Now Reading
The Root Cause
136

The Root Cause

by The MoleMarch 6, 2019

I just returned from receiving the 2nd round of my root canal procedure and the novocaine is still in the process of wearing off. Everything seems to be healing just nicely, which frankly is a huge relief. I am just now starting to bounce back from having to deal with a painful dental nerve infection that lasted almost two months and in the process severely taxed my immune system.

Nobody enjoys going to the dentist but I cannot help but be grateful for having had the foresight to be born into the late 20th century, well aware that I would most likely have been long dead just a century earlier.

Nevertheless I managed to scrape a few charts together for my crew, as to not leave you guys dangling dazed and confused near a crucial inflection point.

Like cockroaches fleeing from impending fumigation potential turning points always stir up the wildest speculations, which purported technical evidence to spare.

One of our intrepid readers posted this tranny correlation chart earlier this morning and I couldn’t help but point out that the original author had conveniently ignored the various times the signal had failed.

Which exactly is the problem with spurious correlations – people only ever look at the times when an assumed correlation resolves in their favor. And then go on firmly believing in this edge for the remainder of their trading career without ever bothering to run the stats.

Exacerbating the problem is that the ‘evidence’ presented many times is based on very low frequency data with at best 100 or so incidents over the past century or so. Noisy low frequency data can be interpreted six ways until Sunday and if one runs enough algos against it something usually seems to make ‘complete sense’.

I actually just filmed a pertinent video on false edges and made sure to highlight low frequency data as a common culprit. It’ll be part of my system development course that will be available on a new yet to be announced portal.

Okay before we get to the price action here’s a reminder that we are looking at several high volatility events on Thursday and Wednesday.

It’s tempting to assume that we won’t see much in terms of resolution ahead of time but I made that assumption a few weeks ago and was proven wrong. So as always let’s expect the unexpected, especially given that we are parked right against the edge of the big wall near 2814.

In case you wonder – I am not taking any action here as I am not (yet) tempted to short this tape, based mainly on the medium to long term perspective reported in my recent MAMO update.

Gold has taken a severe beating over the past few weeks and now finds itself back at the center of its current long term range. Suffice to say that entries here have very low odds and I suggest we keep an eye on the situation in anticipation of more movement.

Bond futures are back near the original break-out range around 144’20. Once again it’s tempting to become active here but truth be told bonds in general have been a very difficult trade one the past few months and I have grown a bit more cautious until a medium term trend finally reveals itself.

Playing the swings is of course an option but clearly this is not that type of setup – it’s a potential break out setup which we still can take a few handles higher once price evinces a bit more mojo.

My Dollar campaign has been faring pretty well and I’m now advancing my trail to the 1R mark after it scraped 2R MFE. The formation on the daily is looking increasingly positive but only a breach > 97.12 will give me more confidence that we are looking at a more extended leg higher and not just another gyration.

Well – for being on novocaine and drooling all over my keyboard that actually was a pretty respectable post. But I’m going to lay down now until it has completely worn off. See you guys in a few hours.


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!

BTC: 1MwMJifeBU3YziDoLLu8S54Vg4cbnJxvpL
BCH: qqxflhnr0jcfj4nejw75klmpcsfsp68exukcr0a29e
ETH: 0x9D0824b9553346df7EFB6B76DBAd1E2763bE6Ef1
LTC: LUuoD6sDWgbqSgnpo5hceYPnTD9MAvxi6c

  • Ronebadger

    Good word…”spurious”. I use it whenever I can (no one know what I’m talking about)

  • HD

    you could take that data and also say the trannies have led 100% of the time since the 2018 top.
    just saying. Each wave has it’s own unique charateristics.

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

    Yes. Gold is disappointing.
    but Platinum, that’s the real loser.

    [gold/platinum ratio]
    https://stockcharts.com/h-sc/ui?s=%24PLAT%3A%24GOLD&p=W&st=2008-05-05&id=p3676933271c

  • Mark Shinnick

    Too bad we can’t usefully use it more often.

  • Mark Shinnick

    Its not looking too bad…never mind the spurious distractions ….everyone knows why its there and will come running back to daddy when the time comes.

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

    Yes….one of the psychotic’s most refined skills.

  • Mark Shinnick

    Doesn’t happen too often but held short eq overnight.

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

    better lucky than good!
    ๐Ÿ˜‰

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

    2767

  • Jason13

    Zero says heavy selling here.

  • Darkthirty
  • BKXtoZERO

    TVIX going the right way…. following the path of the righteous today.

  • ridingwaves

    I was in Portland last 2 days and ran into multiple owner operators getting worried about consumers…..Auto Sales are tanking, tax returns are going to hurt consumer spending big….both talked about gold….interesting vibe coming from some big net worth folks….

    I would be too….
    U.S. personal income fell for the first time in more than three years in January and consumer spending dropped by the most since 2009

  • Mark Shinnick

    I covered because of objectives hit…but maybe for only a little while.

  • Mark Shinnick

    Thanks for this.

  • HD

    6 markets still in bear territory, us got the 20% hit, China and Canada reporting massive slow downs, only trumpers saying things are rosey….. wait for it.

  • ridingwaves

    just observation but interesting to say the least…not a discussion you get with these busy folks often.

    still in the middle of innovation wave 6 – Biotech…..lots of symbols to play….

  • ridingwaves

    HD, why be a sheeple…..suck it up and learn to live with what you have, we did when Czar 44 was ruining the US….

  • HD

    Ha. Iโ€™m living just fine.
    Not stuck in the past. Talking about the present. Itโ€™s a mess.

  • bankwalker
  • BKXtoZERO

    I am giving it a shot at something much larger…. added day position today too…. I just keep after them. One day this chop is gonna pop and if it is the downside, there will be teeth and eyes all over the place

  • BobbyLow

    Rode the Oil roller coaster this morning on oil and thought of Moles “Monk Roller Coaster Ride”. BTW, it doesn’t do any good to yell at the computer. ๐Ÿ™‚

    Market is prettty squirrelly but Short Crude and Short Financials via FAZ for now.

  • Mark Shinnick

    Yes, probabilities seem to support that.

  • ridingwaves

    you are a glutton for punishment…

  • HD
  • BobbyLow

    Hey HD, I probably agree with you for the most part but as Mole said let’s keep politics off this blog.

    All it takes is one statement and then someone has to answer and then answer back and next thing you know we’ll have a full blown shit storm.

  • bankwalker

    correctomundo!

  • ridingwaves

    So HD gets to throw bullshit bullet out and no one else gets too….
    IF he really knew how shit works he would be more inclined to point at the PTB not the puppet they throw in there to cause discourse for last 40 years…..

    he is a sheeple….sheeple believe in parties…
    same shit – 2 different piles…..though the liberal pile is really stinky for citizens not so for illegal alien leeches

  • HD

    Agree. My comment was mostly about the final slow down. Signs everywhere.

  • HD

    Not sure how my comment led to this but I can let it go. You disagree about the global slow down? Fine. Nobody was talking about anything ur typing about. LOL!

  • BKXtoZERO

    no I am tenacious……. just lots of stop outs which is the price to play.

  • BobbyLow

    RW, My reply was to HD for making the initial comment because that’s what gets the ball rolling.

  • HD

    BTW โ€œillegal alienโ€ highest number crossing border in 7 years. Thanks Trump.

  • bankwalker

    correct Bobby. If the foo shits, wear it.

  • bankwalker

    Does the rare big winner compensate for the multitude of small losses over time?

  • Darkthirty

    Pretty sure that falls in congress’ lap

  • Darkthirty

    How’d you arrive at that target?

  • HD

    Just current events. You donโ€™t have to take it personally like you had anything to do with it.
    And itโ€™s ok to be wrong.
    Trade deficit hit 10 year high
    Border crossings have doubled. Auto sales, home sales, rates rising. All after the massive 10 year bull market? Think we retest the lows still.

  • Darkthirty

    Gotta agree with you on the global slowdown HD. This bullshitshow has been running for 10 years now. Trump got elected because everyone that’s living in .Gov’s lie, is well aware of the scam. A lot of people that never gave 2 shits about the govt have awoken and are now paying attention. I’m setting people up with online news resources almost daily, needless to say they’re all stunned by what they thought was news from MSM. Yeah, I voted for Perot, too

  • BKXtoZERO

    in the last 3 years YES

  • HD

    2570ish is HWB. You can see that level looking left. If that holds reassess.

  • ridingwaves

    I won’t bring it up anymore, in fact I didn’t until you reared your sheepish comments on Trump, anyone who believes the border crossings or the current events are on Trump has pink pony dreams too…btw- I can prove by fact that the illegal invasion is 150% on Obama….I actually like the hunter in you but you get flocked when your back in the city…

    don’t worry I’m not taking it personal but I see what party wants America to fail big and deliver socialism to this republic….its so easy to see a cave man could see it…..

  • BKXtoZERO

    2 things though, 1) I have gotten better about being out of their way at the wrong times. Keeping most of it to intraday and only holding promising actual reversals helped. 2) there has been volatility. Can’t trade V without any V. Lots of issues to pop up. Very hard to have endless lake placid

  • bankwalker

    That’s when you sell it ..

  • HD

    Party of personal responsibility sure likes to blame the past. No need to reply. Just the way it works. The boss gets credit and blame. Not the past CEO

  • BobbyLow

    The whole world is run on bullshit. There’s nothing new here. We can argue about this stuff until we are blue in the face and until friends become enemies and that’s all we are going to solve. We are all going to believe what we want to believe and that includes me.

    All I’m saying is politicical philosophy belongs on a political blog.

  • Darkthirty

    Agreed, I can’t change anyone but myself. “I may make you feel, But I can’t make you think…”

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

    Weeks low finding some buyers. Below 2732. Jmho.

  • https://evilspeculator.com Sir Mole III

    I walk away for a few hours and everyone is on each other’s throat…. crikey….

    https://www.youtube.com/watch?v=WVqg3Oz0KbI

  • BobbyLow

    This is my last comment on this topic.

    Yes, you can make me feel but part of my personal freedom is to be able to think for myself. I don’t need any help with my thinking.

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

    @molecool:disqus What was the site for learning Python you had recommended? I’m remembering Quantopian, but it seems there is another.

  • Darkthirty

    Line from thick as a brick, Jethro tull

  • Sp00nman

    Yep, I can acknowledge Trump has issues without being a sheeple and understand that both parties are shit. People were quick to throw Gary Johnson under the bus because they couldn’t think for themself. Heck, you still have blind sheep that swear MJackson is innocent in light of recent events. *facepalm*

  • ridingwaves

    No, I will respond, your idiot in chief opened up the floodgates with his executive czar order to not deport illegal alien children, DACA and asylum rule changes to spurn the rush of illegal alien taxpayer financial terrorists…..when changes are made by the previous czar to facilitate the current issue than its on him. the new guy is trying to fix that idiots illegal invasion….that is good for Americans…..exactly opposite of what the previous admin did…..and the current sheeple flocker liberals in the house are still trying to support the invasion…..So many sheeple in this country like you its amazing…..

  • Julie 35 – 25 – 36

    Chief Thinking of you … I had my permanent crown placed on Monday So far so good.IMO if other correlations occur at the same time serves to augment a possible outcome, Preponderance of evidence
    JULIE

  • https://evilspeculator.com Sir Mole III

    Well what exactly did you have in mind? Python for finance?

  • https://evilspeculator.com Sir Mole III

    Question: How much did you pay at this point? Taken together – with the treatments before the crown I’m up to $1000. But half of that was not root canal related, just to be fair. The final crown is supposed to cost around $400 (depending on the exchange rate that day), which isn’t bad given what I remember from paying for a few in the U.S.

  • nirav777

    Zero short term intraday has Div into the lows, yet long frame sellers lurk, EOD rotatin possible… the close is key IMO

    https://uploads.disquscdn.com/images/dfeed15c43a4639b343932380eae889c6a8e2bafdee8dddb9c45dfa8d630be79.png

  • https://evilspeculator.com Sir Mole III

    Yes slight divergence there, but not very pronounced. I would be careful here and wait for a clear spike low or some other floor pattern. VWAP isn’t going to help us today as it’s a mile away.

  • https://evilspeculator.com Sir Mole III

    By the way you’ve really taken well to this thing – very nice how quickly you’ve come up to speed ๐Ÿ™‚

  • nirav777

    Thanks- I’m trying to show case on this blog as to how I use it, let me know if this is not allowed… I figure if more people found an edge, they would be more active with the tool.

  • https://evilspeculator.com Sir Mole III

    Can you guys believe this? Bought a Rร˜DE mic from an Amazon vendor here in Spain and those bastards sent me a f…ing counterfeit!!

    Exact same red flags as this guy:

    https://www.youtube.com/watch?v=yioKUk87UEQ

  • https://evilspeculator.com Sir Mole III

    I think the Amazon product numbers are going to help cut down on this crap. But on the other hand I don’t really enjoy one int’l vendor to wield so much power.

  • HD

    I have no idea what you are talking about but to clarify I never attacked you personally.

  • BobbyLow

    Back to regularly scheduled programming.

    This morning’s Oil Supply Report demonstrated once again that its worthiness is truly lacking. The forcast was for a 1.2 M Build and a 7.1 M Build was reported instead. It appears that this “news” has been met with a big yawn as there are currently enough buyers or not enough sellers to keep oil from “Tanking”. We’ll see where price goes from here.

    Seeing some “chinks in the armor” of financials and we’ll see how that goes as well.

  • Julie 35 – 25 – 36

    Chief Crown was approx $600 Insurance picked up approx $450 with deductible. Xrays were $80 and cleaning $40. Other related costs approx $120
    JULIE

  • Julie 35 – 25 – 36
  • HD

    Now why would there be a 7.1M build???

  • HD

    My bad I said trumpers…

    Seems grown ups should be able to digest the global financial events on a trading forum. All market related. Only 1 individual chose to start name calling and some how think the last potus and the border were relevant to that discussion.

  • Julie 35 – 25 – 36

    $TNX per chart and comment previous thread Watching for a breakdown at 55 or 89 ema’s Yup pullback at 55 ema
    JULIE

  • BKXtoZERO

    Another day….another stop…flat tvix after a tease

  • https://evilspeculator.com Sir Mole III

    Obviously I’m shipping it back but it’s a PITA.

  • https://evilspeculator.com Sir Mole III

    No it’s actually encouraged ๐Ÿ™‚

  • https://evilspeculator.com Sir Mole III

    HA! So almost on par with what I’m paying. Well, in L.A. you’d pay a lot more, I can guarantee you that!

  • https://evilspeculator.com Sir Mole III

    It’s just that as soon as the tint of politics comes into play all hell breaks loose – here and pretty much everywhere else. The West (U.S. and Europe) has become extremely polarized politically for reasons I could elaborate on but is far outside the scope of this blog. So I think it’s in everyone’s best interest to drop the subject as soon as things get heated as banging each other’s heads won’t make any difference, won’t change anyone’s mind/perspective, and may lead to people taking offense and leaving.

  • Julie 35 – 25 – 36

    Chief If I were a dentist as soon as GG opened his mouth I would double all costs ! LOL!
    JULIE

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

    Yes, that would be ideal.

  • BobbyLow

    I don’t know HD. Here is the report.

    https://www.forexfactory.com/calendar.php

    I think it’s a numbers game that gets played over and over again. And on top of all this, most if not all Pundits that write about supply are full of shit. For these reasons, I just follow price and read written material after the fact. Some of the explanations can be so ridiculous that I can get a little chuckle out of them.

  • Julie 35 – 25 – 36

    IMO SPX pullback 2735 an important level to watch closely matching the daily 34 ema
    JULIE

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

    I remember that… Aqualung is my favorite album of all time.

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

    Chief, if I were a husband, I would triple costs as soon as she opened hers.
    ;-D

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

    like options and inflatable bras.
    not what they appear to be.

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

    Geez, can you please just take a deep breath and stop? I don’t give a flying fuck what anyone’s political opinion is here, but this is plainly not trading related.

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Julie 35 – 25 – 36

    GG I have a level @2743 (Level 2) BUT 2735 is a Level 1 closely matching the 34 ema

  • Julie 35 – 25 – 36

    2814 was a Level 1
    JULIE

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

    does your Level 1’s change day to day?

  • HD

    Good number. Agree

  • Julie 35 – 25 – 36

    NO GG
    JULIE

  • Julie 35 – 25 – 36

    BK You are close just a 100 pts high 2072.26 is a very important Level 1 Seriously
    JULIE

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

    “…you better leave your underpants with someone you can trust…” Jethro Tull (War Child album)

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

    A down week?

  • Darkthirty

    PPT trying to hold this up…โ€ฆโ€ฆ…

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Sp00nman

    I see the VPOC for ES right around there. Seems like a good target for a pullback.

  • Sp00nman
  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • Darkthirty

    What time do you day traders pull out?

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

    usually around breakfast, when the Euro Market closes.
    =P

  • Darkthirty

    and wipe it on the curtain….?

  • Jason13

    Shorts, careful of the EOD ramp…seeing some divergence here.

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

    Breakdown of civility. The psychotics all rejoice.

  • nirav777

    ZERO Divergence into the close…

  • BKXtoZERO

    Vix looks promising…. Holding from 29.5 other day but wiggled out of today’s extra shot. HOLD

  • http://gerb-reloaded.blogspot.com Gold_Gerb
  • http://www.linkedin.com/in/sharondsessions/ Sharon

    ok, which index is going to break down next and follow the RUT, SPX ?? DJI ??? or NasQ ?

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

    +1
    I was thinking this on the drive in today.

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

    look at historical moves would be my vague answer.

  • http://www.linkedin.com/in/sharondsessions/ Sharon

    Well, I am out for appts tomorrow and friday. i may not be here to watch. rats

  • https://evilspeculator.com Sir Mole III

    I’d be careful here – a lot of downside participation today.

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

    trannys? after-hours? that’s kinky.
    ๐Ÿ˜‰

    I wonder if the 233 vs. the 200 would have fit better.

  • https://evilspeculator.com Sir Mole III

    He’s trying to sneak them in.

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

    she.
    but I have no proof she isn’t a …never mind.

  • evilasevildoes
  • evilasevildoes

    not a CONFIRMED down trend

  • Darkthirty

    I’ve had my ass cyber kicked more than once…โ€ฆ…

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

    check the box size. I always get it wrong.

  • evilasevildoes

    confirmed down trend only if BKD down over 2 and trannie off by more than 78

  • Ronebadger
  • BKXtoZERO

    the whole world ends right at that tiny pointy point.

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

    very pretty – what does it show?

  • HD

    10 years ago 666, now 2777. What a run.

  • Ivan Hrusovsky

    (almost) no close price within upward trend below white line.