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Tuesday, March 28, 2017

ZERO HEDGE “NAILS IT”! [ALMOST]


“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:  http://www.zerohedge.com/news/2017-03-27/traders-have-lost-confidence-their-ability-trade ], 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!
-vegas


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.
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