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The Waiting Game
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The Waiting Game

by The MoleFebruary 11, 2019

Once again the week opens with equities parked right below a critical medium term inflection point. Economics are looking good and the bears seem about ready to throw in the towel, having been steamrolled repeatedly on the way up. The historical stats for this week are very bullish, so do we now simply back up the truck, load up on longs, and call it a quarter?

To answer that question let’s start with historical bias and work our way into price momentum from there. Week #7 indeed is one of the most bullish of the year with a Sharpe Ratio of 0.32 on average, which incidentally makes it the 7th highest performing week. Coincidence? I think…….

……. yes 😉

The short term panel as well as the daily makes me want to fill in buy orders. What a juicy spike low and it’s all happening right above the 100-day SMA.

The long term panels are equally tantalizing as we’re bumping against the 25-week SMA right above a breached Net-Line Buy Level AND a breached monthly NLBL.

So Mole – what the hell are you waiting for?

Frankly it’s looking a bit too perfect right now plus given the recent shift in sentiment I decided to start shifting my approach to break-out momo trading. Dip buying is still on the table but it needs to be a convincing one.

What that means effectively is that I intend to grab a long if the current spike high at ES 2736.5 is breached. Alternatively I am open to grabbing a nice dip lower, which I think has decent odds in the first few sessions of this week.

Which brings me to the next chart. Yes, realized volatility again. It’s topped out a bit right now and if you follow the dark blue vertical lines on the chart then you probably would agree that small corrections usually happen. At minimum we should be prepared for a sideways session or two.

And if you think about it, that would potentially be a lot of fun for the MMs as it would trap a bunch of Johnny Come Latelys into iffy looking long contracts.

I’m sure some of you guys will take issue with this but while we are still gyrating inside no-man’s land my first priority must be asset protection and not wild speculation.

Many traders follow an inverted approach (i.e. big bets during uncertain times whilst sitting on their hands during certain times) which invariably leads to account blow ups. Risk of ruin is the eternal sword of Damocles that hangs over all of us.

Gold is not benefitting from a ramping Dollar. Once again all the pundits got it wrong by projecting the ‘death of the Dollar’ in a Pavlovian manner. Just this morning I saw another ZH headline in my twitter feed suggesting the Dollar’s loss of its reserve currency status, according to the NY Fed no less.

My core motto when it comes to ‘Gedanken experiments’ like these is to ignore what they say and instead watch what they do. Or even better, to watch what the Dollar actually does. It’s most often than not the opposite of what the crowd expects.

BTW, note that the DX is now kissing a weekly NLBL. A breach > that and it’s off to the races.

Anyway, here’s the long term panel. I don’t know about you but this looks incomplete to me. It’s been a pretty rough ride up with many small stops on the way.

So yes, a big move could happen but if you look at that monthly panel then you can see that we are still near the center of a multi-year sideways range. It’s not going to be easy to break out of that, so as tempting it may seem, for now I’ll have to wait for a convincing spike low.

Booorrrring!!!!!

I know I know – but remember the old aphorism: There are bold traders and there are old trades, but there are no old bold traders.

Now correlated markets often give us opportunities we could not as easily exploit during uncertain market periods. And if you are a sub then you already know that this is why I hedged my gold position with the USD/JPY, expecting of course for one of them to make it out of the ring as victor.

Thus far this approach seems to be panning out nicely (pun intended) as the Yen has dropped further than gold, allowing me to advance my stop to break/even.

Alright, I’ll push my luck a little and bore you with another ‘no action’ chart. Copper! Actually that one looks damn bloody juicy to me, wouldn’t you agree?

But yet incomplete (arrrghh!!) and just like with equities above I want to either see a dip toward that 100-day SMA – or a breach of the recent spike high near 2.8. Either way I think the resolution of this one is going to be glorious.

Alright, now I’ve got to spoil my subs a little. Please meet me in the lair:

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

    Not a bad way of looking at this.

  • zzezzezz

    I’m learning, sir! 🙂

  • Jason13

    Yes that could be for a good 40-50 points….get over 200SMA before something of a pullback.

  • HD

    did anybody sell the 10 handle pop at the open?

  • Jason13

    No, missed that gap fill. Good job if you did.

  • Jason13

    Soybeans broke lower from a long standing wedge. Looking to 860 region. I’m a buyer there.

  • Jason13

    Platinum is almost there..another 1+% loss today

  • BobbyLow

    “I’m sure some of you guys will take issue with this but while we are still gyrating inside no-man’s land my first priority must be asset protection and not wild speculation.”

    Excellent because for me, upon reflection of my own “wild speculation” of the past, I might have been better served by just going to Vegas and hitting the tables. At least I might have even been comped and taken in a few shows before my luck ran out.

    “Risk of ruin is the eternal sword of Damocles that hangs over all of us.” Absolutely and it’s this kind of fear (Some fear is good like knowing that putting my hand on a hot stove is going to cause severe pain).

    The market can be an evil bitch so in order to survive, I’ve adapted part of the Hippocratic Oath ““primum non nocere” to my trading plan which translates into “first, do no harm”. This helps me stick with 1% or less R, to sleep well at night and to almost eliminate any chance of getting wiped out.

    I have to give a “tip of my hat” at the way the market kept prices on crude so tight on Friday and then let prices regain their downward momentum today. That’s OK Ms. Market even though I took 1/2 of my short position profit off on Friday, I understand that this is what you do. However, I still have a 1/2 Position Open and might add some more back before the COB today.

    Just thinking out loud folks. 🙂

  • https://evilspeculator.com Sir Mole III

    “primum non nocere” – hehe – I’m gonna use that 🙂

  • BKXtoZERO

    Out of UGAZ 31.24 from 27 area on 4R, was also in 1R from 36.9 so nice gain. Took it.

  • Ted

    Rails and the transports are doing well, especially NSC.

  • evilasevildoes

    and RTN

  • Jason13
  • Julie 35 – 25 – 36

    A waiting game it is as the Chief aptly states.Being on the sidelines or cash is a position also. I have a very small short SH and if wrong not wrong long. Chief my turn today at the dentist.Routine exam and cleaning
    JULIE

  • BKXtoZERO

    Nothing happens when you go to the dentist. Mole is good for some corrective market action

  • Julie 35 – 25 – 36

    Hi BK Still looking at approx 10.46 USO and slowly dropping to target. Now below lower trend line of a minor expanding triangle in a pullback
    JULIE

  • Darkthirty

    Price action is looking the same as last Friday…………….

  • Julie 35 – 25 – 36

    D30 SPX from January 31 a very symmetrical Head and Shoulder Pattern developing. Easily seen on a 60 min chart.
    JULIE

  • Darkthirty

    due to oil prices?

  • Julie 35 – 25 – 36

    BAC Unable to get above it’s upper trend line of falling wedge and 5 ema in chart presented previous thread. I stated watching closely BAC is the Big Dog in Banks. THE WAIT ! Remember Guys if they can’t take you out they will wear you out NOT US … We can wait them out !
    JULIE

  • Darkthirty

    786 of previous down move from 2824

  • Ted

    Norfolk Southern $NSC announces strategic plan targeting a 60 percent operating ratio at Investor and Financial Analyst Conference. bit.ly/2SG4lMd
    4 hours ago · Twitter

  • Julie 35 – 25 – 36

    $VIX A possible slight divergence with SPX today i.e. $VIX an intraday reversal. A little fear perhaps…. The Wait
    JULIE

  • ridingwaves
  • Julie 35 – 25 – 36

    Patience Guys .. If at home pour yourself another cup OR it’s 5 o clock somewhere ! LOL!
    JULIE

  • Julie 35 – 25 – 36

    Anyone shorting against today’s high $SPX ?
    JULIE

  • TomW4

    I did

  • TomW4

    Did you add more @disqus_qkFlPoMLUZ:disqus ?

  • Julie 35 – 25 – 36

    Hi Tom … I will with a break below 2705
    JULIE

  • Julie 35 – 25 – 36

    Guys Tape Reading 101… The gap up this a.m. was sold into if anyone has not noticed
    JULIE

  • Darkthirty

    Then the FRBs stepped in………………..

  • Darkthirty

    Like to see January of 18 to see if inventory played a part ………..consumer sectors are dead/dying

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    Below vwap but above prior day’s range. Intermediate TF extended it’s range up, forming new range, not challenging prior.
    H&S? Got two of those in prior range.

  • https://www.youtube.com/playlist?list=PLEx52bnnbLmh2dnV_Vyq1ErXT79LSU6pT xenoson

    Bears, push it below 2675.47! Otherwise my bet is range extension up.

    https://uploads.disquscdn.com/images/0d40a36325a55a298ad848971ed7fa6a69d94ee4618832e9ee27b5c29bb9818f.png

  • TomW4

    Not a very strong one though.

  • BKXtoZERO

    Anyone else feel like jumping of the Sears Tower head first onto a thumb tack rather than watch this market any longer?

  • HD

    Mind the 10-17. Sorry it took all day.

  • Julie 35 – 25 – 36

    The market is not going up because of a tremendous amount of buying and everyone and their little brother is buying. It’s going up because of lack of selling.When selling and profit taking kick in … Yipes. November and December highs and the congestion zone currently in Huge Resistance
    JULIE

  • Mark Shinnick

    Well, the upside to a downside expectation would be a really frigging-good hook-setting.
    I don’t mind watching…actually. Sure beats the chop fest wearing-down the competition’s attention span.

  • ridingwaves

    its there, just use the link below…..bookmark it, start your own economic forecast, I did in 2006….all the tools are there…

  • Julie 35 – 25 – 36

    Patience BK … I have more patience and constitution of a billy goat
    JULIE

  • BKXtoZERO

    I saw .Cougar attack in the news. Colorado I think. Snuck behind some guy and attacked. The guy killed it! Suffocated it is what it said…. So be careful Julie

  • Julie 35 – 25 – 36

    BK I saw that too . He applied a choke hold . Small cougar weighing only 80 lbs. Lucky it was not one weighing 220 which they can obtain (male)
    JULIE

  • Mark Shinnick

    That cougar suffocation thing I heard can be sort of kinky.

  • Julie 35 – 25 – 36

    Mark esp. from behind LOL!
    JULIE

  • Darkthirty

    Too much dis information for me to engage. I try to remember it’s all bullshit, but still run fibs-trendlines-et al……mental masturbation

  • ridingwaves

    keep close watch of AVXL, I’m up 20% right now, presentation at investor conference today, Clinical trials are getting filled up with patients, Retts, Alz., Parkinsons……chart if firming up, could pull back to 2.15-19 area..

    19 is the year for this symbol, any good news out of these trials and FDA will fast track it……and pps will explode with 46 million share float, trailing stop on any substantial moves is must, most likely will dilute much higher to fund rest of trial or fast track move….unmet need for all 3 diseases….

  • ridingwaves

    to each is there own…facts are not disinformation, that is zero edge…

  • Darkthirty

    I’m at the southern end of lake Michigan, ETA is always affected by trains, seems to me train traffic has slowed down a lot.

  • Darkthirty

    You mean like Bullshit Labor Statistics?

  • Darkthirty

    Autoerotic asphyxia, I’ve seen quite a few……….

  • Ted

    A good day for the small caps.

  • ridingwaves

    I guess you forgot, rail and trucking show a lot, st. louis fed reserve gives you plenty but you can keep on hanging on to zero edge Biased Little Shits

    as much as you like…..adios

  • Darkthirty

    Well, how’s that working out? Not getting pissy, just need facts, not massaged numbers. The deeper you dig, the shittier it gets…..

  • BobbyLow

    FBOW, I added my 1/2 Short Crude (SCO) back just before the Close. There appears to be a recent increase of correlation between oil prices and equities so perhaps there’s a little more event risk than normal here.

  • evilasevildoes

    the banks need oil up the sisters want it lower to buy up it is a tug o war

  • https://evilspeculator.com Sir Mole III

    Interesting that he had to kill it. You think choking it out and getting the heck out may have been an option.

  • BobbyLow

    Yep. Kind of muddy waters right now. 🙂 I began my short with /CL at $53.96 and I’m just trying to stick to my trading plan rules. If what little price momentum there is changes enough, I’ll change with it and flip to the long side.

  • https://evilspeculator.com Sir Mole III

    Wow, I guess I didn’t miss much today… (was coding)

  • Mark Shinnick

    …from behind?

  • Darkthirty

    Had a judge and her boyfriend playing sex games with a loaded gun. She got grazed and knocked her out, BF though he whacked her! LOL

  • Darkthirty
  • Darkthirty

    Maybe if the leash is too tight………

  • MonetaryPerspectives

    Economics are looking good?

    Curious how you reach that conclusion? It’s literal non stop shit figures the world over.

    Big big gap tomorrow. 99% chance it’s down, 10% chance it’s up. Either way it’ll be crashing by Wednesday.

    Loaded another several hundred Vix calls today, early March expiry.

    Will it be an 8 or 9 figure profit I’ll be banking, that’s the only issue to be decided.

  • BKXtoZERO

    Loan me some money and if it works I’ll pay you back 🙂

  • ridingwaves

    I was just going toe for toe on BLS acronyms…..not pissy but you have to use something as a baseline…..trucking and rail are pretty darn real….the BLS numbers are just numbers…not paying to much attention to them as many people just quit wanting to work as tech passed them by…

    fwrd PE on SPX 500 is 15.8 as of today….back in 2016 before earnings took off, that was a bubble for sure but QE ate it up….still I don’t base many trades on this…I just look at it for bubble watch purposes….no bubble right now…

  • Jason13

    TTP?

  • Ted

    I’ll bet on it.

  • ridingwaves
  • MonetaryPerspectives

    Gap up it was then.
    Rhymes with some historical tops.
    The gap close will be sold.
    Watch out tomorrow.

  • Mark Shinnick

    …what some people need to do to get a rise.

  • Mark Shinnick

    Shit figures arising out of in-organic activity fuelled by unsustainable debt.
    https://youtu.be/rx6Zgz0TZuA

  • Darkthirty

    LOL we think too much alike…cranked that up yesterday

  • Darkthirty

    QE in progress right now. How much PPT before it’s just FRB pump?

  • Darkthirty

    Got a lot of bizarre stories of sexual errors………