WELCOME TO A NOTHING MONDAY

 

“FX trader as a kid … what could possibly go wrong?”

No adjectives really, to describe adequately today’s EURUSD trade, that 

wouldn’t get my mouth washed out with Lava when I was about 8 years old 

… now that I’m an adult, the mouth washing seems a better idea. To say 

today was “pathetic”, would be an insult to pathetic … good grief … no 

volume, no liquidity, & no range to a nothing day that can only get you hurt.

Another “bigly & yuge” treasury auction the main events of the day ...those 

went off according to the manipulative effect of the FED, who no doubt hit the 

CNTRL-P button to sop up the fiat paper and make it look like there’s no 

problem with running trillion dollar budget deficits. EXIT QUESTION: “Will 

it be like this in 5 years when the inept Treasury Dept. auctions off weekly T-bill 

auctions for a trillion dollars”?

Tomorrow sees “the most important CPI number evahhh”! … the trade 

obviously waiting and playing the “hurry up & wait” game we’ve all become 

accustomed to in financial markets, cuz nobody can do nada without some 

kind of breaking news as the “official” backdrop of the “talking heads”. Add it 

all up, and it makes for a nothing “Flying Wedge of Death” [FWD] day, where 

again, anybody who hangs around any position longer than he/she can hold 

their breath, risks getting that next spike right up your donkey … and so it was 

about 295 times today, where the first 4 hours you can’t get an uptick to save 

your life … somebody at Central Bank HQ throws the light switch … and on a 

dime, the market turns and spends the rest of the day moving higher, almost to 

the Asian high [so far].

And through it all, the market “setups” totally stink … a result of the low 

volume, tight range day with everybody on hold for tomorrow. For example, 

the day’s low price in EURUSD saw action within a PIP or two for about 9 

minutes … “sure, everybody gets a chance to buy the low of the day; why not”?

Only one trade today … PAMM up a few bucks, nothing special.

I wasn’t happy with my long entry fill … in my estimation, it should have 

been about 1.1 PIPS lower, and it was simply the case of getting filled on a 

“mystery” tick … got no “love” from the scumbag LP, that’s for sure. My rule 

when I get “hosed” upon entry of any position, is to look for any opportunity 

to get out at a profit … that opportunity came some minutes later, and I 

liquidated 1/10th of a PIP from the high bid of the M1 … I didn’t hesitate or 

question the decision, cuz when you get a bad fill it skews your profit picture 

… simply liquidate at the first chance and start over. And even though I didn’t 

know it at the time, that was the only good “setup” I saw the rest of the day.

As I stated in an earlier blog, you have to be really careful of tight range days, 

and for EURUSD that definition is less than 40 PIPS … getting long near the 

bottom, or short near the high, opens you up to “stop spikes” that can hurt you, 

simply cuz the early day’s high/low act as Chaos Theory “strange attractors”, 

and will tug a market quickly towards taking one or both out and causing 

losses … losses that have a high probability of being worse than you think, cuz 

you never know where your stop is gonna get filled until it’s over.

And with the day’s range right around 50 PIPS, and price hanging around the 

low of the day for 9 minutes, if you get long in here the probabilities of further 

lows are high … most days, 50 PIPS isn’t gonna be anywhere near the range, 

and playing the “doji” card cuz of tomorrow’s CPI report holding the market 

at bay for the day, is a very dangerous way to trade … you’re inviting a future 

disaster. So, chalk today up as a garbage day, the rest of the week a literal data 

dump of reports and news events the market is surely waiting with hushed 

anticipation … until the next “hurry up & wait” cycle. 

I made some good progress over the weekend with “The EURUSD Aggressive 

Scalper Tutorial” … I still have some issues to resolve, but I’m working 

through them, and I’m hoping it can be ready for release by the end of this 

upcoming weekend … I think it will help many of you with your trading by 

giving you a solid foundation for proper “setups” via short term [scalping] 

trading in the major liquid Dollar pairs that have extremely tight spreads 

[anywhere from 0.0 PIPS to usually no greater than 2 or 3/10ths of a PIP], 

and very low round turn [RT] commissions like we enjoy at Turnkey.

Here, late in the day, EURUSD trying to take out the high now, with a  

“vapors” move to the upside … just another leg in today’s FWD. Back at it 

tomorrow, this day being done an hour ago; if you make a trade now and it 

sours, you got no place to run to get it back. So, until tomorrow mi amigos 

… I’m outta here … Onward & Upward!!

PAMM spreadsheet directly below.

 

Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND

OPERATIONAL; SEE “PAMM/MAM 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”!

  

 

 

 

PETTING THE FIRE BREATHING DRAGON

“Behind every Stock Index there’s a dragon waiting to be unleashed!”

Trading the stock indices is like having a pet dragon; when you attempt to put it on a “leash”, it gets pissed off and does what it wants anyway. So goes the current state of the U.S. markets, where everybody and there brother is bearish, pumping out articles and posts of “imminent crashes”, doom & gloom reports, fake earnings, fake accounting, and only the “dumbest of the dumb” would be long the indices.

Then you look at the prices and realize that the Dow30, at roughly 20950, is about 1% and change from all time record highs, set on March 1, 2017. “Ok pet dragon, I want you to come over here and go this way … No? … I said go this way … wait, what? … why are you dragging me the other way”? Now, this doesn’t mean prices can’t go down … she’s a fickle pet … it simply means the “big one” isn’t anywhere in sight. “Go ahead, be the next brave soul on “the street” to sell everything, go short, buck the FED planners, take on the corporate buyback schemes so much in vogue in corporate America, and then tackle the “Plunge Protection Team” IF prices start falling; at some point you have to get out, and when you do, your pet dragon will be there to inflict more pain on you than you can imagine. And if you don’t believe me, go ask the “wizards” who sold with abandon on the night of President Trump’s election victory; ask them how that worked out”.

Again today, for the umpteenth billionth time, ZH has got a slew of articles pointing the way to financial Armageddon just around the corner; only problem is the same guys have been saying this for years, decades, most likely before most of you were born. Sure, at some point in the future there will be a wicked bear market in the stock indices … it comes when it comes, and no amount of “economic and/or financial chart porn” is gonna change that. Been there, done that, seen that, heard that … and all it ever does is go up!

So unless something happens that threatens the further ability of the U.S. economy to grow, corporate earnings to grow, and changes the “mindset” of the people investing, those old enough to remember will simply hold through the fundamental rough patches and wait it out … they ain’t gonna sell unless they are convinced the “system” has been threatened. In fact, they will continue to buy dips … “alas, the BTFD folks who are derided every day by “smart” money, but whose track record proves they are right, up & until something proves them wrong.” … add money to their 401(k)’s, buy more ETF’s and index funds, and treat stocks like Apple & Amazon like religions that can’t ever be abandoned. And it will drive many traders to a rubber room, cuz they can’t take the perceived stupidity!

In a normal world, if I was a disinterested party in the stock indices, I’d make my case with facts at my disposal and then rest; but that’s NOT what we see on forums like ZH, where bearish articles have taken on a zeal & righteousness bordering on “hyper inflated paranoia” by those who either are short or have a vested interest in seeing prices go down. “Nothing ever changes; talking heads gotta talk, and analysts got to promote their firm’s recommendations. Nobody at the table brings clean hands.” Keep this in mind next time you hear the sky is falling.

Turning to today’s market … again very quiet overnight in Asia & Europe … very small ranges in everything traded … today starts the FED’s May meeting, which culminates in an interest rate decision tomorrow at 2 P.M. EDST, and then on Friday we get the most important jobs number evahhhh from the Department of Unicorns & Fairy Tales. ADP also reports on private sector employment tomorrow morning @ 8:15 EDST as well, with the last few months’ numbers moving the markets substantially. Maybe we’re on “hold” until then … you know the drill … “Hurry up & wait”… we’ll see, but again, we continue to hang up here in the SP500 between 2385 – 2395, and are within easy striking distance of breaking through 2400 – 2402; if that gives way it’s gonna be a complete clusterfark on the way up.

Here at the New York open, some light buying interest … that gives way to more “loose lips sink ships” talk from President Trump, which promptly sees the Dow30 go down 20 points in under a minute cuz “we need a good gov’t shutdown in September to fix this mess” [meaning the budget]. “May you live in interesting times”!

New low for the day saw a bullish engulfing pattern on the M1; after 9 minutes it’s unchanged, but range for the day is still way to low to pick bottoms this close to the open aqua line. SP500 is stubbornly hanging onto the 2390 handle, but really needs to see sub 2385 to flush out sell stops; that more than likely will be a good long point.

And @ 14:44 it’s one of those, “hey, the Dukes know something … let’s get in on this”! Only the Dukes don’t know squat, cuz that 20 point Dow30 rally in 2 minutes out of nowhere, went exactly nowhere, and 30 minutes later the market is right back from where it started [drip, drip, drip right back down]… I can’t begin to describe how pitiful trading conditions have become … and it ain’t only in the stock indices … everything traded across the board just sitting; doing nothing with ranges for the day you can barely see on a daily chart … I realize we got ADP employment tomorrow morning, the FED in the afternoon at 2 P.M., and NFP on Friday, but this is ridiculous.

Well, about time; somebody somewhere got an opinion and shoved the Dow30 through the New York open, and that produced my first trade of the day. Of course, once it got through there it couldn’t do “Mr. Jack Squat”, so I liquidated on a failure to break to a new high; directly below the trade.

 

Yesterday, I was having problems with my image copy software “Snagit”; it would let me copy my chart screens, but it wouldn’t let me save it to file as a jpeg or png file. So, last night after my tubby, and me and the dog got settled in the study while the Mrs. watched Caribbean soap operas on TV [don’t go there, Ok?], I reinstalled “Snagit” and today it works fine. So, problem solved.

I have said before, “doji’s”, when they start showing up on the daily charts, have a nasty habit of clustering; meaning of course multiple days in a row or something like 3 out of 4. Once again today, we get the “Flying Wedge of Death” with Doji action; open, go down, go up to open, go make a new low, and off of that new low rocket straight up through the open and … do absolutely nothing but drift and then start the slow move lower. In case you were wondering, got caught in this crap yesterday, and seeing the market fail up at the high, I didn’t hesitate in liquidating.

In the last 27 years, going back to 1990, we’ve only seen the VIX close below 10 three times; yesterday it closed at 10.11, and I’m betting if things don’t improve by the close, we’ll see a close with a “9” handle; that’s how bad things have gotten. One other thing caught my eye this morning; if you strip out the French election open on Sunday night and the following Tuesday before the open melt up, and the Easter Monday quasi Holiday melt up, the Dow30 has only been higher 4 times [out of 21 market days] in the New York session from the New York open. And only one of those days … exactly one … was there any gain of significance; the rest of the time it’s been grudgingly lower with very sharp rallies that fizzle out as fast as they start.

Which brings me to my next point; namely, for those of you who haven’t been around this biz very long [less than 10 years], bear markets produce some of the strongest bull market days ever seen in stock indices market history. You’ll have completely insane melt ups that will convince 99.99% of all traders that the “bear” is dead and a new bull market is beginning; not the case, cuz what happens after that blow off day up is the market starts to drift lower and within a week or two completely takes out the range of that melt up day and shreds it to pieces. This produces another wave of selling, and the process rinses & repeats, and starts over until the end.

Bull markets, on the other hand usually don’t melt up; instead it’s a steady climb up the “wall of worry”, until shorts can’t take it anymore and throw in the proverbial towel and the market spurts up. It’s that slower action that gives the shorts “hope” to stay in losing positions that makes it so tough to stick with long positions.

Now, take a look at what’s been happening in the indices lately, and you tell me; “what kind of action are we seeing now”? To me, it looks very much like bear market action in the Dow30 over the last month or so; and yet, here we are sitting with the VIX in single digits and the market within about 1% of its all time high. And if you’re wondering, this is why a substantial proportion of the investors out there are confused as hell and why the action lately has a lot of them dumbfounded. “Speed of light trading … then crickets”! isn’t something anybody figured could happen, and adjusting to this has been rough for many investors; especially hedge funds, who continue to go out of business faster than Pols cash campaign donation checks.

Half hour from the close … well, here we are again … another day of “WTF was that”? imitation version of a trading day. Unless you were watching this in real time, it’s hard for me to explain how pathetic this day was; hopefully with ADP & the FED tomorrow, the market can get a healthy range back, and along with it some trades that matter and produce some good profits. We’ll see what happens tomorrow.

PAMM/MAM spreadsheet directly below.

 

Ok, time to hit the beach … I’m 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”!

  

HURRY UP & WAIT [AGAIN]

“What’s more fun than waiting for HVALUES to go up?”

“Oh goody … it’s an hour from the NY gold open and we’re 57 cents from Sunday night’s open, with a whopping HVALUE currently at $3.17 … USDJPY all but comatose as well … neither market coming as yet close to their respective minimum HVALUES for the day [from the Asian session and early Europe] to trade [$5 for gold; 40 PIPS for USDJPY] … welcome to part of the ‘new’ normal”.

Since the start of 2017, almost like somebody flipping a light switch to the “off” position, the gaggle of traders who make up the Asian session have gone completely off the grid when it comes to bidding gold higher. Except for a couple of days, most of the last 8 weeks has seen zero action; have these guys/gals wised up or is there something else in play here I’m not seeing? … some economic reports due out at 09:30 NY time; are the markets waiting for fantasy numbers now? … in order to get anything to move, do we now need to wait for North Korean coal production last month too? … I’m sitting here wondering about the traders who are attempting to trade gold with $0.35 - $0.60 + spreads [and in some cases RT commissions to boot] and asking myself how they are not going completely insane watching a market that hasn’t gotten out of the spread for over 10 hours … maybe everything is collapsing into a singularity with President Trump’s State of the Union address tomorrow night, and appetite for risk ahead of this is at or near zero … and then [good or bad, bullish or bearish] the explosion in markets one way or the other … “tail risk” here a distinct possibility.

Well, an hour into this manic “lovefest” and we’re lookin’ at … crickets. Nothing new here, as we’ve seen this about a thousand times since the New Year started … I want to emphasize again how important these USDJPY & XAUUSD thresholds for trading are; the statistics on this are mind blowing, in that when these 2 markets can’t achieve an HVALUE for the day higher than the threshold, the profit ratio [PR = HVALUE / LVALUE] is in the “1’s”, and when these 2 markets trade above their respective thresholds, the PR = 4.3+; this is a huge difference. So while I don’t like sitting here any more than you like sitting in the dentist’s office, it is very much to our advantage to wait. The other reason we wait is because of “signal noise”; when PR’s aren’t very high, there is a much higher probability any “signal” we get isn’t going anywhere. Now what?

I got to admit, coming into today I thought USDJPY was going to be the “mover”; bunch of reasons, none of which is really important, but instead easing European election “tensions” [meaning, according to the MSM in Europe, when people stand up and want more freedom from EU Apparatchiks that is defined as “tension”] has made EURJPY the big mover today to the upside while USDJPY stays very quiet … “hmm, somebody in Europe forgot to send me the email telling me of this (snark)”.

And once again, at 10 NY time, traders get a lesson in “tight ranges”, along with an advanced course in “stops” from a Reuters report on something President Trump reportedly said RE infrastructure spending & taxes; and this is exactly what I was referring to above about thresholds and tight HVALUES DURING THE TRADING DAY, NO MATTER WHEN YOU COME TO TRADE. Ignore the thresholds, and you are begging for pain; the stats over the years and decades, both in USDJPY & XAUUSD, are clear as Caribbean ocean water. Until you reach the $5 threshold in gold, and the 40 PIP threshold in USDJPY, your risk is 5 TIMES GREATER YOU WILL SEE A REVERSAL IN PRICE THAT TAKES OUT THE OTHER SIDE [and then promptly goes nowhere]. In addition, in gold over the years since it’s been above $1000 per OZ., once the threshold of a $5 HVALUE has been achieved, there is less than a 20% probability the market reverses on that day. So, like I said, ignore these probability stats at your peril. If you allow yourself to get caught up in them, they have the potential to be some of the most painful trading days you can imagine, as you sell the low X times and buy the high Y times looking for some kind of breakout.

In general for both markets, this happens about 15% of all trading days; usually they will “cluster” either around Holidays [Easter, Chirstmas, etc.] or around large event risks [elections, NFP reports, and/or central bank interest rate decisions]. It’s been a while since we’ve seen any, so I’m more inclined to think today and possibly tomorrow could be impacted due to the State of the Union address and the possible event risk it could unleash if the “tone” of the event turns a bit ugly [understatement]; and for that reason alone, “tail risk” in gold and USDJPY is higher than it usually would be after the runs they have had, not to say anything about U.S. stocks, which are so overbought it borders on insanity. So, we could very well be in 2 days of below threshold markets; maybe, maybe not, we’ll see.

I want to mention 2 tangential points from yesterday’s special weekend blog post; 1) the various markets that are available to us, and 2) the nature of the buy/sell signals.

I’m going to tackle the second point first; it’s far easier to identify engulfing patterns [bullish or bearish] and reversals in price from a top/bottom than it is to remember the math behind them [fractals, stochastic momentum, and probability theory]; and, even in slower markets the signals will produce profitable results, especially considering we are buying breaks [at/near/ or over the yellow line] and selling rallies [at/near/ or over the plum line]. You don’t have to be perfect, all you have to be is “close” [general area] to the lines, wait for a move to happen first, and then wait for the pattern.

As to my first point, trading through Turnkey has opened up many FX pairs where the “net” cost to trade them is significantly below 1 PIP; while Europe is open and the U.S. follows shortly, even GBPJPY has a “net” cost around 0.6 – 0.7 PIPS, which is remarkable when you consider 10 years ago Saxo Bank had the best spread on the planet at 6.5 PIPS! So, the door opens for you, if you desire to trade other pairs,  to use the version 3 algorithm on FX pairs where the “net” cost to trade is below 1 PIP [2^nd digit price for 3 decimal pairs, and 4^th digit price for 5 digit pairs].

OK, shortly before lunch hour in NY, gold finally sees somebody panic buy the market shoving the HVALUE above $5; can it do anything now, or is this just a stop hunt for a large resting order that was above the market? USDJPY is still struggling to find its legs lower to get to 40 PIPS, and while I’m not asking the 2 markets to correlate “tick-for-tick”, I don’t have much confidence in the gold move other than as a suckers play, up/until/when USDJPY decides to start moving lower and get an HVALUE of greater than 40 PIPS.

Keeping yesterday’s special blog post in mind, and even though we had no buy signals in gold today due to a restricted HVALUE until about Noon NY time, let’s assume there was in fact a buy signal earlier; market rallied up to the SDEV [plum  line] & the old RM=1 exhaustion line [dashed aqua line] which would have meant liquidation. However, above this, were there any sell signals after this up move near the top? The chart from today directly below.

 

There were 2 bearish engulfing patterns that developed; and after the 2^nd one, the algo’s took the hint and sold the market off quickly. My point in bringing this up is to prove to you via example just how powerful these engulfing & reversal patterns are at tops/bottoms after moves have taken place, and even in this “dead” market price sold off rather fast. [Note: Just because I want to exit a long and liquidate, doesn’t mean I want to be short. As I have said before, you have to be very careful about being short near the high of the day and long near the low of the day after the market has congested and gone back and forth some; you open yourself up and risk a large spike against you that can fill a stop far away from where you intended, and therefore the risk/reward isn’t worth it.] The computer driven algo’s did the math and then sold; if we were in this we could have seen it coming seconds before the algo’s hit the market. That’s why I said yesterday, we’re smarter than the damn computers.

Ok, here we are in early afternoon NY time, and I’m calling it quits for the day in both gold & USDJPY having made no trades today; Yen never did reach its threshold 40 PIPS HVALUE [31 PIPS as I write] for trading, and outside of a buy stop order [don’t know for sure but guessing] in gold that got ripped $3 in less than a minute, it wouldn’t have made its threshold either. Trading action in both pretty terrible, but gold definitely the worst by comparison.

Just to give you a “heads up”, tomorrow I’ll be trading USDJPY [assuming it hits its 40+ PIP threshold overnight], as the trading action has a more “normal” flow to it than gold; right now, today’s gold trade flow is as bad as I have ever seen it, and it’s hard for me to see how it could possibly get any worse. The entire trade day encapsulated in about 3 M1’s, and after that complete and utter … crickets. Considering what transpired today and what’s likely to happen tomorrow, USDJPY is the better trade choice by far. To give you an idea how bad today was, directly below the Daily candlestick in USDJPY with Ichimoku cloud formation & the plum/yellow ± 3 SDEV; today was almost as bad as the 2 hour Sunday session before it. The daily candlestick looks like a pencil “smudge” compared to recent days and weeks; all in all, a day to avoid.

The best trade of the day was not doing “stupid poo poo”. I’m outta here. And just before I finish and head off, USDJPY explodes up and takes out the 112.50 area stops [and lurches gold downward], filling the lucky buy stops around the 112.65 – 70 area and expanding its HVALUE above 40 PIPS. Great, where were you 5-7 hours ago when we had some time? Now, here just about an hour before things wind down in gold & FX for the day and prices go “sleepy time”, you “reversal day” this in USDJPY and clean out stops; meanwhile, all those “lucky” buyers in gold get to panic before the close because they got nowhere to go and are getting “zilch” help from USDJPY.

And if you’re sitting there reading this and wondering how all this can happen and what’s the reason for it, I can explain it simply in one sentence. “This is the kind of stuff that ‘happens’ when Asia & Europe do nothing and everything is left up to the dealer banks in New York; more often than not, somebody is going to get trapped into the afternoon close and be forced to puke positions they don’t want”. It’s as simple as that; and of course, once the stops are “run”, it’s back to … crickets.

End of day PAMM/MAM spreadsheet directly below.

[click to enlarge all tables, charts, & pics]

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”!