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A Lack Of Volatility

A Lack Of Volatility

by The MoleNovember 5, 2013

Yes, equities have been a bit of a mess recently and it seems like we’re currently completing a sideways correction accompanied by lackluster participation. But that’s only half the picture – generally speaking what makes taking trades on the equity side difficult these days is the lack of volatility.

According to over the past year the daily volatility of the S&P500 index fell below 75bp – the lowest level since 2007. Can we go lower? Absolutely and I caution you from drawing any immediate bearish conclusions. But it’s good to know where we are and perhaps why you may have found taking entries in this tape a bit difficult. In the end however – that is how low participation melt ups work – they trap out both bears and bulls. The former don’t get an opportunity to sell (i.e. shallow retracements) while the latter are waiting for dips that never present themselves. Meanwhile institutional traders hold positions and smile all the way to the bank.

Doesn’t mean we have to sit on our hands however as the current gyrations have produced a bit more context. In case you wonder – yes, the RTV-S is still active for two more days and tomorrow’s short trigger will be at 1755.76. However, as I’m counting a series of spike lows and spike highs we may get a hammer long today which would put tomorrow’s long trigger at today’s highs (right now 1767.03 but that probably changes by the EOD).

So effectively we’re following Yogi Berra’s advice: When you come to a fork in the road – take it! We don’t have any directional bias and over the long term that makes life a lot more simple and probably happier 🙂

Quick update on our ZB entry – which I should point out was a speculative but thus far has paid off. The official and more conservative entry was today at the NLSL and the 25-day SMA – if you were a sub then you were briefed on this a few days ago. The general idea here is that the 25-week will hold up and lead us lower. I don’t feel strongly about this setup but heck – it was there so we took it.


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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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  • Sean

    If we don’t break 1768.78 today doesn’t that create a lower spike-high and negate the trend?

  • Heisen_Gerb

    +1 for the sober chart.

  • i Bergamot

    speaking of volatility, i remember you used SKEW in a past. Did it stop working too?

    PS. I used to think that Volar was ‘SoberLook’…lol
    Wondering what he is up to these days. Do you keep in touch?

  • Skynard

    Done, stick a fork it that bitch. Noticed the quick run in AUD, figured that was the one:)

  • molecool

    SKEW has been useful but mostly on mapping possible reversals after a sell off (see below) – a push outside the 2.0 BB usually is followed by dip buying. On the long side it seems less predictive…

  • molecool

    Volar – no have not heard from him in a long time. You know – these guys come and go. In the end it’s been always the Mole who kept the ball rolling 😉

  • SS_JJ

    NYUPV vs NYDNV was not really bullish today, huh?

  • molecool

    Nah – it’s just been ‘fuck ya’ll’ tape.

  • Nojak

    Any thoughts on fossil fuels? heatiNG, CooLing…

  • BobbyLow

    Now that’s tellin it like it is. LOL

  • BobbyLow

    The Kiwi has been Rockin and Rollin over the past 30 Minutes or so. I have no idea why nor do I care why. But as previously stated, most currency pairs have been performing a circle jerk over the last two days.

    NZD is making up for this at the moment. 🙂

  • molecool

    You jumped on board of this one?

  • molecool

    By the way – I don’t mean any disrespect to Volar, Berkshire, Scott, et. al. We cannot dismiss the fact that they all contributed a heck lot and didn’t get paid a cent for it. And in the end they often decide that it’s time to move on – it’s either that or start their own place I guess.

  • Skynard

    Employment at 1645

  • BobbyLow

    I saw that one and it was a beauty but I was already Long NZD/JPY. 🙂

  • BobbyLow

    Thanks Sky.

  • Skynard

    Hehehe, that was a good bump:)

  • yades

    guys where can i see the trade log with results of crazy ivan?

  • molecool

    ah – there is a link under the menu:

  • yades

    thx. was the last trade on the 23rd or must this be update? just wondering

  • Skynard

    Nice inflection point /NG weekly:)

  • Friv Jogos

    I definitely bookmark this page and share it with your friends, hopefully will be useful to them.

  • Skynard

    Long off 1 min.

  • Skynard

    Long /SB with this awesome falling wedge

  • molecool

    Will be updated shortly.

  • newbfxtrader
  • CorporalCarrot

    Well I said yesterday would be decisive and it certainly looks that way at this point. Re entered lottery tickets yesterday evening and increased my position on the hammer long setup. Whether people want to be long here or not is open to debate but I’d be very cautious shorting this today unless we get a big reversal.

  • CorporalCarrot

    Just too profits at upper bollinger on hourly with RSI tagging 70. Will scale back in lower.

  • molecool


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