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Wednesday Morning Briefing
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Wednesday Morning Briefing

by The MoleMay 13, 2015

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

2015-05-13_spoos_briefing

The recent gyrations in the spoos may have wiped out a few more retail accounts but for us steel rats it has actually produced some context we may be able to use. As I’m typing this we are still somewhat in limbo territory but the levels on the chart give you a rough overview of what I deem to be our current inflection points:

  • 2100 is the center of our 10 handle limbo zone. We do have some NLSLs nearby which are in the process of being retested. Should they remain uncontested they will produce additional support in preparation for the NYSE open.
  • 2105.75 is our current NLBL and needs to be breached to pump this thing higher. I also think it roughly lines up with that falling diagonal that’s been ailing the bulls for weeks now.
  • 2095 is where we find the 100-hour SMA, which again is beginning to climb now. A drop below isn’t necessarily a death knell for the bulls but I expect the 100-day SMA to be revisited should be drop below it. Yes, there is a chance we continue lower in that scenario, if we do it should happen quickly. But quite frankly this is the outlier scenario at this point.

Talking about outliers – you know I’m holding my current short positions, well knowing that they are most likely going to be stopped out at break/even. I got a perfect entry there and don’t feel compelled to interfere with my campaign for a little green. Especially during sideways high volatility market periods my prime directive must be to plan the trade and then to trade the plan.

Yes, it’s personal – it always is. But not the way you may think. Although I’m the first one to adapt a campaign should new information arise I am not willing to make up the rules as I go. There is way too much noise right here to derive any new probabilistic information. And my focus needs to be on process, process, process. Confusion and volatility leads to emotion, which lead to trading errors, which lead to small losses, which lead to more emotion, leading to bigger trading errors, and in the end resulting in big losses or wipe out. You need to nip this in the bud early on.

Every single day the market is going to test you. If it’s running in your favor it’ll try to take advantage of your ego and your new found confidence in reading the tape. If it’s running against you it’ll throw everything you believe in into question – it will make you doubt yourself and the process. And if there is no clear direction and confusion ranks high then it’ll attempt to lure you in and to break your rules. Always stick to your rules, never let the tape drive your actions. Only let the tape trigger predefined activities you were prepared to make before placing a trade. I cannot over emphasize how important this is – and markets like these are a perfect crucible for testing your qualitative trading skills.

2015-05-13_gold_briefing

On to the futures: Gold isn’t really a setup (yet) and I almost missed this one. However on second view this is lining up to be a possible break out situation. The daily is budding against a soft resistance line on the daily and clearly this could still go either way. I think 1200 is a good inflection point here but for a better entry I would watch the hourly panel for entry patterns.

New setups below for our intrepid subs:

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You have been briefed – now have fun but keep it frosty. See you guys later this afternoon.

Cheers,


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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  • https://evilspeculator.com molecool

    Sent by DarthMole at 8:00am: Darth Mole senses a looming increase in USDJPY price volatility (i.e. larger candles) over the next few hours.

    Hehe 🙂

  • Bill

    Should of setup my twitter account this weekend…

  • HeadNShoulder

    ZL showing divergence waiting for green bubble to converge and price stay below VWAP? please correct me if I am dead wrong.

  • https://evilspeculator.com molecool

    Where’s my crew!!?

  • https://evilspeculator.com molecool

    Every day starts different and it’s too early to judge this as a real divergence. The small signal does look suspicious but taking positions here or managing them based on the open signal would border over trading and being reactive. We are in limbo mate and there is little participation as you can see, right? So just sit and wait until the signal shows you something more substantial.

  • https://evilspeculator.com molecool

    In a nutshell – don’t over think it. The Zero is not the holy grail – it only shows us participation and directional momentum. If there is none we have to consider the context in which that is happening. Make sense?

  • HeadNShoulder

    “there is little participation” is that from the magnitude of ZL as in the range from -2 to +2?

    btw, my system shows a sell signal around 9:45 but I need more indicators for confirmation and ZL is definitely the important one.

  • Bill

    I’m trying to not let myself get comfortable with how well the last few weeks have gone with Thor, your setups, and my own trades on my proto-system have gone. I have never made money trading before so I need to keep my ego in check and not let my subconscious start to screw me. I also am trying to think about the large draw downs that will be coming at some point.

  • Ronebadger

    Present, Teacher! Sitting on hands with two #2 sharpened pencils.

  • wandering196

    long /zb this am still short ES

  • BobbyLow

    I be here Boss. Just taken care of some business. Still holding on to 3 positions. Got stopped on Long EUR/AUD (which was no surprise) but I had to let it play out.

    Great stuff in this morning’s briefing.

  • OzarkHillBilly

    I’m reduced to sitting on the couch with my girlfriend’s Macbook, watching Sesame Street with my boy, and constantly refreshing charts since my PC is down. Basically I’m reducing my focus and not seeing anything I really want to trade. Yesterday I was in and out for a quick buck, but so far today looks like it might be better spent in the garage with a wrench in my hand. Keeping an eye on the $RUT for equity clues.

    OTOH, I’ve learned over the past couple of mornings that Sesame Street is way cooler than it was in the 1970’s.

  • OzarkHillBilly

    Yes Herr Mole, I really appreciate the time and effort you put into running a high quality blog. I was reminded of this once again as I read this morning’s post.

  • BobbyLow

    Might not want to be thinking about the eventual “Sword of Damocles” drawdown because it will happen in its own time. Enjoy the good runs and utilize the KISS method. 🙂

  • OzarkHillBilly

    I’d also say that I didn’t miss CNBC or Bloomberg while watching Sesame Street.

  • DudePlunger

    I dont see anything I like either. Maybe the Euro in 12hrs…

    I’ve found this week to be challenging. 4 trades, -1.08R, I played some defense to bail out of a few trades which helped this from being a -2 or even -3R week.

  • OzarkHillBilly

    Would anyone care to recommend a book or two on candlestick charting? Amazon reviews are helpful, but since it’s a relatively slow day, I thought I’d just ask here. When I was originally consumed with learning TA techniques, I only skimmed the topic. As a result, when I look at a candlestick chart now, I have to think too hard about what it means, rather than just “seeing” it. I’m of the belief that making the interpretations second-nature would be helpful.

  • jmoney3000

    I’m ashamed to admit it but when I started out trading I bought Candlestick Charting for Dummies. It’s (obviously) simple and to the point, but I definitely learned the fundamentals of Candlestick charting from it. I realize now with most technical work that simplicity is key.

  • BobbyLow

    Billy are you talking about Candlestick Set-ups like Hammers, Gravestone Dojis, 3 Black Crows etc., or charting using candlesticks as visuals while using Bollinger Bands and Moving Averages etc.?

  • BobbyLow

    I honestly think you can learn more about the markets from watching Sesame Street than watching clowns on CNBC and Bloomberg tell us what’s going to happen. 🙂

  • OzarkHillBilly

    I’m only in for one trade this week so far, but I’m limiting myself to the indices and and related ETF’s and options for now. I went short yesterday morning with the expectation that there would be limited but worthwhile downside for a quick trade, and when it hovered around support for a few minutes I bailed out except for a lotto ticket portion that I’m still holding. Usually I make a point of not participating in Amateur Hour, but I’m trying some new things and it’s worth noting that I’m trading in small sums compared to you and Scott and Mole, etc.

  • saltwaterdog

    I’ve read lots of books but nothing is more helpful than simply drawing it out yourself and evaluating what you think the emotional collective is at each point.

  • BobbyLow

    I havent exactly been setting the world on fire myself lately DP.

    One thing I probably over do is constantly review while sometimes going back back 2 or 3 years. Ya I know this is probably over the top.

    But there has been one thing that has stood out to me on the surface and that is from the middle of March through the end of April, trading becomes very difficult and this year did not disappoint. I’ve found that this has been the case over multi year periods at least it has been for my style. Now I won’t go so far to say that come mid March next year that I should take 6 weeks off but there is something uncanny going on here and this might be the best time to take a vacation. 🙂

  • BobbyLow

    Bingo!

  • OzarkHillBilly

    I think that’s good advice. When I was a broker and the discussion turned to TA and learning how to make your own decisions, I always recommended Technical Analysis for Dummies as a starting point. Next would usually be O’neil’s “How to Make Money in Stocks” in conjunction with IBD. However, I advised not to put much weight in CAN SLIM or any other method; just read it for the general advice. That book was recommended to me when I was getting started in the markets; regretfully I blew it off at the time because I thought I had discovered some sort of Holy Grail with EW.

  • OzarkHillBilly

    Good question. The quick reply is both, but I’m most deficient in the set-ups.

  • DudePlunger

    Not sure about this time of year, but I definitely believe in the power of seasonality. It’s possible this year is just not conducive to the continuation of nice smooth trends.

    I just spent the last hour breaking down some of my results since March, when I began trading not just the 4hr, but also 6hr, and 8hr (based on the markets I identified as having the “best trends” and worth stalking.)

    50 trades total, here’s the breakdown:

    ***I’ll preface this by saying I only began trading the 8hr based on Mole’s suggestion back in January that I trade it exclusively, instead of the 4hr. I didn’t want to completely abandon my 4hr trading, which was going well, so I added the 8hr into the mix, trading both along with the 360m if I spotted anything there.***

  • evilasevildoes

    actually i thought Bigelows were ok

  • evilasevildoes

    Mole weird request…you have access to great images…could you post hottest bikini shots for a pal who is interested in signing into thor…i think that might get his undivided attention…lol

  • BobbyLow

    OK. If I turn my head to the left, I can see my bookcase that is loaded with Candlestick Books and various trading books of all shapes and sizes. I think if I were to sum them all up, I would say that they probably didn’t hurt me. But how much they’ve helped me is a different question.

    Now I’m going to sound like Scott now but what I would like to see is what kind of proven edge a gravestone doji has. In all honesty, I don’t believe it has one. That’s not to say that we can’t find instances where after a gravestone doji appeared the product in question tanked. Another thing is that with each one of these set-ups there are a lot of qualifiers that go along with them so when they don’t work it can be said well this wasn’t there or that wasn’t there. So all in all, my thoughts on using candle stick setups like Hammers and all that shit are ok in context but should only be used as “additional” confirmation within your own charting system.

    But to have a basic understanding of candlestick patterns and I would suggest keeping it limited to the most simple and widely used patterns I would reccommend “21 Candlesticks every trader should know” by Melvin Pasternak. The book is thin and easy to read and still in print.

    http://www.amazon.com/Candlesticks-Trader-Should-Secrets-Marketplace/dp/1592802982/ref=sr_1_1?ie=UTF8&qid=1431536247&sr=8-1&keywords=21+candlesticks

    As far as the actual charting part, that’s not going to be so easy. There are many things that can go on to a chart and this is up to individual prefference. Some like to have so many things that it looks like a plate of spaghetti to me and that’s cool. I choose to keep my charts very simple. I use Candlesticks because it gives me a better visual than H L C Bars. My Candlesticks are only supported by 20 Period Simple Bollinger Bands and a Multiple of ATR Trailing Stops. Period! The second section of my chart was recently changed from ADX/DMI to 2 Lines MACD because the ADX/DMI took all price action into consideration while the MACD only factors in the closing price. The third section of my is just ATR all by itself.

    Now why did I end up with them this way. It’s because I’ve tried almost every other combination there is and this is the only one that I can look at and within 3 seconds know what to do. But this has come with countless hours, days and weeks of looking at the same things over and over again. So like Saltwater said, you have to experiment and find out what is going to work best for you. I don’t think books will do you much good here but websites like Stockcharts.com might. Also your current platform might have a charting available. If not, I think you can download Think or Swim and use delayed quotes if you don’t fund it. TOS has an excellent charting system that works well for me.

    Lastly as you already know, nothing is going to win all the time but the whole point of all of this is to be able to trade with confidence knowing that your system has a proven edge through back and forward testing along with a decent APE and SQN 100.

  • BobbyLow

    I see where the 8 Hour has been working for you and that’s good. It appears that the herky, jerky price action might have caused the faster time frames to get whipsawed where the 8 hour was able to smooth things out.

    I’ve traded the 6 Hour and the 4 Hour. Of the 2, I liked the 4 hour best. Then I switched to a scalping system for awhile and traded a 90 minute using a Binary (either win or loss with predefined orders submited). I actually did fairly well with this but it also was a little confining because I had to be at my desk every 90 minutes during my working hours to see what made it, what failed and what’s up next.

    Finally about 6 weeks ago, I switched over completely to trading the Daily using an ATR Multiple as my Stop. I honestly believe that it’s all the same shit (money wise) whether I have 400 Trades per year with shorter runs or 100 Trades per year with longer runs.

    There’s also an age factor that I’ll have to admit to because a lot of stuff that I could do when I was younger like trading multiple charts and even trading 5 minute charts, I just can’t do anymore (at least for not very long) 🙂

    Anyhow, I’ll try to keep track of what happens every spring and see if my theory has any legs.

  • https://evilspeculator.com molecool

    I know you’re kidding but quite honestly the days of cute images in the comment section are long gone and pretty much died the day the Gold Gerb left. If he can’t get himself to get motivated and do his research he’s not a good candidate for Thor and I don’t want him as a sub. He’ll just wash out anyway and we both waste our time.

  • evilasevildoes

    it was a joke…..actually she is a RICH lesbian who has advisors…now there

  • https://evilspeculator.com molecool

    Most candle stick patterns are overrated. I have done extensive research on this topic and so have Ivan, Scott, and many others here. I could elaborate but it’s highly context and interval dependent. CrazyIvan squeezes out a solid edge with a basic set of Ivan’s candle triggers but boy – it’s a tough system to follow.

    There is no real magic in this – and honestly trading candle patterns these days is tantamount to driving a horse and carriage in the 1920s – they were definitely present still but on the way out. Most trading today is statistical and if candles are used it’s price context specific – e.g. candle combination patterns in a particular volatility pattern, or support/resistance levels.

  • https://evilspeculator.com molecool

    Just detach yourself from the outcome and focus on the process right now. You can’t really judge any system’s merit unless you’ve traded it for at least a year or have been through a deep draw down. Wait until we hit a series of six losers and then let’s see how you ‘feel’ – it WILL happen sooner or later. Prepare yourself mentally.

  • https://evilspeculator.com molecool

    Well, sexual orientation is negligible – although she may just fit in here with us boys 😉

  • BobbyLow

    I agree totally.

  • saltwaterdog
  • https://evilspeculator.com molecool

    Damn – CrazyIvan is kicking ass today! 🙂

  • wandering196

    Hmmm

  • https://evilspeculator.com molecool

    And it’s not done yet – several outstanding campaigns which are well into profit by now.

  • evilasevildoes

    thx Mole

  • https://evilspeculator.com molecool

    For what? Well, you’re welcome!

  • https://evilspeculator.com molecool

    No participation today – anything many happen here near the close.

  • https://evilspeculator.com molecool

    Provided without further comment 🙂

  • https://evilspeculator.com molecool

    I think I’m done for today – banked more than enough coin.

  • https://evilspeculator.com molecool

    Did any of you lazy rats grab an entry in gold?

  • Skidmarkalot

    Still holding ABX

  • Scott Phillips

    He pretended to trade here for years. He didn’t trade, or if he did his account was blown up long ago. He is a lovely guy, but a bullshit artist, pure and simple. The crime seems harmless, that he was only bullshitting himself, but he wasn’t.

    Posting random TA with no statistical basis at all
    Pretending to know what he is doing because he had been here a long time.
    Indulging in guru-itis (t theory) without actually taking time to test it
    Being magnetically attractive to subjective methods instead of objective methods
    Being unwilling to do the slightest bit of personal development towards becoming a real trader
    Being lazy as fuck
    Keeping no records of his trades/paper trades

    Truth is, he was a loser, like all the losers that have come and gone before. You want to be a winner, grind it out, get to work, do the WORK!

  • Scott Phillips

    The classic book on “japanese candlestick patterns” is complete 100% horseshit (and I trade exclusively using candlestick patterns). The author does NOT trade

  • Scott Phillips

    Agree. Candle patterns are a mediocre edge at best

  • Scott Phillips

    I wouldn’t draw conclusions from this. Your 240m expectancy was .31 over > 100 trades, but in the last 2 months you have been in drawdown.

    This is “urge to change systems” because you are in drawdown – nothing more.

    Keep doing what you are doing, you have an edge, your equity curve is positive, just grind it out

  • https://evilspeculator.com molecool

    She certainly passes all specifications. DIN 69 approved.

  • BobbyLow

    Just went short EUR/AUD

  • ridingwaves

    silver broke out of a triangle.. I think the bond market is acting up and scaring people into metals right now and the dollar drop helped….Also May is a big deliver month for Silver, not so much gold

  • ridingwaves

    Malia Jones? Used to be a pro womens surfer from Hawaii…she could rip…

  • mugabe

    The key here is what you really *want* to do. I, for example, am happy enough to faithfully trade a monthly rule-based system which cannot hope to replicate what you can achieve. I have decided that swing trading is not for me.
    I think this notion of winner and loser is a bit limited. You are in the end a *loser* if you are trying to do something, whatever it is, that deep down you don’t want to do. if you really want to do it, you will make the effort. If you don’t want to do it, then fine, but you need to admit that to yourself.

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

    A candlestick chart is the same as a bar chart is the same as a fork or a bush knife … it is merely a ‘tool’ … to be used or discarded.

    To assert that something ‘does not work’ etc is a tacit admission that the utterer has yet to find a way to ‘make it work’ … whatever ‘work’ may mean to that person.

  • Bill

    I put an entry order in for a long if CHFJPY breaks up from it’s inside day.

  • Scott Phillips

    I have an order to join you on break of the daily low

  • Scott Phillips

    Again with the over thinking.

    “It broke out of the triangle” – that was all there was 🙂

  • Scott Phillips

    You are a winner when you trade a system with positive expectancy and stick to it. The fact that it is a longer term system is irrelevant. I can achieve larger numerical results because I make more trades. That is irrelevant. In the long term even 15% compounding is a big big wealth building system. I think you are well on your way to trading well. So are MANY others here. A system doesn’t have to be a 100% automated system like Mole or Ivan likes, but it does have to be process and rule driven, with extensive testing involved.

    I’m done pretending that shit trading is good trading because someone is a nice guy.

    You are a loser if you trade like a loser. Gerb thought like a loser, traded like a loser, and when called on his bullshit he sulked like a loser. That is losing.

    This isn’t primary school athletics, every child does NOT win a prize. It’s not enough to be a dilettante in the markets. Part time traders have as much chance as part time gladiators did in Roman times 😉

  • Scott Phillips

    Linda Raschkes book is ok, John Carter’s book has a few setups, trader vic’s 2b setup is ok… a few others here and there

  • Scott Phillips

    Semantics. There are many many widely traded setups which are categorically not an edge.

  • newbfxtrader

    Ahem. He drew the triangle. It was at support last month. Its close to resistance now.

  • OzarkHillBilly

    This is along the lines of what I was already thinking, and will help me narrow down what I’m eventually looking for. Much of what I’m doing now is filling in some knowledge gaps I have; I appreciate the quick lessons I get here on subjects I haven’t studied enough myself.

  • OzarkHillBilly

    Thanks for the extensive reply! If nothing else, it helps me to define my original question. I want to know more about candlesticks because I’ve been using OHLC charts forever (the candlestick charts for the firm I used to work for just weren’t that great), and the consensus I seem to get is that candlesticks convey more/better info as a visual reference for what’s happening in the marketplace.

    As for the setups, at first I just want to be able to conjure up a mental image of just WTF a Gravestone Doji is when someone mentions it, etc. I’d never try to use any individual setup of any kind in isolation; context is always key. But I always like to expand my knowledge and see if I can come up with something more useful.

    I’m definitely a fellow believer in keeping things simple. My own trading has confirmed this lately, as I can see a negative correlation between how hard I thought about a trade and how well it actually turned out. Something I’ve known, but can’t avoid anymore when I’m actually tracking what I’ve been doing.

  • OzarkHillBilly

    Thanks for the advice, as always. I seem to remember a coworker saying similar things about that book once.

  • evilasevildoes

    she still does

  • evilasevildoes

    Point and Figure is awesome

  • evilasevildoes

    went long silver in premarket when dollar broke lows…..also long nugt traded some gc jumped out at 1214

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

    As I always prefer to go to the source … my insights into this 400 + year old way of viewing price action came from “The Japanese Chart of Charts” about a quarter of a century ago. The tool matters not … what matters is how it is used.

  • mugabe

    I agree. All I’m saying is that not everyone is cut out to make money from the markets. If they persist in being in the markets while losing, it’s because the market is giving them what they’re really looking for – excitement, a sense of victimisation, camaraderie with other sufferers, etc. A losing trader will not turn into a winning trader unless they *want* to. And *want* here means a burning sense of dedication to the task. That is a rare quality in most walks of life.

  • phylum

    Keeping mouth shut….

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

    It takes 2 to tango … that long forgotten concept.

  • phylum

    Point taken

  • https://evilspeculator.com molecool

    __ __ ___ __
    | |–.—-.—–.—.-| |–.’ _.—.-.—–| |_
    | _ | _| -__| _ | <| _| _ |__ –| _|
    |_____|__| |_____|___._|__|__|__| |___._|_____|____|

  • OzarkHillBilly

    Thank you, Ivan.

  • OzarkHillBilly

    Thanks for bringing that up. I had some success with PnF several years ago but eventually dropped it because I couldn’t keep up with the charts at work. And I was probably just too lazy to take the time to review them at home every night. I’ll definitely give PnF another look. I remember (possibly misremember) PnF being especially helpful at inflection points.