The Gloves Are Off

Quite a bit of monkey business in equities last Friday which trickled into the index futures after the Sunday open. Look, I could go into details about how this move has inflicted max frustration on anyone who was short all the way up and finally capitulated last week. At this point everyone is worn out – everyone is frustrated up to the wazoo. Which is exactly the type of market condition I happen to live for – this is when the Market Mole operates at peak efficiency.

Since proper timing is of essence here I’m going to make it short and sweet for you guys: This is pure manna from heaven for anyone who missed last week’s entry and is was hoping for a BTFD opportunity. It’s scary as heck and nobody in their right mind is going to take this entry.

Fortunately a sound mind is not a handicap we here at Evil Speculator happen to suffer from. We don’t care about being right, we only care about odds and opportunities. So this is what I am thinking:

My Cunning Plan

Long here with a stop < 2790 – you can be a bit more generous but quite honestly if that level gives we are talking…

TIMMMBEEEEERRRR!!!

A breach of the prior spike low will most likely cause a micro panic and trigger more selling during the session. A short entry after stop out is a possibility but will take a bit of finesse, depending on how good you want the odds to be.

There are two scenarios:

Caveman

Immediately flip for a short position on a breach of ES 2790. Odds here are 50/50 and you may get whipsawed to death. But what does it matter as your average life expectancy is < 25 anyway and online p0rn will not be invited for over 50,000 years.

On the upside: it’s legal to club your contemporaries and ‘tinder dating’ involves cornering her with a torch, then dragging her back to your cave.

Consumate Steelrat

After a breach < 2790 wait for a bit of more downside followed by a fast spike higher. It’s got to be fast – not just a LV crawl higher which may end up as yet another bear trap. The reason is that we want to see rapid profit taking after which momentum stalls.

If that happens you again have two choices. The lower odds scenario is a short position right there at the Last Kiss Goodbye (LKGB) near 2790. The better odds scenario involves yet another drop that breaches whatever spike low materialized prior to the fast counter spike. Entry at breach with a stop > the prior spike high and Bob’s your uncle.

Words To The Unwise

The current market is all about chicanery and fake outs – it’s one massive psych out operation that presses as many psychological buttons as possible. As I said above already, I love tape like this as it brings out the worst in retail traders.

The big take-away here is that if you choose to participate here then you will have to fade all of your inner instincts and beliefs. Ms. Market is not in the mood and she’ll run roughshot over you rectum if you let her.

Meaning – if you hedge strong opinions then it’s probably better you stay out as you will get burned – guaranteed. If nothing else, employ small position sizing: 0.5% or less. Realized volatility will be your friend if you let it.

Post Scriptum

The bulls are skating on thin ice here and the margin of error is approaching single digit territory. Do or die.

Happy hunting!