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Monday, April 10, 2017

IN THE GRIP OF UNCERTAINTY


“It certainly makes for some tough decisions doesn’t it?”

We start the shortened Easter week of trading tightly gripped by the clutches of uncertainty; go ahead, pick ‘em. Between Russia, Syria, ChairSatan Yellen speaking, European elections, reading the tea leaves of charts that make no sense, somebody take a stab at which rears its ugly head first, and in the process moves any and all markets at the “speed of light” before then dying and going into “cricket” mode.


From where I sit, confusion reigns supreme all over the financial investment & trading universe; it doesn’t matter which market you pick, cuz there is carnage everywhere. FX, USDJPY, & gold to be sure have seen perplexing moves, where one minute you swear it will never have another uptick, and 30 minutes later you swear it can never go down again; all told a wicked mess of reversal chart patterns and a total loss of semblance that there is any conviction on the part of any market to put you into a profitable position before your stop kicks in and takes you out.

Stock indices, for their part, got things “kicked off” last week with a mini Asian session meltdown with the fireworks show in Syria, something that caught stock traders by surprise; “first you go out the window; it isn’t the fall that hurts you, it’s the landing. Then later, when you realize you panicked at exactly the wrong moment, you buy back everything at new Dow30 highs for the day, only to then see it sell off. Thanks, come again”.

Surveying the financial trading landscape starting the week, I see traders worldwide in total “paralysis”; as a collective group, there is no “theme” for the start of this week, only confusion & apprehension at the prospects of 1) further problems with Russia & Syria between Putin & Trump, 2) ChairSatan Yellen speaking, which means the words she deliberately chooses to use will hurt your brain while it tries to figure out content and meaning that makes no sense whatsoever, and 3) the approaching French elections which have the European elites in “panic mode” over the prospect of a LePen victory, made entirely possible by a “surge” in support for the communist candidate Melenchon, who now only trails Fillon [the EU sock puppet] by a couple of points; and since the 2nd round of voting only has the top 2 for President, how about LePen versus Melenchon to give the EU elites a case of complete heartburn. And so, half an hour before stocks open we got “Nada in spades” as everybody looks around and wonders what “hits” next.

The good news for markets, at least for the stock indices and those who trade them in the U.S. hours, is that Yellen’s comments come at night when nobody has to listen to them and try and figure out “on the fly” what the hell she is talking about; that’s a problem for others and tomorrow’s potential problem.

Here this week, by Wednesday morning the entire trading landscape will see trading conditions resemble the county morgue; “err, wait; that might be an insult to the dead folks laying there”. It’s not even Noon on Monday, and already things have slowed down considerably; I have no idea what happens next, but it’s feeling like “chopfest” is the word of the hour.

About 3 hours and change into this, and already we’ve had North Korea / China troop rumors, and both longs and shorts are getting punished in the Dow30 with very rapid selling [45 minutes down 145 points] and very rapid buying [an hour later up 100 points] all within a very short time frame [little less than 2 hours], resulting in the infamous “Flying Wedge of Death” as both sides get caught with no place to go and have to cover; this makes for some wicked trading action. The “Plunge Protection Team” no doubt helping the shorts cover as the market recovers quickly back up almost to previous levels.

Like every other market, you cannot buy/sell breakouts in the stock indices and live to tell about it later; and once again politics and/or geo-politics takes center stage and is the driver behind markets moving today. And for all of the up/down panic on “God knows what” today, do you think during any of it I could get any signal to buy on any of the breaks? [Hint: “umm no”.] I’m not complaining [much], and it is what it is, and some days you just don’t get the signals; usually, when there are no signals it is because of one of two reasons; 1) either it’s a “chopfest” with nothing happening, or 2) it’s panic buy and/or sell and all you see is straight up and/or straight down. And worse than other markets, stock indices [if you let them] get into your head and if you’re not careful you end up chasing them; buying the up moves, or selling the down moves, cuz you’re afraid of missing something. I’m not sure what that “something” is, but your emotions will tell you its there. So on a day like today, where literally 1 minute it looks like there will never be another down tick the rest of the day, 2 minutes later WWIII is about to start “thank you very much N. Korea & China” and now you are convinced there won’t ever be another uptick either … outside of the algorithm pattern formations, there isn’t anything “to hang your hat on” cuz traditional support & resistance lines in the stock indices are for CHUMPS; “hell, back in the day I used to run retail brokerage house buy/sell stops through these areas all the time, and then take the other side.

Directly below is the daily candlestick in the Dow30; for 14 days [not including the 2 hour Sunday night session] we’ve been in an approximate 200 point “open to close” range, and all attempts to break out of this range have been met with selling from above and buying from below. At the moment, it shouldn’t be any surprise to anybody that going into an Easter Holiday with so much political, geo-political, FED BS, and the upcoming elections in France, the Dow30 is on edge; nobody is willing to take on risk here, and nobody wants to get caught in some 600 point surprise move that will take the rest of the year to make back.
 


  
My point is simple; if I get signals I’ll take ‘em, but if I don’t the market isn’t showing any conviction one way or the other to make me “lean over backwards” and want to give it the benefit of the doubt. And as today shows, hang around the buy or the sell side for longer than about 10 – 15 minutes and your stop on either side is in danger; what looks good one second doesn’t the next. No trades today because none of the bottoms showed either bullish engulfing patterns, hammers, or reversals to get me in advantageously; if you chase it up, the “smackdowns” can really hurt when they come. And with “war drums” beating today, it didn’t take much to get others to hit the sell button on a couple of occasions.


To put things into perspective, directly below is the day’s M15 candlestick; the blue rectangle is from the open to about 30 minutes from the close in New York. As you can see, from the rather dull overnight sessions in Asia & Europe, first new highs, then new lows, and then back to the middle with … nothing. This is classic “Flying Wedge of Death” from my days in the stock indices pit; not many guys walked out with profits.
 




The problem, of course, is that there just isn’t any conviction and/or follow through for either buying or selling; what corrections the market does get just “keep correcting”, and before you know it the 50% retracement level is breached and then minutes later either a new high or new low occurs. Now, you got a reversal going, but there isn’t any power in the market to “reverse”, and so the market just drifts; this is the worst possible scenario for a professional trader because you want to see follow through FROM THAT FIRST MOVE to that next level to take some kind of profit. And when you don’t get it all you got left is some kind of loss.


So, here we are … another disappointing market action day … not to surprising considering it’s Easter week, where more than likely tomorrow will be it for the week until next Tuesday … happens every year, and there ain’t nothing you and I can do about it to change the behavior. So, I patiently sit awaiting signals that will come, and hopefully tomorrow shows a better trend day than today.

I updated the PAMM/MAM spreadsheet, but I am again having a problem with Microsoft Excel and Windows 10; they don’t seem to want to work together and I think I’ll have to delete and then reinstall to get it to work properly. Anyway, when I get it finished tonight or tomorrow morning, I’ll post the saved spreadsheet.

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

Have a great day everybody!
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