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Tickling The Dragon’s Tail
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Tickling The Dragon’s Tail

by The MoleJanuary 19, 2018

So we’re going to do a momo update today and I think it’s going to blow your mind. But first let me briefly explain what happened this morning which led me to look at those momentum and volatility charts in the first place. If you may recall yesterday’s lottery ticket on the E-Mini went bust by just a tick or two after which the SPX actually ended up bouncing back.

So I look at UVOL and it looks pretty damn bearish except of course for the late session candle painting pump. So of course I’m starting to wonder if we may be sloping over in the near term future, because with the Dollar heading into Italian Lira territory we should have busted higher to grab that new flag.

I guess you may agree that this formation looked too juicy to to pass up. Of course in retrospect my stop ought to have been a bit further below that 100-hour SMA. My bad.

Market Breadth

If you’re a noob – no it has nothing to do with halitosis (google is your friend – actually strike that). If you’re already familiar with this chart then you recall that we have long been expecting a price reaction but to our credit didn’t jump the gun ahead of price actually exhibiting weakness. Yes that’s right the stainless steel rats have learned their lessons over the last decade.

Anyway, so here we are again tickling the dragon and with equities basically heading straight up I don’t think it’s unreasonable to expect at least a small obligatory dip lower? Taking one for the team so to say?

Sentiment And Money Flow

Our old favorite – the CPCE Deluxe. The Count is running out of fingers at this point (he’s got four – I checked) with yet another spike higher and no price reaction whatsoever. I am the first one to admit that bearish signals are a lot more unreliable in this bull market but if you review historical record we ought to have gotten at least get a wiggle lower. This is completely unprecedented.

Here we are looking at high beta vs. low volatility stocks. What we want to see is a juicy divergence as the high beta ones usually get hit first when things start weakening like in the past day or so. But NOTHING!

FAGIX is a high income fund which obviously means it’s composed of mostly junk bonds. And it seems investors can’t get enough of them.

I hope you’re sufficiently warmed up because what’s below the fold is going to boggle your mind…

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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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  • Yoda

    When nobody expects a correction it’s time to pay attention

  • Mark Shinnick

    ….and Whet everyone wants, nobody gets.

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

    Nobody expects a Spanish correction.
    😉

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

    With the S&P going parabolic, I look at those shorts and have to say, “they’ve gone to plaid!”

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

    How do I layover ES on a $INDU stockchart?

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

    I don’t know if it’s possible.
    ES trades different hours.

  • Mark Shinnick
  • Darkthirty

    Did it on yahoo finance before they trashed the system

  • RomPetr Oll

    I thought everybody has been expecting a correction since the summer ?

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

    are you blaming Yahoo!?
    you You Misogynist!
    😉
    http://d.ibtimes.co.uk/en/full/1556971/yahoo-ceo-marissa-mayer.jpg

  • Ronebadger

    Ask the guy we know who lives in Spain…

  • Darkthirty

    I’m as politically incorrect as a person can be, I piss on snowflakes………

  • Yoda

    No, definitively not. Anyway the MOMOs charts speak the truth.

  • Darkthirty

    Bitcoin went parabolic……….

  • BobbyLow

    I’ve learned not to “expect” anything from the markets. 🙂

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

    I confess, I was salivating late August waiting for sub 60.

    but then I had medical issues in September AND
    when the BPSPX moves above the *weekly* 200ma?
    all short bets are OFF.

    http://stockcharts.com/h-sc/ui?s=%24BPSPX&p=W&yr=3&mn=0&dy=0&id=p33640439230

  • Tomcat

    I am hesitating shorting Gold because of this looming shut down, even though I think the orange puppet will figure out a way out of it. If he doesn’t it will catapult gold out of this range its in.

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

    I do. I keep throwing her in bed and jumping on top.

    ..and all I get, is NO!
    ..wench..

  • Darkthirty

    Don’t ask!

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

    not sure your timeframe.

    on the weekly, it’s a tough spot. there’s been a large move. and this week was a pause.
    http://stockcharts.com/h-sc/ui?s=GLD&p=W&yr=3&mn=0&dy=0&id=p05282206534

    map out your plan, and then trade your plan.

  • BobbyLow

    I just got stopped at BE on my short Gold position and am currently neutral on it for the same reason. I’m also holding a short in Oil and just opened a small long position (a little late) in RIOT. I don’t have any understanding of Blockchaining whatsoever but I really don’t have to. I was going to wait until Monday but saw an opportunity now.

  • Yoda

    Non-stop fuckery, that’s what I expect

  • Mary

    Orange puppet? You’re certainly entitled to your political opinions, but why do you choose to express them on Mole’s financial blog?

    He works very hard to provide this valuable resource and has stated recently that he doesn’t want political bickering as it is bad for his business.

    If no one makes that first comment then there is no reason for a dissenting opinion to be expressed to counter it and thus no bickering will ensue.

    Have some respect for Sir Mole. He deserves it.

  • Mark Shinnick
  • Julie

    BL are you no way too late for RIOT. I saw it too . It came down to the daily 89 ema and gap support oversold.. A bullish falling wedge pattern . It breaks above the upper down trend line ; 5 ema ; Ichi cloud conversion line (8) at 20.91 and ……. I am feeling very rough with the flu and back to bed. Everyone have a great weekend JULIE https://uploads.disquscdn.com/images/7377ed74b7901a2eaafb504824a18e2affe31916bf11679430a9e6272f9e1bb4.png

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

    John Houseman. They don’t make ’em like this anymore… too bad.

  • https://evilspeculator.com Sir Mole III

    Julie – since it’s supposed to be terminal. Don’t forget to remember the old Mole when writing your last will! 😉

  • Julie

    Thanks GG Doing everything BUT the boiling water (head) Looks like a possible corrective advance GDX up to targets 23.95 — 24.12 for the lower high to short. Proud of myself No Cougaritis. You and my husband have cured me. Thanks GG. Watching BAC short against the 31.79 high and may not work as the advance off the Ichi Cloud baseline (21) looks impulsive. Again not a wave counter but do look for impulsive and corrective moves. Perhaps a double top BAC or a false breakout may occur. Again Thanks GG
    JULIE

  • BobbyLow

    Thanks Julie.

    I hope you feel better soon.

  • Julie

    LOL ! Chief thanks for everything you do. We gals appreciate everything and I know the fellas do to !
    JULIE

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

    cured!? It’s probably just remission. Let’s wait 6 weeks and see what comes.

    get some rest. The Market isn’t going anywhere (metaphorically speaking)

  • ridingwaves

    Aaay from Toronto…..cold, windy and sucks….
    what the hell is it with the congress and senators trying to shut down the govt. which will cost regular citizens both employed and in need of assistance because of some illegal aliens….

    I can’t wait until the tar and feather party, I’m all in there…

    Sold 1/2 GILD for 2R….so many trades out there…
    I would buy every share possible if we could start a tar and feather company that specializes in both parties….

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

    Guys One last item. The VIX for Gold ($GVZ) observe what happened Gold last August and September with a rising $GVZ along wit rising GLD or Gold Yipes ! Also checkout the PPO (1,10,1) 10% above or below it’s 10 ema Also recent COT reports Gold the Commercials have been steadily increasing their net short positions https://uploads.disquscdn.com/images/985fd92c1f71a536b7353b78262eb8c73179f99cb3a354ce1597b121916b8011.png JULIE

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

    as long as the volatility is above the EMA10, I’m good.
    back in August, it just oscillated between the median and the upper limit.
    EDIT:…while price climbed. In fact, breaking below the 21 & median was a signal to exit the bully run.

    the commercials can do what they want. IMHO, I’d watch the dollar MORE closely.
    http://stockcharts.com/h-sc/ui?s=GLD%3AUUP&p=D&yr=2&mn=0&dy=0&id=p81038898454

  • Tomcat

    Mary, were you offended? Not sure what your dissenting opinion is, orange? or puppet?

  • Tomcat

    BL,

    I had to look that one (RIOT) up and the chart looks interesting to say the least. I happen to understand the technology, but dont have a clue how to trade it. I love how the long term holders of bitcoin view that currency as the substitute to fiat money like $ but yet salivate when they see that price of it has gone up so much in DOLLAR terms.

  • Tomcat

    My time-frame is daily since it met my initial target of 1340, on a weekly, I would agree that this thing looks to be taking off.

  • Julie

    GG Yen and TNX too
    JULIE

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

    exactly. doH! I keep forgetting.

  • Julie

    That’s it for me GG Thanks Bro !
    JULIE

  • BobbyLow

    I’m trading it on a 30 Minute Chart. If I traded it on a longer time frame, my system would call for stops that would be wider than I want to carry. So this faster time frame keeps my risk level down and my sleep levels up. 🙂

    It’s been a few candles since my entry and my chart is already showing price beginning to work against this trade. There’s a chance that I’ll be out before the day is over at BE or at a small loss. I don’t want to carry hopium over the weekend when there is a more than 50% probability that price can have a large opening gap against me on Monday. We’ll see how it goes over the next hour or so and if I close the position, I’ll take another look at it on Monday.

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

    Hi Julie. Solaray has an awesome time release Vit C tablet or capsule. 1000mg 500mg is instant and 500mg is time released across several hours. Plus , I add Vit D and Betacarotine. Hope you get well soon.

  • Mary

    Offended? LOL! Go back and read my post.

  • Tomcat

    Well if you weren’t offended, than stop being a snowflake/bickering and carry on. If you don’t like my post(s) there is this little trick called “ignore”.

  • BobbyLow

    Out at BE on RIOT. Glad I got my feet wet with it but didn’t like the price action going into the weekend. I’ll take another look at it on Monday.

  • Julie

    Hi Sharon Presently laying in bed with laptop. Thanks for the info and will do. I saw your post and picture of the winter snowstorm where you live. Yipes ! We have snow approx. 4 mos out of the year in Bozeman MT and higher elevations much longer. We enjoy winter sports and activities as do most MT residents. Sharon Again Thanks and Have A Great weekend
    JULIE

  • Mary

    Just trying to help Mole.

    *****************************************************************************

    Sir Mole III Mod • 13 days ago
    Mark was a long term sub and a prolific contributor in the comment section, as such his departure is a big loss for the blog, period. It’s easy to dismiss him leaving with ‘there will always be other subs’ but the truth is that the blogging business has become pretty harsh with social media massively draining attention away from quality blog content. I’ve been working my ass off to keep up the quality, to maintain an even keel, and improve the offering/services on a constant basis. But let’s not forget that I’m not running a charity operation and as such I do not appreciate seeing paying subscribers leave for reasons that could be easily avoided by just sticking with the topic at hand: TRADING AND BANKING COIN.

    Quite frankly I don’t care about the political orientation of my readers or subscribers for one single reason: Because I do not care about the political orientation of anyone taking the other side of my trade either. Evil Speculator simply is not the place for political discussions and I have worked hard to not have it turn into ZeroHedge or the Slope. Which actually cost me a lot of advertising revenues to be honest and it was a big price to pay in exchange for creating an island of productivity and constructive discourse in an ocean of noise, drama, clickbait, and systematic misinformation. So seeing long term supporters leave over bullshit political squabbling really pisses me off as I am unjustly punished for the action or opinions of others. I’m not saying this to be finger pointing – we all have varying political orientations based on our upbringing or personal experiences. All I ask is that we keep them for ourselves on the blog and instead focus on helping each other profit and maintain a consistent edge.

    This really ruined my weekend to be honest as put a lot of effort into what I do – five to six days per week for almost a decade now – over 4000 posts as you may remember. The Thursday post alone took me seven hours to put together and thus I have little patience or mind for dealing with futile conflict in the comment section. I would much prefer to instead embrace and work toward the amazing opportunities that now lay ahead of us as crypto currencies will invariably end up revolutionizing modern finance and the global exchange of monetary as well as intellectual assets as we know it. There are literally fortunes to be made and that’s what we all should focus on.

    One thing I should add: I am a staunch believer in the 1st amendment, which is why I became an American in the first place, if you may recall. Moderators are called upon to only delete comments by obvious trolls who are attempting to disrupt our discourse here or submit comments which are clear personal attacks. We are all adults here and should treat each other with mutual respect and kindness.

    Peace and enjoy your weekends.

  • Julie

    Chief and everyone. This is not political. I read a recent article about the ethnic division in the U.S. before WW2 .As horrible as WW2 was something positive in the U.S. occurred following the War. Before the War the different ethnicities lived in their own neighborhoods and did not venture into the other neighborhoods. The Italians ; Poles ; Germans ; English ; Irish etc lived in their own secular neighborhoods. During the War the Jewish man from NYC was in the same foxhole as the Nebraska farmer and Seattle Norwegian fisherman. America changed following WW2 for the better
    Everyone have A Great Weekend
    JULIE

  • Tomcat

    You “scared” me for a second thinking that was re: Mark S, but then I saw Mark comments below…

  • https://evilspeculator.com Sir Mole III

    Yes it did – it was called the greatest generation for a reason. It all got fucked up starting in the 60s.

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

    My experience is similar. I’m a US Navy vet, and I’ve been in 24 countries if I include California . The common folks are great, all over the world. It’s when we get to those in ‘power’ where the trouble starts, fighting over land, money, and control of the populace.

    Time for my reminder re: Carl Sagan’s Pale Blue Dot speech at Cornell in 1994, to put things in perspective. I want this to be read at my funeral.

    https://en.wikipedia.org/wiki/Pale_Blue_Dot#Reflections

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

    Hi GG When Gold and bond yields rise together this can have a negative effect on the stock market The crashes of 1973 and Black Monday 1987 were preceded by rising gold prices and bond yields. Currently Gold and bond yields are rising simultaneously JULIE https://uploads.disquscdn.com/images/8b6c6d68fc16b1c88cb86a7534d5c018b3db047dcd70d3d1220ceadb81266b6b.png

  • Julie

    The Yen is shown in chart also TNX the upper frame. Back to bed
    JULIE