“TWILIGHT ZONE” LUNACY IS HERE TO STAY

 

“Rod Serling analyzes every trade you’ve ever made!!”

Another Christmas in the books, and today only FX currency pairs are open,

although one look at the spreads there and all you can do is laugh … “Boxing

Day” a quasi Holiday in and of itself, and all of the CFD’s at “SLIPPAGE FX”

[a/k/a Coinexx + Turnkey] are closed for the day … that means spot gold

[XAUUSD], WTI Crude Oil, and the DOW30 are down for the count, and will

reopen early this evening for regular trading.

Friday did provide us with important info … namely, how low can VIX go in a

normal session, in this era of central bank manipulation? … and, can the

theoretical version 2 trading algorithm model price behavior as well as the

original algorithm can when VIX is a lot higher? … coming into the last couple

of days into Christmas weekend, I thought it could, but you never really know ‘til

you see it in real time … I would note, though, that if we had had VIX a few

notches lower than Thursday & especially Friday, we would have to sit … there

are some lower levels in our 3 markets that can’t be breached without some

serious ramifications for modeling price behavior … quite frankly, I don’t see it

happening going forward … that doesn’t mean it can’t, only it’s “looney tunes”

even for “The Twilight Zone” … most likely if it does occur, it’s a one off and not

worth modeling … I nor anybody else can make allowances for every market

moving possibility.

Our 3 markets for PAMM trading exhibit as high a VIX structure as you’re gonna

find on a consistent daily basis … the DOW30 trades inside the “88/6/6” paradigm

[88% of the time it goes up, 6% of the time it goes sideways, and 6% of the time it

gets beat to death harder than a baby seal at a Japanese whale hunt] … stay out

of the way in the “back 6”, and you can back the yacht up and load the cash

… crude oil and gold are more demand oriented markets, where not only is

trading action more attuned to a 50/50 model, but unless there is ample evidence

of a complete depression on the horizon in world economies, both enjoy a

somewhat artificial floor underneath price, while at the same time the sky is the

limit for advances.

Currently, crude oil has about a 4% range of the value of the underlying

commodity, gold a little less than 1 ½ % of the underlying, and the DOW30 a little

less than 2% of the underlying stocks … if we could trade the oil CFD’s like oil

trades in the futures market, I’d never look at any other market … the fact is, we

can’t … blown out spreads and slippage a major problem, even on the tiniest of

orders … the DOW30 CFD has a liquidity problem … go up the volume ladder

and watch in horror as slippage goes exponential … it would be nice to be able

to trade the SP500, but the bid/offer spread is a rip off. 

Ever since the 2020 COVID HOAX, when gold spreads went orbital, conditions

have gradually improved over the months and couple of years, to a point they

are only slightly higher than before … on average only a few pennies higher from

$300 - $500 ago in price … as price goes higher, it only makes sense for some

adjustment in spreads, as the VAR [variance] of price changes quicken in scope

… but of the 3 markets, “IF” the spread can stay consistent at around 25 cents

currently [give or take a few pennies depending], gold exhibits much better runs

up & down AND attendant corrective activity, than the other 2 markets … FROM

MY PERSPECTIVE, what has always plagued gold [even back in pit trading days!],

is its innate ability to hit off as many “false positive” positions as the universe

can allow, and get you to be long at tops and short at bottoms, and then take off

on some nice run with you sitting at the train station as the train leaves … all the

while the conductor waves “Buh Bye” and laughs his ass off … for me, it’s never

been about VIX per se, but the “sucker moves” … and nobody but nobody is

better at initiating “sucker moves” than the LBMA [London Bullion Market

Association] that runs and controls spot gold [XAUUSD] … question is, with

higher corrective activity than either crude or DOW30, can gold be modeled

successfully when VIX dips? … the answer is “YES”, but it has limitations … well,

nobody is expecting the “Holy Grail”, and on those days [hopefully few and far

between] when conditions suck, we got crude and DOW30 to fill the void … quite

frankly, crude oil is very, very close to gold in many ways … the big advantage I

see for gold over crude is its corrective activity is stronger more often … bottom

line, though, is if any of these 3 markets are “dead”, there isn’t anything worth

trading anyway.

This shortened week also sees me finish up the very short term binary options

manual … should have it done by New Years Day sometime .. .when I’m satisfied

version 2 of the trading algorithm is “killer”, I’ll update and post over in

“Download Links” … onto the week! 

… OUTTA HERE … “The future’s so bright I need 2 pairs of sunglasses 😎😎,

and my own Brinks armored truck” 💓!! … Onward & Upward!! 

-vegas

SUNDAY UPDATE: MERRY CHRISTMAS & OTHER THOUGHTS

 

“Define good!!”

Merry Christmas everybody, especially those digging out of the “bomb cyclone”

hitting the U.S. … why even myself, I’m a little chilly this morning down here in

the Caribbean, where currently it’s about 76 °F … hang on while I put my light

hoodie on, and raise my clenched fist into the air in show of solidarity, while

sipping my raspberry latte and watching the waves lovingly kiss the beach in

front of me … I’ve got my “Baby it’s cold outside” sympathy ribbon proudly

attached to my hoodie so everyone knows I’m down with the struggle.

And while I bravely carry on down here, wondering if we can hit 80 °F today, and

I have to wear my hoodie all day while clutching my pearls, life goes on … later in

the day, the Costanza family comes over for Festivus celebrations, dinner, and

the airing of grievances … should be a fun packed day!

Directly below, the 20 Day Range MA’s for selected markets.

click on table to enlarge

Note that I’ve added gold [XAUUSD] in the New York session, so all 3 of our

markets [gold, DOW30, & WTI Crude Oil] have data for both daily and New York

sessions [as I have defined them in the notes] … and as you can clearly see,

unless there is something specifically in the news to move them in the Asian

session and early Europe, a substantial portion of the day’s range most often

occurs during New York trading [gold 78%, DOW30 86%, and WTI Crude Oil 86%]

… these percentages are a tad high cuz of Holiday periods stretching from

Thanksgiving to New Years, and I wouldn’t expect them to remain this high once

we get into the new year … closer to 70% - 75% is more like the norm … even so,

over time these 3 markets have shown a remarkable resiliency to remain volatile

… the key factor in trading them for the PAMM continues to be the day-to-day

variable spread placed upon us by scumbag, thieving LP’s … of the 3 markets,

gold is the most consistent, followed by DOW30, and then WTI Crude Oil … and

lest anybody thinks I’m picking on poor “SLIPPAGE FX” [a/k/a Coiness + Turnkey],

I’m not cuz the spreads for these 3 markets are pretty much industry norms if you

do your homework … granted, some houses may have a “loss leader” and have

a quotable spread lower, but you ain’t getting any bargains there cuz they’ll make

up for that by having bid/offer quotes that jump around even worse than houses

that you think are terrible … bottom line is you’re gonna pay the industry norm

one way or the other.

What has pissed me off to no end in these higher than average volatile markets in

2022, has been 1) the INCONSISTENCY OF THE VIX STRUCTURE during the New

York trading day, where one day it’s off the charts, and the next 4 days it sucks

… and that means spikes from Hell, both up & down out of nowhere, where you

think it means what it doesn’t … namely, here we go and market action improves

… instead, after blowing stops out, it dies … and 2) straight shot market runs both

up & down with ZERO corrective activity … and once the moves are over, you

don’t want any part of the corrective activity cuz there won’t be any continuation

of the move.

Both of these go to the very heart of creating and developing a proper trading

algorithm, but they both demand criteria that work against each other! … you

develop it for volatility, and when the market dies, then what? … you develop it for

far slower VIX, and then it goes on a tear, now what? … up ‘til now I’ve been

content to “wait the slow periods out” … problem here, is that they’re happening

with increased frequency versus historical norms, so that even when conditions

improve, you either don’t want to trade a signal or are hesitant to make the trade

cuz you know what happens when it dies down to a trickle … in other words, they

got you coming and going and right where they want you.

The trading algorithm posted over in “Download Links”, does a fantastic job of

nailing price behavior WHEN VIX IS CONSISTENT AND REMAINS ELEVATED

… when it doesn’t, the false positives go north exponentially, and you find

yourself behind losing trades and “chop” … what to do Skippy, what to do?

Over the past weeks and months I’ve been addressing this problem, and through

various code adjustments and other hocus pocus tricks of the trade, as well as

getting small range days mixed in with big range days so I can see both sides of

the VIX coin, from Thanksgiving onward to present day, I think I got the solution

… I fortunately had “Miss Gimpy” test it out on Friday in gold, on a day that saw

the range for the day 50% less than its 20 Day Range MA, as well as very subpar

in the New York session … she had a very profitable day … back testing both

crude oil and DOW30 for the day afterwards yielded good results as well … if you

look, on Friday all of their respective charts were correlating rather well … that of

course doesn’t always hold up, but given the lack of news flow they correlated

well most of the day.

Bottom line is I’ll be using this newer version [version 2.0] of the trading

algorithm come tomorrow or Tuesday, and going forward … take note of the

results … if I like what I see, and I think I most assuredly will, I’ll make the

appropriate revisions in the manual and repost it … onto the week at hand

… Merry Christmas everybody! 

… OUTTA HERE … “The future’s so bright I need 2 pairs of sunglasses 😎😎,

and my own Brinks armored truck” 💓!! … Onward & Upward!! 

-vegas

THE CASINO RESTS

 

“Markets go down much faster than the Titanic!!”

Well, if you were looking for any kind of decent trading action today before

Christmas sets in on Sunday, sorry to disappoint you … Yup, this is “Holiday

trading” at its worst … no ranges, no volumes, and generally no interest … still,

with the spikes from Hell, though … can’t forget those, cuz they are now a

mainstay in markets, as the various banks run stops with impunity and front

run larger orders … and if not banks, then HFT;s or large hedge funds

[think crude oil].

A little bit of a pop for crude, as it heads towards $80, but overall the “Trading

Ratio” [TR] stinks … most of the day well below 3 and at times below 2 into the 1

handle … this means lots of m1’s that do nothing for minutes on end, then bursts

up/down out of nowhere that take price on a short ride … currently up, but with

almost ZERO volume, I don’t think you can trust the rally … still aren’t even close

to a $2 range for the day, which for this time of day is pathetic … gold pretty much

dead [so far] with an $8 range as “Stock Bellies” open at the criminal NYSE … the

DOW30 farting around on some econ stats that mean nothin’, but generally a bias

down … again, not much to chew on cuz there isn’t any volume [so far].

Now into the New York afternoon, and it’s getting worse … TR in crude less than

2 currently, gold at less than 2, and the DOW30 in the mid to upper 3 range … and

while that may sound good for the DOW30, one look at the m1 chart and you’ll

see it’s “chop” with spikes from Hell that go nowhere, with a light bias to the

downside after a run higher right after the open on Chipmunk buying … some

market … throw in the usual horseshit fills from “SLIPPAGE FX” [a/k/a Coinexx +

Turnkey, via a merger from Satan himself], and it ain’t anywhere as great as it

looks on paper … of the 3 markets, while all 3 have been very subdued today, I

will note that gold had the best trading conditions, even with a rotten TR … that

DOW30 rally right after the NYSE open lasted about an hour, and it took gold

along with it, where price went from the low of the day to the high of the day in a

straight shot up, before backing away down to the low to mid 1790’s … even with

that, the algorithm modeled its price action extremely well, something I didn’t

expect … you most definitely can’t say the same for DOW30 and/or crude oil

… that small rally extended the gold range today to approximately $12, which

given current conditions is about as bad a range you’re gonna see, Holiday

period or not … well below its 20 Day Range MA of approximately $24.50 … and

yet, the algo performed beyond well … this is important to know, cuz given the

chance for markets to be close to even with each other, you have to give the nod

to gold and assume things could slow down, in which case gold would be the

better trading vehicle. 

As I’ve said before, gold has “warts” … guess what? … the “warts” are just as big

and ugly in other markets as well … both crude and DOW30 can be just as ugly as

gold, perhaps more so, so you can’t sit there and tell me there’s an edge in those

markets when things slow down … sure, when conditions are flying high every

market makes money … but what about when they don’t? … I won’t go as far as

saying today’s conditions in DOW30 and crude oil were a disaster, cuz they

weren’t … but they did have too many false positives on algorithm signals cuz of

the extremely low ranges AND/OR m1 action via the TR … I didn’t see that in gold

as I was watching it.

I was hoping we would see better trading conditions coming out of the European

session today … we didn’t get it … not even close … nothing to speak of in the

Asian session as well, which is not all that surprising given the calendar … as a

result, no trades today for the PAMM due to lack of volume and range in our 3

markets … Sunday is Christmas, so a shortened trading schedule on Monday

… gold is closed Monday … I don’t think next week will see trading conditions as

bad as this week … so it’s “full speed ahead” come Monday & Tuesday … blog

update on Christmas Day … hope Santa is good to you … Merry Christmas

everybody!

… OUTTA HERE … “The future’s so bright I need 2 pairs of sunglasses 😎😎,

and my own Brinks armored truck” 💓!! … Onward & Upward!! 

-vegas