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Time To Wield The Iron

Time To Wield The Iron

by The MoleJuly 22, 2014

I’ll be quick as we may be dealing with a small window of opportunity here. The S&P E-Mini has painted new all time highs and that means we’re pressing our noses against that volume abyss I haven’t tired pointing out to you guys for the past few weeks. Given the various Soylent scenarios Scott and I have been pimping over the past few days this leaves us with a prime entry opportunity:

Let me paint the picture. A bit over an hour ago I pointed out a glaring bearish signal divergence on the Zero Lite (right panel) to all my subs. Some of you are already short and it was a good entry – however given the fact that price has not responded at all, despite rapidly diminishing participation (i.e. flatline signal on the Zero) we will have to follow price and price only!

However if nothing else today’s ramp & camp candle thus far suggests that we are kissing an important inflection point, which obviously lines up with the upper limit of the current trading range.

Let me throw this one into the soup as well – our GBP/JPY carry trade correlation which has kept us out of a lot of traps over the past few months. Now for anyone long this should be quite concerning, nevertheless given where we are and the increasing possibility of a short squeeze I’m going to propose to distinct setups – one with a high probability good return ratio and one with a low probability but high return ratio.

It’s quite elementary Holmes – we are short right here with a stop at 1982 which is a number I basically pulled out of my rectum. Well to be honest there is that sideways 100-hour BB that’s blocking the way and I felt that it’s as good a line in the sand as any.

Now one of two things are going to happen – we drop from here and I smile all the way to the next turning point which is probably an R or two away. OR I will get stopped out in which case I’m already set up to be long with a stop very nearby below 1979 (where we pretty much are right now, plus minus a few ticks).

Caveat – do NOT play this setup on the Spiders or any other equities based ETF – that includes SPX/SPY options and any of the 2x and 3x symbols you like to trade. You will only and I repeat ONLY take this setup on the ES futures as this will require you to monitor  and manage the situation rather closely. If we get a big spike (or drop) overnight then you don’t want to find yourself 10-15 handles in the minus because you had to wait until the NYSE opening bell.

Also, don’t get overexposed – use our futures risk calculator if in doubt and only attribute between 1/2R – 1R to this campaign. Actually 1/2 ought to suffice on the long side as it’ll probably take off like gangbusters if we reach the inflection point of no return (which we hope is 1982 and above).

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.


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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