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Friday, March 31, 2017


“Ignoring the questions doesn’t make them go away.”

Another day, another BS overnight session that saw more interest in temperature fluctuations in Butte, Montana than in gold; from where the Comex closed USDJPY rallied 60 PIPS, and gold yawned its way to maybe a $2 break if you caught it right before recovering back to the Comex close. So here we sit yet again, 8th day in a row HVALUES coming out of the Asian & European sessions below $5 per Oz. Right here before the New York open gold has an HVALUE of a mighty $4.05, and is less than $1 off the closing price last night; the last 7 hours a complete range of $2.18 from high bid to low bid price; “seriously man, what’s wrong with you”? Why do I have this feeling in my stomach that today is going to be an insult to the word “dead”?

The Asian Chuckleheads did their part last night, lightly selling from the open on Yen weakness but we’re only talking about a $3 decline in price at the worst, hardly a barometer of sentiment you want to heavily rely on; still, whatever they do most often the New York bullion banks “undo” hours later, so it would not be unusual to see higher prices in the U.S. session at some point. “But Toto, we’re not in Kansas anymore … so keep your eyes and ears open … cuz anything can happen”.

There isn’t any way to sugarcoat what’s happening to financial markets; not just gold, but every financial market since the start of 2015. They’ve taken turns going from active, vibrant markets to slowing down ..,. then to barely breathing and on life support … and now to some of them completely dead in the water floating corpses … followed by bat excrement hyper volatility that explodes trader’s capital and accounts to mere bits & pieces … then crickets, rinse & repeat. Take any market you want to name and just look at it; this is what has/is happening. This isn’t by accident nor is it some kind of anomaly; to be brutally honest, the world’s central banks are attempting to destroy volatility, and in the process dictate preferential outcomes that serve their purposes.

So, the $64,000 questions that beg to be asked are simply this: “did the start of 2015 with the CHF debacle [EURCHF unpeg from 1.20] mark the starting point of an entirely new era of trading? One where, going forward volatility is the outlier, and stagnant low range days the norm? Where selling the new 2nd,  3rd, or 4th new high of the day or buying the 2nd, 3rd, or 4th new low of the day is the “ticket” to consistently profiting every day by buying/selling the imminent rebound in price that is coming?

This isn’t simply a paradigm shift in the ordinary sense of the definition; what I’m asking is, “is this a seismic structural shift in the way markets ARE GOING TO BE ALLOWED TO OPERATE by their overlord masters the central banks and by default their partners in crime the bullion banks & LP’s”? Cuz the way things are trading these days, when watching markets under these guidelines, all of a sudden things start making complete sense. “We’ve had approximately 35 – 40 years of wonderfully volatile commodity & financial markets; can I stand here today and say this is the norm for all time going forward? What if we have entered a point in human history where all markets go quiet for 10 – 100 years; where volatility is the exception and not the rule; where $6 - $10 ranges per day in gold are “it”, with the number of days exceeding $15-$20 a handful over the course of years; what the hell does everybody do then when your algorithm is screaming for volatility”?

I remember years ago when I first arrived on the trading scene, just as commodity trading was entering its “heyday”; the first gold & currency pits had some traders who just a few short years earlier had been trading eggs & butter; they had a very tough time adapting to the volatility in the currencies, and would tell me about “the good old days” back in the egg pit, where things were “normal” and a guy could make a good living … now in currencies … yikes what a difference.

I’ve said before on these blog posts, living through history ain’t the same as reading about it; very few people see the changes. Has trading from a structural standpoint changed? Am I now the “anti egg” guy, looking for volatility where there isn’t any, and wondering where the hell its gone to and not being able to recognize that the structural platform and backbone of trading [namely, volatility] in the “modern era” is over and there’s a new Sheriff in town?

It’s still early in the game, but I can categorically state I do not like what I’m seeing in the trading universe regards volatility; it’s not entirely gone, but it’s been severely crippled from days past, and while occasionally it gets to come out and play, these last 2 years it’s been the exception and not the rule. Something is not right in “traderland”.

Ok, turning to today’s gold trade … well Chuckleheads, on the FED Pie Hole Dudley comments you got your buy stops clicked off [again] from earlier sells … HVALUE still right around $4 … once again Pols and/or FED Pie Holes responsible for movement in markets, with once again no follow through after stops are hit off … same old shit, different day with the “good cop bad cop” routine with interest rates and the FED’s desire to manage outcomes all visible for everyone to see … and I’m wondering can gold recover and return to its normal behavior, or is what we are seeing now the new “normal” behavior going forward?

As I stated yesterday, this isn’t just specific to gold, this is happening to all markets including USDJPY, and when you add everything up, new lows aren’t making for further new lows and new highs aren’t trailblazing the path for more new highs where HVALUES and daily ranges are expanding to anywhere near the levels normally seen these many years; and so, unless you are gonna put your head in the sand and pretend everything is “A-Ok”, it begs the questions I’m asking, cuz clearly something is wrong with these markets using standard algorithm parameters.

It’s Noon in New York, and gold providing tortuous entertainment watching it struggle to make new highs by pennies and then watching it get clobbered lower as stuck longs on the pennies upside breakouts get caught and then liquidate on any USDJPY rally over 1 PIP… rinse & repeat how many times now? … and still has an HVALUE of $4.05 and not feeling from the struggling action like it wants to expand that anytime soon. From just literally pennies off the high of the day, now 14 of the last 16 minutes the M1 is down on a 5 PIP USDJPY rally; if you’re long, good luck cuz normal intraday volatility is on vacation and nobody has seen nor heard from him in a while and the bullion dealers are in firm control once again.

Again today, it’s PIE HOLES & politics running things … look at the SP500 here at Noon ESDT; it’s got an 8 index point range and the market at present is about 2 index points off the high, with the index at approximately 2371; when this index was at 1071 10 years ago, the market had 15 – 20 index point ranges EVERY DAY, UP & DOWN. Now of course, that’s not permitted as some financial elite might get his “big girl” panties bunched up and lose some money to those “trader types” who trade markets and pick him off … when you extinguish volatility, this problem for the most part goes away, and now the person “squirming” every day is the SP500 trader, cuz he knows he’s only got 1 shot at making money this day, and he better make it count cuz if he’s wrong the day is over and he’s out money … and how the hell do you make a living flipping a coin? In a nutshell, this is the problem with the stock indices.

Moving over to USDJPY, and really the entire spectrum of the FX crosses and other Dollar pairs as well, the Yen is a special case because it has become its own asset class; however, there are structural problems here as well. To name just a few, 1) liquidity vacuums, 2) stop hunts both buy and sell, 3) slippage, and 4) since 2015 a significant slowdown in volumes across the world some 30%+. Add it all up, and you might as well be trading gold the way you’re gonna get treated.

Gold does have one major advantage over the entire FX arena, though; there is always demand for it, and will always attract buyers at some point. Meaning, off of any exhaustion line or SDEV low it can be bought for profit of usually $2 - $3 within a few minutes; on the upside, unless the “bullion wall” dealers are suddenly going to allow this stuff to freely appreciate [not on your life], and unless there is over riding news to substantiate a good gold move up [i.e. sustained buying all day], the dealers will be up at the high selling you all you want.

Outside of the few minutes ± Dudley’s comments this morning, gold hasn’t moved but about $2 & small change… some market huh? … sitting here waiting for volatility is like going out into a prairie and trying to catch butterflies with my hands … the results about the same. And while dealers in FX are as bad as they are in gold, I’d have to give the edge to the bullion dealers for being the worst on the planet … their penchant for screwing their clients and running stops are legendary within the biz … which leads me to my final $64,000 question; “with hedge funds, FX funds, and a retail public that’s been getting ‘wasted’ these last 2 years and as a collective whole has been decimated with losses [especially in gold, EURUSD short positions & the short SP500 calls], who have been the prime beneficiaries of this ‘transfer of wealth’ with non existent volatility [except briefly, to suck more people into the matrix from Brexit, US elections, a flash crash, and the Greece Crisis]”? ANSWER: “bullion dealers, bank LP’s, and bank dealing desks”.

And to put it all in perspective, as if right on cue from central casting, here a few minutes before 1 PM, gold spikes up, makes a new high, takes the HVALUE to $6.94, and blows out the last remaining short from this morning with most likely a fill at or very near the high … and then what? A new move higher? Continued expansion of the daily range? How about the following directly below.

As clear a case I can ever be able to show you of “let’s clean out the buy stops” and call it a day. Not a damn thing behind this bloodletting except regrets. And if you bought this, I don’t have a clue what comes next except it most likely involves a loss of some kind. This is a perfect example of what I’ve been talking about. We’re about 50 minutes from the Comex close, there is no volume and no trade to speak of; whoever it was that pulled the trigger to new highs about 45 minutes ago isn’t feeling too well, and if you’re still long this stuff you have to be thinking what if this guy comes back and liquidates that buy stop? If that happens, it won’t be a pretty picture at all going into the close.

It’s the end of the month & the end of the quarter today; good riddance to rubbish. Over the weekend I plan on doing a ton of statistical work [mostly from the risk side] on gold and taking an entirely fresh approach and see where it takes me; I’m not ready to “chuck it all” into the trash or anything like that, but I would be less than honest with all of you if I said this type of trading activity we’ve been seeing lately doesn’t concern me; it very much concerns me cuz there is a very big part of me that says “volatility” as a structural construct for trading is over for the foreseeable future. Oh, to be sure, there will be days when news flow will provide the necessary fuel to fan the flames, but overall it might just be finished. If my trading instincts are right, then I need to get with the proverbial program and adjust accordingly.

I have been professionally trading a long time; I’ve seen what I thought was just about everything there is to see; when President Trump was elected, I thought, “well, just wait until he takes office and we get into February & March, we’ll see volatility explode through the roof”! Instead … total crickets most days! None of this makes any sense, and that tells me that serious structural changes are afoot; nobody is going to send us an email and tell us what the deal is; why would they, they want to profit off of our ignorance.

Avoiding risk has always been my top priority as a trader from day one in the biz, and now more than ever markets present us with risk challenges daily, especially in gold. With few exceptions, though, when you “think & trade” like a bullion dealer, you will be profitable in your trading rather easily. The version 3 algorithm incorporates some dealer concepts, but the structural nature of the algorithm requires above average volatility; what if we don’t consistently get it? Then what? And that’s where I’m at right now.

I can tell you “flat out”, I’m not gonna sit here day after day waiting for gold [or any other market for that matter] to get its donkey in gear; hell, we could be waiting a very long time. No, I’ll simply make the necessary adjustments and move forward; look for those adjustments as we start trading next week.

Here we are at the Comex close, and truth be told, this has been one of the worst “action” weeks I can ever remember; all told we’re about $4 from last Friday’s close, and outside of a couple of HR1 candles, not a damn thing happened trading wise. Today’s $5 “necessary to trade” HVALUE only got breeched around 1 PM, about 90 minutes from the close; still, on the retracement no valid buy signal to get long, so no activity for today. Even if we had gotten one, the subsequent rebound has only gone about $1 max, so not much there late on a Friday.

One final note: here’s that “pretty picture” of the close when your buy stop attempting to “muscle” the market doesn’t work on a Friday directly below.

PAMM/MAM Spreadsheet directly below.

Beach beckons … I’m outta here … until Monday mi amigos.

Have a great weekend everybody!

Thursday, March 30, 2017


“Pick the number 19, and you are there!”

Here we are on market day 7, of what is an amazing run of bat excrement “tail risk” run amok days on the “dead side” of the probability distribution curve; who knew a week or 10 days ago we would be staring in the face of a gold market “black swan”.

Briefly, for those that don’t know, “black swan” events are those described by Nick Taleb in his landmark book “The Black Swan”, where “out of the blue” events transpire in financial markets, wholly unpredictable in nature & scope, where nobody had a clue that what happened just happened, and involve “tail risk” on the probability curve and are labeled as such. [Note: Anybody that would like a PDF copy of this book, email me at and I’ll send it to you.]

And while gambling relates to mutually exclusive probabilistic events, and are guided solely by the math, markets are not mutually exclusive and are guided by market history; but the gambling analogy fits to a certain extent when viewed in the context of the roulette wheel pictured above. If the casino let you bet against the number 19 [which they don’t], and you laid down $38 [double zero wheel] to make $1 if the number 19 doesn’t show up on a spin of the little ball, how many times would you double, triple, quadruple up to get that money back, just so you can make $1?

I made this subtle, but very important point yesterday; eventually everything has to happen! Not kinda, woulda, shoulda … everything has to happen. If you were a gambler at this roulette wheel, how would you handle this situation? Would you even think about this situation you find yourself suddenly in before you went to gamble? I’m betting nobody would say yes.

And yet, in this context of talking about “tail risk”, suddenly I, as a gold trader, am very much like the people standing at this roulette wheel and saying to themselves, “WTF is happening here? … How do I process this? … Where is the ‘battle plan’ for this tail risk I thought most likely would never happen in my lifetime?… Now that this stuff is face-to-face with me, and I’m living through it in real time, it is difficult for me to simply accept this event as somehow ‘normal’ in the infinite flow of time … Come back in 5 million years and ask 1) how many times has this happened to gold, and 2) what’s the longest stretch in time so far?… And after only 40+ years of market history behind it, is that enough data and/or evidence to accurately draw any kind of solid conclusion?

But here’s the problem … “IT’S ALL WE [I] HAVE TO GO ON! … THERE ISN’T ANYTHING ELSE IN HUMAN HISTORY! … and so, the only viable solution that exists that doesn’t end up metaphorically “killing you” is to sit on your hands and wait for it to be over; absolutely NOT saying, “oh, it can’t go past 7 or 8 days like this … it just can’t! … you said that at 4 & 5, now at 7 what do you do”?

This is what’s known as “THE TRADERS FALLACY”; somehow, through twisted mathematical logic that makes no sense upon closer examination, you come to the conclusion that “Mr. Market” just has to go up today or down today … cuz it just has to! … and it doesn’t and you lose more and more money.

Nothing brings this closer to home for me than the other “Black Swan” event of the last 50 years, the great October 1987 crash in the stock market, a 36 SDEV [standard deviation] “tail risk” mutation that shook the world into shock. Prior to the crash, and since the start of futures trading in the SP500, I would have guys [yes, more than one] standing next to me in the pit telling me every frickin’ day, “oh man, Barry listen to me man … OMG, this shit is gonna crash and go almost to zero! … you can’t keep buyin’ this stuff man … you just can’t”! And day after day, week after week, and year after year the SP500 index just kept climbing; and all these people who were literally standing in line to see who could be the most bearish … when the crash came, where the hell were they? I’ll tell you where they were; “they were back in the Pudding Business cuz they bucked the streak … they couldn’t ‘go with the flow’ … they sold it every day for 5 years and got it mostly shoved up you know where cuz they mistakenly believed it ‘JUST HAD TO BREAK’ … JUST HAD TO! … and yet it didn’t until they were no longer there … and when it eventually did what it did, not A SINGLE ONE OF THEM WAS THERE TO CAPTURE ANY OF THE DOWNSIDE CARNAGE CUZ THEY WERE ALL BROKE! … there is a valuable ‘lesson’ to be learned from this, so please don’t ignore it!

What we are now facing in gold is on the opposite side … no headline grabbing news of a “dead market”, cuz nobody finds it “newsworthy” that a market is just sitting there and doing nothing … what people want to hear about are guys jumping out the windows or otherwise ending it all cuz markets are so “crazy”; “OMG, this guy killed himself it’s so nuts”! What ordinary Sheeple don’t understand is that many a professional trader meets his “moment with the abyss” from this side of the probability curve, and I can tell you flat out the graveyard of Chicago traders is filled to the clouds with otherwise smart people who never figured this kind of thing could or would happen in the market they called “home”.

Here at the New York open … day 7, you know the rest.

Half hour in, and that escalated quickly didn’t it? First take out the lingering longs with a dealer stop hunt, and now a rally to punish the shorts; maybe gold is getting back to normal.

Ok, HVALUE greater than $5, however, as I have repeatedly told you, buying/selling breakouts on support/resistance lines is pure folly and will lose you more money the times you are wrong than you can make the times you are right; never got a signal to sell on the rally up off the lows, which weren’t that great to begin with given the last 6 days of building sell stops that you knew were under the market. If the low had been greater than a $12 HVALUE, I would have bought off the lower SDEV line.

And then SHTF in USDJPY with a 40+ PIP out the window waterfall in 5 minutes, and it was elevator up time for gold. The reason for the USDJPY waterfall clusterfark? CNBC, citing unnamed sources [cuz clearly, nobody wants there name on this BS], says Treasury report to say Japan & China are “currency manipulators” … “umm yea, we’ve pretty much known that since from about 30 years ago, thanks”. But it’s not the “news” that’s the news, it’s the timing of the news that matters; to wit, “talking heads” break this story right after gold hits its low for the day, thus giving dealers and bullion banks an excuse to sell the $7 rally that immediately ensued. None of this “fake news” is accidental; it’s done with coordination and timing to ensure the “right” people and/or bullion banks are the ones who benefit. And who do you think the losers are?

Two trades today; both on the long side after the CNBC mess; one worked and the other didn’t. Directly below the two trades.

They should have canceled each other out and been a complete scratch, but the second trade as the market is racing up to its high for the M1 of 1250.55, as soon as I see it go 1250.50 bid I hit the liquidate button [mind you, on the way up] and get filled at 1250.31 … where this bat excrement fill came from I haven’t a clue, so that cost us about $20, and adding it all up for both trades it’s another very small $20 something loss for the day. Truth be told, this is a victory day and will go down as one of my best trading days ever from a decision making standpoint. Everybody likes to talk about big winning days … no, your biggest “winners” were your losing days where you skirted disaster, dodged the bullets, and came out at the end with basically a scratch day.

While saying today was marginally better than the last 6 days, it’s like saying in Phoenix today it was only 117° and not the 122° it’s been the last 6 days, so it’s somehow not as hot and better. No, today was the 7th day in a row of complete bat excrement; granted the HVALUE was greater than $5 … big whoop … still no range, and the infamous doji trademark, the “Flying Wedge of Death” was in full effect today. Here’s a recap of today’s action; 1) open at 1250, 2) take the sell stops out and plummet down to the low just below 1246, 3) fart around a few minutes around the low until the CNBC “unnamed sources” piece on currency manipulation hits the airwaves and then rocket back up to 1251, 4) spend the next 4 hours in a $2.50 range going back and forth over the 50%retracement line about 50 times, 5) scream back to the low as USDJPY attempts [and fails] to make a double reversal on the day and make a new high, and 6) move back to the middle having clobbered both longs and shorts the entire day. Unless you were scalping for pennies, you got trapped and/or took heat or losses, with very few winners. So, open … hit low … go to high … go back to low … go back to high … go back to low … come back to middle … “Thanks, come again”!

In essence what the day boiled down to is following almost tick-for-tick USDJPY, and all it took was a 3-5 PIP move in Yen ± the 111.40 – 111.45 area to get gold racing up or plummeting down; and when there was no follow through, now you’re trapped chasing the bid/offer to get a fill. At the Comex close here at 2:30 P.M. ESDT, USDJPY has in fact now made a new high and run some buy stops; gold for it’s part not participating by hitting a new low, or even coming close [yet]. With less than 5 minutes to the close, anything you do here is likely to not work for you but against you as the dealers widen the spread and liquidity dries up going into rollover and Asia. And in true gold bullion dealer fashion, and so they can cover some short positions, the market gets muscled here after the close to a new low by 5 pennies and proceeds to go straight up about 60 cents; some things never change.

I want to be clear here; I’m not managing funds to make or lose ± $20 or $50 or something similar; by the same token I’m not much interested in putting my head under a guillotine either just to see if the gears work; what I need to see from the gold market before I commit money is a willingness on the part of the market to work like it usually does the vast majority of the time; when it doesn’t work and we get either the “Flying Wedge of Death” and/or small doji’s [which very often run hand-in-hand], the key for me as a trader is to break even and/or take minor insignificant losses that don’t mean anything. In the scheme of things this is the only way to fly the plane without hitting the side of a mountain when in fog.

If I put anybody in a winning $2 per Oz. position, any chimp could make money [well, maybe not … I do know some people]; the problem with gold lately [last 7 days in particular] is that price changes so quickly, you run the risk of a run against you if you don’t react; with most times the runs being “fake outs”, but in the moment you don’t know that, and the way the market is trading right now I don’t have the luxury of a moving market that can make back losses with further volatility later in the day. Hence, the caution. And while today’s daily chart may show an improving market with new lows after the Comex close to simply “pretty the tape” up and make it look somewhat normal, it was day 7 of complete crap, filled with trips to the highs and lows multiple times that nobody wants to see; cuz when you fade these small ranges and HVALUES, while you may make a few coins in the short term, at some point real soon they carry you out in a stretcher from losses that come from a screaming market going against you.

And while I am adverse to any kind of loss from any trade, if you had told me 10 days ago I would be down a hundred and some dollars from trading after today, I would have told you then what kind of market conditions would need to be present for that to happen; namely, doji’s & FWD’s all over the place. Over the years they come and go, and there are times when they hang around for longer than I would like [like now for instance], but they are a necessary condition that has to happen from time to time. I’m not making excuses; just providing some perspective. And by the way, there isn’t any other market that is any better right now; watching USDJPY on that CNBC story, price was gapping all over the place, with bid/offer changes 10+ PIPS in seconds. So it’s not like there was any better liquidity there either, and I would also remind everyone what USDJPY is like when it goes into a 100 PIP range for 6 months, which it has done 3 times in the last 4 years. You wanna see small doji’s with no ranges and/or HVALUES and FWD’s?

So, bottom line is that gold isn’t doing anything any other market hasn’t done either; we just happen to be smack dab in the middle of a pig pen at the moment, where my top priority is to not get “whacked” while attempting to position us for profits. It’s impossible to make a lot of money when the market refuses to move one way or the other without retracing practically all of a move a short time later.

Hopefully, today is a good sign that gold is breaking out of its mess, and that higher HVALUES and ranges are on the way; we’ll see, but in the meantime keep your eye firmly on the prize. Sure, “escaping to success” has to have profits, but it also has to have no big losses as well, cuz when the profits come the tiny losses are made up very quickly and easily. Trading conditions simply cannot be worse than what we’ve experienced these last few weeks; this too shall pass as it’s done in the past. Onward & upward mi amigos, tomorrow is another opportunity.

PAMM/MAM Spreadsheet directly below.

Beach beckons … I’m outta here … until tomorrow.

Have a great day everybody!

Wednesday, March 29, 2017


“If only Spicolli ran the FED … how could it be worse?”

If only the country had bright, energetic, selfless public servants running the nation’s central bank; well, I can dream can’t I?

“Hmmm, 1252 and change … I seem to remember way back in the past all the way into yesterday afternoon when we were here … right before FED Pie Hole Fischer opened his cherry pie and set off the HFT algos in Yen & gold [was this planned or just a ‘coincidence’?] on a frenzied search for stops late in the gold trading session … and found some. And I said in jest yesterday afternoon, where can I now sell it and dig a deeper account hole … well, it appears pretty much anywhere actually, cuz here we are right back to 1252 - 1253 as if nothing had happened”.  Only thing that happened is of no consequence to the non trading public, who could care less if you got stopped out of your gold longs. For the FED manipulators, though, it’s “mission accomplished”.

 And so you sit here and wait … and wait … and wait some more, watching M1 candles with 11 cent ranges get put in and wonder where have all the traders gone? And really folks, they’re dead … shadows now … cuz yesterday afternoon, with Pie Hole Fischer just being the latest great manifestation of this “makes no sense” trading 101, gold goes on a short trip to “Nowheresville” as some HFT algos clean out sell stops that had been building all day; and after they are cleaned out, some backing and filling into the Asian open, where our favorite “can’t spit and hit the ground” Chuckleheads sell it right out of the gate for confirmation of a bottom, and you have the perfect recipe for where we are at right now; namely, right back to “square one” after a stop hunt attributed to Fischer, but in reality he was just “noise”, the “excuse” if you will of the “talking heads” on CNBC who have nothing better to do than become HFT shills and fill airtime.

And more than anything else, traders around the world in whatever market they are attempting to trade, see this “circus” of lies & deceit being played out over and over again, day after day, and are rapidly becoming “paralyzed” because they have no idea how to handle these type of events that infect financial markets today. As I said yesterday, it’s a new game of “musical chairs”, and when SHTF and either news breaks or some Pie Hole “yada yada’s”, you better be scrambling for a seat cuz the fat kids are right behind you waiting to crush you as the music stops! And when the dust settles … crickets; and if you were on the wrong side of the “yada yada”, you got almost no chance at making what you lost back, cuz there is nothing left but the “WTF happened?”, and of course … moar… crickets!

I don’t think any of this is by “chance”; it’s coordinated by the large trading banks [JPM, Squid, etc.] and the various central banks around the world led by the FED, and truth be told, they’ve all learned the hard way from the Japanese years earlier how to “bend” markets to their will and attempt to determine outcomes; and believe me, outside of making sure the top 0.01% of the elite rich keep on making money, their other top priority is to hurt retail specs … especially in gold, where the stop hunt “freight train” is ready, willing, and able to run right through your account … gold represents everything evil to a money printing central banker & his/her globalist, crony capitalist pals.

Here we are again, about an hour before the New York open with an HVALUE of $3.14, and very much looking like day 6 of “Dojiville” is in store for us; 2 FED Pie Holes speak today, one at 11:30 and one at 1 P.M. New York time … “go ahead punk, make my day”!

The good news of course, is that Mrs. Watanabe & pals sold the Asian open, so now look for their buy stops to be set off higher between 1255 -1260 sometime later today. Seriously, where do they get all the money they lose over time? And here at the New York open it’s …. Crickets … “Now back to our regularly scheduled coverage of YMCA Champions Tournament in Junior Women’s figure skating compulsory prelims from Norway” … [might as well, it’s got more going for it than gold at the moment.] And, for what’s it worth, we open and try to go higher and can’t … although I’m left wondering if the high at 1254.32 is high enough to take Mrs. Wantanabe & pals out from the Asian open … 60/40 says it’s probable.

Another hour, another new marginal high by a couple of pennies, taking the HVALUE to a mighty $4.16 … then the immediate smack down cuz there ain’t nothin’ up here but Mrs. Wantanabe’s buy stop … anybody see a pattern here besides me? And this is what happens when you are trading “inside” the $5 HVALUE for the day … reversals all over the place [statistically], new highs then maybe new lows then chop, spikes everywhere to nowhere, and you end up trading 27 times and got nothing to show for it except “thanks” from the brokerage house. I guess we have to wait until 11:30 & then 1 PM for the “Oracles of the Mariner Eccles Building” to impart their collective wisdom upon the uneducated and unenlightened masses so we know what to do, knowing of course that the HFT’s will get the info first and … well, you know the rest.

Sitting here watching this stuff aimlessly drift … I feel like I’m in high school detention waiting for the clock to run down to freedom … only this is worse. A little after a couple of hours into this “Clusterfest”, and gold has made a trip down to the 50% retracement line for the day, thus establishing its “bona fides” for another doji day on the potential horizon; this would be the 6th in a row, a feat I can’t find on the daily candlesticks going back as far as the MT4 will allow me, which is August 2010 where the price was … you guessed it … about 1250! It’s not that there weren’t time periods with doji’s, it’s there weren’t any time periods that were 1) 6 days in a row, and more importantly 2) the doji’s that did appear had much higher HVALUES & daily ranges; it’s one thing to have a small doji with a $4 HVALUE and a $7 range, but it’s quite another to have a doji that has a $13 HVALUE and a $17 range. The latter can be successfully traded, while the former must be left alone.

So, almost 7 years worth of data, and before that you’d have to go back to when gold traded sub 900 – 1,000 … back before the financial crisis of ’07 – ’08, when nobody was paying any attention to gold and the parameters for trading were different given the price level [threshold was $3 HVALUE when gold was sub 900]. Before 10 years ago, the market to trade was the e-mini SP500 futures contract [no CFD’s at that time], where you’d have absolutely marvelous HVALUES, daily ranges, and most importantly intraday volatility that would see the market trade back & forth 10 -25 index points during the day; that’s when the index WAS HALF WHAT IT IS NOW. “Thank you FED & other central banks for ruining this once splendid market, since you decided starting in 2011 to begin managing ‘outcomes’ for the financial elite and thus killing any volatility”.

By comparison, and to continue my analysis, before the turn of the new millennium, back in the 80’s & 90’s when gold was dead to the world for lack of any movement and prices were pretty much locked into the $250 - $450 range for 20 years, the threshold HVALUE was $1.50; but remember, this was during a time when there was no internet trading and everything was in a physical gold trading pit; things moved a lot slower back then, and most ranges for the day were $4 - $7, with an occasional day either above or below that level. On a percentage basis, things were wilder when the market was dead!

And so now, here we are in basically “uncharted” gold territory; it’s like we’re on a raft out in the middle of the Pacific Ocean and somebody says paddle to Hawaii; great, if I only knew which way to paddle cuz I got nothin’ to tell me which direction Hawaii is, let alone find it. We now have today, 6 small doji’s in a row [excluding Sunday]… something not seen in the modern era of gold trading … and while you would be hard pressed to go back on the daily candlestick and find 2 in a row that weren’t inside the week of a major Holiday, what do you now say to “Mr. Tail Risk” when 6 in a row show up? … “Yea, me neither”.

Cuz when you get right down to brass tacks, what we are witnessing right now this very day is as “earth shattering”, is as “mind numbing”, and finally is as “damaging” to trader’s psyche’s as the great stock market crash of October, 1987. You’re talkin’ two completely different “tail risk” and “black swan” events nobody but nobody saw coming. I sure as hell didn’t see this coming “implosion” in gold on the horizon; so from a completely objective “tail risk” point of view, and nothing more, they are both similar in their “shock” to me and fellow professionals I can assure you. EXIT QUESTION: “What do doctors do when seeing a brand new disease they’ve never seen or heard of before, and have no clue how to treat it and allow the patient to live”? SHORT ANSWER: “It starts with ‘WTF is this?’ and then works its way down from there; in other words, you begin to figure out how it can be defeated”.

Thing is, unless the whole market is just going to completely die and just sit here … an unlikely event as I can possibly think of at the moment given the state of the world… the only thing that defeats this “tail risk” is patience & discipline.

In so many ways, and in so many major markets, I feel like the world’s stability is hanging by a thread … a thread made possible by idiotic central planners that think they can either do away with the business cycle or can get rid of volatility through their financial derivative machinations; at some point … and we are closer rather than far away … this thread is gonna break, and when the world gets “reintroduced” to volatility, it will be eye watering to say the least. What can’t be sustained forever won’t be, no matter how much money they print or try and manipulate for their desired outcomes. So maybe … just maybe … what we are witnessing now in gold is the markets “eye” of this hurricane that is surely coming … and when the backside “eye wall” hits, look the hell out!

And so now, at 11:30 here in New York, a couple of FED Pie Holes just hitting the wires and saying maybe 4 more rate hikes in 2017 … “excuse me, wait … what”? … “anybody wanna buy some swampland in Haiti for development I got for sale”? And the markets “yawn”; been there done that seen that and most importantly heard that line of BS before, and right up there with Mr. Credibility himself Mr. “Peter Pan Kuroda” of the BOJ, nobody believes the FED Pie Holes or are willing to bet money on this steaming pile of garbage known as “guidance”.

Gold for its part, along with every other major market, laughing itself silly with this “song & dance” rate hike routine we saw repeatedly throughout 2016; “you’ve raised rates 3 times in 11 years, and now in the next 9 months we’re gonna get 4 rate hikes? Yea, sure … Ok … whatever. How come the Dollar isn’t going higher and gold lower on this ‘breaking’ news”?

Well folks, even the crickets are complaining that there are too damn many crickets; and if it wasn’t for the 5 preceding days before it, I might call this the worst trading day evahhhh in the MT4 era. All of you reading this [I would bet] only thought “tail risk” could come from the “wild” side of the probability equation; remember, there are 2 sides to every probabilistic event.

And just when you think the “comedy gold” hits are finished, along comes a straight up 10 minute $2 blitz to a new high for the day to … wait for it … “oh Mrs. Watanabe, why’d you leave that buy stop in there just above the old high”? … and of course, like the sun setting in the West, there is “ZERO” follow through buying and we head immediately lower by about $2 before recovering a few pennies… “again, anybody here but me see a pattern when you buy/sell breakouts”? Hang on while I stop shaking from the excitement of seeing the HVALUE balloon to $4.51 from $4.16 on that blitz less than an hour from the close. And why shouldn’t the market hit a new high; after all, chumps sold the “FED Pie Hole” rate hike hoax 2 hours ago [cuz rate hikes are “bad” for gold] and have been patiently waiting for this stuff to fall, which it hasn’t at all and now are being forced to cover. Why cover with a very small loss when you can put your stop just above the old high and take a larger loss when the bullion dealers go hunting for you, which if you’ve been trading for more than 5 minutes in your life you know without a doubt they will do cuz they need your buy stop to get out of what they sold you 2 hours ago; per chance, do you own a shirt with a red circle painted on the back?

What the last 6 days has shown you, is that EVENTUALLY EVERY SYSTEM, TRADING METHOD, OR ALGORITHM HAS TO WORK! Even if its premise is the most screwed up, twisted, and illogical piece of work a central banker could come up with; eventually it has to work, cuz if it didn’t that would mean there are “guarantees” in trading, and as we all know that does not exist. So, at some point in history, this [now] has to happen … the trick is to “sidestep” it and not fight it; fighting any market has the distinct tendency to take all of your chips away and forcing you to go “buh-bye”.

“Alex, I’ll take ‘Stupid Poo Poo’ for $1,000 please; what is trading inside the $5 HVALUE”? Comex close now at 2:30 EDST; not much more to say or do in regards to this crap, except see if the record books can be extended to 7 doji days in a row since the dawn of the electronic trading era [regardless of what the daily chart looks like at 8 PM when the market closes for the day, we’ve just been through 6 consecutive non Holiday trading days where trading action collectively was/is the worst I have ever seen, each day getting successively worse than the previous one]. In any event, I’ll be here when it moves; we keep our “powder” dry and wait for our opportunities.

PAMM/MAM Spreadsheet directly below.

Beach beckons … I’m outta here … until tomorrow.

Have a great day everybody!

Tuesday, March 28, 2017


“Yes, like buy rallies in gold 5 days in a row on the breakouts!”

Over on ZH yesterday an interesting article entitled, “Traders Have Lost Confidence in Their Ability to Trade” [Here’s the link: ], and while they almost get to what I’ve been writing about these last few months, they can’t quite “connect the dots” to what I see as a paradigm change.

Nowhere has this frustrating phenomena been more evident than in stock indices [SP500], USDJPY and gold; one day you get bat excrement volatility with very good ranges and HVALUES, and the next is pure crickets … and what we have seen in gold is really amazing, cuz outside of Holiday weeks [like Christmas & New Years] you have to go back many years to where you’ve seen anything like the last 4 market days [notwithstanding Sunday’s 2 hour $8 rally from nowhere] of “doji nothingness”; spikes up/down, no follow through, and after 4 days you’re pretty much right back where you started with nothing to show for the experience.
And what ZH is saying is that traders in pretty much all the major financial markets can’t find that “next guy” to take the pioneer arrows in the chest and lead them forward; there is no “next guy” [arrow wounds bled him to death], only a very quick rally/dump to shake you out and then rinse & repeat. And the dirty little secret is that as trading conditions get tougher & tougher, more institutions shorten their time horizons and look for anything remotely close to a spike to cover and let you take the ball to capture alpha… hence the no follow through scenario; and the market is left with absolutely nobody having any “conviction” where price is headed and unwilling to do anything … until, of course, the next Pol Pie Hole opens his/her mouth and takes the market at the “speed of light” up/down multiple $$$ per Oz. in seconds to another level where we can start the same crap all over again.

And this is what I think ZH means; all of the benchmarks trader’s use for trading are utterly useless in the fog of politics and/or the manipulations of the central banks across market asset classes; we first saw this a few years ago with overt manipulative selling in gold & silver; now it has manifest itself most strongly in the various world stock indices, where “Plunge Protection Teams” from the BOJ [Bank of Japan], the SNB [Swiss National Bank], the ECB [European Central Bank], and of course our own FED, are acting to make sure declines in the SP500 [whether liquidating or short selling] are to be “punished” once finished, and then the subsequent rallies that make you wish you didn’t do what you just did.

Trader’s are then left wondering, “hell, what do I hang my hat on here, cuz if I’m wrong during any part of the day there isn’t enough volatility for me to make the money back”?

Outside of Holiday markets though, I can’t remember gold being like this … ever … which leads natch right into about half an hour from today’s open in New York, where after almost 12 hours of mind numbing nothingness, gold has an HVALUE of $2.54, and even though it’s early yet, it very much has a feel like this is going to be another “doji day” where prices drift and we get a few spikes here and there to unsettle things, and then it’s back to drifting … we’ll see what transpires, but with the Chuckleheads in Asia puking this stuff lower in the last hour of the Asian session to new lows [which was subsequently bought quickly at the European open], there has to be a rally here somewhere that sets off their buy stops higher.

“Well, that escalated quickly didn’t it”?

New York opens, makes a new high to take the HVALUE above $5 [Yea!], and then … “oh that pesky USDJPY! … make a new low then rally … if I was cynical I’d say this was a coordinated trap to 1) set off the Asian buy stops, and 2) at the same time selling  gold to ‘em, buying USDJPY. But hey, that’s if I was cynical and jaundiced and thought large dealers run customer stops … geesh, who thinks that”? … this is the 5th day in a row gold has attempted a rally; each and every time the last 5 days [excluding the Sunday 2 hour blitz up] it gets “smacked down”. It’s like watching the fattest kid in 6th grade trying to run up that big hill out next to the school; takes him 60 minutes to climb up [with rests] and then about 30 seconds to fall on his donkey and be right back where he started.

So, now that the Chuckleheads sold the low and bought the high, and we immediately fell back about a $1.50 from the high, we just sit in “limbo” as the M1’s put in ranges of like 10 - 11 cents one after the other after the other. Take a signal? From what? I said this yesterday, that when the offer goes to the bid or vice versa, how can this be a signal of anything? Just when you think maybe a move is starting … WHAM! … so sorry for that USDJPY rally/break [pick ‘em] that hosed you … now what?

Ok, so you lost $1.50 or $2 per Oz. … in “normal” trading situation days that is easily recoverable, especially early in the day; in this, how? If you go in again and get whacked another $1.50, now you’re down $3+, and my question is, “how you gonna get this back in this slop that can’t go 70 cents in an hour”? And this goes to the heart of the ZH post about hedgies going bankrupt or “buh-bye” and most other professional traders who are trying to figure out how to handle the new paradigm; it isn’t a crisis of “confidence”, it’s figuring out the “musical chairs” game being played by central banks & Pols that are “yanking” markets around like crazy, with very little if any time to react to news [real and/or perceived] and adjust without getting “whacked” severely.

And once again, for like the fourth or fifth time today, gold makes a new high by 10 – 20 cents and then gets whacked back down … as I have said before, you buy/sell the breakout you are begging for losses … nothing up here but buy stops, and without USDJPY pushing lower, there is no interest in buying gold at the moment … maybe things change, but right now this is classic “get your ass kicked” by the dealers “bullion wall” on the breakout, with no telling how far it can/will correct [most likely exactly to your sell stop]. “Welcome to the ‘Flying Wedge of Death’ directly below”.

[Higher highs and lower lows - click to enlarge]

So, if you want to put it into visual form on a chart, what ZH is saying is encapsulated in the above M1; it could be the M5, M30, or any other time period as well, it’s fractals all the way up; point is, without anybody taking the “arrows” markets drift and that is very hard on professional traders.

And looking around the financial landscape, there isn’t anything else that looks promising to trade either; “oh, how about that 27 PIP range in EURUSD for the day? … gee, nobody getting ‘chopped up’ in that are they? And you want to talk ‘chopfest’? Take a look at USDJPY today and tell me traders aren’t on the ‘buy high sell low’ yoyo getting pounded to death”. And I could go on, but you hopefully get the point.

What makes all of this highly ironic and dumbfounding is the fact the world is spinning out of control on practically every level you can think; and yet, volatility is shrinking to historically low levels in gold. Why? SHORT ANSWER: “Over the last 12 weeks, since the election, you have no idea the amount of money lost in gold, either long or short or both; fact is plenty of people have been burned badly, and they aren’t real excited about coming back anytime soon, and that isn’t just at the retail level either as plenty of the ‘big, smart’ money got whacked as well”.

And here we are at Noon New York time, now trying to go lower after umpteen trips trying to go $2 - $3 higher failed … I hate to bring this up, but the daily looks like another doji is in the works; this would be 5 in a row, and if you want a research project scroll back on your MT4 and see the last non Holiday time period this happened … it didn’t!

You don’t need to be a rocket scientist to see from the last 5 days just how important the algorithm rules are; without them, the money lost becomes overwhelming. Everything from the $5 HVALUE to the 50% retracement level, to not getting caught in the inevitable spikes gold is infamous for, to not flipping back and forth, long to short and back again, and staying with the direction the market is telling you it is headed. They’re all there for a reason, and that reason is to keep any potential losses very small and minor in nature and not let them “take over”.

And just to make the day a complete mess for gold longs and sell stops, here half an hour before the Comex close, gold finally pushes lower into a new low on USDJPY strength over 111; Yippe! A new low with nowhere to go in 30 minutes of illiquid trading; now, where can I sell this stuff and dig a new hole for myself? [Just kidding] Do you think they can take this anywhere on the downside with sub 30 minutes to go and see prices lower from 1251 [the old low earlier today] with brand spanking new short positions? A few pennies per Oz. … maybe.

Comex close is here, and today is officially a “nothingburger”; no trades because another day of “doji” [no matter what the day’s candlestick looks like at 8 PM when the day ends], no range [until the day is 30 minutes from over], barely a $5 HVALUE, and no signals that meant anything. I don’t like it any more than any of you, but it is what it is, and it’s better than losing money; we take the bad trading conditions with the good. Going forward, I don’t have a clue what shakes this stuff up and gets it moving … something will of course … this is a very hard part of trading for some people to handle, but it is simply mental in nature and must be dealt with properly. I can’t make it move, and I can’t tell it what to do … all I can do and what I have control over is how I react to it … and I have the patience and discipline to “ride out” the “doji storm” to the other side where a bunch of bullion dealers are currently holding our money for us. Cuz when the “doji storm” is over I’m gonna be there to collect.

PAMM/MAM Spreadsheet directly below.

Beach beckons … I’m outta here … until tomorrow.

Have a great day everybody!

UPDATE: “Of course it was”! Another day, another example of a FED Pie Hole opening his yap and speaking in “dovish” forked tongues: Fischer’s comments sparking massive buying in USDJPY which pummeled gold to the days lows right at 2 P.M. EDST. Welcome to the new paradigm, where I guess everybody is supposed to “guess” when these assclowns speak.