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We Have Movement
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We Have Movement

by ScottFebruary 1, 2017

Finally we have something interesting to talk about. We are approaching a good place for a quick long. Yesterday I mentioned that both Mole and I thought that further downside without another leg up was just setting the stage for finding a bottom a little further down. That is exactly what happened.

I’ve marked the triangle which I noted yesterday as a trading guide for the day. It broke to the downside, then hit a double bottom, retested and posted a very strong kickoff.

1

This is exactly what we should see in order to attract sideline dip buying bulls, and stop out already weak shorts. Daily handle was a hammer. Get long on break of the daily high (in market hours) with a stop below the daily low.

The only problem I have with this is the after hours action is weak, overextended, and choppy. I think there is a high probability of a little shakeout on open first, you might be able to get a better entry.

The other thing of interest is that Trump opened his mouth about the dollar and it fell, testing the old spike low. Realistically this is about as far as downside can be allowed while still maintaining the strong dollar thesis. This is an outstanding point to get positioned, because the risk reward is incredible, even though the odds of success now are not better than 25%. A close below the green line invalidates the idea, and being good traders we should probably flip and be short.

3

Lastly, it is very interesting how breadth is strengthening into the move. This looks good from every level.

4

So bottom line, advantage bulls. Good trading today people 🙂

Scott


About The Author
Scott

  • evilasevildoes

    So you are long usd?

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

    Event risk: Fed announcement at 1400.

  • Ronebadger

    Good stuff, Scott, thanks!

  • Yoda

    That’s one hilarious avatar you got there Boom

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

    I became aware of the Crazy Harry Muppet thanks to Gerb. When I saw the picture, I had to use it. Now… back to work on my explodaphone.

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

    AAPL $127.

    YOLO, Muwahaha.

    Gambler..
    https://www.reddit.com/r/wallstreetbets/comments/5qhzcy/well_this_is_it_going_allin_my_last_stand_my/

    “1) I bought $120 puts, twice the amount of $115 puts, 4 times the amount of $110 puts, 8 times the amount of $105 puts and 16 times of $100 puts. Those are unbelievably cheap ATM. TOTAL COST: $100,000 USD..”

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

    Even cheaper this morning…

  • Yoda

    He started with an inheritance of 2.5 m$ and blew everything up.

  • Yoda

    As long as the Monday’s gap is not filled I stay short

  • ridingwaves

    the fed holds, it sinks the dollar to continue rally, boost oil and commodities….

  • Mark Shinnick

    Ugg… Well, short miners this morning.

  • ridingwaves

    so far, so good for u

  • kudra

    In past 10 minutes, miners just got punched in the gut and equities not looking as rosy.

  • Mark Shinnick

    Excellent article, he did a very good job describing all this. The thing is, with that experience put out there, is is loaded with rich meaning for those who understand, but those who don’t remind us this game is forever afoot.

  • ridingwaves

    definitely not a Scott or Mole punch..
    a light tap at most, ISM print pushed dollar up for a bit…

  • kudra

    it’s a sham. demo acct.

  • kudra

    GDX found some footing at 23.50.

  • ridingwaves
  • BobbyLow

    Week after week, build after build and . . .

  • Tomcat

    Flipped to short. producers have been hedging between 55-56. Who am I to bet against them.

  • Tomcat

    My hedge of short Oil is long $CLR. Rationale is that this is one of the only biggest producers that doesnt hedge. So if oil goes higher, this should follow.

  • Tomcat

    Hope you didnt get stopped out like the fool here did bc of the tight stop loss.

  • BobbyLow

    Good idea. I normally don’t like to hedge but I’m considering it. There’s nothing that makes any sense in the oil market right now. And that goes for both sides – Technically and especially Fundamentally.

  • Tomcat

    Respectfully disagree. Fundamentally, producers are telling you something (there is a price cap) but specs are not believing it. Why I am siding with producers for the simple reason that they control production, so although you were right to note “Week after week, build after build and . . .” [insinuating price either dosnt care or keeps going higher] production/demand is what drives price long term and not technicals. With the nationalism movement of the developed world and more specifically of US (which is what I care most) to “build in america”, and based on the well documented fact that most shale producers are profitable above $45 (some would argue >$40 and even lower), production will continue to increase. Now this may mean chit to traders like you and I (based on short term), but this is my plan and I am sticking with it.

    PS: I focus only on WTI. Brent means jack chit to me even though correlated…

  • kudra

    I don’t trade oil or energy sector. no idea what fundamentally drives price of oil and natty. Gold and miners seem more logical – trade off dollar strength and geopolitical fear. Understood that price rules and much of what we deem fundamentals are just noise or ex post facto rationales for price moves, but i seem to have a need to cling to an underlying story in addition to watching price.

  • Yoda

    very tight BBs on AAPL’s 5 min chart. It’s a nice intraday set-up play IMO

    https://uploads.disquscdn.com/images/66afb33d6e8dadb7c5eef3137daf13ad7408b2c7962f0ca1d26abf6ecb0dbf66.png

  • Yoda

    I am playing the Island reversal formation that was mentioned by Ronebadger on Monday. The trade is cancelled if the gap is filled + 1 handle.

  • Mark Shinnick

    The trade’s mojo evaporated so exited.

  • Ronebadger

    I would be so tight on that “1 handle”…maybe, give it a little “pop” room?

  • Yoda

    Can’t figure it out too. But as you said it the other day, there is no need to try to understand the fundamentals on this one. It is much easier to follow price only. The difficult part in this trade IMO is setting the stops at the right place.

  • BobbyLow

    There’s definitely logic in what you’ve said. However my logic and sound reasoning has failed me too many times. Because of this, I now make all of my decisions based on how price is trending via my lens.

    Oil prices have been on a foggy road to nowhere for the past 4 weeks. This can be a little frustrating for a trend trader. But during times like these I have to reach back as far as I can, suck it up, and remember that this is what this stuff does from time to time. Most importantly I have to remember that “One Good Trend Pays for Them All”. 🙂

  • Yoda

    mmm, you got a point here. I’ll raise it a bit higher. Thanks.

  • Tomcat

    I digress, but I think this is exactly how you and I feel about this year’s political events “But during times like these I have to reach back as far as I can, suck it up, and remember that this is what this stuff does from time to time.” As for trading Oil, you seem like one of the good/great ol’ timers. I am confident that you will come on top!

  • BobbyLow

    Thanks TC.

    We’ll be OK. 🙂

  • Tomcat

    For those of you Gartman followers and may I say “lovers” [in the sense of the great counter ideas you get from him”, his tweet today: Magazine headlines indicating market may have peaked. Now let’s wait until he states he is short and do the needful…

  • BobbyLow

    It’s funny how various trading vehicles and styles can have a different feel for all of us.

    I’ve tried trading Gold and Miners many times and they are not a good fit for me. But if you can trade them successfully then they are probably a good fit for you and that’s cool. I think Edd and a few others here have been successful trading them as well. They just don’t work well for my lenses. 🙂

  • HungryNewt

    I’m a newbie with crude, but the contango for crude has fallen quite a bit in the last couple of weeks..without the front month moving. Which means that the back months are being sold.

    Either that or the market is anticipating a massive rally which will flip the market from contango to backwardation. Time will tell. In either case, the back months are being sold at lower prices relative to the front

  • https://evilspeculator.com Sir Mole III

    Fartman is the ultimate contrarian indicator.

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

    That is what I meant by hedging Dec 17-18.

  • https://evilspeculator.com Sir Mole III

    Fed Announcement…

  • https://evilspeculator.com Sir Mole III

    Rates remain unchanged – unanimous decision.

  • Tomcat

    Long $ES

  • Tomcat

    Yellen “got” the message (DJT tweet). If spending is going up (i.e. infrastructure), US wont be the only developed country in the world to pay 2%+.
    Oh yeah, and those 3 hikes, forget about it…

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

    Check out the VIX action at 2.00 pm EST

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

    scr3w the VIXen.

    go SILVERR.

  • BobbyLow

    Probably went crazy. I was watching the Long Bond /ZB and it was all over the place for about 10 Minutes

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

    risk-off trade is looking good

  • Yoda

    it did close Monday’s gap, which is great news for risk-off trades

  • Yoda

    LOL, I had to skip to the 4.00 min mark after watching 15 sec of it.

  • Ronebadger
  • Ronebadger

    She used to be cute…and sing…she should go back to being both.

  • http://greenlander1.blogspot.com/ Greenlander

    stopped out of NTNX this morn. Not doing much else. Boring day.

  • Yoda

    priceless

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

    it’s all Roses till valentines Day.

    http://www.dapper.com.au/c053roses2.jpg

  • Yoda

    I’d rather watch Ashley Juggs 😉

  • Grant

    Regaurding OP bars from Scott’s last blog post. Below were my results using OP’s as a trade and a signal to take trades from 1/1/16 to 8/12/16 when IB eliminated leverage on forex. I used 3 currencies. https://uploads.disquscdn.com/images/b1c087c7bb279a4343c3af453fa0588983325030c4eb333a03c58ba6ca51ecbe.png

  • http://www.ProfitFromPatterns.com/ Ivan K

    Grant … jolly well done … the ability to harness the message and strength of OP bars escapes many … yet can be beguilingly simple and straightforward.

    Have you monitored the outcomes since the playing field changed ?

  • ridingwaves

    damn, that played out..

  • Yoda

    My usd p&f chart shows a P.O. of 99 and on the weekly chart the 25 ma is just below at 98.93. Personally, I wouldn’t bet on much more downside in the short-term.
    https://uploads.disquscdn.com/images/fd2b095e4a28e680718cff799f3f2d7e8cc95499862f27d46097e35d0ba93492.png

    https://uploads.disquscdn.com/images/2ffdd9d15d5b760425c1de6d937ad97ae2e53635781fb437611ba0a5e7f3d8d6.png

  • Grant

    The move by the obama admin and IB on this threw me for a loop. I have had to scramble for alternative means to create income so I had to put following this RBT on hold. I have adapted this to using cash but it is a far cry from what I had. Futures do not cut it for me as getting correct position sizing is important to me.

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

    Crap… there goes my favorable exchange rate.