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Monday, August 14, 2017

WELCOME TO AMERICAN ENTROPY!

“Would it be the same people who show up in Charlottesville, VA.?”

Well, no expectations of trouble here, right? Seriously stupid people on the fringe right and ultra tin-foil hat fringe left go at it while the country sits back and watches. Natch, no matter what happens Libtard Nation screams their faux outrage that it’s all Trump’s fault; “Gee, I never thought of that … thanks for the retarded insight … Note to the idiots on the Left: If you want more Trump, this is how you get more Trump, and they wonder why they lose elections”!

Meanwhile, we all wait for WWIII and the end of the world via a nuclear exchange with the Norks that nobody knows how it will end. I’m wondering this morning if Kim has covered his SP500 shorts and/or liquidated his gold longs? Might want to let the money clear first in Switzerland and give the Chi-Coms & the Ruskies their cut before you go spending all that western cash on hookers & blow.

Of course, what would the start to a week be without the “Plunge Protection Team” [PPT] showing up in Asia and ramping stocks higher on … natch, worse than terrible economic stats out of China, cuz nothing says buy MOAR STOCKS like data that shows the world is in a depression … cuz remember, it’s all about “fun-dur-mentals”. So here we are at the start of a Monday and the Dow30 is up about 50 points on “vapors”, simply cuz they can, and they don’t want anybody to think anything is wrong anywhere about anything … simply STFU and buy MOAR!

As for the DAX30, one look at the M1, and it looks like somebody exploded a grenade inside a spaghetti factory; up/down, gaps, spikes up, spikes down, price everywhere and anywhere, the “Kumo Cloud” left hopelessly wondering what the hell is going on. Well, I’ll tell you; big money that has left the stop hunting grounds of the Dow30 & SP500 [cuz the manipulators won’t let them play anymore] to plunder the German market while the regulators drink beer and watch porn on the office computers. In a nutshell, that’s what’s going on, and if you play in this market, you either lose big or win small, all the while handed shit fills via LP slippage as the bank computer [HAL1000] says, “Dave? Dave? We don’t have a problem do we Dave”?

Turning to today’s markets … EURJPY has now retraced its tight range and is now under the 50% mark on the day’s range; this is worth watching, as the U.S. indices really haven’t moved much, especially the Dow30, but the SP500 is down about a point from a few hours ago [big whoop]. Nonetheless, it seems like the entire world is waiting for another “shoe to drop”, whether its stock indices heading lower via the top floor roof, or the Norks situation deteriorating rapidly into actual missiles. While there are corporate flows that keep EURJPY trading up/down in random fashion, nobody really wants to take a position, or has any confidence in one, when at any second things can go “entropy” quickly.

About an hour after the New York open, and stocks in full PPT mode; the story, though, is the break of EURJPY, with both EURUSD weakness & USDJPY weakness [Yen strengthens]. Those of you that have read the new version 4 algorithm can see the 34 minute Cardinal Cross down move from high to low, that started right after stocks opened. Again today, everything putting in either “Flying Wedges of Death” [FWD] or reversal patterns, and making life difficult for practically everybody.

Noon time in New York, and its “biz as usual” for stocks; meaning simply, they have no range and do absolutely nothing the entire day but drift up ever so slightly on manipulated bids or simply sit… pathetic, but what do you expect after the break last week? Did you somehow think they were just going to go away and leave matters to traders? They’re here forever from now on … learn it, love it, deal with it.

What does it say about EURJPY when the Sunday session that is all of 3 hours long, has almost the same range as the next entire 24 hours [so far]? Another reversal, as we start the day off in Europe attempting to expand the day’s range on the upside, but quickly after about 90 minutes, going into the slow “3 steps down, 2 steps up” grind down to new lows some 6 hours later. And while it isn’t part of the algorithm, the 50% rule I often use saved the day for me, simply because I only want to take algorithm long signals when the market is above the 50% price mark, and vice versa for short positions. Today’s low range in EURJPY complicated things, as literally a couple of PIPS at times is the difference in being long or short … 50/50 on random orders isn’t something I want to get involved in … if that is what trading is about, I’ll go to a casino and get comped playing baccarat or something like it.

Of course, once the sell stops have been cleaned out by restless longs, the market goes up and stays there cuz there wasn’t any real selling to begin with, only traders stuck long at higher levels and being forced out by the dealers and hedge funds that can see the order flow and take advantage of it with their size. In other words, it was a plain old “stop hunt”, once successfully completed, it’s now back to the middle where we can waste away the day doing nothing but waiting for tomorrow.

As I said in the manual, when the “Kumo Cloud” is 1) very thin with no size, and 2) the “Cloud” is sloping straight across and is basically zero, meaning no up or down but simply sideways, you have to be really very careful with trades where price is hanging around whatever “Cloud” there is, simply because random orders can take it a PIP or two any which way and it doesn’t mean anything, but it very well could initiate a buy or sell signal. It doesn’t mean up, and it doesn’t mean down; it was simply a trap for the unwary and “entropy” in all its glory.

Which brings me to the $64,000 question I know many will ask; “ok -vegas, I understand what you are sayin’, but which “Cloud” breakouts are legit and which aren’t”? I can’t answer that, cuz it’s all probability waves at work … nothing more, nothing less. I can only say that when the “Cloud” is thin and going sideways, I will most likely stay away cuz what it’s telling me is that around a PIP or two it’s basically a 50/50 bet, and that’s not good enough for me. Sometimes you win and sometimes you will lose, but you’ll need a breakout that goes somewhere to make up for all the ones you take that are small losers when these 2 conditions are present; you’ll win 1 and lose 5, but more likely than not it’s the 5 losers that come up first, and then the question becomes how willing are you to make the 6th trade? Cuz if you’re going to trade under these 2 conditions, you MUST TAKE THEM ALL!

Where the version 4 algorithm really shines, though, is under adverse trading conditions like small ranges, doji’s, reversals, and the account killer FWD. When everybody and their brother finds out that trading can bring riches, they rush out and will believe anything they find at the bookstore; what they don’t realize is that everything, no matter how stupid, has to work sometime! If it didn’t, you could filter it out and never have a loser, which of course probability theory says is impossible. Problem is, systems/models/algorithms limitations will show up a lot sooner than people realize, thus exposing the weakness of whatever it is they are using to trade … not knowing what to do, the account gets “monkey hammered”. What happened?

What happened is that the system/model/algorithm was being traded under conditions where it had no chance of success because its user did not understand its limitations or conditions, under where it would fail with a greater than 50% fail rate; so, where in the book was the warning? [Yea, right] I can produce total BS, sell it for $99.95, and at some point it will work … and when it does work some month, I can then run infomercials with Grandma’s full of cash in their hands gushing about my system … and when you look at the last 20 years, that’s what you get in many different, yet hilarious forms.

I will be the first to admit, since February 2016 when the FED quietly, and without fanfare took over markets, trading has been a B. I. Itch to make money in and prosper like before. Nobody sends you an email telling you of the change in the rules; trading in the secondary markets like gold, oil, and other FX crosses, the first to feel the brunt of the “new FED rules” for trading. Then slowly, everybody realized the VIX in stocks was getting the life sucked out of it, and wondered why stocks were not reacting to world events, or economic news, all the while daily ranges were collapsing dramatically; nobody wanted to believe the FED, ECB, & BOJ [with some help from the SNB] were manipulating markets … some money managers couldn’t come to grips with the fact. Remember, the “oil king”, Andy Hall … Mr. Perma Bull, multi billion dollar oil trader no more … it hurts when you’re the last one to get the memo and have to shut down your operations.

As I have written before, 2017 is the worst year in the biz for money managers since 1987, whether stocks or commodities doesn’t matter … they’re getting killed; many down 30%+ or more, too late to realize the game has changed dramatically, and how the hell do you make it back? Now, I don’t pretend to be the “smartest guy in the room” … far from it. But when things in trading don’t work, and they’ve been working for years, you have to wake up and smell the coffee pretty damn quick and ask “why not”? The market is very good at letting you know what your weaknesses are, if you’re willing to listen … and I can tell you, I listen more than you know. Nobody comes to trading and is a “perfect trader” … sorry, that person doesn’t exist; we become good because we listen to what its saying to us and we adapt.

Back in my floor trading days, I never, ever envisioned trading like it is today, and especially how acquiescent Wall Street is having the FED manipulate everything. But, here we are, and when faced with problems, you either find the solution or you lose money. That has led my trading algorithm to various versions that fixed one or many problems, but as I have said before, the greatest dangers are the problems you don’t know exist … hell, you don’t even know what questions to ask, let alone have solutions. I simply can’t make the version 4 algorithm more “generalized” than it is for all market conditions we face … it runs the gamut, and when markets like EURJPY trade [or even the Dow30 if it’s ever allowed to trade again … some days I wonder], in its present form, the version 4 algo will 1) keep you on the right side of the market, and 2) make you aware of the short term cycles for tops or bottoms. Of course, it can’t guarantee tops and bottoms … nothing can, only where Gann’s theories on cycles say tops and bottoms “occur here, at this time and place”. Well, that’s good enough for me, cuz it puts me up on a trade while risking little; now I’m in control. The algorithm simply uses Gann’s information and works BACKWARDS in conjunction with my proprietary work in “exhaustions”, and I’m very excited I finally got it released so you know what it is I’m attempting to do.

Today’s trading saw 2 profitable algorithm trades; both were long positions early in the day before the market reversed and went to new lows, while price in EURJPY was above the 50% mark at the time. Both trades directly below.



In both trades, long spikes that went nowhere got me out; this is one of the rules for trading. It doesn’t matter what I think; if I see a large spike up, I’m liquidating on the slightest hint of a turnaround if I’m long. I’ve seen this rodeo before, and waiting for the turn costs you plenty.

On the daily candlestick, if the market closed now after 18 hours, it would be another “doji” … and sure enough, we open, go higher into Europe, go to new lows for the day as the U.S. session opens, and once that’s over with, it’s the slow climb back into the middle, thank you very much FWD. Gets you long up top, short near the bottom, and then traps you into the close for more losses; that’s what the FWD does, and I avoid it like it was the financial ebola virus.

Today’s trade disappointing in many respects, not the least of which is range, but the simple truth is the market caught too many people long EURJPY in Europe, and when higher stocks didn’t produce buying at the U.S. open, the liquidate sell buttons started to get pushed and it was a race to the bottom … all told, it took 34 minutes of the 18 hours, and as I write it’s back into the middle like a good little FWD should. The only real sell signal coming after 4 produced nothing but scratches … the 5th came and took off and never looked back … since then, it’s been a crawl up, hitting off buy stops of those short earlier in the day.
For their part, the stock indices today a complete waste … “vapors” overnight, open higher, “protect & defend” what you stole overnight, rinse and repeat … how many times have we seen this the last 3 -4 months? New York simply a disaster trading arena … what’s the point of it even being open? Somebody please give me one, cuz from where I’m sittin’ I’ll simply quote Art Cashin of UBS, who once said, “today is a waste of a clean shirt and a tank of gas”.

Trading today not as profitable as I would have liked to see it, even with increased volume cuz conditions are excellent at Turnkey, but it is for all practical purposes a “doji” day on the daily candlestick with small tails on either end; this remains the “form of my [our] destruction”, as there isn’t anything else that has a lower probability of occurring day-to-day. So, on days like today, I have to be content to walk out the door with anything to the plus side cuz it’s a “doji” day. Still, I’m happy with how the algorithm performed on its first day available to the public … I hope you can see its power, its logic, how it keeps you out of trouble and on the right side, and how both Gann’s cycle theory utilizing the “Square of Nine”, along with my “exhaustion work [not needed today] comes together to produce consistent profits. If anybody has any questions/comments, please pass them along to me at traderzoogold@gmail.com and I’ll get back with you ASAP. Onward & Upward!

PAMM spreadsheet directly below.


Beach time! … the dog and I are outta here … until tomorrow.

Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

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