for banks. But it is rigged in a sense – no one else gets to borrow for zero except the banks. But it's not rigged in the sense that it still counts as trading.

  • raised_by_wolves

    I've been wondering if it's possible to use an options strategy to short both FAS and FAZ. If you long them both, you are guaranteed to lose. So, is there a way to short them both and be guaranteed to win?

  • Bob the Horse

    This is a deeply unusual environment. Obviously there is a limit to how many freddie mac bond,etc they can buy and fund through borrowing overnight at zero. So there is only a certain amount of free money they get from this 'trade'. They can (and do) do their nuts in equities and various other trades as well – the question is whether a bad day in real trading is enough to offset the carry from playing the curve.

    Right now, those profits are very large indeed as not only is the US yield curve at record levels of steepness but Freddie bonds trade at a premium yield so they are getting even more free money. If you had a situation in which the Fed pulled the guarantee from agency debt, these banks would do their nuts but that hasn't happened – so they have had absolutely no pressure on this trade.

    So to have an actual losing day overall in this environment means you have to have an absolute shocker. There is of course also simple market-making activities which also are a bit of an annuity (though nothing compared to the spread trades). It is honestly like being handed a money printing machine.

  • Tyler_K

    from memory, I think Goldie's Q4 was marred by 2 losing trading days. I think Q3 was, again, a very ugly trading period in which they booked 2 or so days with loses. I'm sure this can be found easily enough (I know I saw the reports on FT Alphaville … and I'm sure ZH must have suffered a few strokes about it)

  • roscoe_casita

    There IS one environment that this is 'normal'. The Beginnings of a Hyper-Inflationary one.

  • http://www.mylifemytrade.com MyLifeMyTrade

    what I said yesterday about gap and run was clearly wrong ๐Ÿ™‚

  • http://www.mylifemytrade.com MyLifeMyTrade

    Now the set up looks very bearish. We could see 1140 today.

  • gsavli

    you're never far off. it was still close to gap up and we still don't know about the run, it could come later.

  • http://www.mylifemytrade.com MyLifeMyTrade

    No salvi… this looks bearish as hell… 1140 on cards today… the dump should come after 11:30am IMO

  • Tyler_K

    when you have a chance later in the day, you might be interested in reading/viewing the following links, as they go a ways in helping to explain why the IBs are posting perfect_or_near_perfect trading.

    http://www.ritholtz.com/blog/2010/05/perfect-qs

    http://www.fundmymutualfund.com/2010/05/video-a

  • http://www.mylifemytrade.com MyLifeMyTrade

    Lets sacrifice an animal.. get a vodoo doll and stick a train up benny's ass

  • gsavli

    might be, it sure looks bearish (the action, not talking about them charts). I went short NQ at 1978.25 and that consolidation at 1980 just wasn't convincing, so I didn't dump it. It looks like we wait for some buyers to come in and then continue down the way.

    However, I am still a bit wary here.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Lose 65.5 and all hell will break lose…

  • Onorio

    Im now long AUD @ 0.9010, look bulish to me but i`ve got a tight stop.

  • OldChicago

    Ditto. It makes no sense to me this market.

    Words are cheap, and bought. EU said $1 T. OK, where the money comes from? Are the European so trusting their politicians? IBM said in 5 years, … They can't even get next 5 months right? OK. Then, let's split the stock, e.g. BIDU, forget about the sales forecast or valuation, it's up another 20%! I think these CEO's have taken a cue from Lloyd BlankCheck, work at the media. It's a quicker way to pump the stock and shorter cut to heaven or hell.

    Would this be tip of P3?

  • gsavli

    well, fuck me (re timing).

  • jacksoo

    hell of call MLMT – -short ES so hope you're right – your 1140 is SPX or ES?

  • Bob the Horse

    boring day – haven't done anything yet. just waiting for 2805 on estoxx

  • raised_by_wolves

    I really like Mole's mother of all setups for it's risk/reward ratio. However, what I think has high probability is ($SPX*(SLV/GLD)) moving up to touch the top of the purple channel. It's also possible there could be some overthrow if this is a repeat of July 2007. So far during 2010 it has always worked to (1) short $SPX, (2) short SLV, or (3) long GLD when ($SPX*(SLV/GLD)) has touched the top of the purple channel. So, if you've been able to figure out which action is the best to take (1), (2), or (3), it has been slappers all the way.

    This lads would be a hell of a mother fuckin' ride:

    http://content.screencast.com/users/raised_by_w

  • gsavli

    bouncing off NQ 1965 and ES 1165, but not convincing so far.

  • dingos

    Nice call!

  • gsavli

    it was MLMT's call

  • gsavli

    Volume low, I dunno, covered for now.

  • Tronacate

    WLL……looking for gap fill all the way to 79ish in the next week

  • amokta

    let me be the first to declare today as reversal day (i could be wrong though)

  • Tronacate

    Glad I dumped my GLD calls…..thnks Mole

  • psycho_puppies

    Sorry about turning your board into a chat room last night. I went grocery shopping and all I picked up was beer.

  • amokta

    why, gld is up?, unless you have already made your profit, and gold loks like its peaking
    – is this secret ring decoder stuff?

  • gsavli

    went short again at line breaching. we are fairly oversold on a 5 min chart though.

  • Tronacate

    already made a nice profit……and when they talk about gold vending machines…….it just has to go down…….too much bullish sentiment

  • http://www.mylifemytrade.com MyLifeMyTrade

    1140es

  • Tronacate

    Time to take out lod es…..die sucker

  • http://www.mylifemytrade.com MyLifeMyTrade

    Come to daddy – as expected dump started at 11:30am and hell broke lose on breach of 1165.5 – Lets see if bears got any balls

  • OldChicago

    H-S on spy 3min. double top on SPY 10min. If we go lower, 116.3 is the potential target. Naz retreat the most. Hmm? DJT holding, RUT finally gets back in line.

  • amokta

    agree trade the tape, bank profit, then rinse repeat (other than after crashes or KNOWN market tops when can perhaps let a winning long/short run)

  • http://www.mylifemytrade.com MyLifeMyTrade

    Things should get interesting NOW that 1165.5 has been backtested from below.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Bulls putting up a major fight

  • gsavli

    we are fairly oversold, we might get few points bounce here.

  • raised_by_wolves

    This BB has a history of being, uh, ravaged. Question is, can she can fight off the bulls this time?

    http://content.screencast.com/users/raised_by_w

  • raised_by_wolves

    No one gives a flyin' fuck about this, eh?

  • raised_by_wolves

    Mole, are you out there?

  • raised_by_wolves

    Bulls are attempting to get it up above this dotted yellow 10d 1 m VWAP standard deviation.

    http://content.screencast.com/users/raised_by_w

  • http://chaugner.blogspot.com chaugner

    its not just the bounce off those lows, its how much selling we can get. Remember, if there are no buyers or sellers its market meltup. If we have buyers, we get crazyed rallies, if we have sellers we get pressure for a few hours, followed by the standard low volume grind.

    I am not seeing much selling pressure here, so this could just be a way to get rid of some of the overbought conditions and of course the lovely theta burn for the retailers.

  • amokta

    i wonder if the top in gld slv is in
    how is our friend Mr cuprinol doing – where can you get copper prices

  • https://evilspeculator.com molecool

    I don't get that joke – Mr. Who?

  • roscoe_casita

    How are you supposed to play that chart?

    SPY * SLV / GOLD

    So you sell SPY & SLV and buy gold?

    that seems like a weird way of doing things.

    ((SPY*IWM) / (GLD * SLV)) is a much easier and rational chart to play.

    Just my 2c.

  • gsavli

    my guess is Cu = cuprum

  • gsavli

    in a very unfortunate scenario, this could also be LOD, and now up.

  • amokta

    cuprinol is a wood presrvative in UK – for painting garden fences etc
    – not sure if it has any copper in it !

  • amokta

    it does have copper in it.
    The company was originally based in the UK from 1937. The factory was bombed in 1941…(!)…..In 1970, the company was bought by Farbwerke Hoechst AG of Germany.

  • Tronacate

    BRCM breached LOD and still looks weak

  • raised_by_wolves

    You could sell $SPX, sell SLV, and buy GLD, but I prefer to use relative strength indicators to filter out two of the possible trades, leaving one optimized trade.

    I think it's easy because you just have three factors. After you compare all three, you compare two at a time, and, finally, you examine at least one by itself before making a trade.

    Perhaps your ratio is more rational (can you explain what's irrational about mine and rational about yours?), but it is also at least a little more work if you want to filter out three of the possible trades, leaving one optimized trade.

  • yudhisthira

    RUT did not follow last bounce in euro, spx.

  • Tronacate

    NQ breached LOD and I expect the ES to do the same

  • yudhisthira

    For bear case, need breakdown of euro. Now would be fine.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Lose 64.5 and that will be interesting.

  • Tronacate

    WLL hit top of descending expanding wedge……puts working well

  • OldChicago

    Rut is hanging in. Naz & SPX sitting on multi-day trendline support. Do you think wave (ii) or (c) top is in this morning? Doesn't feel like it unless it drop hard from here.

  • gsavli

    nah, looks like a bearish flag and some sort of 4th wave or something.

  • OldChicago

    Financial is hanging on the heel of bad news. GS staying put. Perhaps that's what holding up SPX. TRIN has been trending up all morning.

  • roscoe_casita

    I'm not saying its irrational,

    SLV/GLD or GLD/SLV is a incredible fear indicator on its own.

    SPY/GLD or GLD/SPY is the bench mark for 'value is terms of gold'

    I kind of consider IWM & SLV higher beta of SPY & GLD.

    Multiplying is a great Normalizer, so SPY * SLV / GLD is looking at “Inverse Fear Normalized to Indexes”.

    the problem is, an UP move on silver, can now be viewed as an up move on the indexes, and a down move on the index can be viewed as a down move on SLV.

    SLV*GLD ~= Normalized PM prices, As silver is considered a higher beta of Gold, and people pile into silver as Gold depletes this is an interesting chart on its own, which I might add has finally broken out on its own accord. Its easy to play, Buy Both GLD & SLV, or Sell both.

    http://goo.gl/frFi

    IWM * SPY gives you a normalized 'Major Index' and if IWM leads or SPY leads, it doesn't matter as the normalized price drops.

    http://goo.gl/LpLV – Notice we didn't drop below the lows of 2002… -There is some crazy shit for ya.

    Now the best chart that I think represents the 'Broad Market to Precious Metals Ratio” ((SPY*IWM)/(SLV*GLD)) : http://goo.gl/XLuL

    Lets zoom up to the last week or two:

    http://goo.gl/lrme

    -Remember we are getting Dangerously close to End Game. As in: Getting out of the Game. The conditions are now right for multi year 100% inflation. Gold and Silver will soar.

    Gold is at all time highs… silver is 50% off of its highs from its old peak at 40$. 100$+ per OZ of silver WILL happen in our lifetimes.

  • raised_by_wolves

    Hmm, this could get interesting sooner than expected if ($SPX*(SLV/GLD)) can't even stay above the lower purple channel line, especially if simultaneously GLD goes down.

    http://content.screencast.com/users/raised_by_w

  • raised_by_wolves

    Instead of an $SPX/GLD ratio, I see you've created an equities/precious metals ratio.

  • roscoe_casita

    BINGO!

  • roscoe_casita

    BUT I expect GLD & SLV to be exposed for the Fraud they are.

    I've already started taking physical delivery of my Gold and Silver. Its time to run for the exits, not walk.

    As currencies race for the bottom, the fever will take up. There ain't no fever like… Gold Fever!

  • gsavli

    low volume pump job?

  • roscoe_casita

    Bonds are getting the sell off, The next big move comes from the bond market, not from equities.

  • Tronacate

    Too easy to see the deep pocket intervention……

  • raised_by_wolves

    I regularly watch $SPX as well as (SLV/GLD). Multiplying them is an attempt to see information that my brain previously had to combine without the visual aid.

  • Tronacate

    Standard procedure

  • raised_by_wolves

    Everyone thinks I'm Mr. Crazy.

  • gsavli

    hell, I'm still not used to it.
    Although I was looking at that low volume and knew what could come.

  • Tronacate

    PCP…..lower high

  • gsavli

    Angel Dust?

  • gsavli

    providing lower highs now? Nothing is, what it used to be.

  • Tronacate

    lol

  • Tronacate

    So much for that……..

  • raised_by_wolves

    If GLD and SLV are exposed for the fraud they are, does that make all options on them worthless, or would puts be winners?

  • OldChicago

    This pump came around 1:30pm could be a bull/bear trap. Just a thought. Not seeing vol. follow-thru on the 10min chart.

  • raised_by_wolves

    Thank you for your in-depth explanation.

    Question: Are you assuming that naked short selling can't crash silver one more time?

  • raised_by_wolves

    You're taking physical delivery of precious metals. Are you trading any paper assets?

  • gsavli

    bear case still alive here. stochastics turning overbought (not that it matters, but today it might).

    now, i'd like to see us at -10% within an hour, can some thick fingered loyd press the button, please.

  • roscoe_casita

    No clue!

    I did buy puts on Silver to protect my investment if JP morgan tries their shit again.

    Nothing gets Economists like yelling “DEFLATION!” they all fall over in their chairs.

    Looks like my shipment of Silver might get here today!! Wholly smokes!

    -Anyways, If SLV & GLD explode as COMEX goes into Backwardation, then expect settlement in cash.

    Again, we are poised for MULTI-YEAR Inflation now. The play I'm looking at is 5-10 years now. I can't afford to lose the family wealth, what small amount there is.

    -Remember Speculation is Latin, not English. it means: observation. it does not mean “to gamble”

  • roscoe_casita

    Yep, I have a small (1 contract Jun 110 SPY PUT) I got a few weeks back, watched it explode in value, and now implode =).

    I have some GLD & SLV shares I'll be cashing in to create a portfolio of Gold & Silver mining stocks to hold for a few years I think.

    Have a high yield bond @ 8%.

    UNG 8 Call for Jan 11, to hedge our usage.

    SLV Put to insure our physical investment.

  • roscoe_casita

    Any time =)

    I KNOW it can crash it. Thats why I bought some puts. If they do that fucking shit again I'll be loading up again with the their cash from the crash.

    Buy the insurance, that way you don't need it.

  • raised_by_wolves

    Thanks for the convo. I have to go now.

  • roscoe_casita

    Keep it easy =)

    I'm interested in ideas for long term trades =)

  • roscoe_casita

    Aye, my puts are STILL up after a 120 point rally on SPX.

  • OldChicago

    price fixing in front of OPEX friday?

  • OldChicago

    FYI –
    “Big rumors abound that PIMCO has put on a very large short position through the option market near the 119-00 level as of yesterday.”

    I take this as a short on SPY.

  • yudhisthira

    Mole lite channel working nicely.

  • roscoe_casita

    NEW POST!

  • http://www.mylifemytrade.com MyLifeMyTrade

    Damn I certainly didn't expect this… Fuckers

  • roscoe_casita

    Histogram on MACD is going negative on 15 min. 31,53,89

    Its already crossed, give it some time.

  • gsavli

    they have to complicate the tape. it's totally wedged now, showing nowhere. might bust higher or lower.

  • nugie

    Like the idea of the VWAP used it for years as an institutional trader.

  • Rayden

    Hey Guys – new here, could someone explain Soylent Blue/Green/Orange? I searched through old articles but didn't find anything. Sorry for the dumb question.

  • Rayden

    Interesting, but why would they trade SPY? SPY total option volume/oi today is 433k and 17.8M, SPX 657k and 15.8M but each SPX option contract is 10x larger, thus ~15X more liquidity. SPX options are probably even more liquid than ES (don't have ES data handy).