UPDATE 1:48pm EST: Wow, I have to confess that I’m elated seeing the SPX at 925 - the NDX is busting through a 1248/100% RL right now - crazy tape. As I said we are in uncharted territory at this point and it’s anyone’s guess how high we go. Obviously we still can’t rely on the Zero signal to predict RL turning points as the tape is too thin still.
http://evilspeculator.com/wp-content/uploads/2009/01/2009-01-02_indexes.png
Of course even this ride will end at some point. Check out those 2hr stochastics, which have rarely let me down. I however thing that 957 is a real possibility, maybe not today but perhaps Monday. Would be very fitting for the big boys to grab the torch and ride things up just a bit higher before taking profits.
Enjoy!
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UPDATE 12:44pm EST: So, 923 is in close reach now and the percentage on that one is 97%. We got here on nothing but vapor and I’m not sure what to think quite frankly. Very tempted to load up on those June SPY puts again but I don’t plan on jumping right away. Let’s see what happens once/if we get there. I wouldn’t be surprised to see 957 by Monday - unless a seller shows up. Thus far the bears are MIA (just like my leeches).
UPDATE 1:48pm EST: Wow, I have to confess that I’m elated seeing the SPX at 925 - the NDX is busting through a 1248/100% RL right now - crazy tape. As I said we are in uncharted territory at this point and it’s anyone’s guess how high we go. Obviously we still can’t rely on the Zero signal to predict RL turning points as the tape is too thin still.
http://evilspeculator.com/wp-content/uploads/2009/01/2009-01-02_indexes.png
Of course even this ride will end at some point. Check out those 2hr stochastics, which have rarely let me down. I however thing that 957 is a real possibility, maybe not today but perhaps Monday. Would be very fitting for the big boys to grab the torch and ride things up just a bit higher before taking profits.
Enjoy!
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January 1st, 2009 3:14 pm Market Forecasts 4 Comments
I hope you leeches rang in the new year in style. All I can say is that the evil lair needed a haszmat team to come in and clean up after last night’s extravaganza.
http://evilspeculator.com/wp-content/uploads/2009/01/hazmat13.jpg
Anyway, I just wanted to post a quick comment cleaner in case any of you rats are actually conscious and in the process of preparing for trading tomorrow. I have basically been counting the days until January 5th since about X-Mas as I detest those pagan holidays when the process of separating suckers from their ill gotten gains crawls down to a crawl. Four more painful days to go and then it’ll be party time for real. No worries - Berk and I will be around tomorrow in pursuit of our usual shenanigans.
Cheers!
Intra-Day Update: Go trading bots, go!!December 31st, 2008 11:02 am Market Forecasts 162 Comments
UPDATE 11:00am EST: So, right at the open we cut through the 890/86 RL like a hot knife through butter. I think the important lesson learned here is that RL percentages lose a bit of their luster during holiday weeks. I’m not complaining mind you - 900 is in reach right now and I couldn’t be happier. Give me 20 more points, Santa, I’ve been so nice naughty all year, after all! What? I have to wait another year now? Craaaaaaaapppp!!!!
Otherwise I have not much to report - I would recommend keeping your exposure small. Yes, I know I sound like a broken record and we have rallied quite a bit since the 850s but let me remind you all that we’re not running a casino here. As traders we need to realize when market forces reach a level of randomness that exceeds our ability to predict our edge. We had a nice run to the upside - the Zero called it - let’s take profits if you’re long and call it a year. 2009 is going to be fun - that’s for sure. I personally am pumped - how about you guys?
UPDATE 11:30am EST: Ding Ding Ding Ding!!!! 900 reached and VIX is below 40 - smashing, baby, yeaaaah!!!!
http://evilspeculator.com/wp-content/uploads/2008/12/austin.jpg
UPDATE 12:13pm EST: I just checked the medium term stochastics on the averages and boy, are we overbought.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-31_markets.png
Maybe - just maybe - I should not be greedy and start loading up on long term options right here. My greedy little reptilian brain tells me to wait for 920 but looking at those stochastics I think a drop is imminent.
UPDATE 2:25pm EST: Sorry for being quiet in the past two hours but I had a long conversation with Berk on whether or not to grab our long term puts at 900 or not. We were looking at SPY June 65 puts and while we’re debating the issue, flipping through charts etc. those buggers suddenly change from 2.20 to 1.95 (has pushed back up a little since). And I’m asking Berk - what the heck just happened - did we rally or something? And sure enough - seeing the SPX at 908 changed the equation.
Thing is this - we have breached the 903/94 RL which posed massive resistance - maybe we have not breached it permanently but it shows that it’s vulnerable. The next RL is 923, which is light years away. In between is some strong resistance based on our TA around 911. Berk and I are watching that level like hawks as we are ready to pounce. I doubt that we hit 923 today but 910 might be in the cards assuming we get an EOD rally.
Either way, the odds are that this rally will complete either right here, at 911 or 923. We might see 957 next week, but does it really matter if we grab June puts at a VIX sitting below 40?
BTW, in other news - crude just rocketed 12%+ today.
UPDATE CLOSING BELL: Well, Berk and I crossed the rubicon and started to load up on those June SPY puts - we got them at 2.09 - damn market had to drop at 3:59 - LOL. Now, I think this is a pretty defensible play. If we hit 911 I’ll scale out again and re-grab them at 923 - same game if we breach that one - re-load on 957. BTW, in case you don’t know - it’s 4:05pm right now and the main index puts (QQQQ, SPY, IWM, DIA) trade until 4:15pm - good to know if you change your mind about loading up.
Anyway, Happy New Year to all of you leeches - it’ll be a great year for us, I’m sure - just make sure you stick around. I’m off to the strip joint to get my favorites booked for that NYE party http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
December 30th, 2008 9:33 pm Market Forecasts 71 Comments
Contrary to popular opinion today’s tape turned out to be very productive. I bet the weekend bears were already lining up at the will-call counter for the expected joy ride into the abyss. I have to admit, even I was sweating yesterday afternoon when I saw the NDX only one point away from thrashing the entire wave count (the December 12 low). I don’t think I have ever been so happy to watch those black boxes kick into gear and hold the 855 support line which is now firmly established. Those cheeky monkeys - at least they had the courtesy to program their trading bots to ‘hold the fort’ so to speak while they’re out of town blowing their taxpayer funded year end bonuses on strippers and Cristal.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_spx.png
So this evening we find ourselves 35 points to the upside, which puts my favorite two scenarios firmly back into reach. There’s really not much to add as to how this scenario is expected to play out. As we made it into Level II of the ‘House of Whipsaw’ today (light green area) I expect us to chop chop chop around here for a while. Don’t expect much of fireworks based on what you saw today. There is a buyer lurking around 855 which simply turned out to be a catalyst for driving the tape up to 890. Several high probability retracement levels were taken out today and I never saw the Zero signal above 2.2 - that usually does not happen and I chalk it off to Post-X-Mas-Pre-New-Year-Limbo. I also think that 890 will take some real momentum to overcome - if we fail to push past that tomorrow morning then it’s back to Level I again.
Note that the blue scenario remains to be my favorite - despite the overbought conditions. The orange scenario shares its path with the blue one until the separation point around 920 (E). But in order to see any of that happen we need to start climbing up, either now or when the big boys return on January 5th.
As for the downside scenario - obviously after yesterday’s scare it’s a probability I want to entertain once I see 855 taken out - until that happens it’s not worth wasting any bits on it. Why do I call it a ’scare’? Because I am hell bent on loading up on April/May puts if we are so blessed to reach the 920 level. That was on my wish list for Santa and so far I have been cheated out of my well deserved (and evil) Christmas present. I have the means to melt that damn North Pole into a steamy sauna, so Santa better cough that up before I lose my composure. That would happen at below 855 which would force Berk and I to load up on puts at vastly inflated prices. How about that ‘going out of business’ clearance sale? Make my day!
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_cpc.png
Something really strange happened last week - the CPC dropped to the floor for apparently no reason. This was a great cause of concern for Berk and myself as those extreme levels usually precipitate massive drops in the averages. Didn’t happen though - all we got was chop chop and pop. Serves me fine right now (see above) but the CPC is on notice for now. For the record - it’s almost impossible to trust any blasted correlation or indicator since early December.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_bpnya.png
Lest you forget the strange environment we are in currently here is the NYSE Bullish Percent Index which is still stuck at very overbought levels. But it seems that as the market was able to entertain extreme bearish conditions for a while it can now remain overbought. Frankly - I think we’ve overstayed our welcome but I also reckon we might touch 60 and thus 900+ on the SPX before we drop. Maybe that’s wishful thinking talking but hey - we rallied today, right?
However I want to point out that the spread between the Moody’s BAA Corporate Yield and the 30-year T-Bond Yield is still around -5.7. As some of your remember - that particular spread has done a great job of signaling the medium term trend for equities throughout 2008. During the entire November/December rally that spread has remained at record highs - a harbinger of bad things to come for equities and that probably sooner than later.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_dollar.png
Sometimes, my dear ladies and leeches, we find ourselves at an inflection point without knowing it. Only the high priests of the Elliott Wave cult are sometimes able to see the tea leafs and realize their significance. Seriously - the Dollar is at a very important fork in the road here. IF we would see another leg down below the 76.2 low it would have significant implications. This would constitute a motive wave to the downside and the short to medium term impact on commodities as well as equities would be significant. If we hold above that level the count is a bit different and the medium term probabilities continue to indicate further upside potential for the ole’ buck.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_tlt.png
I rarely talk about bonds but this is a special occasion. For the unintiated amongst you leeches - the TLT is an ETF that tracks the Barclay’s (used to be Lehman) 20+ Year Treasury Bond Fund. For more info point your browser here. The reason why I’m bringing it to your attention is that Berk and I think that a major drop is imminent for several reasons - wave count being the primary one - the second one being that the daily sentiment index for the TLT is now around 97 and rising. Frankly, my dear rats, it doesn’t get much better than this. Based on my stochastics and some other indicators I expect a tiny bit more upside or at least sideways tape here. But bonds are about to deflate and the downside potential is quite magnificent. Keep an eye on this guys - this is huge - and I don’t say that very often.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_gold.png
Let’s finish with Gold - as usual. I think the precious metal has a few more upside points in it and I also believe that it’s possible it’ll overshoot that diagonal resistance line by a few points just to reel in the last remaining gold bug. Similar to the TLT the DSI is at record levels right now - a very bearish sign for us contrarians. I’m patiently waiting for this opportunity to load up on puts. Again, we’d know very quickly (and cheaply) if we’re wrong. Doesn’t get much better than this - something to look forward to.
I think this ought to keep you guys busy for a day or two. I strongly encourage all of you leeches to make use of this precious opportunity to gather intelligence on future victims. Starting January 5th the party is going to blast off with our without you.
Cheers!
[ 本帖最后由 hefeiddd 于 2009-3-31 15:56 编辑 ]
December 30th, 2008 10:17 am Intraday Update 156 Comments
UPDATE 10:06am EST: I have to say I have mixed feelings this morning. On one hand I’m happy that we’re pushing up as this leaves us with a glimmer of hope that we’ll see higher prices before the inevitable big drop. But I’m also getting a bit frustrated with a market that cannot stay in one direction for more than one day. Maybe the smart thing is to refrain from trading until January 5th - I’ve kept my exposure very small until now which was the right decision based on some of the comments I see floating around here and on the slope.
The markets right now are going wherever the market makers want it to be. Yesterday the NDX turned on a dime one single point away from 1157.41 - the December 12 low. Coincidence? I think not - the remaining big players running the tape are intent on teasing this thing out all the way to the end. Had the NDX breached that point the current wave count would have been defeated, which in a way would have been a good thing. The way it is now we’re back in limbo and anything can happen. Caveat Emptor!
UPDATE 11:04am EST: If you look at my Zero chart you’ll know that I was actually pretty surprised that we breached that first 877 retracement level. And what do you know - we actually pulled back and are now wedged between the Camarilla 878 pivot and the 877 RL. Maybe the big dogs went out for an early lunch and a lap dance. If you tried to chase the market (always a bad idea) you’re now being punished for it - and rightfully so.
Although I dropped a few bucks on THI and GNK I’m actually pretty pleased that we’re going up. If we can keep going here there might be a glimmer of hope that we’ll actually see new December highs before 09. As you might remember - that was the big X-Mas present I failed to get this season.
UPDATE 11:19am EST: Fibs baby, fibs!!!
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_fibs.png
Even in the thinnest of markets it always comes down to fibs. We just popped from the 38.2 to the 61.8 fib line and are holding thus far - spot on those fibs. Neglect them at your own peril.
UPDATE 1:18pm EST: So, I know feel vindicated as I was aghast at the fact that we blasted through that the 877/63 and 882/79 RL on a weak signal. We all know the mice have a habit of dancing on the table while the cat is out of the house but it was quite a push and looked like good ole’ program trading that kicked in right at the open.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-30_no.png
As you can see by the blue line/dot combo and the blue blocking dots on the RL the Zero told us to hold off on adding long positions until we would breach the 890 RL. Rightfully so, as we are now below the 882/79 RL again. Frankly, we shouldn’t even be here and as I posted earlier - hot air can only lift you that high. I expect another whack at the 882 towards the close and maybe we breach - if not I think we’ll chop around here for a while.
Another lesson learned is the amount of RL pain the MMs seem to be able to exert. I think right now it’s about 3-4 SPX points on an 80% RL - this might change when velocity picks up a bit and the RLs move further apart. So, seeing 885 being touched on an 882 RL was to be expected and is something I am already taking into account with the current version of the indicator.
Valuable lessons learned for going forward. If nothing else this tape seems to provide a great training/tuning environment for the Zero. So far I’m very pleased with its performance - in particular given the current conditions. I cannot wait to throw this thing at a real trend and see how it holds up. Remembering even some of the old charts (i.e. starting mid/late November) in combination with prior versions of the Zero I think this should be very interesting http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
BTW, whoever gets my ‘computer says no’ reference gets 5 gummi points.
UPDATE Closing Bell: Well, I be damned - we actually made it to the 890 RL. Based on my current RL/Zero algo a 2.2 signal should have been blocked at the 882/79. A 79% RL under normal conditions needs about a 4+ signal to be taken out - I’m sure we did not see that today. But it’s thin tape, so anything can happen I guess as there is nobody around to defend important resistance/support levels. And I remain very hesitant to weaken the threshold on that algorithm until after Jan 5th when we see some real volume. My old mantra - never optimize an indicator during holiday tape. So, if you feeling lucky (punk) feel free to ignore the blue lines and just trade the direction - meaning if you see a blue line just interpret it as either a green (pointing up) or red one (pointing down).
I’m elated however as it puts the old wave count (and my X-Mas present of SPX 920) back into play. I’ll hop over to the gym now but will be back later this evening with a forecast. All in all this was a very good and productive day my dear rats.
Chop, Chop, Chop…December 29th, 2008 8:11 pm Market Forecasts, Update 55 Comments
Yawn… Another day at the markets, and again, not much has changed…As Mole pointed out in the last part of the update, open @ 869 ; close @ 869… If you made dough in between, then great.If not, staying in bed would have been the wiser choice.Alas, we are back at work, and it is actually getting pretty exciting…
One thing is certain though, stock have not been moving higher, at least not for the past week or so.This doesn’t mean that we are “going lower,” just that we aren’t “going higher” (i.e. stagnation and/or loss of momentum).I have said this about the markets 3 times in the decline (now being the third), and let me illustrate the others…What is interesting is the time of year when these actions happened.The big boys were gone at all 3 times when this chop happened (which is a great illustration of who REALLY moves the markets).
http://evilspeculator.com/wp-content/uploads/2008/12/dec29dia.png
This stagnation of uptrend, combined with all the indicators we have been mentioning paints a solid picture of a strong bearish case.My primary count at the moment follows this strong flow of evidence, and is calling the recent action the topping touches of a rally phase (wave II) of the ending diagonal.I believe that we should be heading lower from here on out, but will give the institutions a chance to get back in the game before I am really sure.The alternate count remains the dreadful chop of the triangle.I can’t wait to get rid of that option, but right now, we are not in the position to do that.Thus, we wait…
http://evilspeculator.com/wp-content/uploads/2008/12/dec29indu.png
$NDX…
http://evilspeculator.com/wp-content/uploads/2008/12/dec29ndx.png
With that said, I will cut it short tonight while Mole and I amass a grand evil assault for just after the new year.Yes, I know it is a short post, but until the market gives me something to talk about, I will patiently await my turn to speak…
Be sure to relax in the final 52 hours of 2008!!
Skål!
December 29th, 2008 9:42 am Intraday Update 165 Comments
UPDATE 9:30am EST: No, I’m not talking about the indicator. Last night I popped up my favorite MACD/stochastic combo and flipped through several hundred charts. And I quickly started to notice a recurring theme - 95% of the symbols I looked at had a MACD hovering around zero for the last week or so. This market has gone completely flat and there is simply nothing to do for us option traders when the market is flatlining. Sure, you can sell some iron condors, but frankly that’s not my cup of tea. Very annoying…
On top of that traffic on this blog has completely died down lately - I’ve tried to keep things interesting throughout the holidays but it seems everyone is gone (I hope - otherwise this might be the end for EvilSpeculator). Frankly, I hate the 2nd half of December - after December 15th everything shuts down for three weeks.
UPDATE 9:50am EST: I guess I’m talking to myself now…
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_usd.png
This is a monthly chart of the USD - anyone recognize this pattern? The Dollar is going bye bye in 2009. BTW, we’re right at the neckline….
UPDATE 11:14am EST: I can’t believe I didn’t see this before…
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_goog.png
How sweet is that? A tiny head and shoulders inside a channel and it’s all lining up. Give me a reason why I shouldn’t short the heck out of this once it touches 291?
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_wynn.png
Am I seeing double? I first thought I had snoozed on WYNN but this is starting to look pretty nice - maybe puts around 40?
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_gnk.png
I’m starting to like this setup on GNK - maybe good or 3-4 points on a breach of 12?
UPDATE 1:08pm EST: Okay, in case anyone missed the two dozen posts by our Eric_in_SFL
(ahem - fat chance) - he’s got a new blog called TheFutureTrade. Make sure you go check it out - but come right back here or I’ll be forced to hurt this puppy:
http://evilspeculator.com/wp-content/uploads/2008/12/puppy.jpg
In case you wonder, this is the Evil Speculator mascot for 2009.
UPDATE 1:19pm EST: I’m a machine today - is everyone asleep at the wheel or what?
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_amzn.png
Waiting for 48.25ish on AMZN…
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_coh.png
What is this? H&S Mania? COH looks pretty preachy at 19.40 or so…
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-29_xrt.png
What can I say - retailers are really screwed. I think I’ll dip into XRT at about 18.5ish.
UPDATE 4:08pm EST: When I fell out of bed this morning and popped up the futures the ES was at 869. We just finished the day back at 869, which means we didn’t go anywhere - as expected I might add. A lot a hoopla about nothin’. I have to say that the Zero called it pretty nicely. If you got in on those ETAs (first short then long) then you actually banked some coin, even in this whipsaw tape.
My GNK and THI puts are doing well however - which proves that it’s not a stockmarket but a market of stocks. BTW, those MMs on THI are damn pirates - I won out in the end though because I’m a stubborn SOB.
December 28th, 2008 9:25 pm Trading 32 Comments
There are always a few good trades out there - no matter what the tape. Here are some of my favorite picks for tomorrow:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-28_fast.png
Not so FAST! Nicely defensible right here - if it breaches 34.50 all bets are off.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-28_fslr.png
FSLR: I think it’ll wiggle down to the support line where I might try my luck at some calls. If it breaches then we have a nice upper resistance to work with.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-28_goog.png
GOOG: Similar play here - I think this is a pretty defensible position. Grab some calls here and set a step a bit below the current lower channel support line. If it fails flip the trade and set a stop about where we are now.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-28_mos.png
MOS: Bit of a running triangle developing here (B exceeds A wave). I actually think we’re pushing up here to complete wave E - but a breach of 30 would tell us that we’re wrong and some downside is likely. Easy to protect right here - maybe good for 4 points to the upside. Great downside play once it’s done. What makes me a bit nervous here is that the last wave up counts as 5 waves pretty clearly - so this might be something completely different, but it would also favor the upside right now.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-28_wynn.png
WYNN: Yeah yeah - I know I said I wouldn’t touch WYNN anymore - bite me! We might see a little retest here but this one could drop off the plate anytime. If we push up from here wait for it to touch that upper diagonal which reaches 47 by about Tuesday.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-28_pacw.png
PACW: A little birdy is telling me that we’re getting a retest of the lower diagonal resistance line here. I plan to try my luck at some puts around 26 or so.
many of our friends or relatives. It has already begun and what you have witnessed thus far is only the tip of the iceberg. There is little margin for error going forward. However, I expect there also to be opportunities abound in 2009 - but ultimately your success will depend on the following:[*]Anticipation[*]Preparation[*]Action[*]TimingAnticipation (i.e. knowing) of what’s ahead will be key being prepared, so that when the time is right you are ready to take action. For instance - what if we make boatloads of money in the coming year but then suddenly face an explosive bout of hyperinflation rendering your assets practically worthless? Impossible you say?
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-27_dollar.png
Exhibit A: For you non-currency traders - this is the DXY - the U.S. Dollar Index Futures spot price. It just so happens that it dropped nine points in just two weeks - a move that usually takes months to unfold. What we are facing right now are unprecedented moves in currency, bond, and equity markets, the likes of which we have not witnessed for almost 80 years. I want you to forget everything you think ‘you know’ and mentally prepare yourself for what you may think is the ‘impossible’. Whether or not a particular scenario will unfold is beside the point and should not be argued - if 2008 has taught you anything is that very few people are able to predict the future accurately. With the exception of Robert Prechter maybe - who almost down to the detail described the events of this year in his 2003 book ‘Conquer The Crash’.
What separates us steel rats from those who we fondly refer to as mouth breathers is that we are nimble. Adapt or perish should be our motto for 2009. Diversify, and collaborate so that we all prosper while others snooze through the opportunities of a lifetime. As you know I’m medium term bearish on Gold and will continue to remain so unless we breach 920 in the futures. But my long term outlook for the precious metal is equally bullish and there is going to be the time when I will start accumulating physical Gold to ward off possible hyperinflation. But as in all things in life - timing is everything. I know that many expect deflation instead and maybe that’s what will happen. But since none of us have a crystal ball (only the Zero, which is close - hehe) we need to think ahead in our minds of exactly what action we will take when a particular challenge presents itself.
This is why Berk and I don’t just talk about Elliott Wave patterns all day - we often take a step back and look at how inter market correlations or significant political events impact evil speculators like us. We are obviously not fundamentalists but as technicians we attempt to translate technical analysis into near term reality and that cannot be done in a vacuum.
My message for 2009 is to stay nimble, sharp, prepared, and most of all ready for action. All your intelligence, knowledge or preparations are in vain if you are incapable of taking action when the opportunity presents itself. Which is why academics make respectable analysts but lousy traders - it takes the mentality of a stainless steel rat to crawl through some rusty air duct just to extract that extra piece of cheese.
Obviously, Berk and I have a plan and we haven’t been shy about sharing it with you leeches. What you do with your life and your money is your perogative. But if nothing else, 2009 will be one for the history books and we both hope you’ll be along for the ride and come out victorious. Let’s never forget - business is war
UPDATE 11:48am EST: Okay, I added a new rule to the VTAs and PTAs:
The candle must be positive in order for the VTA/PTA to hold.
Obviously, thin tape or not - we don’t want to hold on to a new position while the candle is dropping negative. Price must reflect the sentiment.
I don’t think that is a problem with strong signals, and that’s why I haven’t added it thus far. However, with thin tape like this you might get false positives which can add up over time. So, I think this is a good rule - hope everyone agrees. I love to buy on the dips as well, but larger dips which are followed by strong signals and white candles http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
UPDATE 1:05pm EST: DZZ alerted us to Gold:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-26_gold.png
I’m planning to grab some puts around 875 - if that breaches I might actually go long.
UPDATE 1:29pm EST: I thought I’d share this little tidbit with you guys:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-26_atr.png
Now, I think this is a very nice visual depiction of why option traders want to stay the heck out of this market right now. The hourly 10-day Average True Range (ATR) on the SPX is about 5.5 right now. As you can see it’s been steadily dropping since November 24th when it was about 20. Also, check out the stochastics - we are smack in the middle and pointing down after pointing up. Translation: Anything can happen right now - and whatever happens it’ll be slow and painful. Unless you’re a futures trader - don’t even bother right now. Maybe the best this tape has to offer is some training ground for fledgling ES futures traders http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
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January 6th, 2009 9:51 am Market Forecasts 210 Comments
UPDATE 10:00am EST: I think the title is pretty clear. We’ve got ourselves a nice open and your mission, should you choose to accept it, is to sell into strength - in terms of options that of course means buying long term options. You know the drill - use this rally.
UPDATE 10:20am EST: So here I am at 944 shopping for puts -while Berk and I were arguing about which month to pick we drop to 937 - grrr. Anyway, I was filled with SPY June 70 Puts and I intend to grab March 85s if we somehow manage to reach 954 (the new 957). In case you want to know - I will hold the Junes if we rally up to 954 or higher. This is a long term investment - you buy and forget - unless of course it reaches a treshold which is price/time related. If this statement confuses you please go back and read my Sunday post and look at the chart.
UPDATE 11:00am EST: Berk and I just grabbed Feb CCJ Puts:
http://evilspeculator.com/wp-content/uploads/2009/01/2009-01-06_ccj.png
UPDATE 12:21pm EST: I just had an Internet outage which has been resolved. My apologies for any Zero watchers for the inconvenience. I actually have a wireless backup but for some reason it wasn’t able to make it work from the system I serving the feed from. I can however serve it from a different system if an outage persists, so no worries.
UPDATE 1:53pm EST: Site was down for like 10 minutes - not my day today I guess. My apologies but I’m on a shared server - don’t want to plunk down the monthly fee for a co-hosted box.
UPDATE 2:35pm EST: I’m happy to see the SPX back at 937 - since most of you leeches froze like a deer in headlights - here is your 2nd chance. Maybe we’ll even see 944 or 954 - I’ll just keep adding puts going forward.
UPDATE 3:00pm EST: Mr. VIX now at 37.8 - are you kidding me? Loving it and I just added some March puts to my Junes.
UPDATE 3:28pm EST: So, I could call you guys a bunch of girls for not grabbing puts the first time (or even 2nd time?? ;-)) around, but I know how it feels to freeze in the headlights and not make a move:
http://evilspeculator.com/wp-content/uploads/2009/01/2009-01-06_tlt.png
While I debated with myself on whether or not TLT would bust just a little bit higher it peeled its tires and left me with dust in my face. Not sure what I was thinking - maybe it was a mixture of greed and fear. It all gets us - the ones who survive in this business are the ones who learn their lesson and make a move the next time an opportunity represents itself. We might see 117 or so in the coming days - if we’re lucky - especially if equities start descending as we are anticipating. That’s when I plan to scale into some nice short positions.
The tape in the past two days has been extremely flat, which tells me that a big move is developing. The odds increasingly point to the downside, although I do hope we see 954 before it happens. I gladly take a bit of a loss and load up on even more as the triangle would look best at that level.
Cough, sniffle, sneeze!January 5th, 2009 9:40 pm Market Forecasts 56 Comments
Cough, cough… Sneeze… Sniffle… Sneeze…Yes, folks, I am crawling out of bed to do a VERY brief update.As we all know, after Friday’s big move, we got little follow through. I may be wasting my time by saying what we all know to be the case.We are finishing up our bullish rally.Maybe just this leg, maybe the whole thing, but either way we are poised for a healthy decline after another modest push higher.That would give us seven moves waves higher from the 12/29 low which is commonplace for counter trend moves.
http://evilspeculator.com/wp-content/uploads/2009/01/jan5spx60.png
http://evilspeculator.com/wp-content/uploads/2009/01/jan5spx30.png
HUGE divergence brewing on the MACD on several time frames, indicating the coming decline is likely to be “the real thing.”Also a nice BB reversal set-up on the hourly (1/2 hour as well).The time is drawing near and complacency is starting to set in, so stay on your toes… A pertinent top could be near.
On another note, and definitely worth mentioning, ICE!!What a break-down today.This thing is monster.Since I missed a trend of any length for a couple of months now, I am delighted to see this.Previous lows are under 50, which is about a 30% drop from here.This monster drop also occured with volume (thank you), MACD divergence, and a turn up in a steadily down-trending ATR(10).Choose some nice options for this puppy as it will be big.One of the best looking trades of the new year IMHO… Enjoy.
http://evilspeculator.com/wp-content/uploads/2009/01/jan5ice.png
And now I am crawling back to bed…
Skål!
December 24th, 2008 10:30 am Market Forecasts 48 Comments
First up, merry Christmas to you all of you leeches. I for one was planning on staying in bed following the Zero on my handy iPhone, but due to some damn TOS data bug I had to roll out of my cosey nest and find a work around. I would curse right here but it’s Christmas, so I’ll tone it down http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-24_zero.png
Some of you are complaining about all the recent changes on the Zero. Well, my dear rats, when do you suggest is a good time to make changes? Exactly - right now nobody’s around which is the perfect time to sneak in improvements, which I have been working very very hard to implement. Probably 200 hours worth of labor in the past two weeks alone. So, please be patient with me - I promise that things won’t change around much further. I will stick with the colors, the layout, the signals, etc.
The 30min chart is gone - I never saw the benefit of showing anything outside the actual indicator chart anyway. This also allows me to size up the ‘real’ chart a bit more - something you vision impaired leeches should be able to appreciate. The signal lines have changed a teeny weeny bit - the exit lines are now pink. Very simple. If an exit line is in the center, exit anything you have running. If it’s pointing up only close short positions - if it’s pointing down only close long positions. Everything else remained the same.
Yes, the alerts have slightly shifted in the past few days as I have been improving the algorithm and also fixed a few bugs. Not a big deal anyway - we haven’t seen a trend for over a week now and probably won’t see one until next year.
I suggest you just let all this sink in and go through the chart to study the alerts. Not all of them are winners but the majority (and the good ones) are. I think considering the flat tape of as late the Zero has held up quite famously in not giving us false alerts that lead us into traps. Actually, the past few days were instrumental in developing a whipsaw alert that senses monkey business and gets us out right away. However, I have also been keen on not optimizing this thing for flat markets. There might be subtle chnages in the future but I really like the alert system at this point - so, if you don’t like the colors you’re out of luck, sorry.
I’m going back to my (hopefully still) warm bed now - will follow the action on my iPhone. But I don’t expect any major moves today. Enjoy your holidays, my dear rats - for we have much work ahead of us starting next year. There are fortunes to be made and I’ll make sure we’ll get our share.
Wishing you a Merry Christmas from Mole’s evil lair.
UPDATE 11:03am EST: I’m stopping the Zero feed for now as there appears to be a TOS data problem, which causes the indicator to not update. Obviousy they are having some issues over there or maybe some of the data I pull does not get delivered today. Will let you know when this has been sorted out.
UPDATE 11:29am EST: I figured out which of the data feeds is broken and unfortunately there’s nothing I can do about this right now. Have emailed TOS support to get this fixed. So, I will keep the Zero feed down for now - my apologies but this is out of my hands.
UPDATE 11:59am EST: Okay, it took me 30 minutes exactly to find a work around to the TOS data feed problems. Zero up and running again. Merry Christmas, steel rats!
That’s right - we do Christmas ‘old school’ down here in the evil lair.
Intra-Day Update: X-Mas Trap!December 23rd, 2008 2:15 pm Market Forecasts 60 Comments
UPDATE 1:00pm EST: Apologies for being so quiet this morning but I had tons of issues to deal with and there was little time for blogging. I did however manage to recode the entire Zero alert system and have changed some of the colors:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-23_trapped.png
I have changed the indecision/exit lines to pink. There are also more pronounced exit signals - also in pink but shifted either above or below the zero line - which will replace the old green exit signals which obviously were easily confused with long ETAs. That’s what happens when you keep adding functionality in a short amount of time - you have to go back and refactor some of the old code so it fits the new paradigm. Anyway, I’m going to deploy the new version in a few minutes - today was the perfect time to do this as (hopefully) few of you are out there sitting in front of the Zero feed http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
And yes, I will be updating the tutorial in the coming days - need a break myself - have been working on this day and night for weeks now.
Anyway, looking at the screen grab above it’s apparent that we are trapped between a long and short RL and I don’t expect us to make much head-waves today and probably not until after X-Mas.
There won’t be a forecast tonight as most everyone is busy decorating trees and wrapping some last minute gifts. I myself will probably peek in tomorrow (12/24) but won’t be around for long.
I would like to take this opportunity to wish all of you rats a Merry Christmas! You all have worked hard and deserve to kick back and enjoy the fruits of your labor. Forget about trading for a few days and spend some quality time with your family and friends - even the biggest fortunes cannot replace them. Who knows what may happen next year - some of us may not live to experience X-Mas 2009. Life is short and guaranteed to be fatal, so it is important to step back and appreciate the simple but true things in life. And the true things in life are the ones you cannot pay for.
But enough with the mushy stuff - starting January 5th it’s going to get very evil around here as we will assume a strict ‘no prisoners’ approach whilst ruthlessly separating opposing traders from their ill-gotten gains. I need you rats to be sharp and focused next year, so please take this time to find your center. 2008 was a tough year for even the best of us but we rats came out ahead of everyone else. 2009 will be even better - mark my words http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Cheers!
Naughty or nice?December 22nd, 2008 9:48 pm Market Forecasts 111 Comments
So far, there have been 2 camps divided as to whether intermediate wave 4 was going to trace out a triangle, or whether it was doing something different.The triangle case has been beaten pretty badly today, but it will stumble back into the ring tomorrow and the next day until one count is finally knocked out.
Mole has been laying out some STRONG groundwork for the bearish case.Some of these indicators are showing such complacency that I wouldn’t hesitate to call minor wave 2 of intermediate wave 5 complete at this juncture.If that were the case, then the next move down would be minor wave 3 of intermediate wave 5.If wave 5 is in fact unfolding, and if it is NOT unfolding as an ending diagonal, then this next decline will be the best place to make profits on a bearish move for the next 6 months, maybe longer, which is why I don’t want to get sucked into ANY bullishness.
That said, I am going to label the $INDU as an ending diagonal (to be cautious) with the intermediate 4th wave triangle being my alternate until I can COMPLETELY be sure that it is off the table.It will also, likely, be difficult to determine this with certainty until we are back to normal volume in the markets, but given the OVERWHELMING amount of bearish evidence, I will be watching any drop with an eagle eye, and any rally with scrutiny…
http://evilspeculator.com/wp-content/uploads/2008/12/dec22indu.png
I talked last week about the 4 horsemen of the NASD-Apocalypse.This weak, it appears that 2 out of 4 have begun there descent into the Abyss.Ironically, RIMM, the leader to the downside last week, it being the laggard to the upside this week, but I imagine that will soon change.
GOOG:
http://evilspeculator.com/wp-content/uploads/2008/12/dec22goog.png
AMZN:
http://evilspeculator.com/wp-content/uploads/2008/12/dec22amzn.png
AAPL:
http://evilspeculator.com/wp-content/uploads/2008/12/dec22aapl.png
I would also like to mention that Ag and energy (coal) names are dropping like flies… CF is down 25% in 4 days.POT is down about 20% in the same timeframe…A previous fav of mine, GMXR, took at 13% hit today.And CNX (another coal name) is down 30% in 4 days…Keep an eye on these guys, as the are tossing out home-runs left and right.
http://evilspeculator.com/wp-content/uploads/2008/12/dec22gmxr.png
That is going to be it for tonight, as X-Mas season is now the foremost thing on everyone’s mind.The audience here has cut down dramatically, and we applaud those of you still with us.We only wish that we could make the market a little more interesting for X-Mas, but I doubt we can.
If you have yet to head out this X-Mas season, be careful when driving, and remember when NO ONE around you seems to have X-Mas cheer, that 99% of them were caught off guard by this decline, and many of the older people you see have 1/2 (or less) of the IRA or 401K that they used to.Be kind and patient, ESPECIALLY to those who are neither kind nor patient to you (they need the most help and love).
Happy Holidays All!!!
Skål!
[ 本帖最后由 hefeiddd 于 2009-3-31 16:41 编辑 ]
December 22nd, 2008 10:15 am Intraday Update 182 Comments
UPDATE 10:11am EST: We are now at an important line in the sand.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-22_spx.png
There’s the lower diagonal support line plus we are right at the 38.2 Fibonacci line. If we drop much further the entire wave count goes out of the window. The fact that the 878 RL has only a 26% probability is not exactly encouraging. Frankly, this would suck big time as my entire evil plan goes out of the window - backing up the truck at 920 or 940 would be so much fun…
UPDATE 11:21am EST: Moony just alerted us to the CPC this morning - check it out:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-22_cpc.png
Now, I just talked about the CPC yesterday - strange coincidence. But to see it sink that far on dropping averages is kind of strange. I have to say this is quite bearish - maybe this is more than just a bear trap. I would still like to see more momentum developing though.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-22_cpc-ma.png
FYI - last time it was that low as in mid May - which was the very top of intermediate wave (2).
UPDATE 1:27pm EST: So far we’ve been holding that RL but the tape remains indecisive, as expected. Despite the bearish CPC omen I have hopes that we crawl a bit higher here:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-22_averages.png
Stochastics look they’re ready to turn soon - maybe today, maybe after Christmas. Either way I’m very hesitant to jump into puts right here.
UPDATE 1:44pm EST: And now for something completely different:
December 21st, 2008 8:01 pm Market Forecasts 64 Comments
Christmas is only a few days away and many of our steel rats are busy rounding up the rest of their litter for some well deserved holiday jubilation. And rightfully so, as we stainless steel rats are among a small family of rodent species that saw their economic prospects actually increase throughout 2008. If you haven’t at least added 50% to your assets this year then you really need to come by here more often. Knowledge is power - and thus profit - if you know how to leverage what you know of course. Anticipation of the market tanking is one thing - taking full advantage of it, is yet another.
For my weekend update today I have decided to take a step back and focus on the big picture. Because, looking at 2009 I am confident in making the following prediction:
If you think 2008 was bad, just wait for 2009. It’s going to get even uglier.
But…. oh grandmaster rat… we hear the words you speak but our minuscule rat brains don’t grasp their meaning! Have no fear - my trusted leeches - I’m here to help:
http://evilspeculator.com/wp-content/uploads/2008/12/ewt_path.png
What you see before you is an idealized Elliott Wave principle model that spans several decades. The pattern is inherently fractal by design in that it subdivides into smaller units which all exhibit the same pattern of its larger degree parent. This is how we arrive at lower degree wave patterns which then again subdivide into further lower degree wave patterns, and so on. Wave degrees are measured in decades, years, months, weeks, days, and even minutes. Admittedly, Berk and I focus mostly on the monthly and weekly patterns, as those are of most interest to us options traders.
The basic pattern is pretty simple, and even those tiny rat brains rattling around in those thick skulls of yours should be able to grasp the basic principle: 5 motive waves up followed by 3 corrective waves down (i.e. an a/b/c) - that’s it. To put the big picture into some kind of context I have marked the peak of the last secular bull market which occurred in January 2000. From there we actually descended into a large zigzag (i.e. the large a/b/c waves on the right hand of the chart) which is the Elliott Wave Theory (EWT) definition of a bear market. The zigzag itself again sub-divides into 5 motive waves down, followed an a/b/c correction up, followed by a final motive wave down.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-21_big_picture_dow1.png
Let’s put all that into context - here’s a Dow chart of the past eight years. Obviously, there’s a bit of difference between the idealized map shown above and the actual wave pattern, but I have done my best to label the chart appropriately. As a side note - when put into context it’s very interesting how things have accelerated in the past year. Moves that took years to trace out now transpire in months or weeks.
Now some of your less dim-witted rats might rub your furry paws right now, thinking you have uncovered a major flaw in our theory: So, if that’s true - how come the 2007 peak is actually above the supposed bull market peak in 2000?
Answer: Inflation - which I also often lovingly refer to as the ‘hidden tax on the stupid’. Take a peek at an inflation adjusted Dow chart with some interesting accompanying data. Maybe now things fall into focus for you - what you see charted in Dollar values all over the place should be taken with a healthy amount of skepticism - especially going forward into 2009. Bernanke and friends have printed so much money that you could stack 1-Dollar bills from to the moon and back.
Oh, you think I was kidding? Let’s do a quick math experiment before we move on:
A 1-Dollar bill is .0043 inches thick. 1 million stacked dollar bills is .067 miles, less than a tenth of a mile. 1 trillion dollar bills would be the equivalent of eight and a half planet earths stacked on top of each other.
Let’s do this another way:
One thousand times one million = one billion.
One thousand times one billion = one trillion
In other words. One million times one million = one trillion.
A one trillion dollar stack of 1-Dollar bills would be one million times higher than the million dollar stack -or- picture it this way: It would take one million stacks of one million dollar bills to equal one trillion dollars.
If the million dollar stack is indeed .067 miles high, then the trillion dollar stack would be 67,000 miles high, which is fairly near to one third the distance from the Earth to the moon.
Based on the most recent data out there the PPT has been racking up close to 8 Trillion Dollars in bailouts and other types of crony assistance. That is over half a million miles of 1-Dollar bills stacked on top of each other (not sideways).
So, if you have any illusions about what’s going to happen to the U.S. Dollar in the months years to come, think again.
http://evilspeculator.com/wp-content/uploads/2008/12/ewt_path_zoom.png
But, back to our EWT model - here’s a zoomed-in version of the first overview chart and I have marked our current location in the wave pattern. In EWT lingo we are in Minor wave C of Intermediate wave (4) of Primary wave {1} of cycle wave c - and yes, there’s plenty more downside to come. This might shock you, especially if you are a recovering viewer of the Jim Cramer show. Which is kind of the point I’m trying to make here today. If this crushed your last remaining hopes for a speedy recovery as promised by the untiring ‘bottom-is-in’ crowd, then good - maybe I’ve done my job. After all, a main key to banking coin in the markets is to embrace reality - wishful thinking a sure way to go broke on the double.
Now, that you know where we are - let’s put things a bit more into context: We are getting close to completing that little push the upside which is marked by a circle. After that we will breach the November 21 lows and descent into a temporary low. I expect that low to happen sometime between April and June of 2009. After that we will embark on a multi-month sucker rally (an a/b/c up) that might get us back to about where we are now. So, if you check your stock portfolio in December 2009, you’ll realize that we probably didn’t make much progress. However, there’s a caveat - on paper you’ll see similar numbers in the averages, but in terms of buying power it will most likely be less as the Dollar is going to drop significantly throughout 2009.
There will be a point when we will recommend loading up on physical Gold - maybe Uranium for our most evil leeches, assuming you gain access to some retired Russian sub. But for now Gold is going to head south and touch 650 - we’re sticking with that unless we see a push above the low 900s.
So, that’s the rub for 2009. It won’t be fun for investors - but it’ll be great for traders. Plenty of ups and downs to trade, and then - starting in 2010 - we start all over again and repeat the kind of tape we saw in 2008.
One more thought before I move on to my SPX chart and next week’s forecast: Now that you understand where we are and where we are heading in the coming months, you also might grasp why Berk and I are very eager to load up on index puts once we hit the tip of the current rally. This will probably be around the beginning of January - depending on what happens during the remaining trading days of 2008. Some of your regular rats might remember my profit analysis of how much $4000.- worth of ATM Spider puts purchased mid-July would have been worth on November 20th. Answer: only about $70,000.-.
So, I’m not sure what your plans are for 2009, but grabbing a few grant worth of April/May SPY puts in a few weeks from now may not be the worst trade you’ll do next year http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-21_update_spx.png
Nothing really has changed in terms of the two scenarios I laid out last Sunday. We whipsawed our way up (as expected) and unless we breach that ascending support line I’ve drawn on the updated chart above we should be heading higher and touch the 940 region. The tip of {b} of C is what I was referring to previously. Yes, if we trace out a final motive to the upside (the blue scenario) sometimes in January we might take a small loss, but that’s what I love about this pattern - the upper boundaries are great defensive lines which will allow us to manage our trades. If we push past that at the separation zone around 920 a month from now - well, either hold on to those suckers, or cut them and double down once we reach 1020 - 1040.
I’m not going to delve into many supportive indicators as really not much has changed on the equities side. The Dollar of course has taken a major tumble - this will have a major impact on commodities going forward. $NYMO and $BPNYA still sky high - so, it’s fair to say we are officially in overbought territory. FYI - the spread between the Moody’s BAA corporate yield and the $TYX is still at record highs and growing - while the BAA yield has dropped a little bit the T-Bond yield has completely fallen off the plate. This alone bodes very badly for the bulls on a medium term basis, and the widening yield spread between ’safe’ treasuries and corporate debt supports our view that the current leg up is nothing but a relief rally after heavily oversold conditions at the end of November.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-21_update_putcall.png
But I kept the best one for last. This is a chart of the CBOE put/call ratio index and you can clearly see how we are again approaching the 0.825 region which seems to have preceded a major drop in equities in the past month. Will this happen again? Well, I don’t have a crystal ball but considering the currently overbought conditions which obviously have prevailed or several weeks now - I’m keeping my modified high voltage bull-prod ready and charged http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-21_update_gold.png
Okay, one more since I’m feeling generous. Take a look at the Gold chart above - if we are so lucky to see 860 or above again this week and you don’t grab puts or short positions here - well, don’t blame me, I’ve done my part http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
Cheers!
Michael
December 19th, 2008 4:28 pm Update 63 Comments
Hey, it rhymes!! No, not on my wife of course - on the market when it’s obvious that some market monkey business is about to transpire:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_what_i_did.png
So, this is what I did today - what the chart does not show is that the Zero temporarily signaled pretty negative at the 11:00am EST candle. This is why I posted a ‘forget the rules and get out’ message to any watching leeches. I rarely do this but today was one of those days when you don’t care about a trend because you will most likely not get one as the market monkeys are busy screwing you six ways to Sunday.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_by_the_book.png
But you rats know that I usually play it by the book - let’s see what would have happened had I waited for the new indecision exit rule to kick in. There you have it - out at 1:00pm sharp as the candle pops up and shows blue dot (whatever color that’s going to wind up being going forward). Loss? A whopping 2.75 ES points - or $137.5. Now, looking at today’s tape - I call that ‘over-performing’ for any automated system.
Just wanted to throw this out there - as I said to one of the new rats in my previous post: If you stick to the rules the Zero will treat you very nicely. Also, it will keep you in the game and prevent you from doing dumb things. I mean - how many of you were ready to short the heck out of this market right at 2:00pm? Exactly - we didn’t go anywhere and the pivot basically held - just like the Zero predicted.
Have a great weekend, my dear rats - I’m completely worn out - having worked non-stop for the past two weeks. I need a break - don’t expect any posts until Sunday when I do the grand weekly forecast (no idea what I’m going to say about this tape but I come up with some b.s.).
Cheers!
ExitsDecember 18th, 2008 8:26 pm Intraday Update 124 Comments
Okay, now that you’ve got today’s theme song running let me share something very exciting with you. Yes - on TOP of the Zero-RL I put up today. I think I have discovered something that has been staring me in the face for a while now and after I added the little yellow ‘indecision’ lines it all came together for me. Let me show you:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-18_zero_exit-2.png
First some historical data - the blue market part is on the next chart, which is current.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-18_zero_exit-1.png
I think this tells the story without me having to explain it. What brought this on Thursday was that I watched the tape and there wasn’t a short VTA until the end of the day. Now, we kept adding long positions until Wednesday, after which the trend started going sideways and then dropped off the plate. Now, had we taken an exit at one of the two available indecision lines we basically would have picked the top.
Nice!
So, I went backwards and this is what I got so far. In almost all cases the indecision marks would give us good exits before a trend change. One could even consider the indecision marks early warning indicators that something is going to give.
Now, what else do you need?
[*]We know when a trend starts.[*]We know when a trend ends.[*]We know when to stay in a trade so to not cut too prematurely.[*]We know what the probabilities are inside trends and how to interact with retracement levels.Seriously - what else do we need? This is getting dang exciting…. Of course, this is a small sample, so I am looking forward to building on the existing work and fine tuning the Zero-RL. I actually had a chat with 2sweeties about the new version and he gave me some great input that might make this thing even better.
As I said - 2009 is going to be kick-ass! Right now my focus is on perfecting this thing. Then I’ll stop bugging you guys about it and just keep it running. If you can’t make money following this indicator then you better start looking for a day job.
But wait - there is more!
Let’s forget about the damn Zero for a second - there are so many excellent TA patterns out there, I just had to share them with my leeches:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_chk-300x267.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_bhp-300x269.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_bgc-300x268.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_aapl-300x272.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_amzn-300x269.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_bg-300x270.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_bg-300x270.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_gnk-300x269.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_goog-300x270.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_joyg-300x271.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_ma-300x271.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_lnn-300x273.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_mos-300x272.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_pot-300x269.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_rimm-300x272.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_wynn-300x272.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_wy-300x270.pnghttp://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_de-300x262.png
Anyway, most of those are short strategies - I just can’t help myself. I want to see some input here, leeches - get to work!
UPDATE 1:00pm EST: Frankly, I bent the rules today by closing out my futures contract early (with a nice profit), suspecting monkey business. Usually I would not do that and stick with the ZST as it is now, but I also know what the MMs are up to and smelled a major rat when we first rallied on a 2+ signal which turned negative in a matter of 15 minutes:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_rough.png
I mean, that’s some rough tape! How do you counteract that? The only thing I can think of would be to check for signal dissonance - meaning a very positive signal followed by a pretty negative one in a short amount of time. However, I’m not ready to add this yet - you never want to optimize an indicator for whipsaw expiration week markets. So, I’m going to keep watching this for a few more weeks and then decide if it’s worthwhile adding. Sometimes you might find yourself in a nice trend and a buyer or seller shows up but fails fairly quickly. You don’t want to get kicked out too soon - that’s always the danger of adding too many exit signals. I was watching the indecision marks for a while before I finally added that new rule yesterday night and I think it’s a good decision.
Anyway, I’m not trading anything for the remainder of the day as I’m not the gambling type. That doesn’t mean I’m not working - there are plenty of good setups out there and I want you leeches to go and find me some winners! Come on!!! This is war! Lets be prepared at all times.
Cheers!
UPDATE 1:10pm EST: You leeches are useless - here’s another one:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-19_fast-300x271.png
Am I the only one working around here?
December 18th, 2008 7:46 pm Market Forecasts 56 Comments
Straight to the point… Double top in $SPX on divergent STO and MACD (2hour).$NDX bouncing between support levels, and has yet to break to the downside, double top also.Some resistances are “bending” at this point, but nothing seems to be breaking.We could get some action tomorrow on expiry, but given the large confluence of resistances, I imagine we will just bounce back and forth, screwing as many of us as possible.
http://evilspeculator.com/wp-content/uploads/2008/12/dec18spx.png
Should we manage to break down, I would hop on with some puts, even if just for day-trades, as that strong diagonal resistance finally breaks.If and when this happens, we should be able to look lower for a few hours… http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2008/12/dec18ndx.png
AG stocks looking WEAK… I thought POT could have been a good long this morning, as it was chugging along, but it’s 7% drop today, as well as nearly 9% from CF, AG, AGU, and MON knocking off 4%, 5%, and 6% respectively.Take note, most of these either bounced from an established resistance, or broken a nice up channel.
http://evilspeculator.com/wp-content/uploads/2008/12/dec18bg.png
Nothing new to report on XHB or XLF.XLF has turned back down, and from well below the previous high.XHB has climbed a little higher, but not with the strength in prior rallies.These guys are exhausted.
Finally we come to the $VIX, who is not exhausted.$VIX has traced out an ABC correction that has retraced back to the 38.2 fib level, indicating a retracement of 61.8% (I wrote 61.2% on the chart, but it is 61.8% and I didn’t take the time to correct that) of the prior rise…Just can’t seem to get outside those 2.0 BB either, as that would be a nice Sell signal, which certainly would indicate the arrival of the next leg lower.
http://evilspeculator.com/wp-content/uploads/2008/12/dec18vix.png
Finally, I leave you with … Pretty interesting.Could be a great way to both reward the execs, and get rid of dirty laundry… What say you??
Skål!
December 18th, 2008 11:50 am Market Forecasts 118 Comments
UPDATE 11:50 EST: Okay folks, Berk here… Just did a sweep of the comments, and it appears that we are all hung-over this morning.This is not a call to arms, as I completely understand the lethargy that has creeped its tendrils over the market and its participants.However, when we are not running wide open, there are some important “lazy” things that we can get accomplished during days like this.
[*]Run through your favorite watchlist.Nothing is moving RIGHT NOW, but perhaps a few things are setting up for after the new year that we should keep an eye on?I know I see a lot of triangles forming in the AG stocks… http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif[*]Read the tutorial of your favorite indicator…There still seems to be some questions about how to take entries, and I encourage EVERYONE to re-read it just to make sure.If you are not sure about how the indicator operates, make sure you leave the questions for someone who does.I think Mole puts it best about the entries when he says that the “tip” of the Zero line is NOT USED for signaling, it is the previous candle that actually controls the signal.[*]Exercise… This time of year, most of us are underexposed to the pleasure of the sun’s rays.Getting outside and doing a little bit of exercise can really help refresh you mentally.If you cannot venture more than a step away from your trading station, then you can always do some push-ups and sit-ups on the floor.[*]Read (or re-read) a good trading book… When was the last time YOU read “Market Wizards,” “Reminiscences of a Stock Operator,” “Trend Trading,” or even the “Elliott Wave Principle?”Of course, there is nothing wrong with hibernating away until after the new year.Yesterday should have been the busiest trading day that we will see until after the New Year has come.But it is what we do with our idle time that sepearates the amatuers from the pros…We all know Mole is using this time coding and recoding the Zero to make it the epitome of evil, what are you doing??
Out of curiousity, how many of you folks read the instructions on a new appliance?Do you REALLY read it the whole way through, or just look at the pictures and think you can do it?What about you car?Did you read the owner’s manual on your $75,000 Mercedes-Benz?I would imagine that the majority of us do not read (especially not ALL the way through) the owners manual to many of the devices in our everyday life.For me, it is a cost issue.I may not read how to properly toast my bread in the morning, but I am damn sure going to read the instructions for my computer.Now we all trade in the financial markets, so this indicator could be worth a mighty penny.Therefore, I strongly reccomend familiarizing yourself with it’s actions (and opperating instructions) during this downtime…
UPDATE 12:20am EST: Mole here: Did you see how the VIX dropping by like 10% today?
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-18_vix.png
If we keep dropping like that we might actually push below 40 before the end of the year. Now, if my evil plan works out and we hit 1040 on the SPX in January then we might even approach 35 in the VIX. That would be backing-up-truck time… perish the thought…. But even 44 is a bit of a X-Mas present for me - maybe the option market will actually become functional again - wouldn’t that be something?
UPDATE 2:00pm EST: Here is a quick preview of an alpha version of Zero-RL:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-18_zero-rl.png
It took me three days to code this because thinkscript sucks so much, but I think this is a good start. When I took this screen grab the signal was about zero (smoothed) and the 898 long RL has a 29% probability. Based on my current algo this should hold unless we see a stronger negative signal. I have not released this into the ‘wild’ yet as the math is pretty complex and I want to collect more RL/Zero correlation data before I have sufficient confidence to let it loose on you guys.
The blue dots mean that the pivot should hold this candle. IF we get a trade alert on the bottom and it’s weaker than the RL to be breached it will be shown in blue as well. Which would mean - wait until the RL has been breached before taking on positions. Pretty simple system actually and it should keep us from adding or initiating positions ahead of RLs that are stronger than the current trend signal.
UPDATE 2:23pm EST: Excellent http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-18_zero-rl-2.png
There you have it - we got a 1.0 and it breached the pivot, just as predicted. Also note that I’m hiding all short RLs when the signal is negative plus I’m hiding the long RL one we breached since less lines on a chart is better.
UPDATE 3:06pm EST: We got a short VTA but the Zero-RL puts it in blue, indicating that the signal is not strong enough to overcome the RL below:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-18_zero-rl-3.png
So, I would wait with taking positions here until the Zero-RL gives us the green - ahem - the red light http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
No worries - I keep you guys posted in the comment box.
UPDATE 3:15pm EST: Seems we breached on a 1.25 - the one above was actually 0.65 - sorry. A 1.25% should be able to breach a 54% signal - this RL is a 46% - so far so good.
UPDATE 3:37pm EST: Okay, I caved and deployed my alpha version of Zero-RL 0.1. If you don’t care about the RLs just trade the signals as they come and ignore the RLs and the blue lines/dots. Have fun http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
Lazy Wednesday ReminderDecember 17th, 2008 7:12 pm Market Forecasts 72 Comments
Just wanted to make sure you all remember that Berk and I are taking Wednesday evenings off (for now). We need a little bit of time to get ready for evil Christmas after all - my neighbor has a nice spruce in his yard that might just fit our ceiling…. See you all tomorrow!
Cheers!
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December 17th, 2008 11:13 am Market Forecasts 132 Comments
UPDATE 11:09am EST: I just had a long conversation with Berk of how rough the option market has been in the past few weeks. It’s tough to eek out a living in this environment, with the VIX sky high still you better pick your entries wisely. Anyway, 2.1 is what the TNX yield is at right now - wow - that’s pretty low. But remember to ignore the TNX after interest rate cuts, and accordingly equities are holding steady after the early morning drop. Berk and I are still holding those XLE puts - our line in the sand is 51.45 - the C wave of the triangle. I was tempted to cut this one early today, but decided to stick ‘with the program’.
Anyway, I have some hacking to do while this market is stuck above the 898 long RL. Based on the Zero signal I don’t think this one will be breached anytime soon.
UPDATE 11:16am EST: OPEC wielded the ax by 4.2 million brls. That one sent FLSR flying of course - I totally forgot about their meeting - darn it - because I expected them to cut.
UPDATE 11:21am EST: Let me give you an idea of how useless the latest rate cut was:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-17_ffr.png
Here you see the target FFR stepping lower in the past six months compared with the effective (real) FFR. It’s basically been around zero for quite a while now. The target rate is simply kabuki theater - all they are doing is follow the market. Of course equity investors/traders still have not gotten the memo - massive amounts of assets are seeking shelter in treasuries while we keep rallying. Not that I didn’t expect this (see my charts) - but it still boggles the mind http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
UPDATE 12:10pm EST: MA is going to be one sweet short at 151 http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
UPDATE 12:16pm EST: The Dollar has kept dropping to the point where I think we are looking at something else here. Does not look like an A-B-C to me anymore - or maybe this is part of a massive A leg.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-17_dollar.png
Anyway, it’s obviously dead in here now - I think the X-Mas season is taking its toll. So, I won’t post as much for the rest of the day as the audience is shrinking - will devote myself to finishing ZI-RL.
UPDATE 1:36pm EST: The Zero is flashing green, and I was cautious about taking this one. The plain zero measures momentum, which is positive, but based on the 911 RL (91%) it doesn’t have enough juice. This is really strange and completely violates the data I collected yesterday. Either that - or 2sweeties’ probabilities are wrong http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
I’m almost finished with ZI-RL - all the math and hard work is done. Now working on visualizing it. Should be ready tomorrow.
UPDATE 2:20pm EST: Well, we’re at 918 - best theory I have right now is that it’s an expiration week lure for the bulls. There is NO JUICE in this tape - I’m not arguing it and whatever the market does it does. But I am not going long here, suspecting a take-down by tomorrow or Friday. Remember that Wednesday is usually the strongest day of expiration week.
UPDATE 3:05pm EST: Some of the noobs here were asking about the Zero and why the original version doesn’t know about retracement levels (or senses them). It’s because the original Zero simply has no context of retracement levels. Doesn’t even know they are there. It sees that momentum is positive and according to its rules pops up a buy. Now, in a majority of the cases (90%) this is actually useful as it often pops up signals which are counter intuitive to us emotional trading rats (see recent tape) and either prevent you from going the wrong way, cut at the low/high, or keep you in the game. But there are these rare cases when you are up against a 90% retracement level (according to www.retracementlevels.com) and some big sellers (or buyers on a down trend) are letting the market slip by it just for fun. Then they strike and you see a sudden nasty plunge - which is exactly what happened today. Call it a bull trap or expiration week monkey business. This is the kind of stuff I plan to build into Zero-RL (Zero which is ‘aware’ of retracement levels).
Just a matter of time until the Zero develops a consciousness and embarks on its real mission to subjugate humanity. Mmmhwwuuaahaaaaahaaaaaa!!!!!
Vapor RallyDecember 16th, 2008 8:26 pm Market Forecasts 81 Comments
This is getting a bit eerie - the tape continues to almost exactly follow the path I traced out for it two and a half weeks ago. Sometimes the tea leafs offered to us by black EWT magic pay off in a big way. Of course it didn’t hurt that I sacrificed a number of small helpless animals (i.e. local infestation of cockroaches) to the spirit of Ralph Elliott Ralph Nelson Elliott as part of my ritualistic Black Elliott Wave Cult ceremony. BTW, if you’re interested - memberships are starting at 1 1/2 goats per month.
http://evilspeculator.com/wp-content/uploads/2008/11/2008-11-30_update_spx1.png
Okay, let me rub your nose in my glory - yes, I’m that petty and intend to milk this while it lasts. Here is the chart I posted on November 30th….
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-16_update_spx.png
… and here’s the updated chart. Well, let’s hope my lucky streak continues - frankly, whenever you think you’ve got the market figured out it has a tendency to turn against you. But so far so good.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-16_update_spx_pnf1.png
If you read my weekend post you know that we’ve got two competing scenarios right now - my sideways pattern from hell and the triangle formation - both counted and drawn on the updated SPX chart. There’s a separation point around 920 about two weeks from now - assuming we continue on the general shared pattern. If we keep rallying at that point, therefore invalidating the triangle scenario, then the target range is between 1000 and 1040, as originally projected. Remember that EWT assumes a time target and a price target - both would be satisfied at that point. What also backs this up is the P&F chart you see above, which predicts a similar target after today’s double top breakout pattern. FYI - the formula for projecting this is pretty easy:
Column of x’s that triggered the buy signal (11 boxes) multiplied by 3 multiplied by box size (5 for the SPX). Which comes out to 11 x 3 x 5 = 165. Add that to the point where the column started (855) - and voila - you get to 1020. A little magic there… I’ve got more where that came from. BTW, the multiplier for bearish patterns is 2 - just FYI.
Nothing really has changed since my weekend update, so I’m going to keep things brief. If you take another look at the current SPX chart further above, you’ll note where I intend to load up on July/August puts. Some of you recall my little math experiment on how $4k worth of SPY puts around mid July would have been worth close to $75k on November 20th. And bear in mind - that was somewhere in the middle of intermediate wave (2) up - had you bought those puts around the peak four weeks later you’d be sitting on about $100k. The message is however that you don’t have to pick the exact top. All we care about is to get Mr. VIX from his yodeling post and into optionable territory. Then load up on those July/August or maybe even September/October puts - some SPY, DIA, IWM (I don’t like cubes - sorry) - and you should be good to go.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-16_update_zg.png
Yes, Silver put a fast one on us (and we got our noses rubbed into it immediately by some wanker) - based on today’s tape I expect more upside in both Gold and Silver before we drop to 650 (which we will). The good news is that Gold seems to be linked with Silver again - and that makes reading the pattern a lot easier and more reliable. If we hit 880 in the ZG futures (above) I’d be very tempted to load up on some puts. First up we’d be reaching equality on an obvious zigzag to the upside and if we rally from there something completely different is going on anyway. So, yes - this may backfire like that Silver trade yesterday, but that’s how it goes - it’s almost impossible to get perfectly positioned, especially when it comes to trading commodities (remember Berk’s treatment in existentialism from yesterday). You have to pick your poison, which translates into the most defensible positions. Usually Gold scares you a little once you entry - so make sure you don’t grab a position that makes you sweat if it pushes towards 900.
Many of you have seen my comments on the Zero-RL on my intra-day post today. If you have followed the live screen grab feed you probably have seen my continuous comments while things were pushing to the upside. I actually had coded half through the night and this morning I had a very crude version of Zero-RL running on my workstation. With that I was able to predict that 885 and 895 would be breached. I then projected that it would take a Zero signal of over over 2 to breach 885 and exactly that happened. Then I suggested that it would take a Zero signal of minimum 6 to break 911 and at the very end of the day it indeed breached that one when the Zero hit 6.5.
I’m still working on how to visualize the Zero-RL properly but have the feeling I’m on to something exciting. What this might do for you leeches, once it is done, is to give you a better idea (nothing is of course guaranteed) of when you want to take on positions when trading those daily retracement levels. As I said - I know what the strength of the tape is based on the Zero - and I plan to build a special Zero-RL and add it to the right side of the feed that will visually show if an RL breach is expected. I don’t expect this to be spot on every time but it’ll add another dimension to the retracement levels. I personally think that the combination of the Zero plus 2sweeties retracement levels will be bigger than the sum of its parts.
I’m very excited about 2009 - we’re going to make a killing, my dear rats - hope you’ll tag along for the ride. Berk and I are just getting started.
Cheers!
December 16th, 2008 10:33 am Market Forecasts 156 Comments
UPDATE 10:31am EST: Silver breached 10.73, so Berk and I cut our PAAS positions - this was our line in the sand. Instead however we grabbed some XLE:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-16_xle.png
I think you can see what the thinking process is here. Frankly, I don’t care about the rate cut - buy the rumor, sell the news. VERY defensible position here and if it breaches I’ll turn my coat from red to green.
UPDATE 10:48am EST: BIDU looks also very delicous - might turn into a nice island top pattern - who knows. It’s heavily overbought, so watch this sucker.
UPDATE 11:03am EST: Let’s not forget that the Fed announcement will be at 2:15pm EST. Expect some some volatility around that time.
UPDATE 1:53pm EST: Boring day so far - we’re pretty much stuck at the 886 short RL. I expect some kind of fireworks at 2:15pm - not much longer.
I have been coding my butt off since yesterday and am getting very close with the ZI-RL. It’s already showing me a signal on my test chart - yaaaay!!! However, I’m still thinking about the best way to visualize this. Problem is that RLs change every day - so if I just remove the ZI VTA lines if I expect a block then tomorrow most likely it will show that VTA on the chart again once I update the RLs. That’ll confuse a lot of people when back testing - so, I was thinking of painting the lines on the upper chart and maybe make them full lines if the algorithm expects them to hold and dashed lines if I expect them to be breached. This way we can time our entries better. This will not help with historical data obviously as we won’t know when exactly we took our entry (right at the beginning of the VTA or after the RL was breached). And we will continue to see trade alerts even if we didn’t take them due to an RL warning. But that’s something I would need to re-implement on a different (and more sophisticated) platform but at least we get even better entries this way.
UPDATE 2:22pm EST: Target Federal Funds Rate: 0 - 1/4 percent. As I’ve been saying - the Feds don’t make the rate - they are following the market. BTW, the effective FFR has been around 0.2% anyway - makes no difference. But this kabuki theater makes the mouth breathers (like jjjjjj) happy.
UPDATE 3:23pm EST: Are you guys watching the Zero chart? My predictions so far based on the ZI-RL I’m looking at right now have been spot on. I’m adding comments to the screen grab feed to give you an idea of where we are. The 911 short RL has a 91% probability - based on my research we need a minimum of a 6.0 signal on the Zero to bust through it.
Waiting for Godot…December 15th, 2008 9:28 pm Market Forecasts, Update 64 Comments
The recent action of the market lately has me thinking back to high school, and the numerous lessons that I was supposed to have picked up on.
**Disclaimer:If you don’t want to read a few paragraphs about my (likely) misinterpreted views of some random French play, scroll down until you see charts.Otherwise, enjoy, and chuckle with me.**
Let me skip back in the time travel device to my senior year of English, and the existentialist classic, “Waiting for Godot.”If you are somewhat familiar with the work, you are probably already laughing along with the parallels between that play and our current market situation.
A little synopsis, the two main characters, Vladimir and Estragon, are VERY busy waiting on someone named “Godot” to arrive.They are standing by the tree (the only one they see, so it must be the correct one), where they remember Godot instructing them to wait.However, Godot has a problem with timeliness, and does not show up for many days (he actually never shows), and the antics between Vladimir and Estragon pretty much depicts how many of us feel about the market, especially here lately. The two protagonists try several times to leave the tree, but finally decided to take a stab at hanging themselves with a belt, but cannot, and reside to try again tomorrow (should they actually leave to find a belt suitable for hanging…).
So how does this relate to us and the markets?Well, Godot is “the perfect entry” or even a clean entry.We traders are Vladimir and Estagon, stricken with doubt and indecision.Anytime one of us has our mind made up, the other comes in with the slightest bit of hesitation, and our WHOLE thought process is sent spinning again.While we are reeling in our indecision, we try several approaches to make sure “we are in the right place.”In trading, this might be switching from trend-trading to scalping, changing from options to futures and back, or just “re-exploring” old indicators.All of which tell us, Godot is coming, to THIS tree, stay here and be patient.
Of course we wait, and Godot does not come, the clean entry has left us standing by the wayside, scratching our heads saying “that couldn’t have been Godot!?!”“If it was he surely would have stopped here, with us standing by the tree!?!”The market waits for very few my friends, occasionally, if you are important enough, you will get a retest, but don’t bet on it.
Taking another step back, how does my analogy play out?Well, we are all waiting for the cleanest of entries, many of us have our heads spinning without conviction.None of us actually know if the “perfect entry” will ever come, or where it will come to, but we all know that we must wait, Godot is coming…
This seems especially true with the current 4th wave correction.It is whipping everyone left and right, bulls and bears alike, and STILL has no conviction on direction.Many of us have no idea where the perfect entry would be, some of us know, but have to play the swings in between.Very, very few of us actually see the perfect entry on the charts and are comfortable watching it all the way the final moment.
My last post was do or die, and we didn’t do, so we died.Unfortunately, the bounce off of the Do or Die line, was not sufficient to put in another high to the upside, questioning that we will go higher at all.Of course, we have not pushed enough below it to say that we are firmly moving lower.
To make matters worse, this week is expiry, and we have a FOMC meeting on Tuesday.I have been saying that if we are to see action, I would expect it sooner than later, and since I have seen no action in one direction or another, I question that it is coming at all.
Since I was busy clamoring about Senior English, I will give you art class also, in that a picture is worth quite a few words.Today’s action seemed to boast a little more for the bearish case, but you have to understand that the negative breadth and move was done on very light volume.I mean, it was BLATANTLY obvious when the robots showed up this afternoon.All in all though, volume has been pretty light since Thursday, and we can only expect this to get worse.
Since there was a little confusion last week over my count, I will admit, I am a little confused at the moment, but going forward, my best two counts on $NDX are on the chart.I re-labled the resistance lines to use the final bullish hourly closes, and extremes, and we has rested right above them.Traditionally, we have had a positive reaction to the rate cut, but going down to 0.50% makes it tough to put on the bull cap. ALL CHARTS ARE HOURLY.
http://evilspeculator.com/wp-content/uploads/2008/12/dec15ndx.png
Mole’s post yesterday displayed a number of reasons that we would be bearish on a number of timeframes.To me, you couldn’t have done a better job illustrating how we know this is a bear market rally that is waning, and should soon resolve lower.We do have to give the markets time to work themselves out, and until then, we can only add to the tally of bearish indications.XLF and XHB remain strong indicators of where the market should be heading.They have both broken their uptrend channel, but have not jumped back on the HOV lane to the abyss.That is worth noting, but breaking bullish resistance is the major indication I am looking for.
XLF:
http://evilspeculator.com/wp-content/uploads/2008/12/dec15xlf.png
XHB:
http://evilspeculator.com/wp-content/uploads/2008/12/dec15xhb.png
Here are the horsemen of the NASD-Apocolypse.Could be worse, but these horses are not headed to greener pastures…We took a little counter trend play in AMZN today.If the market are heading higher, we got a nice little entry, if not, we can cut quick and easy.
http://evilspeculator.com/wp-content/uploads/2008/12/dec15amzn.png
GOOG looks like you could build a pretty good bullish case too.I could see up towards 340, but as it stands, we have an A = C equality suggesting lower lows await.
http://evilspeculator.com/wp-content/uploads/2008/12/dec15goog.png
Something knocked AAPL off the tree this morning but it managed to recover some.If did however, gap down this morning, and manage to close the wholeday underneath the bullish trendline.Since these stocks are well known leaders, this doesn’t bode too well.
http://evilspeculator.com/wp-content/uploads/2008/12/dec15aapl2.png
I had to save the best for last.Aside from a mutated quadruple bottom on the 2 hour chart (ya right…), there is nothing bullish about RIMM’s chart.This is the best descending triangle I have seen in a LONG time, and that is not just because the upper resistance line can be drawn ALL the way back to September if you use all data.
http://evilspeculator.com/wp-content/uploads/2008/12/dec15rimm.png
If you have come this far, and are still impressed, point each other up… Seriously though, the markets are at a cross-roads, and we just have to see if the market takes THIS route lower, or waits until we get a little bit higher to do so.
I am going to point the near term trend to “UP”, expecting a positive reaction going into the Fed meeting.“UPDOWN” is the medium term trend, expecting the fed jubilation so fade fairly quickly this late in the year.The long term trend will be dubbed “SIDEWAYS” until we get a move outside of this wretched range-bound market.
Skål!
December 14th, 2008 6:08 pm Market Forecasts 90 Comments
It’s that time of the week again when we take a stern look at our tea leafs and attempt our luck at the losing battle we fondly refer to as predicting market probabilities. As we all know: “Prediction Is Very Difficult. Especially about the Future”. Well, that hasn’t stopped me so far http://evilspeculator.com/wp-includes/images/smilies/icon_wink.gif
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_update_spx1.png
Ain’t she a beauty! Can someone please explain this chart to me? Just kidding… it’s really not that difficult - so you instant gratification leeches just bear with me. There are two scenarios I think are most valid at this point. The first one is what I basically the triple correction I been pimping for a few weeks now:
[*]A zigzag that started on the 11/21 and ended on 11/28.[*]Followed by a flat, in which we find ourselves right now, and in which we are about to complete wave {b} of B of (4).[*]Followed by a motive up to the price correction zone of between 1000 - 1040.[*]Followed by a high altitude skydive into the abyss.There is also much talk about a triangle for which I have added a competing count in orange (or whatever that Prophet color is). I have also drawn yellow boxes around the counts where you see the original one in black and the one for the triangle in that orange color. Anyway, based on the triangle scenario we are in the last leg of C of (4), followed by a drop into D, a rally into E, and then the big plunge back into the abyss.
For the foreseeable future it really doesn’t matter as you can see that the path traveled is identical until the separation point, which is clear from the chart. I think that risk will be fairly easily managed once we arrive that level: If we are starting to drop around 900-920 the more skittish rats among you might want to wait until we cleared the lower boundary of the triangle.
Of course if we keep busting higher it’ll scare the pants off most bears out there and that would be exactly where I would back up the proverbial truck. Frankly, I’m personally not married to any of the two paths - may the better bull trap win http://evilspeculator.com/wp-includes/images/smilies/icon_smile.gif
One caveat however - as you can gather both scenarios require that we rally from here. If we actually start dropping below the Friday low all of that is out of the window and Berk’s count might be what we’re dealing with. I actually give his count an equal probability, so go back to the Thursday update if you want to remind yourself of his projections.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_update_usd.png
The Dollar got pounded last week and seems to be completing an A-B-C correction. And guess what follows a correction - another leg up - most likely. Unless we keep dropping from here, which would change our count.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_update_bpnya.png
There are two things that grabbed me about this chart. First up we are of course in deeply overbought territory - and let’s not forget that the Bullish Percent Index is a long term indicator. I could also show you the McClellan (more medium term), but why bother? The second observation on this chart are the levels of extreme conditions we are now dealing with. It is said that bear market have the most violent bull rallies and I think this comparison chart between the BPNYA and the SPX shows that quite nicely.
BTW, this gives additional credence to Berk’s scenario of an immediate drop. However, we don’t have much further to go in what I outlined above and believe it possible that the thin pre-X-Mas tape makes a few more points to the upside possible.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_update_baa.png
This is Moody’s BAA Corporate Bond Yield which is right now around 8.75 - has actually pulled back a little in November.
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_tyx.png
And this the 30-year T-Bond yield, which has completely fallen apart, just like the TNX. Now, let’s do some math:
[*]Take the $TYX yield, which is pretty much at 3.06%.[*]And deduct from it the BAA yiled, which is 8.75%.[*]And you get a yield spread of -5.69%.Ladies and leeches - 5.69% is record territory and I have never seen it that high. This spells big trouble for the mouth breathers going forward. Unless the $TYX is making a b-line to the upside 2009 there won’t be any sustained rallies and vapid corrections will be all we get. Hey, I don’t mind vapid corrections, just for the record.
Yes, the credit market is still broken and it won’t fix itself - I alert the media!!
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_update_irx.png
Okay, short term T-Bills are basically the safest way to store your assets right now - and investors are willing to endure a negative yield just to get in. Scary stuff which the equities market seems to completely ignore. Why are we rallying again?
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-14_update_zg.png
Whenever an internal count is becoming unclear I always take a step back and try to reach a conclusion by merely counting waves. A count of 9, 13, or 17 with few overlaps (motive + extensions), for instance is likely motive, while a count of 7, 11 or 15 is likely corrective. Right now I am counting 6 major waves in Gold and they are overlapping heavily, leading me to believe that we get 3 more counts to the downside.
Until we clear the 740 mark I would however be cautious - Gold has been acting strange as of late and is completely detached from it’s little brother Silver. As a matter of fact - Silver is at a very interesting spot right now and short positions should be very defensible. If it pops higher by any reasonable margin then something else is going on. I’m playing with the thought going short Silver on Monday - but I won’t touch Gold with a 10 foot pole right now.
That’s all I got for today, my steel rats. I have already slaved non-stop since the Friday close and some nice cosmetic Zero improvments are on the way (nothing has fundamentally changed - no worries). I have also completed the case study and beefed up the tutorial which can both be found on the Zero page. No worries, it will be accessible again later tonight. There is even an Excel sheet you can download that contains all of the signaled trades of the past 15 trading days (correlated with a marked chart in the case study) - if you want you can use that for your own purposes - took me a while to put that together. As a matter of fact I first did the entire case study by hand and when I was done I thought - hey, why the heck am I not using Excel for that? Silly me…
Back to more evil deeds - have more coding to do - see you leeches tomorrow morning.
December 12th, 2008 10:07 am Intraday Update 196 Comments
UPDATE 10:00am EST: Now that was an interesting retracement after the initial gap. Someone was commenting that the ever looming hope for salvation was wearing on his nerves and my response was to get used to it. That’s why Prechter coined the term ‘Slope of Hope’ (and someone else named some unpopular blog that way) - the human mind is not well equipped to the gyrations and tribulations of the stock market. In a bear market investors have a tendency to slide the slope of hope - it’s a psychological fail safe system:
http://evilspeculator.com/wp-content/uploads/2008/12/seymour062001.gif
This is a chart of the 1929 crash and the ensuing bear market ending in 1933. The bubbles are news clips that were issued during the progression downwards. Anyway, click on the image and it’ll show you a page with all the clippings. After reading that you might have a better idea of what’s ahead of us and how to judge the daily headlines you will keep seeing in the news. Most of us might not read printed news papers anymore (another industry bites the dust as expected) and we all now have fancy computers and other electronic toys giving us access to the news, but we as humans have not changed a bit. We’re as silly a ever and that is most likely not going to change.
There have been some confusion about the color changes and the tiny little lines on the Zero I put up last night. People - nothing has changed - I am just making slight modifications. If it was anything major I would have put it right on the screen grab. Be assured that I will be working on updating the tutorial over the weekend - unfortunately there are only 24 hours in the day and I’m already working 18 of them. I do appreciate the enthusiasm and the continued interest. I am also aware that nobody wants to see an indicator change all the time. However, at the same token, many of you have been clamoring for trade signals and that’s what I have been busy adding. Nothing has changed with the underlying algorithm and if you compare prior screen shots to the pattern of the (now) white line, this will be abundantly clear. Just give me a few more days to finalize the tutorial and we should be good to go.
The good news is that the tutorial will now be a lot simpler as people really only have to follow the VTAs.
UPDATE 10:26am EST: Take a look at this grab:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-12_zero_patterns.png
A reader sent me a similar version of this and I added today’s drop in the markings. What I find interesting today is that the intensity of the signal line (in white) is a lot smaller than what we have seen in prior break outs this month. It’s way too early to assign meaning to this but I think we should take note. Maybe, and just maybe, the size of the signal can be correlated with the expected size of the move? Now, throw in retracement levels and this might open up a whole new dimension of how to manage your trades. Again, don’t go all nervous on me now - nothing has changed and I’m just throwing out a few thoughts. If you find yourself breathing through your mouth you can safely ignore this posting.
UPDATE 12:51pm EST: TNX is still up and Yen seems to have run into some overhead resistance. NQ just passed the 1197 pivot and YM is pushing through 8620. Zero is about to give a long VTA and I intent to take up a small long position. Will stack if we see more momentum - obviously right now everyone is waiting for some Detroit related bailout news.
UPDATE 1:30pm EST: Market is in gyration mode right now - everyone’s waiting for those bailout news - as if it’ll make much of a difference. Strange how human psychology works. Anyway, it’s December 12th and I’m only taking on very small positions at this point. The big players are decorating their Christmas trees already and if you recall the Thanksgiving week, market is now becoming very sensitive to monkey business. No sense to burn cash in this environment…
UPDATE 2:00pm EST: Take a look at this Gold chart:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-12_gold_digital.png
I know this sounds strange but it reminds me of a read-out of a digital signal on an oscilloscope (yeah, I used to be an engineer). Now, I don’t want to jump to conclusions but the thought has occurred to me that the spikes might be generated by program trading. Gold has lagged Silver as of late which has been flat like a flounder. This is supposed to be bearish for Gold, but I am not confident enough at this point to burn theta on puts. Unless you got positioned right at the cusp of these moves you probably had to either give up or found youself waking up to a considerable loss/profit. Now, if you believe in fractal theory (and I do) then the next turning point may be only days away. Also note how little Gold has moved during last night’s panic sell off in equities. A lot of food for thought….
UPDATE 2:14pm EST: Here’s a quick preview of a chart that will be added to the new tutorial this weekend:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-12_preview.png
I have written down all the entries and exits and will be updating the case study in the next two days. However, what I wanted to point out is the area which I framed. See the short VTA - the very first trade? That must have been scary to sit through! However, the Zero did not buy it and stayed below - it might have swung above briefly but since it’s a maribuzo candle I doubt it reared its head above the zero line. Well, that patience paid off - which is a point that one of our newer readers just made.
Anyway, these are the 20 days before this Wednesday. I think it gives you a good idea of how the Zero performs in varying conditions.
UPDATE 3:38pm EST: Some of you seem to be on a Zero update crack feed. No need to report the signal here - people who care are watching the chart. Listen, there is nothing the Zero can do about a market like this:
http://evilspeculator.com/wp-content/uploads/2008/12/2008-12-12_update_zero_day.png
I mean - look at these candles! The Zero is not a crystal ball - it feeds off of market sentiment, which is whack today (even more so than usual). It cannot make the market move - it can only report on the general trend, which has remained slightly bullish since that ETA. Did I take my position off the table and lost some? Yes, but had I held it and believed the damn thing I would actually be sitting on slight profits right now. We didn’t get a green line up and the market reversed and droped 20 points. Let’s keep things in perspective folks - this is a trend trading system and that’s why I posted the chart further above. If you can’t sit through some losses you should not trade the Zero (now I have to take my own advice).