Joke’s On You!February 25th, 2009 2:14 pm Intraday Update 108 Comments
UPDATE 2:13pm EST: I couldn’t resist:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_funny.png
Seriously, sometimes I wonder if I fell asleep and woke up to the Twilight Zone.
UPDATE 2:22pm EST: The collection of candles is really interesting today.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_interesting.png
Trainwreck anyone? Maybe this market rallies into the close, but frankly - there’s no meat on this bull’s bones. As I said short and thick - I expect candles to follow reality downward.
UPDATE 2:33pm EST: Not sure what to make of this breach yet:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_channel.png
Retest and then rally into the close?
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_direction.png
For me this is the line in the sand. If we breach today’s highs then we probably bust higher and complete an a-b-c.
Chaff and WheatFebruary 25th, 2009 12:20 pm Intraday Update, Trade 177 Comments
UPDATE 12:18pm EST: Here’s where the chaff separates from the wheat:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_chaff.png
I think the chart is pretty clear although I admit that I’m liberal with that channel. Yen so far is not convincing me - kind of weak. Don’t get too married to the downside - I’m sitting on a boat load of puts but am ready to hede with some NQ or ES futures again if I see this upper border being breached.
UPDATE 12:26pm EST: Someone mentioned the p/c ratio but I now prefer the ISEE:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_isee.png
So if you fade the MMs and the institutions long put/call sentiment is:
All Securities: bullish
All Equities: bullish!
Indices and ETFs Only: bearish
Glad I’ve got SPY puts - LOL - but seriously this is a mixed bag. Can be interpreted in various ways - e.g. high bullish maybe bearish signal, or high reading might mean we get a snap back to the upside. Whatever - but what irks me is the discrepancy between equities and indices. Anyone any suggesions as to how to interpret this?
UPDATE 1:54pm EST: See, I told you guys to not get too comfortable with the short side. I’m taking a tiny hit right now on those SPY futures but fortunately I did compensate this morning with my NQs. If we breach 775 I might sell some puts against them as we then might see 790.
UPDATE 2:06pm EST: We bounced back from those lofty heights - I like that - clear cut and we didn’t spend much time up there. Let’s see what the next hour brings. I’m staying short and thick.
Turning Points 2.0February 25th, 2009 10:24 am Intraday Update 191 Comments
UPDATE 10:20am EST: Good morning rats! So, as of now it seems we are completing Minor 3 of (5), but we now find ourselves at yet another inflection point.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_spx-intra.png
IF we’ll get a zigzag (the blue scenario), then this is about where we would retrace. I’m not sure what the odds are on this but it’s something we should allow for. I grabbed a bag of April 70 SPY puts around 770, so even it happens I’ll probably just sit it out.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_silver.png
Silver (and Gold for that matter) has retraced back up but thus far my July SLV puts have not been punished yet - thank you Mr. VIX! I think I will hold those suckers until that 16 mark I’ve drawn on the chart.
UPDATE 11:47am EST: I just hedged myself uphill with some NQ contracts - took the edge off those SPY puts. I’m not sure we’ll bust all the way to 790 but it’s a possibility. Of course that would most likely change our wave count as you remember.
UPDATE 11:56am EST: Yen just woke up:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_yen.png
I know this correlation has been ’soft’ lately but I’m fairly certain it won’t help equities if we bust higher.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-25_yen2.png
More longer term wrapped in a 2.0 BB - wow - how long can this go on? A while but eventually it always snaps back.
Turning PointsFebruary 24th, 2009 9:03 pm Market Forecasts 257 Comments
I’m going to be really quick tonight - was not actually planning on posting but when I was starting to count the new waves I felt that my new analysis needed to be shared.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_spx.png
Blue: We completed Minor 3 of Intermediate (5) and are now pushing into Minor 4 which should terminate around 793ish. We must not breach 804.3 as a brach of Minor wave 1 is not permissible EWT - at least not if this is a motive wave. If it is not a motive wave but some complicated W-X-Y, then the entire count changes. There is a problem with this count in that Minor 3 would be shorter than minor 1, which is permissible but only if Minor 5 will be the shortest wave. Thus the lower target for the bottom of Intermediate (5) in this scenario would be the 690 - 700 zone. Not exactly exciting IMO. There is the possibility that (4) might turn into some sideways action - perhaps a triangle - that would extend the target zone for 5 of (5) a bit.
Orange: My favorite scenario. We completed Minute (iii) of Minor 3 of Intermediate (5) and are now in the late stage of some ugly wave (iv) zigzag that should either drop right away or maybe push a bit further but not beyond 793 - ugly because I’m not sure I see a clean zigzag there. From there we continue into (v), breach the November 21 lows and complete Minor 3 of (5). This will be followed by a retest of the November lows and the final descend into the target zone of 650.
Fibolacious!February 24th, 2009 3:48 pm Intraday Update 129 Comments
UPDATE 3:44pm EST: That wasn’t so bad after all - despite those SLV MMs screwing with the bid/ask spread - or maybe I should blame Mr. VIX, who’s in freefall right now.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_fibs.png
Where we bounce back will determine my wave count (see previous post). I hope we can make it at least to 784 - a measly 23.6% retracement is not exactly exciting. Note that there is a fib congestion zone ahead. I’d love to get there by tomorrow’s open - although I do see some profit taking right now. Hope the bulls stay strong - jeeezzz - did I just say that?
Depending on my afternoon schedule I might or might not post tonight. But you guys know the drill by now http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE Closing Bell + 14: Here’s today’s Zero chart:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_zero.png
Another good signal day - pheew - am I glad I didn’t start the subscription last week when it was flat http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Cheers,
Mole
ISEE The LightFebruary 24th, 2009 12:51 pm Intraday Update 234 Comments
UPDATE 12:46pm EST: I’m really starting to appreciate the ISEE index - especially those intra-day readings. Check it out:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_isee.png
We started out quite bullish on all fronts and that changed quickly around 10:00am EST. We have maintained a generally bearish stands in the indexes, but note that sentiment in securities is almost on par while equities look bullish. I think there’s a chance the bulls will try to make a run for it later today. We have held yesterday’s lows, which is obviously a huge line in the sand. Here’s to 780 - maybe there’s a chance we’ll see it before we breach the SPX November lows (741.02).
UPDATE 1:00pm EST: XLF getting ready to run - hat tip to Eric:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_xlf.png
I’ll wait for a few more ticks for a breakout confirmation but then I’ll dip into this sucker. However, based on what I’ve seen on the VIX it might be more profitable to sell OTM puts. I know - I know - that’s not for everyone - if you do take profits before the bell. You could also sell a ATM bull put spread - less risk this way.
UPDATE 2:07pm EST: Silver down, XLF up - not a bad day. Let’s see if the bulls can make this puppy run. Only question is whether or not this is {4} of 3 of (5) on the SPX, or the beginning of 4 of {5}. I would prefer the latter frankly.
« Older Entries
Newer Entries
Try Harder!February 24th, 2009 11:20 am Intraday Update 105 Comments
UPDATE 11:17am EST: It’s trying but not getting out of the gate thus far.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_channel.png
However, it’s possible that this is only a small consolidation before we descend further. I’m counting minuette waves down now and this could be 8 of probably 9 to complete Minor 3 of Intermediate (5).
I’m going to grab breakfast now for 30 minutes - keep a lid on the market while I’m gone http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 12:00pm EST: Channels within channels:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_spy.png
Some SPY channels to watch. If you watch closely you can see a little inverse H&S - requires some imagination I know. Not sure what to make of this now but we should have resolution fairly soon - one of those lines will be broken.
Snap!February 24th, 2009 10:24 am Intraday Update 54 Comments
UPDATE 10:18am EST: Good morning rats - did everyone get a nice whip just now? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_snap.png
Almost feels like OpEx week - let’s see what happens at those ES overnight lows. Unless we start breaching resistance levels the trend continues downward. What I find strange are those long quick hard candles which then suddenly stop. The Bush PPT was a lot more competent - LOL!!!
UPDATE 10:44am EST: I’m looking at Silver right now and it seems we are getting close.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-24_slv.png
I’ll start dipping into puts on a breach or after we bounce higher here.
We Made History!February 23rd, 2009 8:54 pm Market Forecasts 191 Comments
My dear rat minions - today the Gods of Trading bestowed us bears with a momentous gift:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_dji.png
The 2002 DJI low of 7197.49 was not just breached - we closed below it! That is not just a major confirmation of Intermediate wave (5) of Primary 1, it is a confirmation of this entire secular bear market. The ramifications are of this are tremendous and will ultimately culminate in the DJI touching 4,500 or even lower (in a year or two).
Also, today also happened to be exactly the 100th time we closed down six days in a row in the history of the SPX. The odds for that are extremely low and the odds for seven consecutive down days are less than half of that. It’s time for a bounce, ladies and leeches.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_spx.png
The odds now strongly support the intermediate (5) scenario and all that’s left for us to do is pray for a reload bounce which might or might not materialize.
However, be warned in that market sentiment has been extremely negative today and is reaching levels that indicates that we are in the final stages of Minor 3 of Intermediate (5). Which means our next chance to load up will be near the peak of Minor 4 of Intermediate (5). So, the idea here to not load up on one of the smaller bounces just like the one we’ve seen today. What we need to see happen is a 20 point jump in the SPX minimum, or at least several days worth of slightly bullish sideways tape, which would satisfy my criteria for Minor 4.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_isee1.png
The ISEE index was brought to my attention recently and promises to be not just more reliable than the traditional Put/Call ratio but also much easier to read (it’s a bit like the supertrin I introduced today). A reading above 100 indicates that more long call positions are being bought and a reading below 100 means that traders (but not market makers or institutionals) are bulking up on long puts. I did a bit of reading about it and it seems that the 10-day MA has been tracing the SPX extremely well in the past. Nevertheless, seeing today’s reading of 113 really surprised me - that is a bullish sign and hopefully what many of us are waiting for.
If we happen to bounce tomorrow then I would like to see 780 before I feel comfortable dipping in one last time. This would actually be a perfect setup as we have not breached the November lows on the SPX just yet. Otherwise I will keep you apprised as things unfold in order to pick a good level to dip into the cookie jar.
Gold did not follow suit today but I do see more upside potential and thus believe it would be premature to bulk up on short positions or puts. The same applies to Silver, which is currently tracing out an exponential curve.
The Dollar was pushing up today and I expect one more drop soon to complete its current a-b-c retracement. After that it’ll most likely initiate its 2nd booster rockets to propel it beyond 90 and breach its prior highs.
That’s all I have time for tonight folks - I leave you with this:
UPDATE 11:05pm EST: BTW, this was today’s Zero chart:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_zero.png
I think subscribers made their 39 bucks back today http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 2: WOW -post about AIG from Karl Denninger - he’s one sharp guy.
Cheers!
Strap On Your HelmetsFebruary 23rd, 2009 3:53 pm Intraday Update 168 Comments
UPDATE 3:50pm EST: Strap on your helmets people:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_low.png
We are about four points away from breaching the November 21 lows (741.02) - if that one gives it will be another confirmation of the Intermediate (5) scenario. I’m not saying we but through and drop continuously from here. But if we brach this level and it’s getting dangerously close, no matter what happens after that, you will see 650 on the SPX. Best we can hope for at this point is a counter rally - please please pretty please!!
FAILED!February 23rd, 2009 3:01 pm Intraday Update 88 Comments
UPDATE 3:00pm EST: It seems the bulls are have finally lost their luster. Remember that channel I posted this morning?
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_nq1.png
For a few minutes I thought we might actually push through this time, but it failed yet again and we’re right back in the down channel. I actually grabbed some puts when it was turning, so good timing on that.
NQ LeadingFebruary 23rd, 2009 12:36 pm Intraday Update 170 Comments
UPDATE 12:30pm EST: The NQ is clearly leading today - it was dropping harder than the ES this morning, and it bounces stronger than the ES as well.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_nq.png
Watch the NQ or the NDX for any signs of a retracement. I thought I’d never say this but if I see one more daily down candle I’m going to puke. Player needs a reload once in a while…. this morning was extremely disappointing. I actually miss the Paulson/Bernanke duo - now there were two fellows who knew how to bang up the tape!
UPDATE 12:52pm EST: Something’s not right - observe:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_trin.png
This is another indicator I wrote a while back - I call it the Supertrin. It’s basically the TRIN normalized to compensate for the bearish extremes and then flipped - reads so much better than the traditional TRIN. Anyway, you can see that the readings are very strange - it’s actually pushing up while the market keeps dropping and dropping in a very orderly fashion. Call me paranoid but I’m thinking big huge bear trap - there might be a bounce coming.
Down Channel HoldingFebruary 23rd, 2009 10:04 am Intraday Update 199 Comments
UPDATE 10:00am EST: Happy Monday rats! We’ve bounced up a bit on Citi 3.0 bailout hype but the down channel remains intact:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-23_spy.png
I have to say I am disappointed - was hoping for a nice rally allowing me to load up again. I sincerely hope this down drip is not going to continue - I hate buying puts in oversold conditions. Get whacked every time I do that. Where’s all the irrational exuberance? Come on mouth breathers - you can do it!!
Yen just snapped back and is slightly overbought on a very short term basis.
UPDATE 10:27am EST: BTW, Zero is pay for play now. Folks, I saw some emotional posts complaining about that and frankly you can all bite my shiny metal ass.
[*]If you don’t like the Zero and prefer - fine - I don’t care.[*]If you cannot afford a measly $39 for an indicator that’s used to trade options and ES futures - fine - not my problem. I’m not going to cater this to people with $1000 accounts, sorry. Go back to those indicators and enjoy the riches you are surely raking in. BTW, why are you here again?[*]If you are unable to follow simple instructions and cannot get it into your head how a swing above the zero line is bullish and a swing below is bearish - please don’t sign up - because I don’t have time to babysit the mentally challenged.[*]If you don’t like the fact that I used PayPal to implement the payment system - fine - then don’t subscribe.Seriously, I’m getting sick of self entitled freeloaders who come by here and complain about every little thing. Nothing is ever good enough and Mole is now the greedy asshole who’s taking advantage of his rat minions. Maybe I should stop posting forecasts for a month or two and we’ll see if you’re better off without it. Yesterday alone I spent five ing hours of my Sunday afternoon working on the weekly forecast. And I don’t make a dime off of that.
In that context - ad click rates have followed the SPX lately and thus I don’t bank much coin with those either. From the 133 people who voted for the Zero only 20 signed up (how’s that for conversion). If I add together the amount of time I spent writing on this blog plus the time I spent maintaining the Zero chart, plus the hosting charges for the colo server I’m massively in the hole - even at a McDonald’s branch manager hourly rate. So, before you guys keep whining like little girls keep all that in mind. If you have nothing nice to say or just come here to complain, then just go back to that mysterious blog that gives you spot on trading tips and daily market analysis all for free.
I’m going outside to kick a tree.
February 22nd, 2009 6:53 pm Market Forecasts 140 Comments
I think it was Karl Denninger who said:
You can dress up a pig and call it daisy but in the end it’s still a pig.
If I think back and reflect on the past year the one salient sentiment that stands out is a complete and utter disregard for reality. Trillions of tax payer dollars have been pumped into obviously insolvent banks, GSEs, and other financial entities - and this is what we got in return:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_xlf.png
Just take a step back and marvel at this chart for a minute or so, and then reflect on the fact that during each and every small retracement the financial ‘experts’ on CNBC, Barrons, MSN, etc. claimed that the bottom was in and that now was a good time to shop for bargains. As the old saying goes: Analysts - you really don’t need them in bull markets - and you definitely don’t want them in bear markets.
Hillary Clinton just returned from an Asia beg-a-thon as overseas money is , which they now want to be guaranteed (FYI - GSE’s are government supported but not guaranteed). Of course we cannot do that without blowing up the treasury market as this would send yields into the sky - the opposite of what Uncle Ben wants to have happen. Yes, the law of of unintended consequence - it never fails to strike, especially when the levers of our economy are being played like a medieval pipe organ during Sunday mass:
http://evilspeculator.com/wp-content/uploads/2009/02/pipe_organ.png
Last week’s tape was ugly for the mouth breathers - breadth was clearly negative every single day and it seems that the 2009 Bull Hunting Season started in mid February. If you didn’t bag your 2000 pound bull just yet, no worries - the bears are just getting started and there’s plenty of downside left to enjoy. BTW, in case you guys ever wondered what Tim and I do during our weekends - here’s a recent snapshot:
http://evilspeculator.com/wp-content/uploads/2009/02/rodeo-bull-riding-sm.png
Okay, let’s get serious - we’ve got tons of charts to look at, but I promise you that you’ll like what you’ll see.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_dji_9mo.png
On Friday I mentioned that the DJI had breached its November 21 low of 7449.38- and that pretty much was the death knell for the pesky triangle scenario. Good riddance, you shan’t be missed! BTW, for now just make a mental note of that 7,197.49 line I marked on the chart - we will get back to that one a few charts down.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_spx.png
Although it is still a theoretical possibility for the SPX, at this point probabilities clearly favor our intermediate (5) scenario. I am now projecting two possible paths going forward. Either the little rally on Friday was it for the expected consolidation and we continue our trajectory downwards or we retrace up to 780 or maybe towards the 800 zone before we drop into the abyss. There are some interesting fib cross-overs which I have taken the liberty to highlight for you rats.
Orange: We are half way in Minuette (iii) of Minute {iii} of Minor 3 of Intermediate (5). The path from here is straight down and it should be violent, especially if we take out the November 741.02 low, which in this scenario would probably happen later this week.
Blue: We are in Minuette (a) of Minute {ii} of Minor 3 of Intermediate (5). We consolidate, maybe very quickly as bottom feeders (and the PPT perhaps) step in again to bang up the tape one last time. After we touch 780 - 800 bearish sentiment should should catch up with them just like gravity hitting a burned out Titan booster module at 60,000 feet. Seriously now - if this turns out to be the count my target zone highlighted above would be extremely conservative.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_bounce.png
For obvious reasons I would prefer the blue scenario as I am looking for an opportunity to reload - besides we’ve seen five down days in a row now and a little bounce would re-energize our downside potential. Remember, the market rarely continues in one direction for an extended period of time.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_dji_a_low.png
Remember that 7,197.49 mark I mentioned above? Well, it just so happens to be the very bottom of the 2002 cycle a wave. The 2007 ‘bull market’ peak was nothing else but the end of this Supercycle’s b wave. We are now in the beginning stage of the c wave, and if you think you’ve seen the worst you’ve got another thing coming. This bear market is just coming out of hibernation as we are now only completing Primary {1} of Cycle wave c - we’ve got 4 more waves to go.
But in the immediate future - what do you think will happen once we breach and eventually close below that 7,197.49 low? Your imagination is as good as mine but I can promise you that it won’t be pleasant for the bulls. Unless of course you enjoy wearing battery charger clamps on your testicles - to each his/her own. How’s that as a visual for you? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_vix.png
As you know I recently started to count the wiggles on Mr. VIX as well. Again, I must point out that any conclusions are still premature but it seems that my current count strongly supports the Intermediate (5) scenario in equities. Based on the above we are now pushing into Intermediate (3) and the target zone here would be 75 -80. So, better enjoy your ‘cheap’ options while they last - volatility should challenge those prior peaks in a fairly short order.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_gold.png
I am the first one to admit that I didn’t expect to see 1000 before we would see 650 in Gold but here we are. Bullish sentiment among Gold traders is now well established in the 90 percentile - and no matter what the count is at this point (and I will follow up on this next week) it’s time for a retracement, just like in March 2008. I’ll be loading up on GLD puts and maybe some ZG contracts when I see signs of a rollover (e.g. stochastic divergence, lack of volume, etc.). Remember that commodities often trace out an extended fifth wave (while equities like to put in extended thirds), so I think we need to give Gold a bit more time - but not much.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_yen.png
While I’m typing this the Yen is doing exactly what I told you guys it would do - slingshot back from the lower border of its 2.0 Bollinger band. That can’t be good for equities tomorrow - I actually hoped they’d keep a lid on it for another day or two - I really want that damn counter rally!! &@%*#*
That’s all I got for tonight - I could go on with various measures, correlations, etc. - but it’s becoming quite clear where we’re heading, which is down. One word of encouragement: If we rally it’ll probably be very violent and you’ll see some long candles as a lot of pent up upside momentum has accumulated - Keirsten mentioned something on Friday about the quiet accumulation of calls by institutional traders. I personally will not let any counter rallies discourage me from grabbing index puts left and right while they’re on sale. Frankly, at this stage I will continue to load up even if we push past the 800 mark and maybe towards 820/830. The DJI is at a new low and so are the Dow Transports (DJT), the Dow Jones Composite (COMP), and last but not least the S&P 100 (OEX). These are bearish Dow Theory confirmation signals and the probability for a counter rally at this stage has been greatly diminished.
2Sweeties To Houston: Nailed It!February 20th, 2009 5:40 pm Update 208 Comments
Well, our Zero was not exactly useless either and I hope that you all enjoyed what I have the pleasure of looking at all day: the glorious Zero-RL. Seriously, it doesn’t get much better than this combo when it comes to timing reversals.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_nailed.png
As you can see my chart was claiming 756 to be solid support (indicated by the blue dots). Zero signal was flat and although we somehow slipped through the 786 in thin trading yesterday 756 had a 87% probability according to my count, which under normal circumstances requires a 4+ signal to breach. Not with this flat tape, you won’t!
2sweeties’ RLs have become an integral part of my medium term trading system. We are super lucky to be able to benefit from his work - if I remember it correctly he has spent over a decade working on this. In case you don’t know - 60% of program trading is based on statistics, not on technical analysis as you know it. Small time rats like us usually do not get access to this kind of data and you should consider yourself lucky that 2sweeties has the patience of a Saint and is willing to put up with you leeches and freeloaders.
Okay, I can’t think of any more insults, so I let you rats enjoy the beginning of our ill deserved weekend. Seriously now - you guys did exceptionally well - and of course we all got a bit lucky as a real PPT rally could have put a quick lid on our profits. I am holding my SPY calls into Monday, it’s not much - just some play money.
Anyway, expect my report Sunday evening - until then I’m off to my new favorite nudie bar.
Cheers!
« Older Entries
Newer Entries
Bull Hunting Season!February 22nd, 2009 6:53 pm Market Forecasts 140 Comments
I think it was who said:
You can dress up a pig and call it daisy but in the end it’s still a pig.
If I think back and reflect on the past year the one salient sentiment that stands out is a complete and utter disregard for reality. Trillions of tax payer dollars have been pumped into obviously insolvent banks, GSEs, and other financial entities - and this is what we got in return:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_xlf.png
Just take a step back and marvel at this chart for a minute or so, and then reflect on the fact that during each and every small retracement the financial ‘experts’ on CNBC, Barrons, MSN, etc. claimed that the bottom was in and that now was a good time to shop for bargains. As the old saying goes: Analysts - you really don’t need them in bull markets - and you definitely don’t want them in bear markets.
Hillary Clinton just returned from an Asia beg-a-thon as overseas money is , which they now want to be guaranteed (FYI - GSE’s are government supported but not guaranteed). Of course we cannot do that without blowing up the treasury market as this would send yields into the sky - the opposite of what Uncle Ben wants to have happen. Yes, the law of of unintended consequence - it never fails to strike, especially when the levers of our economy are being played like a medieval pipe organ during Sunday mass:
http://evilspeculator.com/wp-content/uploads/2009/02/pipe_organ.png
Last week’s tape was ugly for the mouth breathers - breadth was clearly negative every single day and it seems that the 2009 Bull Hunting Season started in mid February. If you didn’t bag your 2000 pound bull just yet, no worries - the bears are just getting started and there’s plenty of downside left to enjoy. BTW, in case you guys ever wondered what Tim and I do during our weekends - here’s a recent snapshot:
http://evilspeculator.com/wp-content/uploads/2009/02/rodeo-bull-riding-sm.png
Okay, let’s get serious - we’ve got tons of charts to look at, but I promise you that you’ll like what you’ll see.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_dji_9mo.png
On Friday I mentioned that the DJI had breached its November 21 low of 7449.38- and that pretty much was the death knell for the pesky triangle scenario. Good riddance, you shan’t be missed! BTW, for now just make a mental note of that 7,197.49 line I marked on the chart - we will get back to that one a few charts down.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_spx.png
Although it is still a theoretical possibility for the SPX, at this point probabilities clearly favor our intermediate (5) scenario. I am now projecting two possible paths going forward. Either the little rally on Friday was it for the expected consolidation and we continue our trajectory downwards or we retrace up to 780 or maybe towards the 800 zone before we drop into the abyss. There are some interesting fib cross-overs which I have taken the liberty to highlight for you rats.
Orange: We are half way in Minuette (iii) of Minute {iii} of Minor 3 of Intermediate (5). The path from here is straight down and it should be violent, especially if we take out the November 741.02 low, which in this scenario would probably happen later this week.
Blue: We are in Minuette (a) of Minute {ii} of Minor 3 of Intermediate (5). We consolidate, maybe very quickly as bottom feeders (and the PPT perhaps) step in again to bang up the tape one last time. After we touch 780 - 800 bearish sentiment should should catch up with them just like gravity hitting a burned out Titan booster module at 60,000 feet. Seriously now - if this turns out to be the count my target zone highlighted above would be extremely conservative.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_bounce.png
For obvious reasons I would prefer the blue scenario as I am looking for an opportunity to reload - besides we’ve seen five down days in a row now and a little bounce would re-energize our downside potential. Remember, the market rarely continues in one direction for an extended period of time.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_dji_a_low.png
Remember that 7,197.49 mark I mentioned above? Well, it just so happens to be the very bottom of the 2002 cycle a wave. The 2007 ‘bull market’ peak was nothing else but the end of this Supercycle’s b wave. We are now in the beginning stage of the c wave, and if you think you’ve seen the worst you’ve got another thing coming. This bear market is just coming out of hibernation as we are now only completing Primary {1} of Cycle wave c - we’ve got 4 more waves to go.
But in the immediate future - what do you think will happen once we breach and eventually close below that 7,197.49 low? Your imagination is as good as mine but I can promise you that it won’t be pleasant for the bulls. Unless of course you enjoy wearing battery charger clamps on your testicles - to each his/her own. How’s that as a visual for you? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_vix.png
As you know I recently started to count the wiggles on Mr. VIX as well. Again, I must point out that any conclusions are still premature but it seems that my current count strongly supports the Intermediate (5) scenario in equities. Based on the above we are now pushing into Intermediate (3) and the target zone here would be 75 -80. So, better enjoy your ‘cheap’ options while they last - volatility should challenge those prior peaks in a fairly short order.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_gold.png
I am the first one to admit that I didn’t expect to see 1000 before we would see 650 in Gold but here we are. Bullish sentiment among Gold traders is now well established in the 90 percentile - and no matter what the count is at this point (and I will follow up on this next week) it’s time for a retracement, just like in March 2008. I’ll be loading up on GLD puts and maybe some ZG contracts when I see signs of a rollover (e.g. stochastic divergence, lack of volume, etc.). Remember that commodities often trace out an extended fifth wave (while equities like to put in extended thirds), so I think we need to give Gold a bit more time - but not much.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-22_yen.png
While I’m typing this the Yen is doing exactly what I told you guys it would do - slingshot back from the lower border of its 2.0 Bollinger band. That can’t be good for equities tomorrow - I actually hoped they’d keep a lid on it for another day or two - I really want that damn counter rally!! &@%*#*
That’s all I got for tonight - I could go on with various measures, correlations, etc. - but it’s becoming quite clear where we’re heading, which is down. One word of encouragement: If we rally it’ll probably be very violent and you’ll see some long candles as a lot of pent up upside momentum has accumulated - Keirsten mentioned something on Friday about the quiet accumulation of calls by institutional traders. I personally will not let any counter rallies discourage me from grabbing index puts left and right while they’re on sale. Frankly, at this stage I will continue to load up even if we push past the 800 mark and maybe towards 820/830. The DJI is at a new low and so are the Dow Transports (DJT), the Dow Jones Composite (COMP), and last but not least the S&P 100 (OEX). These are bearish Dow Theory confirmation signals and the probability for a counter rally at this stage has been greatly diminished.
2Sweeties To Houston: Nailed It!February 20th, 2009 5:40 pm Update 208 Comments
Well, our Zero was not exactly useless either and I hope that you all enjoyed what I have the pleasure of looking at all day: the glorious Zero-RL. Seriously, it doesn’t get much better than this combo when it comes to timing reversals.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_nailed.png
As you can see my chart was claiming 756 to be solid support (indicated by the blue dots). Zero signal was flat and although we somehow slipped through the 786 in thin trading yesterday 756 had a 87% probability according to my count, which under normal circumstances requires a 4+ signal to breach. Not with this flat tape, you won’t!
2sweeties’ RLs have become an integral part of my medium term trading system. We are super lucky to be able to benefit from his work - if I remember it correctly he has spent over a decade working on this. In case you don’t know - 60% of program trading is based on statistics, not on technical analysis as you know it. Small time rats like us usually do not get access to this kind of data and you should consider yourself lucky that 2sweeties has the patience of a Saint and is willing to put up with you leeches and freeloaders.
Okay, I can’t think of any more insults, so I let you rats enjoy the beginning of our ill deserved weekend. Seriously now - you guys did exceptionally well - and of course we all got a bit lucky as a real PPT rally could have put a quick lid on our profits. I am holding my SPY calls into Monday, it’s not much - just some play money.
Anyway, expect my report Sunday evening - until then I’m off to my new favorite nudie bar.
Cheers!
« Older Entries
Newer Entries
Channel 2.0February 20th, 2009 3:19 pm Intraday Update 149 Comments
UPDATE 3:20pm EST: This was all nice and good but we are still inside that SPY channel:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_channel.png
If that’s the best the PPT can do then they’ll have to talk themselves out of a market crash on Monday evening. Better get those bots ready to load up around 3:30pm - not much longer now. Unless we breach this channel this spike was meaningless.
SPY Channel BreachFebruary 20th, 2009 1:18 pm Intraday Update 201 Comments
UPDATE 3:17pm EST: We just breached that little channel on the SPY:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_breach.png
Looks like we’re just going to walk this one off - strange tape but if you’re short just wait it out. Take a reasonable amount of some losses before you cut, no sense in cutting your legs off here. Partial profit taking is of course encouraged. BTW, 756 was a long RL in the SPX - next one is 707.
UPDATE 1:54pm EST: I grabbed a small amount of SPY calls at 856 - so far so good. BTW, while you guys are stroking your boners over Ms. Ponga the folks over at the slope are exchanging quantum physics jokes. Can we please just raise the benchmark by an inch or so over here? I was hoping for some long symbols, etc. - don’t get complacent because you lucked out this week.
Yen wa suge desu ne?February 20th, 2009 12:26 pm Intraday Update 121 Comments
UPDATE 12:19pm EST: While equities are embroiled in a life or death struggle let’s look across the pond at the Yen futures:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_yen.png
I never counted waves in the Yen, but its recent action leads me to believe that we might be close to a bounce here. Above a chart with two possible counts - again, this is early stage and I’ll have to monitor it for a while to develop more confidence. It’s also scraping its 2.0 BB, so let’s see what happens in the next few days. I was tempted to load up on some FXY but it just shot up - as the super short term stochs indicate an overbought condition now I’ll wait a little.
UPDATE 12:46pm EST: Ding Ding Ding Ding Ding!!
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_gold.png
Gold quietly crept across the 1000 mark - it’s been almost a year since we saw those levels the last time. No, it’s not ready yet - not buying those puts just yet.
UPDATE 12:50pm EST: We are getting closer to a possible mini-crash:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_xlf.png
Enough said.
UPDATE 12:54pm EST: Things are moving fast now XLF barely holding 7 by a penny and Gold at 1007 almost.
February 20th, 2009 9:46 am Intraday Update 280 Comments
UPDATE 9:40am EST: Well, that was a nice little drop overnight and it seems that the mojo has finally been sucked out of the bulls for good. We’re in the 760s now and I have been suspicious about this move since here:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-20_spx.png
So, I’m just going to shut the heck up now and let you guys enjoy your profits. Maybe that’s how it’ll go - drip drip drip to the downside. You’d think if there was an intervention the PPT would have stepped in by now.
Hey, did you guys get that short sell bulleton from Interactive Brokers this morning? Seems IB clients can’t short stocks this morning - ooops….
April Crude slightly up - Gold up - Dollar up. Mr. VIX slightly above 49 - that was quite a jump - had no business being down there anyway.
UPDATE 9:49am EST: IB short selling problem seems to have been resolved http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 11:26am EST: About to grab breakfast but before I run off for 30 minutes I wanted to point out that the NQ has been hovering around its VWAP all morning while the ES has been dropping. Tighten your stops people but stick with your trades - maybe it’s nothing.
Deja VuFebruary 19th, 2009 8:28 pm Update 207 Comments
Okay, I’m going to post one more chart on this topic and then I’ll shut up about it:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_repeat.png
Last time we saw the market drop and then flatline like this was at the beginning of February.Then we got one more candle to the downside, followed by a slingshot rally. Again, I’m not saying this is how it’ll play out this time around, especially since I have not tracked this pattern on our Zero/Mole combo before. Maybe it’s nothing and we’ll proceed into the abyss as scheduled. But at least set some trailing stops at a generous distance if you’re heavily delta negative. Just set it 5 or 7 SPX points away - you can do that in TOS easily with a conditional order. This way, if we see a sudden spike back, you’ve got out without too much of a hit.
Remember, only the paranoid survive. I’m with Andy Grove on this one.
Line Of DefenseFebruary 19th, 2009 2:55 pm Intraday Update 175 Comments
UPDATE 2:46pm EST: After much chop chop we slowly degraded back to the old line of defense:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_spx.png
Are we going to be greeted by some long ass candles again? Or is this where we finally breach and challenge the November 21 lows? After three days of sideways tape I frankly don’t care anymore - just do something! http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_channel1.png
I’m keeping an eye on this channel, which thus far has been well observed - I’m not completely useless it seems. FYI - we are way below VWAP at this point on all three index futures and Mr. Yen is beaten to death. This is not a bad set up and there’s a chance we can drop, but I don’t trust the tape - as I have pointed out on several occasions right now. Zero is still flat as a flounder - not much momentum.
XLF is making new lows - 7.65 as I’m typing this - I haven’t checked the comments in the past hour but I’m sure Eric is getting excited. Let’s see if the rest of the market follows suit.
UPDATE 3:08pm EST: Rick Santelli strikes againBTW, this is one of the rare moments you will see a CNBC link on this blog - mark your calendars.
UPDATE 3:43pm EST: Quote of the Day:
Who cares where it was 6 months ago? That’s not what makes something cheap. What matters is where it will be 6 months from now. — Goldmund over at the Slope
In other news - new SPX lows for the week/month. This tape is really strange - it’s all way too orderly. If I was in the market right now (which I’m not) I’d get a bit suspicious.
Dirty ChannelFebruary 19th, 2009 11:09 am Intraday Update 278 Comments
UPDATE 10:53am EST: I am bored, which is when I start drawing channels all over the place.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_channel.png
I know - there are way too few touch points to validate this channel but I think it lines up nicely with where the potential inflection points are. Based on that MMs might walk this market lower and then we either drop like a rock or we break to the upside.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_chop.png
Thus far I would not want to wager which way it’ll go - this is way too reminiscent of what happened during the end of October. We kept chopping and everyone expected a major drop and suddenly we busted to the upside into {2} of 5 of (3). I’m not saying that’s what’ll happen this time around but just be careful - I don’t trust this tape further than I can throw the average market maker (and they are pretty heavy set from what I’ve seen). Keep your exposure thin and don’t get too greedy. I saw comments yesterday along the lines of ‘going all in for this one’. Sure - you do that - if it goes your way you look like a hero - but if it doesn’t you get wiped out.
There are old trader and there are bold traders. But there are no old bold traders.
Gamblers have a tendency to shift into ‘all or nothing’ during times like this. Traders weigh the odds and walk away if they are not in their favor. The question you need to ask yourself is this: What do you know that makes you think we crash and burn here? As you know I’m one of the most bearish traders out there. So, remember this is not coming from a slobbering mouth breathing permabull. If you hold June puts - never mind all that and just hold those suckers. But if you are sitting on March or even February puts - you might want to be looking for exits. Otherwise, if it goes in your favor - good for you. But if it blows up on you please don’t come crying here - I have been warning you rats for three days now.
UPDATE 2:50pm EST: FYI - I set up an Evil Speculator RSS feed with feedburner. You can either use that one or the Wordpress generated on the top right corner of the page.
UPDATE 3:08pm EST: Rick Santelli strikes again - you GOT to watch this. BTW, this is one of the rare moments you will see a CNBC link on this blog - mark your calendars.
VIXedFebruary 19th, 2009 10:00 am Intraday Update 95 Comments
UPDATE 11:53am EST: This must have been the first full eight hours of sleep I got in a long time.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_economic.png
There are some economic announcements starting at 10:00am and spread throughout the day:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_vix.png
Mr. VIX bounced off of its 2.0 Bollinger and is now resting around 47 - was closer to 45 for a while. You can see that I actually started to count the waves on it recently, but am not exactly sure if we see a larger drop here. Doesn’t matter too much as the damn thing has been broken recently and did not keep up with the drops we saw in equities.
Dollar softer today - Gold holding - Crude higher. Should be an interesting OpEx close.
UPDATE 10:35am EST: Note that we’ve been bouncing around in this chop zone for three days now - typical option expiration week madness.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-19_chopzone.png
Of course, as I stated yesterday, the MMs love it here and are happy to drive the tape up and down over and over. I’m like Switzerland (without the snow) - neutral - and watching.
Rat PoisonFebruary 19th, 2009 12:28 am Market Forecasts 141 Comments
That’s what I would call the tape of the past three months - I remember drawing some approximations of the nastiness looming ahead in late October and since then it’s been - well - interesting. Not fun - occasionally profitable - most definitely annoying - and I spent a lot of time just sitting and watching. Intermediate fourth waves are never fun - especially if they are preceded by a sharp second wave correction. Remember one basic EWT alternation rule I quoted a few weeks ago:
If wave two of an impulse is a sharp correction, expect wave four to be a sideways correction, and vice versa.
Sideways correction - indeed…
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_spx2.png
Anyway, I wish I could do an entire update tonight but I was meeting an associate and just got back an hour ago. So, I’ll have to do this telegram style - and although Tim joked that telegrams usually are the purveyors of bad news I think this one might be the exception. If you take out all the whipsaw of course…. and the fact that it’s expiration week…. and the constant threat of the PPT stepping in out the blue…. and…. you know what - never mind.
The good news is that we are nearing an inflection point. This consolidation has teased out a resolution for three months now and it’s finally time to either shit or get off the pot. We’ve got two contenders as elaborated on Monday - Mr. Green and Mr. Orange:
Mr. Green: We are in minute {3} of minor 3 of intermediate (5) and about to plunge into the abyss - no questions asked. There should be only a minor correction after which everyone including Cramer is heading for the hills.
Mr. Orange: A.k.a. the nasty one, a.k.a Mr. Tease-It-Out-For-Another-Ten-Days, a.k.a. the Triangle Of Doom, a.k.a. minor E of intermediate (4). Ya’ll know what this means - we might slide a bit lower, which is permissible but should not breach 741.02 - the November 21 lows. Followed by a rally back up to about 880. I know, made this one out to be all ominous but it’s actually my favorite as I get to reload yet once more.
Momentum was indecisive today but NYSE breadth remained in the bearish camp around 2.5:1.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_cpc1.png
What really surprised me was that CPC chart I posted earlier and which led me to cast doubts as to the potential for any significant near term downside in equities. These levels are pretty extreme and although they can push higher I wouldn’t expect that much pessimism so ‘early in the game’. I’m just not sure we have enough left to finally breach those November lows. Maybe I’m wrong - but it’s worth keeping an eye on.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_gold.png
Okay, I got one more chart before I have to catch some zeezz: Oh, you knew this was coming, didn’t you? Yes, it’s our old friend Gold again and I’m getting very excited for two reasons:
[*]It’s nearing it’s prior March 2008 highs.[*]Cramer just gave it a buy recommendation today - a.k.a the ‘Kiss Of Death’ (thanks Joseph).I think it has a few more points to the upside in it - but near the 1000 mark I will start loading up on GLD puts. Heck, maybe I even sell a few futures contracts - there’s no way I’m missing out on this one.
That’s all I got for tonight folks - sorry but it’s been a busy week for me. And you know I’m making up for it during the day.
See you tomorrow bright and early.
Cheers!
P.S.: Watch the RLs on the Zero chart - I think this has been a very insightful combo this week. I wish I could run it this way all the time.
« Older Entries
Newer Entries
Bulls Better HurryFebruary 18th, 2009 3:44 pm Intraday Update 219 Comments
UPDATE 3:36pm EST: Hey, where is my scheduled 3:30pm PPT rally? I feel cheated!
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_yen1.png
Seriously now, the bulls better get a move on because once this thing snaps back - and it will snap back - it won’t be a pretty sight. So - calling all mouth breathers!! Drive the tape up while you can!
I’m split right now - we have dug in but have not been able to make any upward progress. It’s opex week and two more days to go. Wednesday is usually the big day - and traditionally Thur/Fri are thin. Maybe I should just stay in bed tomorrow because I was bored out of my mind today with this chop. Sitting on a pile of cash right now and liking it - this is not definitely not where you sell and maybe where you buy. Emphasis on maybe as I have to see some buyers step in and push this party across VWAP and keep it there.
The trend however remains to the downside - no doubt about it. Both scenarios are still in play - which one - well we shall see. I really cannot make an educated guess right now - especially not during nasty opex week. On final thought - we’ve got 12 minutes to go - watch for a repeat of a last minute sell off in the futures. Could be a repeat of Friday 3:58pm again.
UPDATE Closing Bell: Here’s the sell off I was waiting for - LOL - so predictable. Not as bad as last Friday though… yet. Anyway, I’ll be in touch later with an update - good show today.
Before you guys run off: Does any of you have experience with AdSense? The first two days were amazing and suddenly the conversion rate has trickled to a crawl. The ads are mostly shit too - I even hooked in Google Analytics to get better targeting but I keep seeing those damn Spanish ads - what’s up with that? Might just pull those banners if this doesn’t improve. If anyone has pertinent experience please post some tips - I would appreciate it.
UPDATE 4:11pm EST: DAMN - did you guy SEE that?? ES just touched 776.50 there for a second. The games continue… if anyone wants still in - 3 more min to go.
Yowzers!February 18th, 2009 11:45 am Intraday Update 284 Comments
UPDATE 11:41am EST: Zazu pointed me towards the CPC which I didn’t bother to look at last night:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_cpc.png
Talking about going from one extreme to the other. This does open the door for a potential snapback rally - remember, the majority is usually wrong. Not saying it must happen, but just make sure you are not too exposed on the short side.
UPDATE 12:32pm EST: Let’s talk trading psychology for a moment:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_spx1.png
We just had a nice drop and touched a key resistance line around 780. It’s expiration week with only 17 trading hours to go. The bears have smelled blood and are reloading at the peaks, expecting a continuation of the drop. The bulls are beaten down but are positioned to make a stand around 780 or if necessary around 750ish.
The Zero is painting a thin signal indicating indecision - stop signals are being triggered due to whipsaw candles and signal reversion. Now, if I was a market maker I know what I would do. I would run the tape up and then I’d run it down again - not unsimilar to what we just saw. I’m seeing a lot of wild jaggeed moves to the downside and I’m sure it won’t stop until we touched the lows again. Laggard bears are probably chasing it down and hopeful bulls are taking profits or trying to minimize losses. Lather, rinse, repeat.
I don’t want to sound like your pappy here and all I’m saying is that you might want to be cautious. It’s understandable that you guys want a release move to the downside after having waited now - what - 3 months? But everyone is scared right now and the bears are getting overconfident. If I would see a -4 Zero signals it would be a different story but the indecision flags are telling me to take a step back and wait this out. Yeah, maybe I miss out on the best reload we’ll get - but maybe I’ll also be spared from a wild chop session.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_spy.png
Exhibit B.
UPDATE 3:00pm EST: Boy, those were some nasty candles - LOL - somebody just stepped in and it’s not even 3:30pm yet. Not much else to say - as expected we’ve been chopping around all day, however we did drop further than I thought. Let’s see if we get some EOD fireworks. Zero is flatlining with a bias towards the upside. Don’t get whipsawed around, boys and girls.
Bulls MIAFebruary 18th, 2009 10:20 am Intraday Update 106 Comments
UPDATE 10:17am EST: I was riding the futures downhill since the open - nice trip so far http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_spx.png
The trend continues to the downside and we are now resting exactly at my support line I drew over the weekend - sometimes you get lucky. Frankly, I am not sure this one will hold, the bulls are MIA and the bears are running the show again. But if we’ll see buyers step in today this should be where it’ll happen.
FYI - the next long RL is at 756, and the next one after that is 707. But of course we are much more interested in what’ll happen at 741.02, which is the November 21 low. We breach that and Kansas is going bye bye.
UPDATE 10:43am EST: Yes, it’s that time of the day again:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-18_yen.png
Sorry to keep harping on this but the Yen is getting hammered hard and is way outside its 2.0 BB right now. The bulls better pray that the Yen doesn’t catch a break because if it does it’ll get really ugly, I talking Spanish Inquisition style.
UPDATE 11:25am EST: Okay, we are now approaching pivots on the NQ and the YM - we’ll know very soon if there is any juice in this bounce. Thus far it looks pretty meager - way too orderly.
BTW, the TNX has been positive all morning - which made me a bit suspicious about the drop. However, lately this correlation has been soft at best, so I don’t put too much weight in it.
UPDATE 11:32am EST: Tim was complaining to me about the horrible bid/ask spreads on XLU and since SPD is even worse I think the only other way to play this is to pick out some of its components directly. So, here’s anwhich you can import into Prophet - so, knock yourself out. Here’s also afor your convenience - got to keep my leeches entertained after all.
Mole MIAFebruary 18th, 2009 1:05 am Market Forecasts 105 Comments
Hello rats - I had to take care of some personal business most of the afternoon/evening, thus I didn’t have time for a full update. Nothing much has changed thus far - we gapped to where I thought we’d stop, which was near 786 in the SPX. That line in the sand remains tomorrow and the next one after that is 756, which is 1/2 way between the 78.6% fib and the 741.02 November 21 low. Now the only question remaining is whether or not we continue tomorrow or if there’s a relief rally brewing - I personally wouldn’t mind the latter as I want a reload. Frankly, if today’s tape was any indication - fuggetaboudit.
The Monday post is still valid in every respect and both wave counts remain in play.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_yen2.png
One quicky chart before I fall into bed: The Yen has been pushed outside its BB again - no doubt that it can stay outside for a few days but it’s been beaten to death lately and there doesn’t seem to be much of a reprieve. This however can’t go on forever and I expect a reversal rather sooner than later. We watched equities taking it in the rear all day today despite a weakening Yen and I can only imagine what will happen if we see a reversal here. I gave that FX dislocation last night some thought and am convinced that there was (and continues to be) some massive Yen manipulation at work here - this feels unnatural. They knew what a Yen rally might have done to equities today and even throughout a weak Yen we barely avoided a slide into the abyss today.
Anyway, that’s my story until someone offers me a better theory. And with that I’m turning in.
Cheers,
Mole
Whip-dee-dooFebruary 17th, 2009 3:16 pm Intraday Update 327 Comments
UPDATE 3:13pm EST: We have not gone anywhere since the early morning open gap - I could have just run some errands.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_yen1.png
The Yen has been pushed down every time it attempted to breach the 50 yard line - we got some skilled linebackers here. However, despite seeing some very violent candles in my index futures charts they are not making much progress either. There is a big battle being fought right now and I’m not sure yet which side will get the pop by the close. I was hoping for a nice reload-rally but the way we’re going I can kiss that one good-bye. Maybe some of our intrepid mouth breathing friends will step in at the close to load up on ‘deals’ but I wouldn’t bet an money on that right now. Need to stay patient and wait for the right moment.
UPDATE 3:27pm EST: XLF just painted new lows - not looking good for the bulls…
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_xlf.png
UPDATE 3:31pm EST: PPT just stepped in. Those are some nasty candles!
UPDATE Closing Bell: XLF closed at 7.97 - bulls lost this one. I actually grabbed some puts a minute before the close.
786 A.D.February 17th, 2009 12:35 pm Intraday Update 194 Comments
UPDATE 12:32pm EST: We’re slightly pushing up right now but if we continue our drop watch this level on the SPX (the ES fair value is -2.02 right now):
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_spx.png
I mentioned that the bulls are most likely to stage their defense at this level, so if you are still short and are looking for a spot to take profits this might be it.
UPDATE 1:35pm EST: Here’s my decision on the Zero/Mole chart. Since 2sweeties has a free week and since we are at an important inflection point I’ll keep it freely available until the end of this week. After that I’ll set up a simple password protected section and if you are interested I’ll accept PayPal payments for the first month or two. If I indeed get 100+ subscriptions and they don’t drop off I’ll set up a more sophisticated member section.
This gives you all rats a chance to correlate the market’s momentum with 2sweetie’s RLs all week. I think this is a great moment for the Zero to show what it can do after some of you wrote it off during the whipsaw. Oh yee of little faith… http://evilspeculator.com/wp-includes/images/smilies/icon_razz.gif
UPDATE 2:07pm EST: Attention ladies and leeches: VWAP breached on all three index futures - expecting a retest now. Yen has been showing no strength at all - I wonder how far they can push this thing before it snaps back like a rubber band.
Pass It AroundFebruary 17th, 2009 11:10 am Intraday Update 104 Comments
UPDATE 11:09am EST: POT is taking it up the rear this morning - nice!
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_pot.png
Remember I posted this chart a week ago, and what’s interesting is that it stopped right on that downward diagonal. Let’s see if we get a bounce here - another reload? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 11:18am EST: I’m back with my favorite Yen/ES correlation chart:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_yen.png
Observe how the Yen just dropped like a rock but the bounce in the ES has been listless thus far. Not a good sign for equities - we’ve seen this happen several times in the past few weeks and almost every time equities got murdered once the Yen snapped back. Now, before you start loading up on puts - it’s quite possible we won’t see the Yen push above the 25 line today - there’s a lot of action in the FX markets and a lot is riding on a weak Yen right now. PPT is probably on standby.
Also, Zero signal has not degraded thus far - if you’re already delta negative this is good news. If you are not - well, this is not the time to load up on puts IMHO. Yes, we the bottom could give any moment in equities but the risk/benefit ratio is tantamount to a crap shoot. Be patient - let the market come to you.
UPDATE 11:32am EST: The Empire State Manufacturing Survey just came in:
http://evilspeculator.com/wp-content/uploads/2009/02/gbcchart_february09.gif
Either I accidentally flipped the chart or this is very bad.
UPDATE 12:00pm EST: It’s only noon and I feel like I worked a whole day already - LOL
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_stochs.png
As you all know stochastics are lagging indicators. However, they do give you an idea of upside/downside potential if you know how to read them. Right now my grid shows all main averages pushing down again as expected last night. Yes, we might snap back (like what happened in January marked in orange) but remember that as long as the signal line stays below about 20/25 it can keep going for a while. I usually only cut my short positions once I see either a divergence or a swing above that lower line.
UPDATE 12:16pm EST: Since a lot of people are fans of Eric’s XLF chart I’m posting his latest rendition:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_eric.png
Yo, Eric - can you make it more square? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Don’t Chase!February 17th, 2009 9:47 am Intraday Update 123 Comments
UPDATE 9:41am EST: We just plunged below 800 - boy that was fast http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2009/02/chase.jpg
Whatever you do - if you are not in the market already since Friday do not start chasing the tape right here. If we get a counter rip - that is the time to get positioned. Yes, perhaps we don’t get a chance for a reload and we keep sliding from here (which I doubt) - if so we have to remain disciplined and sit it out.
FYI - the RLs are fair game this week - you can talk about them all you want. I also have turned on the Zero-RL, so that you rats can watch the interplay between those two. I’m a bit surprised about the weakness of the signal I’m seeing right now - a minus 1.8 is pretty measly considering this plunge. Which gives me added reason to not chase right here.
UPDATE 10:02am EST: I’m getting popular request for ‘Break On Through ‘ but I won’t play that one until we breach the November 21 low at 741 http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 10:15am EST: A lot of symbols on my watch list are turning the corner - I cannot wait for a decent rip to dip in. However, more significantly XLU has finally breached its triangle:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-17_xlu.png
That is a very bearish signal and supports the wave (5) scenario. I bought this sucker two weeks ago - but if you are not already in there wait for a retest. Perhaps we get one last kiss goodbye before it embarks to my 22 target.
BushidoFebruary 16th, 2009 11:40 pm Market Forecasts 132 Comments
It’s good to be back in business - as the sun was setting in Los Angeles I was getting worried about not being able to trade at all tomorrow. Anyway, I have lost most of my day, so let’s get cracking.
Being cut off from civilization however gave me a lot of time to reflect on last week and thus draw various conclusions which I would like to share with you rats before we get to our charts. What’s become abundantly clear is that Thursday and Friday was nothing but one big shake out designed to clear out the hobby bears.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-15_level2.png
Keirsten was so kind to send me some screen grabs of her Level II historical time/sales history over the weekend. I have not even bothered to highlight particular sections as the massive block orders posted just before 4:15pm EST are quite salient. Remember futures and and big ETFs like SPY keep trading for another 15 minutes past the NYSE closing bell. That is usually right when market makers and primary dealers show their cards - once it’s too late for the average small spec to jump onto the bandwagon. Let’s also not forget that probably 80% (educated guess) of all small specs out there are unaware that SPY, IWM, QQQQ, and DIA continue to trade for a 15 more minutes. Even if you do know you probably get a horrible fill and it’s probably too late to get in as in most cases a large chunk of the move has already completed.
We both basically came to the following conclusion: The big boys were probably quietly buying up puts throughout the Friday peaks - then a few minutes before the closing bell they initiated a massive block sell assault, which triggered panic market orders by the bullish L2 crowd who suddenly faced being hit by margin calls. They usually panic and place market order in a desperate attempt to get out. Once they got the pendulum swinging towards the bearish end the rest was pretty much procedural. The nasty slew of economic news reports spread all across a three day weekend only helped to expedite bearish sentiment. It’s been downhill since and ES futures are trading around 808.75 as I’m typing this.
In one of my comments this morning I mentioned that we have been stuck in this 800 region for over a month now and that it might take a significant trigger event to get us out of this channel. We finally did breach 8000 on the DJI last week (i.e. 2 consecutive closes below) but the SPX has thus far been stubbornly clinging to the bull’s line in the sand at 800. Maybe this weekend’s flood of bad news represents an inflection point that will able to get us out of this horrible whipsaw zone we have had to put with for much too long now. But I still believe that the permabulls will not admit defeat so easily and put up a massive fight to hold the fort. For they know that a breach of 800 will most likely lead to a breach of the November 21 low of 741.02 - and beyond that lies the darkness of the abyss.
Which brings me to the theme of tonight’s post: Bushido.
http://evilspeculator.com/wp-content/uploads/2009/02/bushido.jpg
Bushido comes out of Buddhism, Zen, Confucianism, and Shintoism. The combination of these schools of thought and religions formed the code of warrior values known as Bushido.
From Buddhism, Bushido gets its relationship to danger and death. The samurai did not fear death and had no fear of danger. Through Zen, a school of Buddhism one Samurai engaged in mental disciplines with the goal of reaching the ultimate Absolute. Zen meditation teaches one to focus and reach a level of thought words cannot describe. Zen teaches one to know thyself and how not to limit yourself. Samurai used this as a tool to drive out fear, unsteadiness and ultimately mistakes. These things could get them killed.
So, what does all that have to do with trading?
Everything! Especially in this upcoming week.
If the past few weeks have taught us anything it’s that technical analysis has slowly degraded to point where it utility has almost broken down. Various inter market correlations have been out of sync,daily moves have bordered the random, and trading during NYSE hours has turned into a virtual war of wits. The stakes are high on both ends - and in this case the two warrior factions are the bulls and the bears. The bulls are represented best by the PPT, the primary dealers, and the millions of mouth breathers sliding the slope of hope (i.e. the Cramer crowd). The market makers are neutral and synonymous with arms dealers - no matter where the tape goes they make money as long as they keep the conflict going. The bears are the few remaining hedge funds, institutional speculators, Tim Knight and his intrepid disciples, and finally us rats.
The past two trading days were brilliantly executed strategies that turned out to be an extremely profitable endeavor by institutionals. Sun Tzu would have been proud - with the exception of maybe Eric and a few hardcore bears most of the small specs buckled and got shaken out. Anyone who was expecting another rip leading to an opportunity to reload on puts is probably kicking him/herself right now - myself included.
Now where am I going with this? I had plenty of time to think long and hard about what I needed to convey this week as we might be on the brink of a significant move to the downside. What differentiates this blog from many others is that it seeks to avoid academic technical analysis which might be useless to hands-on traders. My core mission is to offer insights that will lead to real trades capable of producing maximum profits at the least amount of risk exposure.
What is clear to me right now is that whatever happens tomorrow morning, unless you are already positioned, active participation in wave {3} of 3 of intermediate (5) will require the following:
[*]Commitment to participate[*]A lack of fear[*]Focus[*]Time[*]Capacity to embrace death (i.e. total loss of invested capital):A commitment to participate: You have to make a decision on whether or not you want to trade this wave down. I know this may sound silly because chances are you have been waiting for this for weeks now and might even have incurred losses in all the whipsaws. But I want to make it clear that, just like 3 of intermediate wave (3) this one won’t be easy and in the best case scenario we probably will have to endure losses before we arrive at a final release to the downside. It is crucial that you sell the rips and are not lured into chasing the market. Even if you are able to time your trades well, there is not guarantee that a PPT assault of the likes we witnessed on Wednesday and Thursday won’t repeat itself. They will do whatever it takes to keep this market from crashing. So, before you position yourself you must commit yourself to sitting through any counter moves.
A lack of fear: This plays into the commitment part - I am sure we will see nasty whipsaws this week. Use them. This is the only way to position yourself. Follow your charts, the RLs, the fibs, and whatever else you think you can rely on. But be ready to pull the trigger - if you snooze you will lose. Now, that does not mean that you should be reckless - follow your system to the letter, whatever that may be.
Focus: Again, leads into the prior point. We cannot be driven by fear. This has been my mantra here for months now but we have to constantly remind ourselves that it is human emotion that keeps us from placing winning trades.
Time: I made a big mistake two 1/2 weeks ago in buying February puts. The one weakness of Elliott Wave Theory is that does not offer us a clear time dimension. It is up to us as traders to look at various complementing indicators that may give us a reasonable estimate as to how far we are along in a particular count. That doesn’t mean you buy puts six months out, but it’s obvious that option buyers should err on the cautious side, especially at critical defensible lines.
Capacity to embrace death: I know that sounds a bit over the top - just stay with me here http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif Whatever capital you devote to riding this one down should be money you can afford to lose. We are not gamblers, and as traders we do our best to position ourselves ahead of moves that afford the highest probability of success. However, I personally always approach a trade with an expectation that I will lose. I know where my line in the sand is and that is where I exit, no questions asked and no re-evaluation. Never enter a trade unless you know what your exit is. However, we have recently reached a point at which risk management is almost impossible. Therefore, this plays into point number one: If you decide to play this week you might not be able to employ your usual stop loss provisions. Or at least you might have to be extremely generous in how much losses you will be able to tolerate. For me personally, this means playing it relatively small - I initially thought that I would be vested 50% or more at this very stage. However, even if I decide to take entries in the coming days - assuming we don’t just plunge to the bottom tomorrow morning of course - then I will most likely limit myself to less than 20% of my trading capital. Remember rats - the key to surviving in the long term as a trader is not getting taken out by your own greed.
Sorry this took so long - now that I have painted the picture from a psychological perspective let’s look at some charts:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_spx.png
You might remember that SPY chart I posted on Friday in which I proposed that we might complete an a-b-c which would have gotten us to around 854 (equality). Frankly, at this stage this train seems to have left the station as the ES futures were trading around 808.75 as I started typing this. In the chart above I am calculating the SPX equivalent by deducting the PREM from the ES. That gets us to around an equivalent of about 810.75 - barely above the bottom of minute wave (i) of minor 2 of intermediate (5). There is a very good chance we’ll blast through that tomorrow at some point (probably after an obligatory post-gap counter rally) and then proceed to challenge 786, which is a long retracement level plus it happens to be close to the 78.6% fib line relative to the November 21 bottom.
I do believe that the bulls will make a stand right around that level, and whether or not they succeed will determine if we push up into wave E of a triangle which would complete intermediate wave (4), or if this is already intermediate (5) and we finally breach the November lows and proceed our plunge into the abyss. Frankly, I give both scenarios equal weight at this point as various of my trend/sentiment indicators are almost in equilibrium right now:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_nymo.png
Medium term we are far from oversold levels by any standard.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_bpnya.png
More long term we are traditionally in neutral territory, but when compared with recent readings we are slightly overbought.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_nhnl.png
This one gives me hope - the moving averages on the NYSE new highs/lows chart have not budged and there is plenty of room below. Again, we have not seen such levels since last August at the peak of intermediate wave (2) of primary wave {1} of cycle wave c.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_cpc.png
The CPC chart shows that the we have retraced from those extremely bullish levels but then started to drop again on Thursday and Friday. No matter which way you read this chart, there is plenty of room above and I do believe that we will see a ratio of 1.3 and above before this wave is complete.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_yen.png
Oh, I must say I like this chart very very much http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif There has been a lot of pressure on the Yen all last week plus over the weekend. I wish I had the time and space here tonight to explain some of the underlying dynamics. However, this post is way too long already and this is the gist: It might be possible that we see the Yen drop a bit further but it can’t last forever and eventually it will snap back inside the the BB, even if it’s only for a day or two. If and when that happens - and that might be tomorrow or it might be a week from now - it will put immense pressure on equities. I was spot on with that last time I posted this chart and I am confident that we will see a repeat.
In that context the following news tidbit is extremely interesting:
Japanese Finance Minister Nakagawa Resigns After Furor Over G-7 Briefing
The proverbial excrement is about to hit the fan down in Japan and it might just be the trigger event we have been waiting for.
UPDATE: Karl Denninger points out that there might be an FX dislocation in progress. Again, I didn’t have access to the markets all day and am just now catching up on news.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_grid.png
This chart is my fly in the proverbial ointment. As I’ve made it already abundantly clear - as long as this one keeps pointing up I am extremely hesitant to expose myself to the downside. I will of course need to see those readings after the open, as a gap to the downside might be able to swing them southward.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_repeat.png
Last but not least my favorite chart for tonight. What seems to be developing on the weekly stochastic may be a repeat of what we saw prior to wave 5 of (3). Remember that back then I was a bit nervous about my stochastics pointing up, after which we however got one last drop before we consolidated into intermediate (4). The pattern looks familiar but I don’t want to jump to conclusions. Nevertheless, it’s a possibility - and based on prior precedence a door to the downside appears to be open.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_gold.png
I think Gold might actually have overstayed its welcome and I might try my luck with a very small position in GLD in a few days (yes, I swore I would never touch the stuff again, but I can’t help myself). The stochs/MACD on GLD look like they are close to rolling over - but emphasis is on ‘close to’ - don’t jump on this tomorrow morning. I will let you guys know when I think this one is ready for the plucking. Hey, 6th time is a charm, right? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Alright, that’s all I got for tonight - my apologies if this one feels a bit rushed but as you know I didn’t have much time this weekend due to my 10 hour power outage. Based on the flood of comments you guys have been on fire this weekend - I’m truly impressed by the quality of the discussions I see here lately. Good stuff - keep it up and we might just make it through this wave with some profits.
Also a big up to Eric - mate, you stuck with your guns last Friday and are now reaping the benefits.
REKOGNIZE!!
Cheers,
Mole
I’m Back!February 16th, 2009 8:05 pm Update 47 Comments
Okay, power has been restored - only took them 10 hours - I’m so moving out of this town.
http://evilspeculator.com/wp-content/uploads/2009/02/rotj-forcelightning2alt4.gif
Anyway, it’s charting time - going to work now. Unfortunately many of you might not see this before tomorrow morning - I’ll do the best I can.
Cheers,
Mole
« Older Entries
Newer Entries
Capacity to embrace death: I know that sounds a bit over the top - just stay with me here http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif Whatever capital you devote to riding this one down should be money you can afford to lose. We are not gamblers, and as traders we do our best to position ourselves ahead of moves that afford the highest probability of success. However, I personally always approach a trade with an expectation that I will lose. I know where my line in the sand is and that is where I exit, no questions asked and no re-evaluation. Never enter a trade unless you know what your exit is. However, we have recently reached a point at which risk management is almost impossible. Therefore, this plays into point number one: If you decide to play this week you might not be able to employ your usual stop loss provisions. Or at least you might have to be extremely generous in how much losses you will be able to tolerate. For me personally, this means playing it relatively small - I initially thought that I would be vested 50% or more at this very stage. However, even if I decide to take entries in the coming days - assuming we don’t just plunge to the bottom tomorrow morning of course - then I will most likely limit myself to less than 20% of my trading capital. Remember rats - the key to surviving in the long term as a trader is not getting taken out by your own greed.
Sorry this took so long - now that I have painted the picture from a psychological perspective let’s look at some charts:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_spx.png
You might remember that SPY chart I posted on Friday in which I proposed that we might complete an a-b-c which would have gotten us to around 854 (equality). Frankly, at this stage this train seems to have left the station as the ES futures were trading around 808.75 as I started typing this. In the chart above I am calculating the SPX equivalent by deducting the PREM from the ES. That gets us to around an equivalent of about 810.75 - barely above the bottom of minute wave (i) of minor 2 of intermediate (5). There is a very good chance we’ll blast through that tomorrow at some point (probably after an obligatory post-gap counter rally) and then proceed to challenge 786, which is a long retracement level plus it happens to be close to the 78.6% fib line relative to the November 21 bottom.
I do believe that the bulls will make a stand right around that level, and whether or not they succeed will determine if we push up into wave E of a triangle which would complete intermediate wave (4), or if this is already intermediate (5) and we finally breach the November lows and proceed our plunge into the abyss. Frankly, I give both scenarios equal weight at this point as various of my trend/sentiment indicators are almost in equilibrium right now:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_nymo.png
Medium term we are far from oversold levels by any standard.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_bpnya.png
More long term we are traditionally in neutral territory, but when compared with recent readings we are slightly overbought.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_nhnl.png
This one gives me hope - the moving averages on the NYSE new highs/lows chart have not budged and there is plenty of room below. Again, we have not seen such levels since last August at the peak of intermediate wave (2) of primary wave {1} of cycle wave c.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_cpc.png
The CPC chart shows that the we have retraced from those extremely bullish levels but then started to drop again on Thursday and Friday. No matter which way you read this chart, there is plenty of room above and I do believe that we will see a ratio of 1.3 and above before this wave is complete.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_yen.png
Oh, I must say I like this chart very very much http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif There has been a lot of pressure on the Yen all last week plus over the weekend. I wish I had the time and space here tonight to explain some of the underlying dynamics. However, this post is way too long already and this is the gist: It might be possible that we see the Yen drop a bit further but it can’t last forever and eventually it will snap back inside the the BB, even if it’s only for a day or two. If and when that happens - and that might be tomorrow or it might be a week from now - it will put immense pressure on equities. I was spot on with that last time I posted this chart and I am confident that we will see a repeat.
In that context the following news tidbit is extremely interesting:
The proverbial excrement is about to hit the fan down in Japan and it might just be the trigger event we have been waiting for.
UPDATE: Karl Denninger points out that there might beAgain, I didn’t have access to the markets all day and am just now catching up on news.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_grid.png
This chart is my fly in the proverbial ointment. As I’ve made it already abundantly clear - as long as this one keeps pointing up I am extremely hesitant to expose myself to the downside. I will of course need to see those readings after the open, as a gap to the downside might be able to swing them southward.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_repeat.png
Last but not least my favorite chart for tonight. What seems to be developing on the weekly stochastic may be a repeat of what we saw prior to wave 5 of (3). Remember that back then I was a bit nervous about my stochastics pointing up, after which we however got one last drop before we consolidated into intermediate (4). The pattern looks familiar but I don’t want to jump to conclusions. Nevertheless, it’s a possibility - and based on prior precedence a door to the downside appears to be open.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-16_gold.png
I think Gold might actually have overstayed its welcome and I might try my luck with a very small position in GLD in a few days (yes, I swore I would never touch the stuff again, but I can’t help myself). The stochs/MACD on GLD look like they are close to rolling over - but emphasis is on ‘close to’ - don’t jump on this tomorrow morning. I will let you guys know when I think this one is ready for the plucking. Hey, 6th time is a charm, right? http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Alright, that’s all I got for tonight - my apologies if this one feels a bit rushed but as you know I didn’t have much time this weekend due to my 10 hour power outage. Based on the flood of comments you guys have been on fire this weekend - I’m truly impressed by the quality of the discussions I see here lately. Good stuff - keep it up and we might just make it through this wave with some profits.
Also a big up to Eric - mate, you stuck with your guns last Friday and are now reaping the benefits.
REKOGNIZE!!
Cheers,
Mole
I’m Back!February 16th, 2009 8:05 pm Update 47 Comments
Okay, power has been restored - only took them 10 hours - I’m so moving out of this town.
http://evilspeculator.com/wp-content/uploads/2009/02/rotj-forcelightning2alt4.gif
Anyway, it’s charting time - going to work now. Unfortunately many of you might not see this before tomorrow morning - I’ll do the best I can.
Cheers,
Mole
« Older Entries
Newer Entries
Spikes!February 13th, 2009 1:42 pm Intraday Update 308 Comments
UPDATE 1:30pm EST: As you know I’m watching the futures pretty much tick by tick all day. Not because I trade them heavily or that I’m a daytrader but just to get a ‘feel’ for the market.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_spikes.png
What I keep seeing for the past few days are ‘trigger spikes’ - for a lack of a better name. So, you see the market happily wind its way down and then suddenly you get a massive spike to the upside coming out of nowhere. Panic short covering ensues and - voila - the short term trend switches to the upside. Lather, rinse, repeat.
Now, this tells me something. First up it tells me that there’s a strong buyer of course. But the timing and placement of these trigger spikes seem to be very deliberate and occur at key lines, sometimes after a small overshoot.
Then I’m looking at the Zero chart and there’s no momentum either way. The Yen also is just flatlining - and its valiant attempt of breaching S2 was quickly stomped on. TNX is pushing towards 2.9% again, which is bullish.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_stochs.png
Then I’m looking at my trusted stochastic grid and am not liking what I see. Ladies and leeches - this is not the type of setup I usually short into. Rather, this is where I take profits and go long. That line keeps pushing the upside and based on months of monitoring this very chart I am very hesitant to be exposed to the downside.
Now, maybe I’m wrong and that line is going to wiggle itself back down again. But, I have very rarely seen that - so you tell me if as a trader it’s worthwhile to pull the trigger on going short. If nothing else long symbols might be worth considering at this point.
Just a warning - I don’t want to freak you guys out, but this is pretty strong evidence to support stepping to the sidelines. You know I’m an Ueberbear by heart, but I’m also a trader and as much as I want this ing market to crash, I just don’t see it right now, today, before the long weekend.
UPDATE 2:00pm EST: Wow, I timed that one quite well http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_abc.png
Here’s a possible scenario - not sure that’s what we’ll get but if we breach 840 on the SPX it’s a real possibility. FYI - we are now above VWAP on all index futures - here comes the retest.
UPDATE 2:20pm EST: Eric has been posting a lot of XLF charts. Here’s my take:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_xlf.png
Thus far we remain stuck in the chop zone…
UPDATE Closing Bell: What we saw in the last two minutes was nothing but profit taking before the three day weekend. Like a little ‘thank you suckers!’ to everyone who was hoping we’d rally hard. I didn’t get resolution either way - no new highs and no breaches of significance. This was just one big chop fest and the 824 low in the SPX held.
As I’m typing this the index futures keep dropping like a rock (819 now). So you GOT to wonder if all of this was just one big middle finger to the bears and that the top dogs made their money and now won’t care about letting equities slide. All I’m sensing in the market right now is confusion - and as you can judge by the Zero/Mole - there is little participation.
Tough tape but we can’t force it. I personally prefer to position myself outside of chop zones. Anyway, I’ll be pouring over my charts again for the next few days, trying to make sense of it all and come up with a strategy for us rats. Right now I feel we’re in limbo. Many of us are not leveraged to the downside and we also are not given distinct opportunities to load up again. If we drop from here it’ll be one big waste for most bears out there.
Resident Evil ZeroFebruary 13th, 2009 10:57 am Intraday Update 237 Comments
UPDATE 10:46am EST: Okay, I’m split regarding the future of the Zero indicator. The vast majority voted against it but I did get 122 yays, which is kind of cool. I’ll think about it over the weekend, maybe I’ll set up some sort of paypal system as implementing a membership based module would mean a few grant in upfront cost. So, for now I’ll leave it up and running as is and then tell you what I’ll do on Monday.
http://evilspeculator.com/wp-content/uploads/2009/02/resident-evil-zero-1.jpg
However, since I feel generous today I have thrown in a little goody for you Zero loving rats. At the bottom of the data feed you now see a different visualization of what’s behind the Zero. It’s actually an early version of it and I personally watch it a lot during trading as it offers me a lot of hints of what the state of the market is at any given moment. I’m not going to spend a lot of time explaining this but just observe expansions and contractions of the ‘bubble’. Also, note how the bubble did not increase much at all during yesterday’s PPT sponsored ‘candle from hell’. That in itself is an important piece of information as the large expansion during the Tuesday drop is in sharp contrast with those readings.
I’m going to let you guys digest this and maybe I’ll put up a poll later to see if it’s useful. If not, I’ll pull if off again but I have an inkling some of you will ‘get it’ right away http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 11:19am EST: Some people are reporting problems accessing the site. This might be caused by your ISP’s DNS servers not being updated quickly enough. The standard these days is once every few hours but it used to be once every few days. In the meantime some of you might have better luck with this URL: http://67.227.134.246
Market: Frankly, at this point I’m almost mentally checked out. We have retraced most of the upside progress while the Yen has rallied and is testing its S2 pivot. I didn’t short at SPX 840, which was in the middle of nowhere and I’m sure not going short or long right here.
UPDATE 12:48pm EST: Ladies and leeches, I am having problems accessing this site myself today. My ISP says it’s not their fault and you know how arguing with tech guys goes - they insist you have no clue and even if they’re wrong they don’t admit to it. Never mind that I used to be an engineer for 15 years and have set up my own networks.
Anyway, I’m not sure what server I’m on right now (old or new) how many people can see me, and the comment count is lousy. So, I’ll probably not going to be posting for the remainder of the day. Let’s hope that this has been resolved by Tuesday. Friday XIII indeed….
The market: I have little confidence about the tape today - nothing makes sense. Correlations are broken (Yen, TNX) and it feels like an all-purpose-trap to me. I might miss out on a drop later this afternoon but am pretty comfortable sitting in cash right now.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_retail.png
I’m pretty ticked off as I missed out on a great entry because I was burning time debating server issues with my ISP. Perhaps we’ll get back to that line again - thus far it’s been holding, even during this morning’s quick rally.
I am actually looking forward to a long weekend.
New Server!February 13th, 2009 9:45 am Intraday Update 78 Comments
UPDATE 9:38am EST: I am happy to announce that EvilSpeculator now runs on a semi co-hosted super computer, which should cut down any outages.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_server.png
Its name is HAL and it even talks to me http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
My stochastics grid will need to see a lot more of a drop before it agrees to point down. This is just some profit taking. Wee seem to be holding around 828. I’m watching the Yen drop along with equities, which is reminiscent of yesterday. Zero is only slightly bearish - unless I see some real momentum sometimes soon I might just take profits and reload on Tuesday.
UPDATE 9:57am EST: Consumer retail report worse than expected but we are shooting higher now. I cut my positions with small gains and will just observer for the rest of the day.
BTW, that ing server is expensive, so don’t be shy when you see an advertiser that looks attractive. Of course do not click on anything unless you are interested in their services - I don’t want to get booted off of AdSense.
UPDATE 10:19am EST: Okay, we’re now just turning in circles and I’m in 100% cash. Reason: I really feel uncomfortable being in a non-winning theta-burning situation while stochastics are pointing up, I see huge candles against the original trend, TNX pushing up, Yen getting slaughtered during NYSE hours, etc. Yes, it’s possible that it all gives way and we crash downwards today but I’m looking at the odds and they are not in my favor.
Had I kept my Junes I would probably sit all this noise out, but in the face of a 3 day theta burning weekend I treat very carefully. Remember folks, we cannot force the market and right now it seems to be bouncing back every time. That reminds me of last November when we were thinking that we’d see further downside and the market kept telling us otherwise. I suggest we head for the sidelines and wait until we find ourselves in a spot where the odds are on our side.
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_fibs.png
In a perfect world I’d like to see the tape climb those fibs. I’d get interested around 841, excited around 850 and ecstatic around 861.
UPDATE 10:32am EST: Check out my 2.0 BB band on the Yen:
http://evilspeculator.com/wp-content/uploads/2009/02/2009-02-13_yen.png
That’s a nice Yen smack down - also observe the little gap it wasn’t even able to fill. Again, I get excited once we push outside this band, not before.