Stock Slinging

It seems that most forex and futures symbols continue to run in circles ahead of the Friday presidential inauguration and unfortunately I found little to share on that front. Which leaves us only with stock symbols but fortunately I was able to uncover a few goodies.

2017-01-18_LXP_update

First a quick update on our LXP campaign which I posted for the subs last week. We snagged a pretty decent entry and thus far it’s sticking to the script. Time to advance or stop to near the break/even mark at 10.79.

2017-01-18_APC_setup

APC is a possible long term campaign which is why I’m showing you the weekly and monthly panels. As you can see it’s been trading inside of tight range for the past few weeks and I’m sure it wants out. As it’s near the lower boundary plus given the monthly context I am tempted to grab a long position with a stop below 68.

2017-01-18_APC_financhill

Seasonality courtesy of Financhill – click on the chart or here to look at a dynamic chart plus some juicy stats. I don’t see any red flags here so this is a go for me.

2017-01-18_LOW_setup

LOW has been trading even lower lately but managed to reconquer a daily NLBL plus its 100-day SMA. I’m interested in a long position but only if it drops back down to the 72 mark. Stop would be placed below 70 – how’s that for nice round numbers?

2017-01-18_LOW_financhill

Seasonality very supportive – we’re looking good here.

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Off To The Races

And we are officially ticking in 2017! I trust you enjoyed a memorable holiday season and are now ready to slowly abandon each and every New Year’s resolution you committed yourself to just last week. Personally I’m pretty proud of myself as I survived yet another Christmas without adding a single pound. Plus I spent much of the past 10 days collaborating with Scott and a few others on an improved version of Scalpius. I’ll be sharing more on that that as we’re forward trading the system over the coming two months.

Now this being the first trading session of the year I’m not exactly eager to jump into new positions with both feet. So to properly kick off the year let’s first run through some of our key charts to get a general idea of where we are at.

2017-01-03_spoos_update

And here it is – our first chart of the year, which of course is E-mini. It’s sitting pretty right now with prices still above the 25-day SMA but having reversed from the nose bleed highs above the upper 100-day Bollinger. As long as our current LT inflection point of 2236 remains intact this is actually a pretty good base from which to enter long again. However as I said already – let’s give it a session or two to weed out some of that new year reshuffling we’re most likely to see.

2017-01-03_gold

Gold continues to look tired and quite frankly there’s nothing to be said here unless it reverts back to 1140 where I may consider a tiny long position if it manages to hold.

2017-01-03_silver

Silver hasn’t seen a decent bid in ages and the daily panel (on the left) seems to indicate that it’s losing more and more of its mojo. We traded through an awesome long opportunity near the 17 mark which however turned into a failure. For now I don’t see much of an edge here unless you’re holding short.

2017-01-03_crude

Crude however is looking very perky these days after a sideways range that tormented us all last year. The weekly panel is pushing toward a major inflection point near 55 where we’ve got the 100-week SMA plus the upper 25-week Bollinger. The 25-month SMA plus a monthly NLBL at 56.18 are not far away and if it manages to push above all that then we are truly off to the races here and most likely for the rest of this year. This thing has been stuck inside a pressure cooker for a long time and could be trading at 80 this summer. Caveat: crude is very event driven and most likely will respond strongly to whatever happens after January 20th.

Quite a bit more below the fold. If you’re not a sub then start the year off in style and sign up for Evil Speculator Gold right now!

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Unpredictions For 2017

The subtle sucking sound you may be hearing is the increasing drop in participation that started yesterday and is expected to exacerbate during the final trading sessions of the year. Which makes for increased intra-day volatility and the occasional stop run. ‘Tis the season after all – and when we’re not busy being run over by religious fanatics in weaponized tractor-trailer trucks at our local Christmas market, we’re now shifting focus on last minute errands and gift wrapping of useless trinkets guaranteed to be returned for soon to be illegal cash early next week.

2016-12-22_participation_es

For most people it’s been a rough year on practically all fronts: politically, economically, culturally, socially, as well as financially. Some of us didn’t even manage to survive the year and if you’re still reading this then you at least have the benefits an ongoing existence going for you. On the trading front it’s been brutal most of the year with only brief spikes of trading opportunities which we fortunately managed to milk for all they were worth. Not surprisingly participation on the blog has dropped a little but given the mess we’ve been through I think that we’ve done extremely well. While many other once popular trading blogs have long disappeared and fallen prey to social media over the past few years Evil Speculator is proud to count itself among the few who are still standing.

Unpredictions For 2017

I decided to post my unpredictions for the new year a little earlier as usual as I’m planning to take some time between Christmas and New Year’s Eve off. Although my body is slowly recovering from a nasty cold I am feeling the burn of what has been a hugely taxing trading year which required maximum effort and attention just to stay ahead of the curve. In other words, sometimes even the Market Mole needs a few relaxing days without looking at charts.

Once again if you happen to be looking for actual predictions of future events then I suggest you consult your local palm reader or better yet do what Yellen and her colleagues at the Federal Reserve have been doing since the onset of the financial crisis: gather for a seance with an unemployed actor channeling Alan Greenspan as the medium. So without further ado here are my predictions of events that will most certainly not happen in 2017:

  • Markets are going to go up, then they’re going to go down. And then up and down again. Then sideways. We nailed that one almost perfectly last year, expect that it was mostly sideways.
  • Once again you will dispense with following any structured rule based trading system and instead attempt to beat the market courtesy of your vastly superior IQ and your uncanny ability to predict future market movements.
  • As usual we here at Evil Speculator are going to post a myriad of setups and present hard earned educational trading wisdom on a daily basis. Most of which you won’t have time to appreciate as you’ll be busy heckling disgruntled Clinton supporters over on Breitbart. Lesson yet to be learned: Just because you’re running doesn’t mean you’re getting anywhere.
  • This year your wife is going to mix things up by buying you clothes that actually make you attractive to other women, but will then insist on making you feel guilty about it. That’s right, she still hasn’t forgiven you for blowing up her trading account.
  • Unlike last year this year you will not be dreaming about a shirtless Putin riding a white horse. Instead your nights will be haunted by a shirtless Trump riding a black bull across Times Square. Which by the way will be renamed Trump Square by the end of his presidency. Once again you will enjoy all that a lot more than anticipated.
  • Your mechanic is not going to rip you off as he’s now sleeping with your wife. On the upside your car is going to run on water and will not break down.
  • No Mexican waiter will be spitting into your drink in the coming year because by February they will all have been deported. Taking his place will be an underpaid gender neutral triggered Clinton supporter who will first urinate in your drink and then proceed to lace it with codeine (if you’re lucky). Just don’t call him/her/it ‘sir’ – you have been warned.
  • Once again terrorists are going to blow shit up when they’re not busy raping and maiming infidels as well as lousy tippers like you. Heck, at least some people are straight forward and consistent when it comes to communicating their agenda.
  • The weather is going to suck everywhere, except if you live in Southern California and are impervious to smoke inhalation.
  • Someone is going to break into your online bank account again but it won’t matter as you’re already broke. As a future precaution I recommend that you increase your Yahoo password from four digits to five. It won’t matter anyway because Yahoo employs an old copy of Norton Commander as its firewall.
  • Germany and Sweden are going to introduce mandatory chastity belts to be worn in public for any females between 14 and 72 as well as young boys between 7 and 14. The boys will be required to wear them backwards, unless they are gender ambiguous in which they will be allowed to mix things up.
  • Meanwhile the U.S. is going to introduce mandatory assault rifles for any male between 12 and 72.
  • Not to be outdone Florida will introduce a new Shoot First And Ask No Questions bill to replace its antiquated Stand Your Ground Law.
  • Trump will make America greater by annexing Canada. Curiously Canadians won’t notice much of a difference except that their Dollars will be suddenly worth more.
  • Mexico will build its own wall and even pay for it. However instead of spanning between San Diego, CA and Brownsville, TX it will separate Nevada and Arizona from California. Curiously the rest of the union won’t mind much and decide to leave it intact.
  • However the day after the inauguration of the Big California Wall the San Andreas fault will finally rupture and effectively turn Nevada and Arizona into beach front property. Problem solved, except that America will be technically smaller again, thus proving right all of Trump’s most ardent critics.

You all heard it here first – and probably last. I actually wouldn’t be surprised if much of the above would actually come true. If nothing else one thing I’m sure about – it’s going to be one crazy year full of surprises again. And Evil Speculator will once again be on the case all year to help you bank as much ill gotten coin as possible.

 

No Escape From Winter

Did I mention that I hate winter? I wish I could tell you that I am all back to my normal devious self, but unfortunately I’m still trying to shake what has turned out to be one nasty head cold. My wife’s actually had it for almost a week now as well as apparently every other Spaniard we hear walk by our house judging by the incessant coughing and sneezing. Honestly I think this will be the last winter I’ll be spending over here in Europe. Even down here in Spain the humid weather and short daylight hours eventually catch up with you. I was actually considering to make an emergency run for the South but even in Tenerife it’s only a few degrees warmer with rain on the way. Unless I’m prepared to head back to L.A. or somewhere to South East Asia there is no escaping winter!

2016-12-19_spoos_update

So as I’m going to be relatively useless on the trading front let’s at least run through a few major symbols starting with the spoos. It’s still looking pretty bullish and it’s quite possible that we’ll have another run higher ahead of us. That diagonal I painted on the short term panel may serve you to stage your entry. Personally I’d probably stay out until there’s better medium term context.

2016-12-19_bonds

Stay out of bonds for now – I’ll leave it at that 

2016-12-19_crude

Crude continues to be heaven or purgatory, depending on your trading style. It’s the former if you simply enjoy trading the swings and the latter if you are looking for a long term entry. I personally like both approaches but would not want to be long here until it drops back to 45 or makes moves to actually breach LT resistance overhead, followed by a retest. And that is most definitely not going to happen before Christmas.

2016-12-19_silver_lt

Silver triggered a weekly sell signal last Friday and let’s remember that it is in the process of doing the same on the monthly. Could get even uglier there in precious metals, so unless I see a very compelling reason I’m not going to attempt any long entries here anytime soon.

2016-12-19_yen

The Yen on a rampage all last week and it’s that one entry that got away in late October. For now I don’t see an edge here and if you’re already long then I would probably suggest that you hold it.

2016-12-19_eurusd

Last but not least the Euro which just doesn’t seem to be able to find a decent bid. Last week it actually dropped through previous all time lows and briefly traded below the 1.04 mark. I’m pretty jazzed about it obviously as I earn/trade in $s and spend in €s. Life’s getting quite a bit cheaper over here – which it may as well, as I’m not paying top Dollar for such a lousy climate! Anyway, no good entry here either until we either see a pull back or drop toward par.

And with that I hope you can forgive me if I cut out here. Hopefully by tomorrow I’ll finally be in better shape again.

Out Of Ammo

It’s not for a lack of trying but I’ve got zilch today on the setup front. So we’ll have to make due with nursing some of our ongoing campaigns. The E-Mini didn’t grant us an entry yesterday but some of the subs and yours truly actually grabbed a long position on the Russell futures. 

2016-12-14_tf

Which unfortunately hasn’t gone anywhere up to this point and that’s a problem because of the event risk we’ll be facing later today:

2016-12-14_events

Yes, it’s that time of the month again – the FOMC interest rate decision which pretty much hoses our entire session. Which is why I’ve decided to exit the TF long position about 30 minutes ahead of the announcement.

2016-12-14_eur_update

EUR Futures – I’m already long here and I would consider a second one IF (and only IF) we’re not seeing too large of a swing here later this afternoon.

2016-12-14_6a_update

Ozzie Futures are looking good and I’m moving my stop up by about 0.5R to 0.746.

2016-12-14_copper_update

We tried an entry on copper not just once but twice and it all went horribly wrong. This chart was flowing beautifully for months but has turned into Dr. Seuss’ worst nightmare since the roll-over. I think copper is off my setups list until things start moving more orderly here. Way too many overlapping long wicks and that means it may be heading into an extended sideways churn period.

Let’s Not Push Our LUck

We’ve had a very profitable Christmas season thus far but the take away message today apparently is not to push our luck, especially ahead of the FOMC announcement. Catch later this afternoon once all the craziness settles down a little.

Time To Pack It Up

Equities have come a long way since our fortuitous (but most deserving) entry last week. Exhibiting an irrational exuberance exceeding even ole’ Greenspan’s wildest imaginations indices have mercilessly pushed higher way beyond our initial profit thresholds. Which means now it’s time to pack it up and call it an awesome Christmas rally.2016-12-12_spoos_update

I only had 25% of my positions left on the table but obviously I’m glad I did take the risk. At the peak it’s been a 60 ES handles ride which represents more than 10R in ill gotten gains.

2016-12-12_spoos_lt

But let’s not get greedy (heck, did I just say that?). The weekly panel shows us quite a bit extended at this point and although it’s quite possible that we’re going to see 2300 before a meaningful correction I have decided to call it quits here. I actually scrolled back all the way to 2009 and couldn’t find one instance in which the ES futures traded outside the upper 25-week BB for more than one candle – gravity usually sets in here, at least temporarily.

2016-12-12_6a_update

Quick update on our Ozzie futures (AUD/USD) campaign. I’m now advancing my stop to 0.5R as this one needs to get out of the gate after this many gyrations. Plus we’re now in our final week before all the serious players are leaving for the Hamptons (or the Gstaad here in Europe). Let’s get this show on the road! To the upside if at all possible.

More below the fold for my intrepid subs:

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Under The Weather

Unfortunately I’m feeling a bit under the weather today and please forgive the lack of Mole-mojo in today’s update. Apparently one of the 20 cups of Glühwein I had this weekend must have been bad 

Rolling Equities Into 2017

Equity futures are rolling into March (H7) on Thursday and thus we should expect an increase in volatility for the remainder of this week. For us traders more volatile tape means we will need to be extra conservative with our position sizing and optimally add a few more ticks to our initial stops. 

2016-12-06_volatility

Short term we seem to be primed for a more active session as most Monday jump higher (in realized volatility and in price) has been digested overnight and placed us once again at the bottom range of the RV cycle range.

2016-12-06_spoos_setup

The E-Mini is gyrating higher ahead of the open and I will wait for a bit of weakness to get positioned on the long side. My preferable entry zone is around ES 2204 (2198 on H7) or lower until about 2002 (2196 on H7). The initial stop loss will be 5 handles from my entry point which places it squarely below 2200 (or 2194 on H7). If you want to be extra conservative place it below the SMA at 2197 (or 2091 on H7).

However my most productive equities setup today I reserved for my intrepid subs:

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It's not too late - learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

Campaign Updates

2016-12-06_6b_update

it seems Ms. Market is in a good mood as several of our open campaigns are now progressing nicely. The British Pound futures or GBP/USD have continued to push higher since last week and is now heading toward its 100-day SMA where I would expect a bit of turbulence. I’m moving my stop to < 1.27 which locks in about 1R in profits of stopped out. Humble beginnings only as I believe this one has more space to run if it manages to break daily resistance. What works in our favor is that the 100-day SMA has not been tested in ages and may just be ignored.

2016-12-06_silver_update

Silver is slowly progressing as well and here we can now advance our stop to slightly below 16.7. As you can see we are also heading into daily resistance on this one as there are is yet another Net-Line Buy Level ahead of us at 16.945. If breached and held it should put us on the the path higher.

2016-12-06_zs_update

Soybeans are in a pretty similar position having pushed higher and now approaching overhead resistance on the daily panel. I’m moving my stop here to below 1040 which locks in a bit of profit but hopefully leaves enough room for the gyrations I’m expecting near the upper 100-day BB and those NLBLs.

Easy Ride Over In Equities

If you are a trend trader then past two weeks will most likely turn out to be your most productive ones of the year. As the old adage goes: The trend is your friend until it ends. Of course you cannot help but wonder if the end is in sight, after all we’ve come a long way since early November. So let’s talk about that and add a bit more context which I believe may be of value if you’re still holding long (or are anxiously waiting for an opportunity to go short).  2016-11-23_russell2000_b

And here it is in all its glory: 13 consecutive higher highs on the Russell 2000. Which again should serve as a reminder to many analysts who continue to rely on normal or even platykurtic distribution (after a long sideways range) and are occasionally steamrolled by leptokurtic distribution.

2016-11-23_vix_easy_rides

The advance on the S&P 500 hasn’t been this smooth but I’d be happy to ride a 15% rally in little over two weeks anytime. To answer the question I posed in the intro: No, I do not think this advance is over, probably far from it. However what is most likely over is the easy part of this advance, and that is a consideration which will probably affect your campaign management, or at least it should.

So what do I mean by easy ride? Take a look at the chart above which shows us the daily VIX in grey on top of the SPX in light blue. The second panel below runs a simple ROC against the VIX and on the very bottom you’ll find a light green line which serves as our threshold. The yellow highlights across the entire chart are the ones we are going to focus on, as they show us what I call the ‘easy rides’, and by that I am referring to the initial rally phase of an advance. Quite often these periods are the result of short squeezes which feeds off of accumulated sellers on its way up.

What usually follows the initial fast paced and most brutal ‘easy ride’ is usually one ore several smaller corrections (often due to profit taking), after which the advance grinds higher in a more volatile pattern all the way into the final peak.

2016-11-23_vix_weekly

In order to better time those final peaks we are dropping back a little into a weekly chart, which otherwise pretty similar to the one I posted above. Here our threshold on the lower panel is around the -40 mark which appears to be touched near medium term highs. Remember that this is a weekly chart, therefore we should always wait for a bit more confirmation, i.e. a continued push higher for a week or so, until the odds support that a true high is in place. And that is fine as by then we are most likely seeing some price confirmation patterns as well as more evidence on our momentum charts.

Now despite the fact that the VIX is approaching the 12 mark the ROC shows us plenty of downside momentum  remaining to continue this advance over the coming weeks. A correction over the coming week or two will probably push the VIX by a handle or two, clearing out some weak hands in equities, and thus preparing us for the final leg higher. This scenario would also fit our seasonal expectations, meaning it’s not unusual to see a little shake out preceding the final X-Mas rally.

Bottom Line

Although being a comparably simple approach plotting the volatility of implied volatility appears to provide us with valuable clues as to the discrete phases of an ongoing advance. This permits us to better time when to take partial profits, when to re-enter, and how to adjust our campaign management if necessary.

thanksgiving

Here’s me wishing you all of you a Happy Thanksgiving. Always remember, those delicious turkeys asked for it. Show them no mercy! I expect you several pounds heavier and ready for trading action next Monday.

Post Election Volatility Changes In Equities

If you have been visiting regularly then you probably recall some of my earlier posts on realized volatility [1][2]. For the rest of you here’s a quick recap as it’s important to understand what realized volatility (RV) is and how it compares to implied volatility (IV). Simply RV measures the amount and amplitude of price change observed in a financial instrument over time. Big moves to the up side and down side will both produce spikes in RV. As such the volatility we measure or predict always produces an unsigned return – it does not care whether the market goes up or down.

Implied volatility (IV) also produces an unsigned return but it works a little differently. A widely observed measure of IV in equities is the VIX, which rises when prices fall, and falls when prices are on the rise. However it never even gets close to the zero mark and there are no negative readings. The reason for that are pretty simple – IV’s goal is to measure the expectation of volatility and as such rising prices are considered positive and thus less ‘volatile’ as falling prices. One could say that IV measures how investors/traders ‘feel’ about the market and what they expect will happen in the future. This also explains why you will often see the VIX fall a little after a big IV spike to the upside. Although fear most likely prevails the expectation is that the probability of more downside (in the underlying) is now more limited. As such IV is a bit of a strange beast and many traders use it on a daily basis without fully appreciating what it really represents.

Realized volatility cycles aren’t exactly clear cut either but can generally be separated into the following phases:

  • High Volatility
  • Depleting Volatility
  • Low Volatility
  • Rising Volatility
How Did We Get Here?

It is important to keep in mind that market direction needs to be separated from RV and thus you may find yourself in a high volatile sideways market, a low volatility trending market, or perhaps a trending market with depleting volatility. Most traders as well investors focus solely on market direction but not how it got here. It’s the difference between a drag race (straight and no curves), a Formula 1 race (straights and mixed curves), or a NASCAR race (in essence one big oval). As such the point of this post is to highlight the fact that a change in volatility can offer us important clues as to the nature of the market and where it may be heading next. In other words we are attempting to read between the candles 			<div class=