Fade The CloseMarch 27th, 2009 8:59 am Intraday Update 168 Comments
UPDATE 9:30am EDT: Alright we just opened about 15 points down, despite extremely bullish breadth numbers last night exceeding a 7:1 advancing ratio. Let me share something with you guys:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-27_whipsaw.png
Do we see a pattern here? This market has been reduced to one big gotcha! game. In the last 5 days we got a long inverse candle following the close every friggin’ time. Now, as you guys know I’m not exposed to this crap so I probably shouldn’t care. However, just looking at this is frustrating to me, quite frankly and although the long term trend looks pretty obvious on a daily chart the intra-day action has been tantamount to sticking you toe into a wood shredder. I think even 2008 was easier to trade than this shit.
The good news is that the directed trading strategy I’m preparing has been breezing through all this with flying colors. The last few days have been great - profit curve is pointing straight up - I think this was a great acid test. Not that 2 years of continuous profits wouldn’t have been enough supporting evidence already http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Patience is the ultimate virtue when it comes to trading. It’s easy to get frustrated when the tape starts to paint what we see above. My home made remedy is to focus on other things and let things take their course. Again, once we’ll have a good entry, we’ll know it - trust me.
Another thing - I was getting a bit riled up last night about the ‘faux EWT’ affair. As I said - I strongly encourage intelligent discourse, but when following the comment stream lately it seems that everyone is busy offering their own count - seems the goal is to somehow compete with me and prove me wrong. In the past few days I didn’t see one comment even referencing my count - instead I see plenty of responses to what everyone else has to offer. So, I have to think - if nobody even wants to discuss my work then I don’t really feel incentivized to put in all those hours to put it all together. Do you rats have any idea how much time I’m spending on this?
Another example of this were the option strategies I posted yesterday. One of the few people who responded was fujisan, the rest of you were busy chatting amongst yourself - the topic at hand was completely ignored.
So, forgive me if I am probably going to quiet things down today ahead of the weekend - I might even take the entire weekend off and come back on Monday. I don’t see a good entry anyway unless we drop another 15 - 20 points, plus I think my time is better spent working on getting the email alert system finished. Until I see a meaningful drop the wave count is mainly an academic exercise as nobody in their right mind is going to load up on the rips and I won’t play the short side until we complete (A) of {2}.
Tea LeafsMarch 26th, 2009 7:32 pm Market Forecasts 130 Comments
I’ve been poring over my charts again and also consulted my resident Gypsy woman who conducted a ceremonial tea leaf reading. This is what the future may have in store for us:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_spx1.png
For shits and giggles, let’s assume for the moment we are in Minute {iii} of Minor 3 of Intermediate (A) of Primary {2}. I see some monster resistance ahead of us around 870 - 880, based on four factors:
[*]That’s where we are touching the upper channel connecting (2) and (4) of {1}.[*]That’s also the 23.6% fib line of Primary {1}.[*]Minor 3 of (A) would measure 78.6% of 1 of (A).[*]Because I said so.So, that seems like a good spot for a little pull back - which wave degree I’m not sure yet. After that we got the psychologically important 900 range which I believe we’ll retest (Minor 4) and finally, we might complete Intermediate (A) around the 960 level.
Please bear in mind that this scenario is highly speculative - especially at this early stage - but I wanted to throw it out there.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_overbought.png
Having said that - boy, are we overbought. But take a good look at how useless stochastics are in such conditions. We have been doing the Chinese snake wiggle around the 80 line for three weeks now - and as long as the bears remain in hibernation this is likely to continue.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_ndx1.png
The fly in my ointment is the NDX, which has been leading the tape right from the very bottom of this channel. It’s pretty obvious we’re about to run into some heavy resistance here. So, if we start dropping tomorrow and consolidate more than a few points then I’ll have to adjust that wave count above a little - really tough to say how right now. I have been going through a few scenarios in my head but don’t have a perfect count to offer that would accommodate a short term bearish scenario. Again, this is all a bit premature at this point but that’s my process of establishing some bearings.
No matter which way we’ll head tomorrow - fact is that we have not had a great chance to load up on medium term bullish trades here. It’s been one steep channel to the upside - and we might have to wait until this Intermediate is over and complete - which sucks, but that’s the card we’ve been dealt. Of course the moment we get a deep retracement (40 - 50 SPX points) I would be very motivated to jump in with one of the spread strategies we discussed today - Fujisan has also offered great additional input on the subject.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_gold.png
Gold - do I have to say it? Exactly - that ing diagonal still has not been breached. Yeah, we are theoretically below it today but that’s more of a tease. I can literally hear it taunt us: “Over here, big boy - come and get me!” Yeah right - I wasn’t born yesterday - I want to see a clear breach below and then a retest, otherwise no heavy metal for me. Which reminds me:
Thursday Wrap UpMarch 26th, 2009 3:12 pm EOD Wrap Up, zero 66 Comments
Zero held up very well despite all the whipsaw:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_zero.png
I have to point out that there was a long VTA at the 5th candle. But due to all the whipsaw we’ve been seeing in the past few days I decided to switch the Zero into restrictive mode, which means that it does not give you a trade alert on a contracting signal line. That is a filter that can work against you in trending markets but here’s my reasoning:
[*]We’ve seen a lot of overnight and intra-day spikes and contortions.[*]Although we are most likely in wave 3 of (A), according to the latest count, what we are dealing with is a proregressive wave (page 56:2 of our bible), so I do expect this to be ‘difficult’ terrain.[*]According to my preliminary targets for (A) of {2} we have made a lot of progress in price in a very short amount of time.[*]Finally, Tim Knight - friend of the blog - has shared some very excellent TA on what’s looming ahead, which is one truck load full of resistance zones.Thus, I decided to activate this filter today - my only regret is that I didn’t switch it on earlier as it could have avoided some of the recent false positives on the Primary Zero.
The Zero Lite licked it again IMNSHO - in particular I liked that divergence that preceded a nice drop into 818. From there we pointed straight up and the Primary was in sync, leaving little doubt that we would finish in the plus.
I might chime in later today but frankly, I’m a bit worn out - need a day off. So, if I do it’ll be brief and painless.
Cheers,
Mole
Sun Tzu - Part IMarch 26th, 2009 1:14 pm Intraday Update 137 Comments
It’s time to talk strategy:
1. Sun Tzu said: The art of war is of vital importance
to the State.
2. It is a matter of life and death, a road either
to safety or to ruin. Hence it is a subject of inquiry
which can on no account be neglected.
I will continue to quote Sun Tzu going forward as it is the most essential rule book written for conducting strategic warfare (no, not the shit they’ve been playing down in Iraq or in Afghanistan). I might also point out that Sun Tzu predates the new testament - so, it is written by someone who lived in a time when war was a real, ever present, tangible, ugly, and daily reality of his life. And make no mistake - trading, just like business, is war. We don’t take prisoners - and in the end, no matter what anyone tells you, only victory is what counts. You don’t get a gold star for participation and no - we can’t all be winners. The market is a zero sum game. Brutal? Yes. Life is not fair - sorry, your great kindergarten teacher was full of shit.
Reverse Calendar Spread:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_calendar.png
Let me introduce you to our first strategic monstrosity - the reverse calendar spread. I could start explaining this beast, but frankly, I had to read this text several times back when in order to fully digest it.
So, the idea here is that we want to play the long side. But we have an enemy that eats volatility, let’s call her Miss Vega. She’s a wonderful mystical creature but she’s got a nasty habit of devouring profits on call options despite price moving your way. She loves to strike when volatility is very high - that’s when her powers are most lethal.
One magic weapon that can defeat her is a strategic maneuver called the ‘reverse calendar spread’. You see, calendar spreads are bit arcane to begin with and are usually used to exploit periods of inactivity in the markets. December would have been a good time to buy some calendar spreads as you don’t want prices to move beyond your profit zone. If you expect the inverse - namely a big move in price coupled with a hefty drop in implied volatility it’s ugly cousin, the reverse calendar spread might just do the trick.
What we basically have here is a credit spread - but one that increases your profits as volatility starts to drop - therefore defeating Miss Vega. The idea here is to get out of your spread about one month before the near term leg expires - you don’t want to hold it much longer than that (there’s probably ways to play with that but I’m the first one to admit that I’m not an option spread aficionado - ask Mrs. Fujisan). The volatility curves are increments of -2.5%, so you can see how Mr. VIX dropping into the 30s might add to your profit margin.
I suggest you read that tutorial I provided above and also play with the analyze tab in ThinkOrSwim if you have access to that. I’d like to see especially Fujisan to chime in as she’s a professional spread trader. I would also like to hear what some of you other senior traders have to offer. While you guys do that I start working on the plain old Bull Put Spread, which I’m posting next.
Bull Put Spread
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_bullput.png
Next on the menu we have the good ole’ ‘bull put spread’ - OX has a good page on it. It’s just like the vertical bull call spread in that it’s got limited profit potential but again, it’s a safe way to play the long side and not get hit in the ass by Miss Vega closing in on you. The maximum loss would be the difference between strike prices less the premium you received.
Bull Call Spread
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_bear_call.png
And finally here we have what most folks start out with - I call it the vanilla of all options spread strategies - the ‘bull call spread’. That one is almost too easy compared with their more exotic cousins, isn’t it? See, I usually start with the most difficult subject and work myself down - nothing like a good challenge, right? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
BTW, the one big advantage of debit spreads is the maximum loss is the net debit you paid if both options expire worthless. Doesn’t that make you feel all warm and cuddly?
UPDATE 3:00pm EDT: Attention futures traders - we are now at or slightly below VWAP on the ES and the NQ. Either we bounce here hard or it drops through and we see a sell off. I for one will not play the short side going forward. The plan is to start legging into bullish positions during dips.
UPDATE 3:51pm EDT: For all you proponents of the long term bearish trend: Breadth on the SPX right now is a ratio of 7.5:1 advancing issues. That’s bullish market sentiment, period.
BTW - I’m going to do the wrap up a wee bit later today as Mrs. Evil is waiting with lunch http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Too Close For ComfortMarch 26th, 2009 8:33 am Intraday Update 292 Comments
UPDATE 9:37am EDT: Morning rats - we are getting very close to my line in the sand after which I will have to cut my short positions:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_spx.png
Almost there - remember wave 2 should not cross the high of wave 1. If it does then we’ll most likely see more upside.
UPDATE 9:48am EDT: You’ve got to be kidding me - it turns 2 ticks away? Well, that happens - sometimes two ticks mean all the difference in the world. If you follow P&F charts then you probably know a thing or two about that. BTW, that doesn’t mean we’re out of the woods yet - it might come back for the final breach later today. Meh - I’m playing it small - have my conditional order set - really don’t care too much as I got a great fill last night right at the top.
UPDATE 10:03am EDT: For the record rats - just to respond to some comments:
[*]I did not call for a top at 826.78 - all I was saying was that this line should not be breached.[*]I also am not ueber-bearish - I have made it clear that my current trade is pointing against the overall trend, which is up.[*]So, if this one goes against me - I’m taking a very small loss as I got in at the very top last night.[*]Which also means that I have no compunction about playing the long side once/if we breach 826.78.I hope that clarifies the situation. Some people here seem to think that I am married to the short side as if trading puts is some nasty crack addiction. Nothing could be further from the truth. I’m a whore when it comes to playing the markets - give me a direction and I happily suck the long end of that trend.
UPDATE 11:41pm EDT: Well, it seems we are nearing resolution fairly soon:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-26_spy.png
Either this is a nice little bearish wedge or we push through that concrete wall at 827 once and for all. Frankly, despite the fact that I’m holding puts from last night the tape ‘look’s very bullish to me, further confirming the underlying higher degree trend. But there’s no reason for me to scale out right here - maybe at 815 would have been justifyable but I snoozed that opportunity and again, I’m not a daytrader. Let’s just see what’ll happen - my order is in, the line in the sand is ther - everything else is just mental masturbation.
UPDATE 12:04pm EDT: Breakfast time for Mole - very good chance my conditional stop is going to be hit by the time I return - I see higher highs and higher lows - doesn’t look good for the short term bearish case.
Two Lines In The SandMarch 25th, 2009 8:26 pm Market Forecasts 91 Comments
I have to run out and grab dinner with a friend, so I only have a few seconds to share the lastest count with you rats telegram style:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-25_spx1.png
I think the chart explains all you need to know - we’ve got two lines in the sand. Whichever we breach tomorrow will determine our count. Orange means we are already in 3 of (A) and should shoot up like a greased arrow. Green means we’ll breach today’s lows and push towards 775 - 780, which woud be equality with {a} of 2 of (A). Of course if you are a long term trader none of this matters - the medium and long term trend are both pointing up up and then up http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Well, that’s all I have time for tonight rats - but I think tomorrow will actually be a lot easier to play than today’s tape.
Cheers!
Mole
Wednesday Wrap UpMarch 25th, 2009 3:28 pm EOD Wrap Up, zero 120 Comments
Boy, I wasn’t kidding when picking my previous title - talking about a whipsaw day!
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-25_zero.png
Okay, I’m not going to sugarcoat it - as suspected the Primary Zero was pretty much useless today and got whipsawed to pieces. The action was all in the Zero Lite, which was pretty clear right from the get-go as we saw wild swings which continued all through the day. The starting point of the slide was the ‘McDonald’s’ signal we got, which everyone cracked up about http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif After that we saw one more head fake, which almost got me, but then the tape started painting a large channel to the downside. Take note of all the directional changes and the sentiment swings, which were pretty wild but the Lite got us in/out nicely as you can see from the abrupt signal changes - it almost looks like the sharp edge of my hunting knife.
As we touched one major RL I knew it was time to take profits - I was also expecting wave {b} ahead of us. Once we breached the top side of the channel (marked in red on the Zero Lite) it was clear that there would be a late day rally. I actually added puts right at the top around 1:10pm EDT (the Spiders trade until 1:15pm).
Great day - I give the Primary Zero a D for the day and the Zero Lite a straight A. The question of course is how do we know which side to look at. Well, I do look out for divergences in the Primary vs. the Lite. It seems that on non-trend days the Lite disagrees with the Primary most often and most vividly. If both point in the right direction most of the time during your trading day then the trend as shown by the Primary Zero is likely to be valid. This might sound a bit more complex than it actually is and maybe it’s also context specific. That early morning rally was a great sell-the-news example and I suspected we wouldn’t bust much higher than 835 (see my prior entry). In addition with the Zero Lite stubbornly pointing downward I decided to politely disagree with the Primary and stick with the Lite today.
I’d be curious to get some input from subscribers on how you fared today. Some people seem to have done great, but there’s always a silent majority which I’d like to hear from.
Cheers,
Mole
Whipsaw GaloreMarch 25th, 2009 11:46 am Intraday Update 242 Comments
UPDATE 12:45pm EDT: Boy, that’s some ugly tape - hating it. Frankly, right now I don’t have much to offer besides this:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-25_channel.png
We seemed to have transitioned into a new channel - observe how we gyrate up/down with some pretty wide swings. I think daytraders are loving the action today but as you know that’s usually not my cup o’ tea.
Anyway, instead of babbling on about this crazy tape I will probably remain quiet into the close unless something exciting happens. Prefer to keep hacking on that new pet project I’ve been talking about. For the record: I don’t even think I’m going to touch any of this until we arrive at what seems a pronunced low - anything in between is chop suey.
UPDATE 2:46pm EDT: Well, glad I held those puts - just have been letting them ride all afternoon. Not much to say otherwise. Another reason why we fade the news, rats http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 3:35pm EDT: I think we just got ourselves a nice B wave:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-25_abc.png
I will add to my puts towards the closing bell as we might gap down tomorrow morning.
« Older Entries
Finger Of GodMarch 25th, 2009 9:26 am Intraday Update 144 Comments
UPDATE 10:16am EST: We’ve got a new channel for today, which I call ‘Finger of God’:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-25_finger.png
One of the characteristics of the directed trading program I’m getting closer to introducing is that it always closes out before the bell. I have backtested this thing over several years and the difference in profits is distinct. I believe the past two days are a testament to the fact that holding overnight these days is tantamount to playing Russian Roulette with a inebriated Siberian. I think it was actually less risky in throughout the turbulent 2008 episodes - these days I think you could probably bank a fortune to just take opposite positions at the end of the day.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-25_spx.png
I find it intriguing that we first had to drop to 806 in order to push back to 825 and fill that gap. At this point we’re all turning into daytraders and I’m hating it. As I said - I’m going to hold my puts until 835ish - maybe 840 - indicated by the orange band. At this point I have no idea as to when we’ll consolidate. It seems there is no end to how high they can bullshit this tape despite overbought conditions. Best policy is to pick a spot where you feel comfortable and add to your positions. But beyond that orange region I would probably admit defeat and proceed with cutting and running. This is not about ego after all - traders need to know when they are on the wrong end of the tape. So far I am still in my comfort zone. Let’s see where they take it from here.
Tuesday Wrap UpMarch 24th, 2009 3:18 pm EOD Wrap Up, zero 176 Comments
Boy, that was a nice close - at the very end I counted a 1:4 advancing/declining breadth ratio in the SPX. My puts were enjoying the ride down - actually surprised to not see more of a fight after 3:30pm.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_zero.png
Zero gets a B minus today - it did very well despite the very very flat signals we had to cope with today again. I just don’t like that long VTA despite the thin tape, but it’s almost impossible to account for all eventualities when programming those trading rules, especially in thinkscript. So, I told everyone to not touch it, especially since the Lite was not impressed with the upside. Someone actually grabbed it at the bottom and was happily telling me about it - I told him to get theout and I think it wasn’t a moment too soon.
I think the Zero Lite nailed it again. Helped us negotiate the early morning whipsaw move and it kept me patient during the slow crawl to the upside. I loaded up fairly close to the top and after that the tape started to swing to the downside. Having learned from yesterday’s ‘relative signal strength lesson’ I interpreted the modest signal as buyer exhaustion and held on into the close. Your last chance to load up came around the 820 region and final confirmation came when we swung below the zero mark on both sides.
Difficult day but it turned into a good one. Show me an indicator that gave you better signals on a day like this http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Cheers,
Mole
Gaps GaloreMarch 24th, 2009 12:57 pm Intraday Update 188 Comments
UPDATE 1:42pm EDT: We pushed up one more time and almost filled the gap:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_gap.png
I just started to grab some puts despite the fact that I believe that we may push up once more to fill the gap completely. However, one never knows and this is as good a spot as any. My line in the sand is the 835 region - if we push beyond that I expect more exuberance to take place. BTW, I’m playing it fairly small at this point as this is a trade against what I consider to be the current trend.
HA! I just finished typing this and we’re whipping higher. So f…ing predictable - I wouldn’t be surprised if we retraced all the way up. Let’s see what happens around 3:30pm EDT.
I am actually a lot more concerned with picking the next low and to settle on a strategy on how to counteract a drop in implied volatility (i.e. option vega). Reverse calendar spreads might be a way to go, but before any of this happens I’m going to start hunting for short squeezed candidates.
UPDATE 2:24pm EST: stxinon challenged the fact that the McClellan was overbought previously, so that might not mean much. The more longer term NYSE Bullish Percent Index appears to support his argument:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_bpnya.png
The way I’m reading this one however is in the context of the entire (A) push inside Primary {2} of c. I believe (and there’s an emphasis on believe - I do not know for sure) that we might find ourselves at the 60+ level once we complete Intermediate (A), and this gives us about the right amount space to complete this motive, assuming that we’ll probably drop into 2 first and then get close to the max once we finish 3 of (A).
Hope this makes sense - but as I keep saying: I don’t have a crystal ball either and this is a very fluid environment.
UPDATE 2:37pm EDT: Mr. Waffle just announced that he’ll short Gold right here:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_gold.png
Now, with all due respect - I think that might not be one of his best ideas (as a matter of fact we already retraced quite a bit since he posted). See how we snapped back to that ing diagonal again? Yes, it shall be known as the ‘ing diagonal’ henceforth - LOL. I need to see a close below this damn line and then I’ll grab GLD or whatever on a retest which we’ll most likely see. Gold is a bitch to trade - especially in the past six months. So, you’ve got to have the odds on your side, othewise it’ll whipsaw you to pieces. Sometimes you get lucky - yeah - but more often than not selling the dip is just asking for punishment, which the precious metal will be happy to administer post haste.
UPDATE 3:15pm EDT: Rats - I need to pay hosting fees - you know what that means… BTW, nice drop so far and my puts are liking it. But we’ve got 45 minutes to go and I won’t get over excited unless we see a follow through - plenty of time to get a whipsaw back up. I will hold those puts either way.
UPDATE 3:34pm EDT: Lester’s new resolution just made it as the quote of the day:
I will never trade long again! – Lester, dismayed owner of IWM calls.
Snort!! http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
UPDATE 3:38pm EDT: Here we go:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_channel.png
As expected the buyers are stepping in after 3:30pm EDT - so far it’s been feeble. Observe the first attempt to breach today’s short term channel (2min chart). I think if we clear this one we put holders might see some of today’s profits melt away.
UPDATE 3:48pm EDT: Breadth numbers:
[*]SPX: 2.1:1 declining[*]NDX: 3.5:1 declining[*]DJI: 2.3:1 declining[*]Russel 2k: 4.1:1 decliningUPDATE 3:58pm EDT: SPX breadth now 4:1 declining - nice http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
I Know What You Are ThinkingMarch 24th, 2009 10:37 am Intraday Update 116 Comments
UPDATE 11:25am EDT: As usual when presented with two possible option (close gap or gap down) the market chose the one that screwed the most people:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_pattern.png
Let’s just observer the irrational exuberance exhibited towards the close yesterday. Which was of course followed up by a nice gap down, shaking out the mouth breathers. Which then was followed by a counter fake to the upside, and now we’ll probably get more head bobbing than an Amsterdam streetwalker after midnight.
I know what you are thinking:
We are heavily overbought and need to consolidate. But then again - the tape has been relentless in the past two weeks. How do I know this is when it finally breaks into 2 to the downside?
Rats - I feel your pain but there’s really no reliable way of knowing - no matter what anyone tells you. And taking short positions must be especially tough psychologically if you have been burned most recently betting on the downside. The best reasoning I can suggest you guys is that every day the market pushes up the more likely it is that we’ll get our eagerly anticipated consolidation. Simple law of probabilities.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_nymo.png
Mr. NYMO is in heavily overbought territory and that in part also gives me a certain level of confidence to start taking on short positions right here.
There is a certain Zen pilosophy to trading the markets. You have to know when to stay out. But you also have to know when to strke. How the hell do you know? Well, often you don’t - but the best you can do is to not trade when the tape does not ‘feel right’ and when the odds seem to be stacked against you. Which is what I have been suggesting most recently - again, in my world capital preservation is my primary directive. However, there comes the time when you must let reason and not fear guide your trading.
Right now today I see a market that’s been rallying 156 SPX points (24%) in roughly two weeks. The ‘odds’ are on the short side, but of course that doesn’t mean we cannot bust higher. So, what do we do? We pick rips to sell short positions (or buy puts) and we know where our line in the sand is. That’s pretty much it - you have been briefed.
UPDATE 11:54am EDT: Chrys and Mickmock suggested in the previous thread that there still may a case to be made for a medium term bearish scenario. The underlying idea is that we may be in an ending diagonal as outlined in 37:2 in our bible:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-24_ending.png
It’s a theoretical possibility - yes. But here’s one big strike against it. In psalm 88:2 Cain spoke to Abel:
In the contracting variety, wave 3 is always shorter than wave 1, wave 4 is always shorter than wave 2, and wave 5 is always shoerter than wave 3.
I know what you’re thinking http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif Maybe it’s not an ending contracting diagonal - but frankly - although we can count waves ’till the cows come home the question arises as to how realistic this count is. The latest push up IMNSHO is very bullish and the breadth numbers confirm that. So, forgive me if I don’t offer this scenario as one of my top contenders - as of today the probabilities are not in its favor.
That said - it’s not impossible of course and a push below 700 would give this additional credence. Yes, that would be a tad late, but at this point we are either in the late stages of Primary {1} and most likely in the beginning stages of Primary {2}, and these transition periods are always a bit tough on us Elliotticians - as many possibilities are on the table until certain resistance/support zones have been breached.
http://evilspeculator.com/wp-content/themes/web-20-100/images/evil_header.png
[*]Home[*]evil[*]about[*]zero [*]Zero Tutorial[*]Where
Nine Little PiggiesMarch 23rd, 2009 7:42 pm Market Forecasts 207 Comments
I’ve been working almost non-stop since Saturday morning and quite frankly, I’m exhausted. However, I can’t have my rats linger in utter confusion or ignorance, so here’s an update on the wave count:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_spx.png
I’m counting nine little piggies to the upside - making this most likely a motive count. As if today’s breadth would leave very little doubt about that - advancing issues led declining by a ratio of 10:1 - it was even higher intra-day.
The Friday low is too meager to be counted as {ii} of (A), plus the motive wave looks a lot cleaner now. Thus it seems very likely that we completed a monster {i} of (A) of {2} today if you favor the orange count - or a {i} of C of (4) of {1} if you’re feeling the blues.
We’re dropping in the ES futures right now but I’d almost be disappointed if we didn’t complete filling the tap I marked on the chart. At that point I’d feel pretty comfortable loading up on some puts as I think we’re due for a retracement to about 765, the 38.2% fib line. My line in the sand would be the 835 zone - if we get there that.
Well, by now we all know how the game is being played. Either we fill the gap at the open or, depending on the hype overnight, we gap lower and would then have to find a good spot to go short. It’s been very tough doing that lately as the whole ing game is rigged. If you dip into this market make sure you come with the expectation that your resolve will be tested - it’s probably best if you can afford to lose your entire premium and not lose any sleep over it.
Judging by some of the comments I think today was very educational to a bunch of rats here. The learning experience is that doubling down on a bad trade does not work. And maybe this also teaches those guys among you a lesson who last week were convinced that there is ‘no way this market could pop any higher’. Now you guys know why I operate very cautiously in this environment - what helps matters is that I don’t have a gambling bone in my body.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_gold.png
Okay, remember when I posted happily about Gold finally having breached that diagonal? Well, I was a bit too forward as we never closed below it - as a matter of fact last Wednesday we dropped below and then snapped right back, finishing right around support.
This bothers me.
See, until I see a ‘close’ below that trendline we are still officially in an uptrend. Some of you did a great job daytrading the precious metal today but I hope you guys got out because I start having the feeling that we’re starting to climb up that line again. We have been at this convergence zone for about two weeks and just looking at this I onl see a lot of whipsaw - it’s not breaking. So, as a technician I can draw tons of lines and fibs all over the place and talk myself into reason why a short position is justifyable. But all that means nothing until we officially bust through this ing diagonal - not dip below it and recover right away. Close below it and hopefully with some confidence. Then maybe push back up for a re-test - at which point I would feel comfortable dipping into short positions again. For now however I’m staying out despite the fact that my stochastics and MACD are pointing downwards.
Alright, that’s all for tonight - you’ve been briefed - so, now go out there and find me some kick ass puts for tomorrow http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
I leave you with this:
UPDATE 12:00am EDT: Go here for a nice summary of what’s been going through my head as well in the past week or so.
Monday Wrap UpMarch 23rd, 2009 3:24 pm EOD Wrap Up, zero 58 Comments
Today we saw some extremely strange readings on the Zero Lite:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_zero.png
In the early morning we got a monster signal but it started to degrade right after the first candle. I saw some divergences develop and tried three times to short the tape - I was lucky to get the timing right and got out with some small gains as we dropped a few points - factoring in the first two attempts I ended up modestly profitable. After that I left for breakfast and when I came back I saw the tape had pushed even higher, which was extremely strange. And that’s the theme we saw for the rest of the day - Zero Lite stayed more or less flat - especially compared with that early morning signal.
Some of the subscribers were wondering why the Zero didn’t like this rally. Pretty simple - it did like it this morning when we got those huge readings but after that the tape went ‘thin’. What do I mean by ‘thin’? Lack of participation - meaning the small specs at this point are driving the tape up, the big boys had their fun in the morning and are now waiting on the sidelines. There is something else going on though and it has to do with human perception. When we got that huge spike this morning it thwarted everything else we had seen in the past week or two, thus the indicator got scaled accordingly. After that all of our Zero Lite readings looked tiny. Now if we cut off the morning spike this is what our chart looks like:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_zero2.png
So, I guess human perception does play a role here and we should not forget that indicators should be digested with some healthy amount of relativism. That said however - it still is quite a strong rally for such weak tape and I won’t debate that. I for one am glad that I stayed out for most of today as I’m not the gambling type.
If you took the early morning ETA/VTA and stuck it out then congrats to you. This obviously was a good day for the Primary Zero as the signal never even hit the zero mark until the closing bell - nice. The Lite didn’t know what to think of it and I wouldn’t be surprised to see a large pullback looming. Nevertheless, I would not recommend loading up on puts unless we see a clearer signal.
Cheers,
Mole
Please Bend OverMarch 23rd, 2009 10:29 am EOD Wrap Up, zero 211 Comments
UPDATE 11:22am EST: I’m usually not one to bring up non-trading subjects during the trading day but this really riles me:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_reality.png
I mean, have we lost any sense of reality? This is not ing Duke Nukem where you can just press the reset button and you get a new lease on life. Where do you think those assets are going to be ‘disposed’ of? Exactly right - to you Mr. Sixpack tax payer via the Fed printing money like there’s no tomorrow. They’re not even buying/selling repos anymore - no, this shit is now going on behind the scenes and out of (over)sight.
Anyway, nothing we can do anyway - I’m not going to raise a battle cry for civic action as this shit never seems to lead anywhere anyway. I for one learned from the fable of Don Quixote. We’re stainless steel rats after all and our primary means for vengeance is to do what we’ve been doing in the past year: Hit them where it hurts by out-trading their greedy dumb asses.
While I’m on that subject - the Zero Lite sensed a strong ‘divergence in the force’ this morning and I have been selling ES contracts right around the top. Got in/out three times and it seems three times is a charm http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
UPDATE 12:48pm EDT: I come back from breakfast and we beached the Wednesday high of 803.24:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_eleven.png
I just counted the waves again and IMNSHO the latest retracement is too large to count is as part of an eleven wave consolidation (which would be bearish). So, there’s a good chance we are already in 3 of (A) of {2} - or {iii} of C of (4) of {1}. Frankly, I’m a bit surprised that we rallied up this high and if this winds up being confirmed it kind of sucks as well since none of us really got a chance to buy the dip.
There is a chance that we are painting an expanded or running flat, but we’ll only know for sure in retrospective. The argument for that may be the sudden lack of participation I’m seeing right now. It’s gone from huge to almost flat in the past three hours - very strange.
UPDATE 2:14pm EDT: Okay, this is what happened this morning. The folks on the inside were all tipped off on Friday or even before that. They all swooped in this morning (or overnight) in a classic drive-by buying frenzy triggering a seismic shock on the Zero and several other momentum indicators. A few hours later we’re basically completely flatlining (hope I don’t give too much away to non-subscribers but it’s been three hours, so I guess it’s okay) and there is only the ole’ chop chop chop on basically zero participation. My tip to you rats:
STAY THEOUT!
I know - I seem to say that a lot lately…. but my primary tenet is capital preservation and what I’m seeing lately is dangerous tape. The only way to get in is to position yourself at defensible positions - and that is my primary directive.
UPDATE 3:02pm EDT: I was bored out of my mind and thus went slummin’ over at Mr. Fly’s place. I have to say - I don’t agree with him very often but his latest post is spot on:
The King and all of his men have promised to bestow gifts of leavened bread and sea urchins on us regular folk. They give us 401k plan balance increases, by way of trying to cause inflation. If you think about it, it’s a ing odd sort of monetary policy, one that everyone seems to be clamoring. They have programmed us into believing “inflation is good,” while “deflation will make you die.”
Who made that shit up?
Last I checked, I like when prices drop. After all, I’ve got money in the bank and spare change in my ing pockets. The last thing I want is to see the value of my savings deteriorate via gangsterism induced inflation.
Well spoken, Mr. Fly. I can’t get over how these cats on bubble vision actually have the balls to suggest to us that inflation is a good thing. GREAT - your money is worth jack shit and will be worth even less when we’re done with you. Now shut theup and bend over while I ram another tax suppository up your sphincter.
A brave new world indeed. And yes, I’m in a crappy mood today - once I post the Zero wrap up you’ll know why. BTW, it’s not because I’m losing money - I was actually doing well swing trading this morning. Now, I’m 100% cash as I was on Friday night.
UPDATE 3:16pm EDT: I just checked the breadth on the SPX and it’s 491:5 - wow!NDX is 93:2, and DJI is 30:0. This is as bullish as it gets folks…
UPDATE 3:35pm EDT: 30 more minutes to go - this should be very interesting. BTW, check out Karl’s latest treat on how we taxpayers are going to be gang raped via the ‘bad bank’ scheme.
TRIN Gone Horribly Wrong!March 23rd, 2009 8:57 am Market Forecasts 69 Comments
UPDATE 9:53am EDT: Right at the open I get smacked with this TOS alert:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_trin.png
That is either a glitch or the strongest intra-day TRIN we’ve seen for years. The highest previous reading was on September 8th, 2008. I’m going to check on my other platforms as well - can you guys do the same on yours?
UPDATE 10:13am EDT: The market this morning with Bernanke and Geithner at the helm:
http://evilspeculator.com/wp-content/uploads/2009/03/astronaut.jpg
UPDATE 10:17pm EST: Ladies and leeches - the way I’m looking at this we’re pushing dangerously close to the Wednesday highs. God possibilities we are already in Minor 3 of Intermediate (A) of Primary {2}. Judging by Friday evening’s P/C ratio a lot of bear balls got squeezed like lemons this morning.
UPDATE 10:48am EDT: I know big Tim already posted this but I implore you to read this Rolling Stone article. It also brought up the fact that there are no more repos happening since the end of 08 - the Fed is basically providing massive liquidity behind the scenes.
Post Dramatic Bear DisorderMarch 22nd, 2009 6:03 pm Market Forecasts 85 Comments
I’ve spent a good portion of my Sunday spiffing up the Zero tutorial, which admittedly was long overdue. So, please forgive me if this forecast will be more or less of the bear bare bones variety. Let’s get right to our charts:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_bullish.png
A lot of folks believe that 5 of (5) of {1} is still in play but I’m not buying it (or selling it for that matter). Maybe some of you guys are suffering from post dramatic bear disorder - you’ve gotten so used to playing the short side that going long feels almost unnatural. Well, I feel you rats but if we weigh the evidence, which I don’t have the time to list in painful detail then we have to consider the fact that:
[*]The wave up starting on March 9th looks very motive.[*]The NDX and COMPQ breached their prior Minor wave 1.[*]Market sentiment was clearly bullish in the past two trading weeks.[*]We kept pushing upwards despite heavily overbought conditions.http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_spx.png
All this suggests to me that the probabilities currently favor the Primary wave {2} scenario. What would change my mind is a drop through 700 and below, in which case I might concede the probability that we may see a push below our March 9th low of 666.79. But until that happens let’s take a wait and see approach. For the record, that’s a number befitting Evil Speculator - LOL http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
So, as of tonight the assumption remains that we are in either:
Green: Minor 2 of Intermediate (A) of Primary {2} - a pro-regressive wave (see our bible psalm 56:3). This is my primary count as this point.
Blue: Minute {ii} of Minor C of Intermediate (4) of Primary {1} - a large flat. For now this remains my secondary count.
Both scenarios suggest that the medium term trend is a zigzag to the downside, followed by a continuation of the larger degree trend to the upside. Shown on the chart above are two short term paths - one in blue and one in orange. We painted a tiny double bottom on the 5-min chart on Friday afternoon, which was accompanied by a divergence suggested by the Zero Lite. So, there is a possibility - but not a necessity - that we push up on Monday and then follow through to the downside on Tuesday - as indicated by the blue lines. Or we might trace out the reverse scenario - as indicated by the orange lines. Either way I expect to see a zigzag to the downside as my current wave count suggests that the main trend is to the upside.
Target for the bottom of this zigzag is the 740 - 750 region, but it’s not impossible to see us touch the 61.8% fib line sometime next week. I would however not want to see us push much below that - as this would put additional (short term bearish) scenarios back on the table.
The spread between the 30-year T-Bond yield ($TYX) and the Moody’s BAA Corporate Bond yield was roughly around -4.75 Friday, so it has not increased by any measure but it also has not narrowed by much as the prior reading was -4.8. Let’s bear in mind that this is a more longer term supporting indicator, so a narrowing might not kick in until a bit later. I also attribute this to the confused state of the bond market right now - and it might be time to put this one to the sidelines for a while.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_dollar.png
The Dollar has snapped back a bit from its Bernanke induced slip off the plate. At this point there’s stil a possibility we’ll see it continue its prior rally but we need to hang on to Thursday’s low.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_gold.png
I’m glad I cut my GLD puts on Wednesday afternoon as we saw a strong retracement to the 61.8% fib line around the 960 level. Depending on where I find the ticker on Monday morning I might actually dip back into puts here. We should not push much past the Thursday high - if we do breach 980 it might question our current wave count and thus the short term bearish scenario.
Until we see evidence to the contrary the trend now is to the upside, which will be the focus of my trading activity for the coming weeks and months. I also plan on proposing some lucrative (and insanely devious) option spread strategies as the name of the game is to not get hit by a drop in option vega which can strip away much of your profit potential. So even if we are correct in timing a market bottom, there may be little to no gain from a big reversal move following the sell-off we’ve seen in recent weeks. As volatility slowly diminishes the premium of call options are negatively affected despite price moving in the right direction. There are ways around it and we’ll touch on that in the coming days as we are nearing a bottom of Minor 2 of (A) of {2}.
Finally, I will soon be making a very exciting announcement regarding the directed trading service I been polling about. I don’t want to give away anything prematurely but I think you guys are going to love what I have in the works as it’s something many of you have been asking for. In the past few weeks I have been secretly working on this in the murky depths of my evil lair but am getting very close to being able to share some details and charts with you rats. I personally believe that this addresses the wishes and needs of a large part of this community and therefore I personally cannot wait to pull back the curtain and let you see what’s in store. Give me a few more days to put together a page that explains everything in excrutiating detail.
Rats - that’s all I have in me tonight - have been working since shortly after breakfast and it’s almost dinner time. I’ll be sure to chime in tomorrow as the tape unfolds.
Friday Wrap UpMarch 20th, 2009 3:17 pm EOD Wrap Up, zero 161 Comments
Hell week ended in style - with one last whipsaw just to say goodbye in style:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-20_zero.png
Okay, before you complain about the short VTA - I told all subscribers today to stay the heck out and to forget about the Zero Grande (left side). The name of the game was to follow the Zero Lite since we expected a whipsaw day. I also told subscribers to not touch the tape unless we saw a strong signal, which we started to get around 1:30pm EDT, after the market had dropped for a while already.
I personally did not jump in at that point but when Zero Lite started to point up and form a divergence I shot out a message highlighting the fact that we might be forming a bottom. Based on the responses I received anyone left trading today headed for the exits, which was great because it turned out to be today’s bottom.
Watching the tape and the signal line afterward it was easy to believe that we might see a rally into the close. However, we suddenly ran out of steam and Zero Lite started to point downward, which surprised me. It quickly started to make sense however as we never really pushed away above the Zero line, which suggested that this was only a head fake. And sure enough - sellers closed the market today and we ended up pointing downward on both price and Zero signals.
If you observe the Zero Grande you’ll notice that it’s touching its zero line right now. I would however not put much stock into that as this was the last day of OPEX week and there was very little participation. Almost anyone worth their salt took today off - makes me wonder what I’m doing here typing this http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Alright - I’m outta here - I’m in desperate need of some R & R. Again, in case you missed it: I will be checking in on Sunday but it’ll be a very short one as I promised my subscribers to polish up the damn Zero tutorial. They are sooo high maintenance, you have no idea!! (j/k)
Cheers!
Mole
P.S.: FINALLY I see some ThinkOrSwim ads over here. Glad to see an advertiser whose product I can full heartedly support http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif Hey, it took ‘em long enough…
« Older Entries
Newer Entries »
Please Bend OverMarch 23rd, 2009 10:29 am EOD Wrap Up, zero 211 Comments
UPDATE 11:22am EST: I’m usually not one to bring up non-trading subjects during the trading day but this really riles me:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_reality.png
I mean, have we lost any sense of reality? This is not ing Duke Nukem where you can just press the reset button and you get a new lease on life. Where do you think those assets are going to be ‘disposed’ of? Exactly right - to you Mr. Sixpack tax payer via the Fed printing money like there’s no tomorrow. They’re not even buying/selling repos anymore - no, this shit is now going on behind the scenes and out of (over)sight.
Anyway, nothing we can do anyway - I’m not going to raise a battle cry for civic action as this shit never seems to lead anywhere anyway. I for one learned from the fable of Don Quixote. We’re stainless steel rats after all and our primary means for vengeance is to do what we’ve been doing in the past year: Hit them where it hurts by out-trading their greedy dumb asses.
While I’m on that subject - the Zero Lite sensed a strong ‘divergence in the force’ this morning and I have been selling ES contracts right around the top. Got in/out three times and it seems three times is a charm http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
UPDATE 12:48pm EDT: I come back from breakfast and we beached the Wednesday high of 803.24:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_eleven.png
I just counted the waves again and IMNSHO the latest retracement is too large to count is as part of an eleven wave consolidation (which would be bearish). So, there’s a good chance we are already in 3 of (A) of {2} - or {iii} of C of (4) of {1}. Frankly, I’m a bit surprised that we rallied up this high and if this winds up being confirmed it kind of sucks as well since none of us really got a chance to buy the dip.
There is a chance that we are painting an expanded or running flat, but we’ll only know for sure in retrospective. The argument for that may be the sudden lack of participation I’m seeing right now. It’s gone from huge to almost flat in the past three hours - very strange.
UPDATE 2:14pm EDT: Okay, this is what happened this morning. The folks on the inside were all tipped off on Friday or even before that. They all swooped in this morning (or overnight) in a classic drive-by buying frenzy triggering a seismic shock on the Zero and several other momentum indicators. A few hours later we’re basically completely flatlining (hope I don’t give too much away to non-subscribers but it’s been three hours, so I guess it’s okay) and there is only the ole’ chop chop chop on basically zero participation. My tip to you rats:
STAY THEOUT!
I know - I seem to say that a lot lately…. but my primary tenet is capital preservation and what I’m seeing lately is dangerous tape. The only way to get in is to position yourself at defensible positions - and that is my primary directive.
UPDATE 3:02pm EDT: I was bored out of my mind and thus went slummin’ over at Mr. Fly’s place. I have to say - I don’t agree with him very often but
The King and all of his men have promised to bestow gifts of leavened bread and sea urchins on us regular folk. They give us 401k plan balance increases, by way of trying to cause inflation. If you think about it, it’s a ing odd sort of monetary policy, one that everyone seems to be clamoring. They have programmed us into believing “inflation is good,” while “deflation will make you die.”
Who made that shit up?
Last I checked, I like when prices drop. After all, I’ve got money in the bank and spare change in my ing pockets. The last thing I want is to see the value of my savings deteriorate via gangsterism induced inflation.
Well spoken, Mr. Fly. I can’t get over how these cats on bubble vision actually have the balls to suggest to us that inflation is a good thing. GREAT - your money is worth jack shit and will be worth even less when we’re done with you. Now shut theup and bend over while I ram another tax suppository up your sphincter.
A brave new world indeed. And yes, I’m in a crappy mood today - once I post the Zero wrap up you’ll know why. BTW, it’s not because I’m losing money - I was actually doing well swing trading this morning. Now, I’m 100% cash as I was on Friday night.
UPDATE 3:16pm EDT: I just checked the breadth on the SPX and it’s 491:5 - wow!NDX is 93:2, and DJI is 30:0. This is as bullish as it gets folks…
UPDATE 3:35pm EDT: 30 more minutes to go - this should be very interesting. BTW, check out on how we taxpayers are going to be gang raped via the ‘bad bank’ scheme.
TRIN Gone Horribly Wrong!March 23rd, 2009 8:57 am Market Forecasts 69 Comments
UPDATE 9:53am EDT: Right at the open I get smacked with this TOS alert:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-23_trin.png
That is either a glitch or the strongest intra-day TRIN we’ve seen for years. The highest previous reading was on September 8th, 2008. I’m going to check on my other platforms as well - can you guys do the same on yours?
UPDATE 10:13am EDT: The market this morning with Bernanke and Geithner at the helm:
http://evilspeculator.com/wp-content/uploads/2009/03/astronaut.jpg
UPDATE 10:17pm EST: Ladies and leeches - the way I’m looking at this we’re pushing dangerously close to the Wednesday highs. God possibilities we are already in Minor 3 of Intermediate (A) of Primary {2}. Judging by Friday evening’s P/C ratio a lot of bear balls got squeezed like lemons this morning.
UPDATE 10:48am EDT: I know big Tim already posted this but I implore you to read this . It also brought up the fact that there are no more repos happening since the end of 08 - the Fed is basically providing massive liquidity behind the scenes.
Post Dramatic Bear DisorderMarch 22nd, 2009 6:03 pm Market Forecasts 85 Comments
I’ve spent a good portion of my Sunday spiffing up the Zero tutorial, which admittedly was long overdue. So, please forgive me if this forecast will be more or less of the bear bare bones variety. Let’s get right to our charts:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_bullish.png
A lot of folks believe that 5 of (5) of {1} is still in play but I’m not buying it (or selling it for that matter). Maybe some of you guys are suffering from post dramatic bear disorder - you’ve gotten so used to playing the short side that going long feels almost unnatural. Well, I feel you rats but if we weigh the evidence, which I don’t have the time to list in painful detail then we have to consider the fact that:
[*]The wave up starting on March 9th looks very motive.[*]The NDX and COMPQ breached their prior Minor wave 1.[*]Market sentiment was clearly bullish in the past two trading weeks.[*]We kept pushing upwards despite heavily overbought conditions.http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_spx.png
All this suggests to me that the probabilities currently favor the Primary wave {2} scenario. What would change my mind is a drop through 700 and below, in which case I might concede the probability that we may see a push below our March 9th low of 666.79. But until that happens let’s take a wait and see approach. For the record, that’s a number befitting Evil Speculator - LOL http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
So, as of tonight the assumption remains that we are in either:
Green: Minor 2 of Intermediate (A) of Primary {2} - a pro-regressive wave (seepsalm 56:3). This is my primary count as this point.
Blue: Minute {ii} of Minor C of Intermediate (4) of Primary {1} - a large flat. For now this remains my secondary count.
Both scenarios suggest that the medium term trend is a zigzag to the downside, followed by a continuation of the larger degree trend to the upside. Shown on the chart above are two short term paths - one in blue and one in orange. We painted a tiny double bottom on the 5-min chart on Friday afternoon, which was accompanied by a divergence suggested by the Zero Lite. So, there is a possibility - but not a necessity - that we push up on Monday and then follow through to the downside on Tuesday - as indicated by the blue lines. Or we might trace out the reverse scenario - as indicated by the orange lines. Either way I expect to see a zigzag to the downside as my current wave count suggests that the main trend is to the upside.
Target for the bottom of this zigzag is the 740 - 750 region, but it’s not impossible to see us touch the 61.8% fib line sometime next week. I would however not want to see us push much below that - as this would put additional (short term bearish) scenarios back on the table.
The spread between the 30-year T-Bond yield ($TYX) and the Moody’s BAA Corporate Bond yield was roughly around -4.75 Friday, so it has not increased by any measure but it also has not narrowed by much as the prior reading was -4.8. Let’s bear in mind that this is a more longer term supporting indicator, so a narrowing might not kick in until a bit later. I also attribute this to the confused state of the bond market right now - and it might be time to put this one to the sidelines for a while.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_dollar.png
The Dollar has snapped back a bit from its Bernanke induced slip off the plate. At this point there’s stil a possibility we’ll see it continue its prior rally but we need to hang on to Thursday’s low.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-22_gold.png
I’m glad I cut my GLD puts on Wednesday afternoon as we saw a strong retracement to the 61.8% fib line around the 960 level. Depending on where I find the ticker on Monday morning I might actually dip back into puts here. We should not push much past the Thursday high - if we do breach 980 it might question our current wave count and thus the short term bearish scenario.
Until we see evidence to the contrary the trend now is to the upside, which will be the focus of my trading activity for the coming weeks and months. I also plan on proposing some lucrative (and insanely devious) option spread strategies as the name of the game is to not get hit by a drop in option vega which can strip away much of your profit potential. So even if we are correct in timing a market bottom, there may be little to no gain from a big reversal move following the sell-off we’ve seen in recent weeks. As volatility slowly diminishes the premium of call options are negatively affected despite price moving in the right direction. There are ways around it and we’ll touch on that in the coming days as we are nearing a bottom of Minor 2 of (A) of {2}.
Finally, I will soon be making a very exciting announcement regarding the directed trading service I been polling about. I don’t want to give away anything prematurely but I think you guys are going to love what I have in the works as it’s something many of you have been asking for. In the past few weeks I have been secretly working on this in the murky depths of my evil lair but am getting very close to being able to share some details and charts with you rats. I personally believe that this addresses the wishes and needs of a large part of this community and therefore I personally cannot wait to pull back the curtain and let you see what’s in store. Give me a few more days to put together a page that explains everything in excrutiating detail.
Rats - that’s all I have in me tonight - have been working since shortly after breakfast and it’s almost dinner time. I’ll be sure to chime in tomorrow as the tape unfolds.
Friday Wrap UpMarch 20th, 2009 3:17 pm EOD Wrap Up, zero 161 Comments
Hell week ended in style - with one last whipsaw just to say goodbye in style:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-20_zero.png
Okay, before you complain about the short VTA - I told all subscribers today to stay the heck out and to forget about the Zero Grande (left side). The name of the game was to follow the Zero Lite since we expected a whipsaw day. I also told subscribers to not touch the tape unless we saw a strong signal, which we started to get around 1:30pm EDT, after the market had dropped for a while already.
I personally did not jump in at that point but when Zero Lite started to point up and form a divergence I shot out a message highlighting the fact that we might be forming a bottom. Based on the responses I received anyone left trading today headed for the exits, which was great because it turned out to be today’s bottom.
Watching the tape and the signal line afterward it was easy to believe that we might see a rally into the close. However, we suddenly ran out of steam and Zero Lite started to point downward, which surprised me. It quickly started to make sense however as we never really pushed away above the Zero line, which suggested that this was only a head fake. And sure enough - sellers closed the market today and we ended up pointing downward on both price and Zero signals.
If you observe the Zero Grande you’ll notice that it’s touching its zero line right now. I would however not put much stock into that as this was the last day of OPEX week and there was very little participation. Almost anyone worth their salt took today off - makes me wonder what I’m doing here typing this http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Alright - I’m outta here - I’m in desperate need of some R & R. Again, in case you missed it: I will be checking in on Sunday but it’ll be a very short one as I promised my subscribers to polish up the damn Zero tutorial. They are sooo high maintenance, you have no idea!! (j/k)
Cheers!
Mole
P.S.: FINALLY I see some ThinkOrSwim ads over here. Glad to see an advertiser whose product I can full heartedly support http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif Hey, it took ‘em long enough…
« Older Entries
Newer Entries »
Witches GatheringMarch 20th, 2009 10:00 am Intraday Update View Comments
UPDATE 10:49am EDT: It’s real busy in the evil lair this morning as it’s quadruple witching day (a.k.a. quadruple options expiry). Every third Friday of March, June, September and December, when the moon is perfectly aligned all of our four food groups - index futures, options on index futures, single stock futures, and stock options all expire together. A truly devious occasion during which female market makers celebrate their black arts by boiling rats like you and me into a thick whipped stew of at low flame. Here’s a live shot from our ‘evil lair web cam’:
http://evilspeculator.com/wp-content/uploads/2009/03/witches.jpg
I think Helga added too much crunchy frog again - every freakin’ year the same.. But between you and I - she’s wearing a hot red Victoria’s Secret outfit underneath those ragged threads. Yummmieee….
Seriously now - I’m not touching this market with a ten foot pole wearing a HAZMAT suit. Instead I’ll start working on some charts for your weekend consumption. Here’s a little public service announcement: I have promised my subscribers to finally polish up the Zero tutorial over the weekend, so the Sunday forecast will be very short and sweet this time around. But I’ll put something together, and will of course follow up with charts on Monday.
UPDATE 11:37am EDT: Was about to grab breakfast (see stew above), but needed to show you rats this:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-20_wedge.png
This observation was brought upon by someone commenting that ‘we are finally back to where we were before Bernanke’s shenanegans’. Yes, but look at this pattern. I could be wrong but it’s looking like a falling pennant to me, which usually is being interpreted as a bullish pattern. The trendlines of this pattern converge, with both being slanted in a downward direction as the price is trading in a downtrend. Here are some more details for you TA nerds.
As I’ve said - I’m very cautious here - this is not the day to pick a direction. Only play the swings and keep your exposure limited.
UPDATE 12:32pm EDT: BalaB put together a nice little video on his ongoing research to correlate the Zero signal with 2sweeties retracement levels:
http://evilspeculator.com/wp-content/plugins/quicktime-embed/ipod.png iPod version (5 MB)
For the record - I’m really stunned about the level of community support I’m seeing lately. People are putting videos together, posting tutorials and input on the forum. Good stuff - we’ve got ourselves a real blog going over here.
UPDATE 1:03pm EST: Want to become a billionaire fast but are too lazy to build an evil empire? Well, do I have a solution for you - move to Zimbabwe!
http://evilspeculator.com/wp-content/uploads/2009/03/billion.png
Hat tip to Duuuuuude for sending me this. BTW, I don’t think it’ll ever get that bad over here in the U.S. but I do believe that we’ll be using 50 Dollar bills to buy cups of coffee sometime in the next decade. No, I am NOT kidding. For the foreseeable future (i.e. the next year or so) I think cash is king and the Dollar should be safe, although we will see some weaking in the coming weeks/months. But at some point down the line the Fed’s quantitative easing policy will start catching up with us. But by that time I expect to have completed renovations at my offshore island of doom - no way I’ll be living in L.A. when hyperinflation hits.
UPDATE 3:42pm EST: Nice - looks like I called the bottom (for now) which Zero subscribers enjoyed as an exit point. Everyone - watch the index puts for pinning action - 78 or 77 seems like a logical target.
Also, believe it or not - this weekend EvilSpeculator will be migrated to an even bigger badder server - old HAL is unable to keep up with the current onslaught. This will however triple my hosting cost - so, make sure you obey.
Cheers,
Mole
Thursday Wrap UpMarch 19th, 2009 3:07 pm EOD Wrap Up, zero View Comments
Boy, that’s was a slow and painful grind - reminds me to make an appointment with Sugar at my Korean massage parlor again.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-19_zero.png
As expected today’s participation was MIA - hence the Zero remained flat as a pancake all day, except for the early morning ride down which I actually took advantage of.Otherwise I pretty much told everyone to stay the hell out - and based on the lack of comments I received from subscribers they actually took me literal and took the whole day off.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-19_spx.png
Okay, this is what I spent the last hour working on - the updated and nicely colored wave count - just like you rats like it. I think it’s pretty much self explanatory as I have provided the count right on the chart. The black line indicates that the path is shared until further notice - which is actually a nice thing.
And no, I will not entertain the 5 of (5) of {1} scenario (Mr. Orange) unless we breach 700 and continue dropping hard. Probabilities point towards that being in the lower 20 percentile at this point - not impossible but questionable. Thus far I’m expecting a slow grind down to 720 - 730, followed by a rally to the upside. Of course I keep you rats posted as things unfold.
See you tomorrow - but I might actually sleep in. Friday should be a bit more interesting than today as it’s quadruple witching day.
UPDATE 11:33pm EDT: Good news folks - I uploaded Waffle’s Zero Lite videos onto to our server, so there should be no problem accessing them:
Waffle’s Adventures 1
Waffle’s Adventures 2
Cheers!
Mole
Slomo Channel BreachMarch 19th, 2009 2:00 pm Intraday Update View Comments
UPDATE 3:00pm EST: Good - only one more hour to go - fortunately I’m keeping myself busy with other chores - this is worse than watching paint dry.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-19_channel.png
Okay, I’m not going to alert the media here but we’re slowly grinding our way out of this up channel. Might be just a throw-under but let’s keep an eye on this as it might be a precursor to a real breach on Monday.
Otherwise it’s been very quiet over here. I don’t even get my usual fill of silly questions from my Zero subscribers. What are you guys doing - taken the day off? Or did you guys all get wiped out in yesterday’s rally?
Listen ladies and leeches - this is the perfect time to start looking for victims we can hop on to once we finish 2 of (A) of {2} - or whatever count we’re in right now. Either way we’re going to consolidate at some point and once we’re ready to pop higher I want to have a top ten list of most excellent long candidates to get my greedy paws on.
Do I have to do everything on my own over here? Let’s get to work, rats - this deafening silence is unacceptable and we should take advantage of this quiet period before the next storm hits.
Chop Till We DropMarch 19th, 2009 10:32 am Intraday Update, zero View Comments
UPDATE 11:24am EDT: I’m about to grab breakfast but wanted to chime in real quick:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-19_chop_zone.png
The meat of the move is obviously done and many bears (and bulls alike most likely) are expecting a nice drop to the downside as we are in demonstrably overbought conditions. Well, that sounds all nice in theory but I can easily imagine a scenario where we just chop around for the next two days until OPEX draws to conclusion. Theta burn is the name of the game but even if you bought ITM March index options hoping to ride the consolidation down with little mini-futures (which is what options turn into when there’s no time value left) you might be out for a burning.
Anyway, maybe I’m too paranoid and we drop like a rock soon, but I wanted to throw it out there. The Zero is pretty flat right now, which always gives me pause. For the occasion I also would like to post Tom Sosnoff’s Ten Golden Rules for Expiration week - make special note of rule number 1:
[*]Look for flat and range-bound markets after Wed. After a large move (usually on hump day - Wednesday), the markets go flat. Reason is that most of the churn is done at the move day. Don’t expect large back-to-back moves. Look for flat and range bound trading.[*]There tends to be a continuation of the major trend. Use pull backs for buying opportunities - use rallies for selling into it. You get buying/selling pressures into the following week. Don’t be a contrarian! If it’s bullish you should be buying dips, if it’s bearish you should be selling rallies.[*]Wed-Fri of expiration week have historically a bias to the buy side. There is an enormous amount of arbitrage going on. It happens to be one of the more bullish times of the months. Most professional traders are very flat during that time - and if for instance they have an open SPX position, it makes them very nervous to have exposure to the upside.[*]It is best to be out of your front-month positions by Wed of expiration week. If you are expecting a certain move and it hasn’t happened by Wed, you want to get whatever salvage value there’s left. Or if you’re in a good position that cost you some money, you don’t want to go into the delta/gamma risk and Wed should be your close day. Don’t get too greedy during expiration week.[*]The Monday after expiration is one of the most liquid trading days of the cycle. It is also the best day to get an option as close as possible to theoretical value, and it’s a great day to get involved if you missed establishing positions the following week. It’s one of the more intense days and everybody is at work. Traders are less at edge. It’s a wonderful day to establish new positions - as there is no front month expiration risk.[*]Stocks and options don’t lie going into expiration week. For whatever reason stocks that are strong tend to stay strong. Strong stocks stay strong, weak stocks stay weak. Usually the market is very fairly priced.[*]April tends to be a bullish month around expirations. March, which has the ‘triple witching’, tends to be a little flat. You have a triple witching cycle which is March, June, September, and December (3/6/9/12). The months following (1/4/7/10) have a historical bias to the upside.[*]Be strike-price aware! Remember that options have a tendency to go to the number that hurts the most people, which is a strike. TOS calls it pin-risk. Over time, certain stocks have a tendency to go the next strike price. Even indices have a tendencies to go to their nearest strike.[*]Close ATM positions prior to expiration. Your target spot is your at-the-money strike for at least half your positions no later than Wednesday. The expected move in the following days will take you away from your sweet-spot price. Again, don’t be greedy - we all know what happens to pigs![*]Familiarize yourself with the 4 major futures food groups. Look at the Russel 2000, Nasdaq and the Dow - a strong index will stay strong, and a weak index will be weak. You have to watch what pushes the markets: /ES, /NQ, /YM, /ER2, SPX, NDX, VIXUPDATE 2:14pm EDT: I have been a bit quiet in the past two hours as it’s a boring day and I am taking care of some website related chores. First up I had to add polish up our subscriber agreement - it looks much nicer now. Then I just put an order in for another server upgrade - you leeches are killing me and we already burned through 500 GB worth of bandwidth and the month is only 2/3rds over! Hey, that’s what I get for being an attention whore! http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
I’ll continue to chime in here and there today and tomorrow but don’t expect the usual onslaught of comments - there’s not too much to talk about right now unless I have some kind of epiphany. I might post a more polished version of last night’s charts - if you missed those go here and take a look.
Mole Is An IdiotMarch 19th, 2009 8:43 am Intraday Update View Comments
UPDATE 9:39am EDT: Okay, this is really really tough to watch:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-19_idiot.png
As you guys might remember - I was expecting the Yen to snap back despite many voices to the contrary, so I grabbed some FXY calls early last week. On Tuesday I wound up selling them as I kept looking at the whipsaw and was expecting one big theta burn.
Well, you all know how this story ends: I was punished for being impatient - comes to show that I also screw up every once in a while. Not sure what happened - maybe it was because of the Fed week or . The tape never even got near my stop, so this was all in my head.
Comes to show - when you let your emotions or suspicions get the better of you instant punishment ensues - especially when trading the markets. This stuff rarely happens to me these days but when it does I openly invite ridicule and verbal abuse.
Mole - you are an idiot!
Waffle’s AdventuresMarch 18th, 2009 9:08 pm Market Forecasts, Trade, zero View Comments
One of my favorite rats is Mr. Waffle - he’s been working overtime to make the Zero work for himself and even has gone so far as to post tutorials in the forum.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_waffle.png
Today he seemingly had a kick ass day trading the swings and we all wanted to know how he was able to leverage the Zero Lite. Fortunately for us Mr. Waffle is not just a talented trader but also appears to be technologically savvy as he put together a video of each of his trades today. This is a must watch for all you subscribers and maybe also for you guys thinking about joining:
Click here for Part 1
Click here for Part 2
Quite frankly, I’m not a day/swing trader but watching this I’m considering to throw a few contracts into the mix myself next week, just for shits and giggles. Of course the trick is knowing when we’ll get wider swings like that which is why I am watching the mole as well. When you see the bubble expand and increase in size as it did today you just know you’re going to have some movement. Plus, it was Wednesday of OPEX week, which traditionally is the busiest day. Thursday and Friday are most likely going to be a lot more subdue.
A big up to Mr. Waffle for putting this together - you totally rule, mate!
UPDATE 11:45pm EST: Okay, since I’m a workoholic and just finished updating my charts - here’s a quick preview ahead of tomorrow morning:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_spx_large.png
I am actually looking at two scenarios. Either we are in Primary {2} and thus plotting green or we might be tracing out that old blue scenario I was pimping until the beginning of February - remember that large blue flat?
http://evilspeculator.com/wp-content/uploads/2009/03/2009-02-01_update_spx1.png
That’s where we where when we discarded it after February 1st. We breached through 800 and thus assumed we were in 5 of (5) of {1}. Well, it’s possible that 944 was the peak of A of (4) of {1}, 666 was B, and that we are now in C.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_spx1.png
However, none of that matters for the next few week(s) as the path seems to clearly favor the upside plus even if it’s a flat we’ll get five waves up. Short term we might push up a bit further tomorrow (maybe breaching 804) but sooner than later we’ll start consolidating - a good target would be the 750 range.
Anyway, this is all I have time for tonight - we’ll have plenty of time to digest all this in the coming two days. I expect the tape to be pretty boring.
Cheers,
Mole
Wednesday Wrap UpMarch 18th, 2009 3:08 pm EOD Wrap Up, zero View Comments
Good day for the Zero again - believe it or not - despite the crazy tape:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_zero.png
Early in the morning Zero Lite got us short to ride the sucker drop down. It was pretty clear to me that this wouldn’t last and the sudden rise above zero at 10:50am EDT confirmed that. Since then we’ve been wiggling around but never broke strongly below the zero line. We did test below for a few minutes but it always swung back. Watch the signals explode at 2:15pm EDT at the Fed announcement - boy - I’m glad I wasn’t caught on the short end of the stick for that one.
I did ride the tape down from 800 as that was close to one of today’s RLs and I knew that the MMs would whip us before the close. I was quick to swap positions back to long when we bounced off the upper boundary of the price channel (not shown in this chart - but I’m sure you can see it) and Zero Lite began to point back up. Technically that was a violation because the signal only briefly dropped below zero and snapped back up - well, I’m taking my liberties sometimes (which has backfired - usually I don’t). If you stayed long all the way then you ended up in nice profits, especially since the futures kept crawling up after the close.
Dang, what a crazy day. I need a break now rats - probably will chime in later.
Cheers,
Mole
Narrow ShaveMarch 18th, 2009 2:18 pm Market Forecasts View Comments
UPDATE 3:20pm EST: I’m rotating over here collecting all the data:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_spx.png
Officially we have not breached the 804 mark but I still have my doubts - we are way too close for comfort. I think it is possible to count the wave up to here as an 11 - however, maybe it’s just wishful thinking. Market falling apart right now - wow, what a ride!
UPDATE 3:33pm EST: Before you bears get all excited:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_channel1.png
We are still in that up channel, which started on the 9th and has been relentless since then. Nothing material is going to occur unless we breach this one with confidence.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_cpc.png
Market es loco.
UPDATE 3:47pm EST: Guys - I’m looking at that SPX chart and it really does look like a 9 count to me. Which would be motive. Which would also mean we might retrace here for a day or two but there’s a good chance green is in play. Trade cautiously, folks!
!March 18th, 2009 1:35 pm Intraday Update View Comments
UPDATE 2:33pm EST: Exhibit A:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_gold.png
Exhibit B:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_tyx.png
Exhibit C:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_tnx.png
Exhibit D:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_irx.png
I see most of the activity/compression in the 10-year bond yield. I am not a bond trader but IMHO this could dislocate the bond market.
BTW, go here tomorrow. ing Cramer is on MSNBC right now praising Bernanke - and I quote:
This is the real deal - I can’t believe how good this guys is. In Ben Bernanke I trust!
– Jim Cramer
Okay, this is how I feel about all this:
BTW, for the record: I’m not pissed because I am losing money - I was actually mostly in cash except for DLTR and GLD.
Anyway, watch the 800 level - which we are touching right now in the futures - 805 on the SPX and it’s bye bye for the bearish scenario.
Blue Plate Special Please!March 18th, 2009 10:14 am Intraday Update, zero View Comments
UPDATE 11:10 EDT: Before you rats get too excited about the possibility of the blue scenario playing out - we have not dropped enough to make this a proper count. This is what I would want to see:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_count.png
In the perfect case scenario we would roll over right here and drop a bit more. This isn’t too hard to imagine as it’s hell week and the MMs love whipsaws. 765 seems like a good level for the bounce to the upside. I would greatly appreciate a push upwards into the close, which is probably when I would start selling ES contracts and load up on some puts.
Back over in reality land I will of course monitor the Zero to gauge momentum swings.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_wohoo.png
Good news on the Gold front: We finally dropped throguh that damn diagonal and are below the psychologically sensitive 900 mark. My GLD puts are loving it - wohoo!!!
Finally, exciting news for Zero subscribers - or subscriber wannabes: I got the PayPal auto module working and there’s no more manual authorization required on my part. So, when you subscribe the first time or (hopefully) extend your membership you don’t have to manually go to that PayPal URL anymore - you will be forwarded automatically. Plus the process is a lot easier now - you will be logged in automatically once you complete your payment.
This will also free up a lot of my time - frankly, I have spent over an hour a day at this point manually approving users. The number of subscribers has grown to double of what I expected! I think this can be attributed to the Zero Lite which many day/swing traders seem to enjoy.
Anyway, it’s still a bit rough around the edges, but we’re getting there. I’m trying to figure out where to replace the placeholders for the ’sales terms’ - once I got that entered I’m done fiddling with this beast.
UPDATE 12:21pm EDT: Just came back from breakfast and it looks like I’m not getting what I hoped for:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-18_channel.png
IMNSHO this was not enough of a consolidation - it’s debatable but I would have preferred to see a larger drop. Unless of course you count this as part of the current push up that started yesterday at the open - not quite sure yet.
I have added a little sub channel for your entertainment - seems like we are traversing that one today.
UPDATE 2:15pm EDT: NO CHANGE IN FUNDS RATE - as expected. Also, they’re going to buy the long end of the bond curve - this is going to get ugly…
« Older Entries
Newer Entries »
Cash Is A Position!March 17th, 2009 10:56 pm Market Forecasts View Comments
I’m reading the blog comments tonight and there’s much much confusion and uncertainty in the force. Same situation on some of my favorite blogs - nobody has a clue of what’s ahead - with the single exception perhaps of T.K. who posted a very valuable fib chart.
I myself feel a bit uneasy about the current main trend but am confident that we shall arrive at a conclusion fairly soon. Which brings me back to a simple concept I feel I need to drill into your tiny little skulls just once more. Repeat after me:
CASH IS A POSITION!
Got it? Good! I saw a bunch of messages this afternoon as well as tonight indicating that some people took it up their rectums during today’s tape. For crying out loud - didn’t I implore you guys to sit this one out and to only throw money into the mix you are comfortable losing? But nooooo - just like crack addicts you can’t just stay away - just one more trade - just one more!! Didn’t I list several reasons as to why this week is toxic? Do I have to repeat myself again?
Anyway, for the mentally challenged among you rats - here’s a summary of what I said on Sunday and again repeated today: This is hell week, and there’s no accounting to where the tape will swing. Yes, it’s a regular fur ball and if you must play then use your petty cash and also make sure to sell major rips or to buy deep dips. Anywhere in between you will most likely get shredded by this guy:
http://evilspeculator.com/wp-content/uploads/2009/03/horror1.png
The art of trading is to know when not to trade. Believe me - you will know the second you place a good trade. We don’t trade when we lose our bearings and at the closing bell this afternoon we just introduced another variable to the mix. At this point in time it is impossible to know in which Primary wave we are right now. So, why not wait until we do? There are many signals that point to the downside but the upside is not out of the question either. Sure, it’s possible to make a guess right here and maybe look like genius a few days from now - but you might as well go to Vegas and put your money on black.
I suggest we wait out at least some of tomorrow’s tape and see what we’ll get. If we paint 11 waves and then drop I might actually throw a few bucks into the market. And if we keep pushing lower and then rally hard I might start believing in the long side.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_stochs.png
Here’s a good example of why MACDs or stochastics fall apart in heavily overbought or oversold markets. But the message still remains - we are really overbought here and at some point we’ll see a multi-day drop.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_cpc.png
I think the CPC doesn’t know what to with itself - we’ve got a strange inverse situation happening over there as well. Beats me why it’s pushing up along with the tape now - maybe it didn’t take its meds again, just like last December.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_nymo.png
Final chart for tonight - the NYSE McClellan (a medium term trend indicator) is pushing into extremes - high as a kite I might say. Just a matter of time of when cold turkey sets in.
So, in conclusion - I’m glad I sat this thing out today and yesterday - was only playing with a few ES contracts and otherwise I’ve got three options in the running. But whether or not we’re in Primary {1} or {2} - a correction is on the horizon and most likely soon. I hope we get a nice confluence of signals that shows us that it’s time to pounce - I’m watching the Zero Lite for divergences and signs of weakness in the tape. But whenever that happens - be aware that the market may stay irrational a lot longer than you thought/hoped - so keep your exposure small.
G’night.
Mole
Tuesday Wrap UpMarch 17th, 2009 3:22 pm EOD Wrap Up, zero View Comments
Boy, it doesn’t seem like it when you look at the tape after the fact, but this was a rough day! The Zero did very well, despite all those gyrations but the difficulty was in that we did not have a clear bullish trend confirmation until a minute or two before the closing bell. Otherwise, we might actually would have traded them signals today! http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_zero.png
I tried to play the swings a few times but the tape moved so quickly that I ended up break/even at the end - I think that’s actually not bad considering (I know - paltry excuses galore - LOL - give me a break). But the Zero kept us from being married to the short side right from the get-go: Observe the two long alerts we got, which could have been a great long play. For the record - we did have a false positive very early in the morning (i.e. a short VTA) which then disappeared quickly and was replaced with the long VTA before the candle froze. Up to the closing bell the probabilities had remained with the blue scenario and thus I did not want to grab long contracts and trade ‘against the trend’. Not a big deal - better than being caught on the short side http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
The Zero Lite did its very best to help us negotiate today’s tape. Observe how it only briefly breached below the zero line - heck, that should have told us something - LOL. I started painting those channels for my super rats (i.e. subscribers) as the signal kept wiggling its way upward. Finally, we got a breach below zero which was then followed by a needle to the upside - just before price action kicked in. I was able to get out of my short positions without any damage - Zero Lite saved my behind for sure today.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_spx.png
Generally, the blue scenario is now on par with the green scenario - I’d give it 50/50 at this point. We find ourselves at a very curious situation right now actually. If you are a bear you better pray that we drop a bit and then push higher fairly quickly. We need a count of 11 to turn this into a corrective wave (3, 7, 11 is corrective - 5,9,13,17, etc is motive). So, if we drop further than maybe 760 tomorrow and then bounce back it’s actually a bullish sign and will further strengthen the probability that Mr. Green is in play. Mr. Blue needs to push up a bit further but not too far - 804 must not be breached.
So, this hell week presents us with a new slogan: Up is Down and Down is Up! http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif I sense a great disturbance in the force:
I see you on the other side - keep it clean, rats!
Hell WeekMarch 17th, 2009 1:06 pm Market Forecasts View Comments
UPDATE 2:00pm EDT: Yep, I wasn’t kidding when I promised you the whipsaw of hell - and it even started earlier than I thought. Are you having fun yet? Didn’t think so http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Let it be heard that this shall be known as ‘hell week’ - a fitting name indeed!
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_abc1.png
During expiration weeks (and especially this one) I always expect head fakes and this time around is most likely not an exception. IF we continue to drop from here we can comfortably count this as an a-b-c correction. However, we really need to drop straight down from here - past the ‘good start’ line and then finish below the lower yellow square. Similarly, the bulls will want to see the 161.8% fib taken to the woodshed, which most likely would be followed by a breach of yesterday’s peak.
I had sold some ES contracts earlier but then reverted into cash - I just reloaded around 765 and again will head for the hills (i.e. cash) if we take out today’s highs. So far so good http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
BTW, that drill instructor is me on a good day…
UPDATE 2:45pm EDT: Boy, that is some fugly tape today - not much else to say frankly.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_gold.png
Gold is adding to the fun by diddling around with our diagonal support line. But we are converging and it’ll have to shit or get off the pot. Pardon my french - but it’s driving everyone crazy - bears or bulls alike. Officially we are still in a large scale uptrend until this line is broken - you know the drill. I’m still holding my GLD puts - if you must know.
UPDATE 3:50pm EDT: Okay, ladies and leeches - this is going to be an extremely interesting close. If we breach yesterday’s high then we are painting nine waves to the upside - which is a strong bullish signal and would point towards the green scenario. We might just get close and then turn - but I still don’t like what I see. However, once I get a bullish confirmation I guess I will like what I see http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
BTW, does anyone know what I mean by ‘obey’? It seems that one is getting lost while you rats are scratching your rectums all day.
UPDATE CLOSING BELL: We have nine waves - the only way for this to turn into a corrective is for us to tack on two more - which would get us to 11. Frankly, it is still a plausible scenario but green is starting to look very good right now.
Be Afraid - Be Very Afraid!!March 17th, 2009 9:30 am Intraday Update View Comments
UPDATE: 10:16am EST: Okay, let me attempt to visualize once more the type of tape we are facing in the coming days:
http://evilspeculator.com/wp-content/uploads/2009/03/horror.png
Close enough. BTW, this is an accurate depiction of the average market maker during OPEX week. Whipsaw galore - and if you ever had the pleasure of dipping your foot into the wrong end of a woodchipper then you know how trading this environment feels like.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_chop.png
Welcome to the chop zone from hell - actually, we’re not even in it yet but it’s already starting. Just watch - it’ll get really bad after we pass 749. There’s only two ways to trade this - long term or very short term (i.e. swing or day trading). So, pick your poison or - better yet - stay in cash and wait until we’ve passed this mess. I actually just sold some futures contracts and will hold them all the way through. I would not want to play this with options as I probably would incur theta and freezer burn at the same time.
Seriously now - there are many ways how this can play out. Maybe Minor 4 ended yesterday - maybe we’ll buld a triangle of some sort and maybe we put in an ending diagonal.Who knows - we’re at the end of a Primary wave and anything can happen. If you are new to futures I usually recommend trading the NQ, but looking at the action in the $COMPQ and NDX I am not sure if that’s the right policy - it’s been acting… well…. difficult as of late - almost petulent. So, I’m am playing the ES (S&P e-mini futures) but remain in high alert mode over here. My exit zone is about the 760 area - if we push past something else is probably going on.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_spy.png
I know - I know - this is not a real channel - more like a gentle guide. But it’s worth observing that we are breaking the trend of higher highs and higher lows. I do think that the peak of Minor 4 is in at this point. However, if we consolidate and then breach yesterday’s highs our line in the sand is the 61.8% fib line around the 80 mark in the Spiders.
UPDATE 12:55pm EST: I swear - jing is a turd on OS X - keeps crashing. I have been trying to put this chart together for 10 minutes now:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-17_abc.png
This thing uses up a gig of memory on my system - I need a jing alternative until those wankers finally fix these problems. Anyway, this is looking either like a 3rd wave to me or the end of c. I think we’ll know fairly soon, as we have overshot equality with wave a. Either we drop down hard from here or something else is going on - the conclusion of the latter would most likely be the breach of yesterday’s highs.
So, let’s just see and watch the tape before we jump to conclusions. BTW, what the heck happened to DLTR? It was all going so well yesterday, dropping nicely and minding its own business and today this mofo shoots up like a rocket. I hate these kind of weeks and if it wasn’t for your Zero subscribers I probably would have taken the week off.
Monday Wrap UpMarch 16th, 2009 3:07 pm EOD Wrap Up, zero View Comments
I know I start to sound like a broken record but it’s been a beautiful day for the Zero:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_zero.png
Clean signals all day - on both sides. Zero Grande kept us long in the morning and Zero Lite got us out at the top. Watch those divergences - I wish you guys could have seen some of it as they are hard to convey after the fact. The first arrow on the right side is an example of that - the signal line was already pointing up while the tape was still dropping. Got in there right away and rode it up for a few points. Then we had multiple divergences at the peak - which I think is clear. Finally, we had a divergence when the MMs pushed the tape back to 766 - Zero Lite remainded flat.
It’s been a fun day and I told everyone to take profts at the close as I expect the MMs to push the tape around tomorrow morning. It seems however that the Zero Lite loves expiration weeks as it clearly shows us divergences (which are mostly market maker induced) as they develop. Call it our anti-dote to MM monkey business - mmwwuuaaahhaaahaaaaa!!!
Shop smart - shop Zero-Mart http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
BTW, obey!!
One DownMarch 16th, 2009 2:14 pm Market Forecasts View Comments
UPDATE 3:08pm EST: I wish the rest of you guys would have seen the divergences in the Zero Lite today. I’ll post about it later.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_spx.png
Okay, at this point I’m discarding the Orange scenario - we’ve pushed up way too much for this one to play out IMHO. Probabilities are now pointing to either Mr. Blue or Mr. Green. If you are not already playing this push downwards I recommend to wait for 725ish which is the inflection point.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_gold.png
Not much else to say today - Gold is still driving us bears crazy - keeps bouncing back to the 925 region. It will have to breach 900 at some point, or we won’t go anywhere. There’s also a diagonal support line which now converges around 920 - if we keep climbing it up in the coming days it could turn into a major theta burner.
UPDATE 3:42pm EST: Sell, sell, sell!!! I think at this point the MMs are offering two for the price of one - can’t sell them fast enough - LOL http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
No, it never gets old….
March 16th, 2009 10:35 am Market Forecasts 242 Comments
UPDATE 11:30am EST: As most of you know I did expect a pullback today - not another rally. However, whenever I’m a bit confused I simply start counting waves:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_seven.png
And guess what - I’m clearly counting seven, therefore, according to EWT rules, indicating that this is a corrective, not a motive wave. Quoting again psalm 54:3 of our bible:
Notice that while an impulse wave has a total count of 5, with extensions leading to 9 or 13 waves, and so on, a corrective wave as a count of 3, with combinations leading to 7 or 11 waves.
There you have it - so as strange as this might sound - today’s bullishness might actually be a sign of more bearishness to come. Thus I will watch the Zero and my favorite stochastics/MACD combo to load up on a light amount of index puts fairly soon.
UPDATE 12:20pm EST: Okay, I rarely revise a prior statement but I think this is appropriate. What I had failed to do this morning is to check the action in the COMPQ and it seems we’ve got some alerts flashing:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_compq.png
What I counted as a 1-2 in the SPX might actually be something else, judging by the COMPQ. Also, we breached through its prior 1, which is something that should not have happened in the current count. Now, listen rats - there are times when averages diverge and that’s fine and dandy and can often be ignored as long as the main trend is clear, but we cannot forget the stage we’re at right now.
[*]It’s OPEX week.[*]Volatility will be at max.[*]Quadruple witching this Friday.[*]FOMC meeting on Tuesday and Wednesday.[*]Either end of Primary {1} or onset of Primary {2}.[*]We have a clear divergence in the averages.[*]Unclear count on a minor wave degree at this point - looks like motive until we get a corrective wave.[*]5th up day in a row (thus far)I don’t know rats, but I don’t want to get hit by a speeding train here. Thus, I would recommend that you close all but your favorite (and most clear) positions at this point. If you went short 30 minutes ago - take profits and wait things out. Yes, it’s likely that we drop from here after a 5th up day - should we get that today. And if you can play that and think you can outsmart the MMs - I strongly encourage you have fun. But I also believe that we should negotiate this tape very cautiously - there are too many variables at this point and remember - we are not gamblers - we are traders. Thus, my instincts and my cerebral cortex are screaming at me right now - telling me to stay out and wait for instructions.
Smokin’ CrackMarch 16th, 2009 9:03 am Market Forecasts 55 Comments
UPDATE 10:00am EST: Yes, several of our elected leaders obviously are. But I”m actually referring to this little jewel:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_crack.png
There are several ways of counting this mess in EWT but in almost all cases we appear to be on the onset of another rally in the crack spread. I’m going to start hunting some refiners - yeeee-haaaaa!
Nice pop and drop this morning - I told you guys - this week is going to be painful. Market makers are not messing around - they are ready to inflict some pain! BTW, watch the NQ - seems to be either leading or lagging - have not made up my mind yet.
UPDATE 10:55am EST: I’m hunting for some refiners:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_cvi.png
CVI: I know, this channel is weak as ass but there’s also a horizontal resistance line (not drawn). I think it could go to 5 if it breaks out here.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_tso.png
TSO: I’m split on this one - but it seems to be in a short term ascending triangle. I think if it overcomes the horizontal line we might be good to go for two points. Let’s wait for a break out - I’d set an alert at 13.4.
Bird Is The WordMarch 15th, 2009 4:02 pm Market Forecasts, Market News 154 Comments
Okay, I’m not going to sugar coat it for you rats - this week is going to be painful. Let’s just list the range of horrors we are about to face:
[*]Yes, it’s that time of the month again. No, I’m not referring to your wife’s menstrual cycle and those dreaded evenings when you dodge incoming missiles containing high explosive war heads packed with high concentrate verbal discontent of your very existence. This is much worse - I’m talking about the monthly ritual of option expiration week (a.k.a. OPEX week), when Hulk-like genetically modified market makers wield x-large nuclear powered cattle prods with the sole intent of chasing hapless rodent traders like you from one end of the tape to the other whilst inflicting as much max pain as possible.[*]Then Tuesday and Wednesday the world will eagerly await the words of the Delphic Oracle (a.k.a. the FOMC), culminating at 2:15pm EST when Apollo announce his prophecies through his chosen oracle (i.e. Ben Bernanke). This will be followed by the sacrificial slaughter of your option portfolio.[*]But it gets worse - Friday is not only the last day of OPEX, it’s also a quadruple witching (a.k.a. quadruple options expiry). It just so happens that every third Friday of March, June, September and December all of our four food groups - index futures, options on index futures, single stock futures, and stock options all expire together. The horror - the horror….In other words expect an unhealthy dose of volatility, whipsaws, fake-outs, market maker shenanigans (bid/ask games), and mad mental masturbation in the financial news. I wish there was a way to visualize the level of pain and suffering you are about face - just to prepare you mentally for the inevitable. Wait…. actually… you know what…. there might be a way…. here you go:
Now, don’t fight it - just embrace the pain, which is the only way you might just make it through this alive and with your sanity intact.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_spx.png
Alright, enough of the idle chatter - let’s talk some charts. The bulls pretty much have worn out their welcome and I expect at least some minor pullback starting Monday. Note that the maximum number of consecutive up days we have seen since October 11, 2007 is five. Friday was our fourth day up and we are heavily overbought at this point. Thus, although it is not statistically impossible for us to push a tad higher, the odds suggest that we’re going down either tomorrow or Tuesday, even if it’s just for a day or two. Which brings me to our three horsemen of doom:
Blue: We are done consolidating and almost immediately drop into Minor 5 of Intermediate (5). Target is the 620 - 635 region. Simple and sweet. Note some longer term diagonal support lines better shown on the zoomed out chart below which magically line up with our target zones.
Orange: We just completed {a} of Minor 4 of Intermediate (5) and are now dropping into {b}, leading us into the 720 - 730 region, which constitutes a 23.6% fib retracement of Minute {a} of Minor 4 of (5). We might go as far as 723, which is the 38.2% fib line. This is followed by {c} of 4 of (5), pushing us into 780 - 790. We must not breach that zone and foremost of all we must not even get anywhere near 804.35, which is the bottom of 1 of (5). If we do breach that one we are most likely in the green scenario:
Green: We completed Minor 5 of Intermediate (5) and thus Primary {1} on March 6th. We also completed, or are close to completing Minor 1 of Intermediate (A) of Primary {2}. We will most likely descend into 720 as well but only to complete 2 of (A), which will be followed by a monster rally into 3 of (A). Can you say ‘bear squeeze’?
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_large_spx.png
In terms of probabilities I would give Blue 40%, Orange 40%, and Green 20% as of now. Unfortunately there is still not one scenario that I would give a clear preference (50% or higher) at this moment. We will have to see some more tape before we can arrive at a better estimate.
SevenMarch 16th, 2009 10:35 am Market Forecasts 242 Comments
UPDATE 11:30am EST: As most of you know I did expect a pullback today - not another rally. However, whenever I’m a bit confused I simply start counting waves:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_seven.png
And guess what - I’m clearly counting seven, therefore, according to EWT rules, indicating that this is a corrective, not a motive wave. Quoting again psalm 54:3 of our bible:
Notice that while an impulse wave has a total count of 5, with extensions leading to 9 or 13 waves, and so on, a corrective wave as a count of 3, with combinations leading to 7 or 11 waves.
There you have it - so as strange as this might sound - today’s bullishness might actually be a sign of more bearishness to come. Thus I will watch the Zero and my favorite stochastics/MACD combo to load up on a light amount of index puts fairly soon.
UPDATE 12:20pm EST: Okay, I rarely revise a prior statement but I think this is appropriate. What I had failed to do this morning is to check the action in the COMPQ and it seems we’ve got some alerts flashing:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_compq.png
What I counted as a 1-2 in the SPX might actually be something else, judging by the COMPQ. Also, we breached through its prior 1, which is something that should not have happened in the current count. Now, listen rats - there are times when averages diverge and that’s fine and dandy and can often be ignored as long as the main trend is clear, but we cannot forget the stage we’re at right now.
[*]It’s OPEX week.[*]Volatility will be at max.[*]Quadruple witching this Friday.[*]FOMC meeting on Tuesday and Wednesday.[*]Either end of Primary {1} or onset of Primary {2}.[*]We have a clear divergence in the averages.[*]Unclear count on a minor wave degree at this point - looks like motive until we get a corrective wave.[*]5th up day in a row (thus far)I don’t know rats, but I don’t want to get hit by a speeding train here. Thus, I would recommend that you close all but your favorite (and most clear) positions at this point. If you went short 30 minutes ago - take profits and wait things out. Yes, it’s likely that we drop from here after a 5th up day - should we get that today. And if you can play that and think you can outsmart the MMs - I strongly encourage you have fun. But I also believe that we should negotiate this tape very cautiously - there are too many variables at this point and remember - we are not gamblers - we are traders. Thus, my instincts and my cerebral cortex are screaming at me right now - telling me to stay out and wait for instructions.
Smokin’ CrackMarch 16th, 2009 9:03 am Market Forecasts 55 Comments
UPDATE 10:00am EST: Yes, several of our elected leaders obviously are. But I”m actually referring to this little jewel:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_crack.png
There are several ways of counting this mess in EWT but in almost all cases we appear to be on the onset of another rally in the crack spread. I’m going to start hunting some refiners - yeeee-haaaaa!
Nice pop and drop this morning - I told you guys - this week is going to be painful. Market makers are not messing around - they are ready to inflict some pain! BTW, watch the NQ - seems to be either leading or lagging - have not made up my mind yet.
UPDATE 10:55am EST: I’m hunting for some refiners:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_cvi.png
CVI: I know, this channel is weak as ass but there’s also a horizontal resistance line (not drawn). I think it could go to 5 if it breaks out here.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_tso.png
TSO: I’m split on this one - but it seems to be in a short termI think if it overcomes the horizontal line we might be good to go for two points. Let’s wait for a break out - I’d set an alert at 13.4.
Bird Is The WordMarch 15th, 2009 4:02 pm Market Forecasts, Market News 154 Comments
Okay, I’m not going to sugar coat it for you rats - this week is going to be painful. Let’s just list the range of horrors we are about to face:
[*]Yes, it’s that time of the month again. No, I’m not referring to your wife’s menstrual cycle and those dreaded evenings when you dodge incoming missiles containing high explosive war heads packed with high concentrate verbal discontent of your very existence. This is much worse - I’m talking about the monthly ritual of option expiration week (a.k.a. OPEX week), when Hulk-like genetically modified market makers wield x-large nuclear powered cattle prods with the sole intent of chasing hapless rodent traders like you from one end of the tape to the other whilst inflicting as much max pain as possible.[*]Then Tuesday and Wednesday the world will eagerly await the words of the Delphic Oracle (a.k.a. the FOMC), culminating at 2:15pm EST when Apollo announce his prophecies through his chosen oracle (i.e. Ben Bernanke). This will be followed by the sacrificial slaughter of your option portfolio.[*]But it gets worse - Friday is not only the last day of OPEX, it’s also a quadruple witching (a.k.a. quadruple options expiry). It just so happens that every third Friday of March, June, September and December all of our four food groups - index futures, options on index futures, single stock futures, and stock options all expire together. The horror - the horror….In other words expect an unhealthy dose of volatility, whipsaws, fake-outs, market maker shenanigans (bid/ask games), and mad mental masturbation in the financial news. I wish there was a way to visualize the level of pain and suffering you are about face - just to prepare you mentally for the inevitable. Wait…. actually… you know what…. there might be a way…. here you go:
Now, don’t fight it - just embrace the pain, which is the only way you might just make it through this alive and with your sanity intact.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_spx.png
Alright, enough of the idle chatter - let’s talk some charts. The bulls pretty much have worn out their welcome and I expect at least some minor pullback starting Monday. Note that the maximum number of consecutive up days we have seen since October 11, 2007 is five. Friday was our fourth day up and we are heavily overbought at this point. Thus, although it is not statistically impossible for us to push a tad higher, the odds suggest that we’re going down either tomorrow or Tuesday, even if it’s just for a day or two. Which brings me to our three horsemen of doom:
Blue: We are done consolidating and almost immediately drop into Minor 5 of Intermediate (5). Target is the 620 - 635 region. Simple and sweet. Note some longer term diagonal support lines better shown on the zoomed out chart below which magically line up with our target zones.
Orange: We just completed {a} of Minor 4 of Intermediate (5) and are now dropping into {b}, leading us into the 720 - 730 region, which constitutes a 23.6% fib retracement of Minute {a} of Minor 4 of (5). We might go as far as 723, which is the 38.2% fib line. This is followed by {c} of 4 of (5), pushing us into 780 - 790. We must not breach that zone and foremost of all we must not even get anywhere near 804.35, which is the bottom of 1 of (5). If we do breach that one we are most likely in the green scenario:
Green: We completed Minor 5 of Intermediate (5) and thus Primary {1} on March 6th. We also completed, or are close to completing Minor 1 of Intermediate (A) of Primary {2}. We will most likely descend into 720 as well but only to complete 2 of (A), which will be followed by a monster rally into 3 of (A). Can you say ‘bear squeeze’?
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_large_spx.png
In terms of probabilities I would give Blue 40%, Orange 40%, and Green 20% as of now. Unfortunately there is still not one scenario that I would give a clear preference (50% or higher) at this moment. We will have to see some more tape before we can arrive at a better estimate.
How to play this mess is another question - here’s a possible strategy I call the ‘triple stretch’:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_triple_stretch.png
I think the chart is pretty clear - make a pass down field and then basically cover right at the inflection point where Blue separates from Orange and Green. Priority is to keep possession and and not to fumble (i.e. lose your profits) while preparing for our chance for a touchdown either at 650 or 785.
SevenMarch 16th, 2009 10:35 am Market Forecasts 242 Comments
UPDATE 11:30am EST: As most of you know I did expect a pullback today - not another rally. However, whenever I’m a bit confused I simply start counting waves:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_seven.png
And guess what - I’m clearly counting seven, therefore, according to EWT rules, indicating that this is a corrective, not a motive wave. Quoting again psalm 54:3
Notice that while an impulse wave has a total count of 5, with extensions leading to 9 or 13 waves, and so on, a corrective wave as a count of 3, with combinations leading to 7 or 11 waves.
There you have it - so as strange as this might sound - today’s bullishness might actually be a sign of more bearishness to come. Thus I will watch the Zero and my favorite stochastics/MACD combo to load up on a light amount of index puts fairly soon.
UPDATE 12:20pm EST: Okay, I rarely revise a prior statement but I think this is appropriate. What I had failed to do this morning is to check the action in the COMPQ and it seems we’ve got some alerts flashing:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_compq.png
What I counted as a 1-2 in the SPX might actually be something else, judging by the COMPQ. Also, we breached through its prior 1, which is something that should not have happened in the current count. Now, listen rats - there are times when averages diverge and that’s fine and dandy and can often be ignored as long as the main trend is clear, but we cannot forget the stage we’re at right now.
[*]It’s OPEX week.[*]Volatility will be at max.[*]Quadruple witching this Friday.[*]FOMC meeting on Tuesday and Wednesday.[*]Either end of Primary {1} or onset of Primary {2}.[*]We have a clear divergence in the averages.[*]Unclear count on a minor wave degree at this point - looks like motive until we get a corrective wave.[*]5th up day in a row (thus far)I don’t know rats, but I don’t want to get hit by a speeding train here. Thus, I would recommend that you close all but your favorite (and most clear) positions at this point. If you went short 30 minutes ago - take profits and wait things out. Yes, it’s likely that we drop from here after a 5th up day - should we get that today. And if you can play that and think you can outsmart the MMs - I strongly encourage you have fun. But I also believe that we should negotiate this tape very cautiously - there are too many variables at this point and remember - we are not gamblers - we are traders. Thus, my instincts and my cerebral cortex are screaming at me right now - telling me to stay out and wait for instructions.
Smokin’ CrackMarch 16th, 2009 9:03 am Market Forecasts 55 Comments
UPDATE 10:00am EST: Yes, several of our elected leaders obviously are. But I”m actually referring to this little jewel:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_crack.png
There are several ways of counting this mess in EWT but in almost all cases we appear to be on the onset of another rally in the crack spread. I’m going to start hunting some refiners - yeeee-haaaaa!
Nice pop and drop this morning - I told you guys - this week is going to be painful. Market makers are not messing around - they are ready to inflict some pain! BTW, watch the NQ - seems to be either leading or lagging - have not made up my mind yet.
UPDATE 10:55am EST: I’m hunting for some refiners:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_cvi.png
CVI: I know, this channel is weak as ass but there’s also a horizontal resistance line (not drawn). I think it could go to 5 if it breaks out here.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-16_tso.png
TSO: I’m split on this one - but it seems to be in a short if it overcomes the horizontal line we might be good to go for two points. Let’s wait for a break out - I’d set an alert at 13.4.
Bird Is The WordMarch 15th, 2009 4:02 pm Market Forecasts, Market News 154 Comments
Okay, I’m not going to sugar coat it for you rats - this week is going to be painful. Let’s just list the range of horrors we are about to face:
[*]Yes, it’s that time of the month again. No, I’m not referring to your wife’s menstrual cycle and those dreaded evenings when you dodge incoming missiles containing high explosive war heads packed with high concentrate verbal discontent of your very existence. This is much worse - I’m talking about the monthly ritual of optionhttp://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_spx.png
Alright, enough of the idle chatter - let’s talk some charts. The bulls pretty much have worn out their welcome and I expect at least some minor pullback starting Monday. Note that the maximum number of consecutive up days we have seen since October 11, 2007 is five. Friday was our fourth day up and we are heavily overbought at this point. Thus, although it is not statistically impossible for us to push a tad higher, the odds suggest that we’re going down either tomorrow or Tuesday, even if it’s just for a day or two. Which brings me to our three horsemen of doom:
Blue: We are done consolidating and almost immediately drop into Minor 5 of Intermediate (5). Target is the 620 - 635 region. Simple and sweet. Note some longer term diagonal support lines better shown on the zoomed out chart below which magically line up with our target zones.
Orange: We just completed {a} of Minor 4 of Intermediate (5) and are now dropping into {b}, leading us into the 720 - 730 region, which constitutes a 23.6% fib retracement of Minute {a} of Minor 4 of (5). We might go as far as 723, which is the 38.2% fib line. This is followed by {c} of 4 of (5), pushing us into 780 - 790. We must not breach that zone and foremost of all we must not even get anywhere near 804.35, which is the bottom of 1 of (5). If we do breach that one we are most likely in the green scenario:
Green: We completed Minor 5 of Intermediate (5) and thus Primary {1} on March 6th. We also completed, or are close to completing Minor 1 of Intermediate (A) of Primary {2}. We will most likely descend into 720 as well but only to complete 2 of (A), which will be followed by a monster rally into 3 of (A). Can you say ‘bear squeeze’?
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_large_spx.png
In terms of probabilities I would give Blue 40%, Orange 40%, and Green 20% as of now. Unfortunately there is still not one scenario that I would give a clear preference (50% or higher) at this moment. We will have to see some more tape before we can arrive at a better estimate.
How to play this mess is another question - here’s a possible strategy I call the ‘triple stretch’:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_triple_stretch.png
I think the chart is pretty clear - make a pass down field and then basically cover right at the inflection point where Blue separates from Orange and Green. Priority is to keep possession and and not to fumble (i.e. lose your profits) while preparing for our chance for a touchdown either at 650 or 785.
Once the separation point arrives we’ll have to turn to our momentum indicators to see where we go next - Orange or Blue - and if we push up Orange or Green. The Zero has been very helpful in correlating wave scenarios with momentum - stingy unworthy non-subscribers might resort to their favorite stochastics or MACDs - I would suggest you drop them into a 2-hr chart.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_moodybaa.pnghttp://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_tyx.png
On a more medium to long term perspective one hint may be one of my longer term indicators - the spread between the 30-year T-Bond yield and the Moody’s Corporate Bond BAA yield. On March 8th I said:
Finally, the spread between the 30-year T-Bond yield ($TYX) and the Moody’s BAA Corporate Bond yield was roughly around -4.5 on February 15 and has actually increased to -4.85. This also supports my current wave count as it has been a fairly reliable long term indicator throughout 2008. Once we see this spread decreasing it will be an early warning sign that we are nearing the end of the current Primary wave cycle.
As of March 11th - which is how far back I am able to go with those two charts above - this yield has held steady at -4.8%. To me this indicates further downside as a narrowing spread in the past has preceded a longer term rally lasting more than just a few days. This is one of the reasons why my money is still on either Orange or Blue. Of couse I will keep monitoring this spread on Monday and Tuesday and if I see a narrowing trend develop I will you rats now.
Let’s look at a few more momentum/trend indicators:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_cpc.png
Put/Call ratio distinctly points to an overbought condition - that’s quite an extreme reading.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_nyud.png
Advancing issue on the NYSE reached some extreme levels - also indicating that we are heading lower soon, even if it’s just for a day or two.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_nymo.png
Mr. NYMO is back in overbought territory, confirming CPC and NYUD.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_bpnya.png
If the NYSE Bullish Percent Index was closer to 40 I would be more confident to anticipate either the Blue or Orange scenario. But those readings are inconclusive and we could easily just drop a day or two and then embark into Green.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_gold.png
Expect the contagion of market volatility to have an impact on precious metals as well. I’m currently holding GLD puts and might have to endure some upside pushing into the 940 zone. However, we are converging towards this diagonal support line around the psychologically sensitive 900 mark which finally must be breached once and for all. This would be a final confirmation that the upside trend which started on October 27, 2008 has finally ended.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_fxy.png
Finally, the Yen has been whipping around spasmodically in the past few days, burning theta on my FXY calls. I’ll give this thing some more time as I still believe in some upside here. However, if we drop below the 100 mark I’d probably run for the hills.
I’ll be traveling very light this week due to the ‘unique’ environment I elaborated on in my intro. Also, we are either at the tail end of Primary wave {1} or the onset of {2} - it makes sense to limit your exposure and limit your trades to capital you are comfortable losing. Whatever trades you take - you’ll need very generous stop loss provisions - I suggest a minimum of 2 x daily ATR.
That’s all I got for you rats - time to hit the gym and tend to my luxury body - Candy offers 10% discounts to evil megalomaniacs with washboard abs.
SUNDAY NIGHT UPDATE: Okay, this really riles me:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_headlines.png
See the MarketWatch headline above - which is a clear sign that the ‘end is not in sight’ - not by a long shot. Yes, we’re about to embark on a multi-month consolidation rally - but as I’ve made very clear in the past few weeks: Do not let that lull you into thinking that this bear market is over - as a matter of fact it’s just getting warmed up.
Sometimes I want to go out there and bitch slap certain irresponsible people - I even obtained the appropriate tool for the occasion:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-15_gauntlet.png
Take a number and get in line, bitches!
Friday Wrap UpMarch 13th, 2009 3:20 pm EOD Wrap Up, zero 239 Comments
I’ll make this quick as most of you rats are probably getting tanked during Happy Hour:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_zero.png
Again, a great Zero day - We did get a stop signal this morning as we dropped during the first two candles. Starting at noon however it got us long right away up into the close. The more short term Zero Lite got us into short positions early on (circled in orange) and then back into long positions shortly after (circled in green). What else could we ask for?
I’m off - enjoy your weekend, ladied and leeches. I’ll touch base by Sunday with my notorious weekend forecast.
http://evilspeculator.com/wp-content/uploads/2009/03/madoff-in-prison.jpg
Cheers!
Mole
« Older Entries
Newer Entries »
Yaawwwnn…March 13th, 2009 1:57 pm Intraday Update 86 Comments
UPDATE 2:38pm EST: I’m pretty quiet today as there is not much to say. We have dropped a tiny bit and retraced a tiny bit. Actually, I’m a bit surprised by that - we are near the day’s highs again and I don’t see much weakness. As you know I did expect us to drop well into the 720 region. Which makes me double happy that I’m in cash today.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_yen.png
FXY is spasmodic right now but I’m holding my long positions into Monday. This looks either like bottoming action or consolidation action - if it’s the latter I won’t be so happy when it drops through 100. Actually, this tape reminds me a bit of the TLT as of late - hey, this even rhymes! http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_gold.png
Gold also slapped me in the face this morning but I’m glad I didn’t waver as it dropped back down. It seems there’s a seller sitting at 942, which suits me just fine. Also holding into next week - meh - I’m stubborn as long as none of my line in the sand isn’t breached.
UPDATE 3:00pm EST: Finally, the final hour - I don’t think I can take any more of this tape. It gets a ten point rating for slow water torture - in some way it did live up to our Friday XIII expectation.
Endless PossibilitiesMarch 13th, 2009 11:30 am Intraday Update 198 Comments
UPDATE 12:30pm EST: Usually Friday XIII is my lucky day - not kidding - for real. But today’s tape is boring the heck out of me. We seem to be topping but there is little participation at this point, which diminishes my confidence in picking a direction. So, I will start throwing out some of the material I was planning to post on Sunday - I’m sure you won’t mind http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_spx.png
There are three possibilities I shared with you last night. And all three of them lead us lower at this point, which is a good thing I guess if you are a short term trader. However, I play on a longer scale and the inflection point in my not so humble opinion will be around the 720 - 225 region - we might even see 710 - all based on my fib lines. This is where I see a first separation point - the second is around 785, if we get there.
How to play it is the question - do I go long or short at that level? I think we’ll have to turn to our momentum indicators to answer that question. The Zero is one I like obviously - others might resort to stochastics or MACDs - but remember to drop them into a daily chart.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_moodybaa.pnghttp://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_tyx.png
One hint may be one of my longer term indicators - the spread between the 30-year T-Bond yield and the Moody’s Corporate Bond BAA yield. On March 8th I said:
Finally, the spread between the 30-year T-Bond yield ($TYX) and the Moody’s BAA Corporate Bond yield was roughly around -4.5 on February 15 and has actually increased to -4.85. This also supports my current wave count as it has been a fairly reliable long term indicator throughout 2008. Once we see this spread decreasing it will be an early warning sign that we are nearing the end of the current Primary wave cycle.
As of March 11th - which is how far back I am able to go with those two charts above - this yield has held steady at -4.8%. To me this indicates further downside as a narrowing spread in the past preceded a longer term rally, lasting more than just a few days.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_cpc1.png
There’s also the CPC, which is currently at record lows again. We have been pushing upwards for four days now, but this is way too bullish for such a small rally. The blue arrow points at what happened last time after seeing such low readings.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-13_ndx.png
However, what disturbs me is the reading on the NDX - it pretty much smashes our bearish potential. Either 4 of (5) is still in the works or Primary {1} of c ended quietly and we are already in Primary {2}. Frankly, I need to give this some thought over the weekend - in the meantime I am keeping my exposure very light.
Alright, I’ll leave it at this for now - the weekend forecast will be a tad shorter but it seems we now have time to digest some of this info, discuss/debate/argue it among ourselves and perhaps find some strategies that maximize our chances for negotiating this tape successfully whilst incurring least amount of risk.
Lines In The SandMarch 12th, 2009 8:46 pm Market Forecasts 275 Comments
I was looking at my charts tonight and felt the needs to spell out some important ‘must not go zones’ for the next few trading days:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-12_spx3.png
Looking at the wave pattern which started on March 6th it’s pretty obvious that we could easily count this as a motive wave. So, at this point we have three possible scenarios:
Blue: We are done consolidating and will now drop into Minor 5 of Intermediate (5). Target is the 610 - 635 region.
Orange: We just completed {a} of Minor 4 of Intermediate (5) and are now dropping into {b} until about the 710 region (700 max), followed by a push into 780 - 790. We must not breach that zone and foremost of all we must not breach 804.35, which is the bottom of 1 of (5). If we do breach that zone we are most likely in the green scenario:
Green: We completed Minor 5 of Intermediate (5) and thus Primary {1} on March 6th. We also completed, or are close to completing Minor 1 of Intermediate (A) of Primary {2}. We will also descend into 710 but to complete 2 of (A), which will be followed by a monster rally into 3 of (A). There is a faint possibility that we don’t even drop from here and directly proceed upwards and not stop until we touch 780, but based on what I’m seeing in my momentum indicators I do not give this scenario a lot of credence.
In terms of probabilities I would probably give Blue 40%, Orange 40%, and Green 20% as of tonight. Of course as the tape unfolds I will follow up with updates - unfortunately there is no scenario that I would give a clear preference (50% or higher) at this point.
There you have it rats - Mrs. Evil has been waiting with dinner for 30 minutes now and it’s probably already cold. But based on the comments I received tonight (some of them a bit emotional) I needed to make sure you rats are up to speed.
I personally will play it very small going forward until we either see a clear sign that we drop from here or that we are nearing the point of no return.
See you on the other side.
Cheers,
Mole
Thursday Wrap UpMarch 12th, 2009 3:11 pm EOD Wrap Up 131 Comments
This was again a good day for Zero subscribers:
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-12_zero.png
We got an early morning whipsaw - which often happens at the turning points of consolidations. After that it was straight up right at the 2nd candle. Beautiful play - and based on the comments I received my super rats are sitting pretty http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Shop smart - shop Zero-Mart. (No, it never gets hold - hehe)
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-12_emotional.png
Here’s your emotional roller coaster guide for tomorrow. Today we stopped right at my green channel line - that’s right - I command the market’s every move (just kidding). We might push a bit higher but I would get nervous if we breach 770. If we go past 795 I would start questioning the 5 of (5) scenario, and it would give 1 of (A) of {2} additional credence. If we drop from here it would still work with boths scenarios but the separation zone would probably be around the 720 mark - 700 at the most.
That’s it for today, ladies and leeches. I had a lot of fun - hope you’ll be back tomorrow for more naughty games.
Perfect!March 12th, 2009 1:36 pm Intraday Update 167 Comments
UPDATE 2:29pm EST: Boy, this has been almost a perfect pattern to the upside.
http://evilspeculator.com/wp-content/uploads/2009/03/2009-03-12_spx1.png
SPX ran by the script and we find ourselves in my target zone. I do expect a bit of resistance here but this might be a good spot to start loading up on some puts. Have been chatting with a friend of mine in the last hour and need to go through the previous thread to pick apart some of your contributions. DLTR was a good one IMHO.
However, for the rats among you who think this is the start of 1 of (A) of {2}: If you look at the wave pattern an argument can be made that we completed (or are close to completing) a motive wave, which might be {1} of 1 of (A) of {2}. So, this would now be followed up by an {2} of 1 zigzag. I just wanted to throw it out there as it is no implausible. Also, this would line up withso, let’s see how the tape behaves before we back up the truck.
But don’t be scared - be happy!!