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Tuesday, March 14, 2017


“At the top of the list? Trading days like today!”

Coming in this morning, it took me about 5 minutes to figure out this day was a “nothing burger”; Ok, sure … we got a very tiny rally to about 1.4107 – 10 area in EURAUD from the lower 80’s, but volumes were horrible, the trade flow very erratic and choppy … now time to chop lower a while, putting in reversal patterns and engulfing patterns all over the place to entice you into doing something you know better than doing. As I have said before, unless the market is moving clearly up or clearly down, the formation patterns lose their statistical significance and are no better than flipping a coin; trade off of them in a “nothing burger” market and you will be disappointed.

Of course, tomorrow is the big event risk day for EURAUD, and I don’t mean the FED interest rate hike decision, which truth be told is the world’s most telegraphed policy move ever … no, it’s the Netherlands election, where if Geert Wilders wins it’s gonna set the financial elite’s hair on fire where it’s going to have 2 implications; 1) the Euro is as good as dead, and 2) momentum for Marine Le Pen in France in about 2 -3 weeks, where like Wilders, promises to crack down on immigration and pull out of the Euro ASAP. Grab the popcorn, the fun should start right around dinner time in New York and most definitely carry over into Asia and the European open.

It really shouldn’t come as a big surprise today, that trading is almost non-existent in FX, gold, & USDJPY; USDJPY for its part doing absolutely nothing for the better part of 2 weeks now … intraday volatility way down, and HVALUES as low as this market has seen in a good long while. Gold? Please, I just ate; no market on the MT4 is more sick than gold, what with trade flows very low while dealers dominate and run stops continually on both sides of the market.

And while I don’t like to sit here watching grass grow, it’s better than losing money in a market that has no clue where it’s going right ahead of its biggest event risk day since the Greek crisis erupted 2 summers ago; Trading is “tight”, which means on days like today you aren’t [most likely] going to get expanded HVALUES, and you have to contend with position squaring among institutional types that makes today look and feel like late Friday afternoon before a weekend.

The main thing, though, is that statistical signal degradation occurs when markets get “tight” and more or less chop, even if there is a slight bias up/down during the day; now, I’m not saying things have to be straight up or straight down, but we’re gonna need more than 10 PIP corrections over the course of 30 minutes or so, and a moving market, before I risk capital; anything else is not worth doing. Trust me, once tomorrow is over, those of you who are trading crosses, you’re gonna get all you want and then some.

With increasing frequency over at least the last year and a half, and probably as far back as the spring of 2012, trading has morphed at times into nothing more than a “roulette bet”; we find ourselves consistently waiting for the “next piece of news” that’s going to move the market, and as time moves towards a specific event, trading dries up, volumes slow down, daily ranges & HVALUES collapse … and then … “welcome to ‘speed of light trading’ followed by … crickets … rinse & repeat until you’re all out of money and back in the Pudding Business”!

So, just how hard is it to survive this type of terrain? Two items caught my eye today over at Zero Hedge; directly below the 2 link headlines:

I understand completely the problems they face, but ultimately even the biggest and “smartest guys in the room” have to face reality and swallow the bitter pill that comes with sitting on your hands when there isn’t a damn thing to do, and avoiding the temptation of shoving “chips” into the center of the poker table and then asking, “by the way, who’s the chump here”? Fact is, nobody likes to sit … but there are times.

And my question to these guys is twofold; 1) do you understand the term “risk tolerance”, and 2) you didn’t lose this kind of money on a scalped trade, so where is it in the “professional trader’s handbook” where it says hang on to losers for big whoop ass losses?

And through it all, people put up with this crap and shovel them even more money! And somehow, cuz I got my hands dirty on the trading floor for more than a decade, I’m somehow the “cowboy” like I’m living in the 1980’s movie “Trading Places”? Wait ... what? It never ceases to amaze me.

How come, almost on a consistent monthly basis, I see headlines like this over-and-over again? And remember, these guys [some women, but mostly guys] have the Ivy League degrees, are supposedly so smart, sophisticated, and worldly; don’t get me wrong, everybody makes mistakes, gets involved with bad trades or positions … nobody comes to the table perfect … no, what “kills” these guys is their hubris and arrogance bestowed on them by the faculty lounge members with tenure, that truth be told, couldn’t run an ice cream stand at the beach in July without FUBAR-ing it into oblivion.

“Hey, the Dukes know somethin’ … let’s get in on this!”

Wrapped up in their “hedge fund universe”, all they can see is what they want to see, not what’s right in front of them plain as day; if you haven’t seen the movie “The Big Short”, rent it out and watch the hubris & arrogance on both sides of the Credit Default Swaps in the financial crisis of 2008, it’s breathtaking in scope.

So, here we are, the day before SHTF and once again markets most likely go “Full Metal Jacket” orbital at the speed of light; EURUSD, in my opinion has the most to gain or lose, and by proxy the Euro crosses like EURAUD. If Wilders wins the Netherlands elections, the Euro will undoubtedly go down, but the world is mostly short Euros, and I’m sure the ECB will unleash the “Plunge Protection Team” to inflict damage on those accounts that get “too short”. A Wilders loss, and the way the financial world is not only underweight EURUSD, but short as well, and we could easily see a massive “melt up” in the Euro crosses. The FED I believe is almost irrelevant at this point. In any event, the worse outcome for the Euro would be a very slight victory for Wilders, but he can’t put a coalition government together, and political uncertainty hangs over the entire continent going into the French elections a few weeks later; this could lead to a “drip, drip, drip lower” in EURUSD that would take its toll.

Stay tuned, the “fun” starts tomorrow.

PAMM spreadsheet totals directly below.

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

Have a great day everybody!

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