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Monday, November 7, 2016


Crowds everywhere celebrate the release of the “Tutorial”!!
And you thought I only lounge around in my gym shorts all weekend and get nothing done … not so … I lounge around in my gym shorts all day every day and pretty much avoid getting anything done! … but, I was a busy little beaver this weekend getting the tutorial finished and linked up to the website last night. [For you Obama voters who need a little help this early in morning (it’s 11 A.M.), the tutorial file is available for viewing online or download over in the “Download Links” section of the website in the right hand column (no, your other right hand).]
I want to highlight 2 key criteria from the tutorial; 1) the algorithm was created and “flows backward” from the exhaustion lines to the rules & trading signals on the M1, and 2) the largest stumbling block I had to overcome in developing the algorithm was giving up my “hope” that I could somehow predict exhaustion moves, and moved away from that to realize what is more important is to simply put yourself in a position to capture “all exhaustion moves” by defining every M1 as “an exhaustion move”, thereby allowing us to identify the “precedents” in the market that must happen first before you see any upper exhaustion move. In other words, it’s all about “OPPORTUNITY” , and the fact that since we can’t predict with any accuracy, it’s more important to “be there” when the conditions [aka trade signals] are right and simply wait for it to happen and capture it.
You don’t have to be able to “predict”, you just have to be smart enough to put yourself in a long position via the trading signals that in every instance give a buy signal before an upper exhaustion move occurs; by doing this simple task, by default you will capture any exhaustion move and thereby defeat the necessity of playing [and losing] the prediction game! It sounds simple enough on its face, but believe me, it took me a very long time to see this “trading truth” and give up wanting to be able to “predict” and call myself a trading genius; “I’d rather be stupid and rich, thank you.”
You’ll notice also from the “Download Links” that the title of the tutorial has the DOW30 in it; that’s because I finally realized when writing that all 4 of the markets we have volatility algorithms for have the same theoretical constructs as gold; it’s simply the different “personalities” of each market that are the reasons they have different trading rules & signal parameters. The philosophy & logic of the algorithm’s main premise, the actual math behind it all, and Gann’s ‘Square of Nine’ all are the common threads that are present in each market’s volatility algorithm; so why have a separate tutorial for each when there is so much redundant material in all of them. So, if you trade crude oil for example, simply “swap out” gold and think crude oil when reading; same for the other markets as well.
Now that I have the tutorial finished, in a few days I’ll have the DOW30 done as well and posted up for viewing and/or download. As always, I support what I write, and if you have any questions/comments about the tutorial, I’d love to hear ‘em from you.
And before I forget, you people unfortunately stuck in the mainland U.S. are now back on “regular” time, as Daylight Savings Time is over; great news for me, because down here in Paradise none of the Caribbean islands ever need to make time compensations during the year for sunlight, so New York is now 1 hour behind me. That means, of course, I get to start my day 1 hour later, and it also means the start time for gold on the MT4 has changed with ASSETS FX server time changing to 13:00 from 12:00, and LMFX staying the same at 15:00 server time.
“Ahhh, what a great time of year for those of you in the mainland U.S. … this is the time of year I start to watch the weather channel at night so I can get some giggles thinking about “wind chills” over about 80% of the country. Enjoy the 4:45 P.M. sunsets!”
Turning to gold today … now you know why we never take positions home over the weekend … you just have no idea what’s going to “pop” when you are playing at the beach for a couple of days. Exit Question: “How many FBI, DOJ, or other asshats in government knew about this before markets closed on Friday and positioned themselves accordingly for the Sunday open for some, quick, easy bucks through their offshore accounts somewhere?” I’d love to know. [“And believe me, they ALL have offshore accounts.”]
Here near the open, gold feels soft, even with the bloodbath lower opening from last night … today’s trade is either going to be “balls to the wall” volatility or “dead in the water” I wish I’d stayed in bed. I don’t see a lot of middle ground here going into tomorrow’s election. We’ll know soon enough … an hour into this and I think I’ll clip my nails … some equities strength early after the NYSE open sending the DOW30 right up to the RM=1 exhaustion line … chart of this directly below, and once again the exhaustion lines prove magical!
As would be expected, correlated weakness in gold, but so far nothing to buy… I’d be surprised if the bullion banks & dealers didn’t do some retail spec sell stop hunting down here … first trade of the day directly below.
What you need to recognize here and remember are 3 criteria of prime importance; 1) the price is below the daily calculated white horizontal line, and this move can be described as a “waterfall” that didn’t hit the exhaustion lines, 2) having said that, and getting long once the next M1 goes green [which it did right away], the whole point of this trade is to catch the move back up in a very short time frame and then liquidate it back to the dealer LP at a higher price because we are below the white line. These types of trades must have the obligatory “short leash” on them because probability wise what we are playing is the “pop”, and 3) you can’t care [when you liquidate] what happens to price; maybe it goes higher, but from where I’m sittin’ it looks like it is stalling and can’t make any more headway and therefore needs to be liquidated. The trade made a few pennies per Oz. but that isn’t the point … concentrate on the trade and the algorithm rules, not the money!
And, an hour later here we are hitting marginal new lows, while the SP500 is taking weekend shorts to the woodshed. Equities were way oversold anyway coming into this week, and this Cankles bullshit where she isn’t guilty of a crime by head FBI professional asshat and part time rodeo clown Comey, just gave them the excuse last night to light the fuse for short covering. And today, those position players in equities on the short side saw their “risk exposure” blow up in their face as “gamma” went exponential and the risk-parity funds were forced to adjust. Any wonder why the guys managing $5 billion+ in hedge funds are taking early retirement and/or shutting the doors to their now defunct funds?
We now have about a $16 range for the day, and unless some other “news shoe” drops, I don’t see anything besides “chop city” dominating the market until tomorrow when big money will start shoving markets around as election results come in and somebody is forced to puke. Until then I don’t see the point of trading this stuff anymore today. Could be wrong … if I am I deal with the consequences of missing opportunity … that’s all.
Beach beckons … I’m outta here … Until tomorrow.
Have a great day everybody!

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