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Wednesday Surprise
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Wednesday Surprise

by The MoleAugust 12, 2009

Had a rough night again and just woke up – for some reason the stress of the past few months seems to start interfering with my sleeping pattern.

Anyway, we are nearing the point where we either get a reversal followed by a sell off (Blue) – or we continue higher and yesterday’s low was the bottom of B of (Z) of {2}.

Breadth on the SPX is 10:1 positive, which is quite bullish but not unheard of for a temporary snap back ahead of a reversal. It’s a tough call right here – if you go bearish do it with play money you can afford to lose – it’s an FMOC day and who knows what might happen in the afternoon.

Similarly the Dollar appears to be completing a nice zigzag consolidation which should now be followed by more upside. This is really the chart to watch: If we continue to drop much beyond 78.6 then I would start getting a bit concerned and consider that something else is going on.

11:17am EDT: Black Swan baby!! Hat tip to Tyler at ZH:

Short term markets mean nothing — Nassim Taleb

Exactly.

12:26pm EDT: I’m not liking this tape a bit – we seem to be consolidating sideways here – be very careful.

The Dollar has plunged to what I think should be the maximum for this zigzag – we are already at the 161.8% fib line in relation to wave A. Something doesn’t smell right – I would like to again caution everyone to keep your bearish exposure light and to only play with money you can afford to lose. It’s FOMC day and thus I decided to remain in cash for now.

2:40pm EDT: I actually grabbed some SPY 89 butterflies right around the top. Thinking was that we either bust higher or drop at least to 89 – thus it’s a lottery ticket and there’s little risk.

We are now at ES VWAP (1001.5) – NQ VWAP (1616.5) has already been breached. It’s going in the right direction – I like it.

3:00pm EDT: Soylent Orange it is then. Wow – that was executed masterfully – amazing. Glad I didn’t buy puts – that’s the beauty of using a butterfly: if you’re wrong the pain is very limited.


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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