CHINA FIREWORKS

 

“You can’t even do frickin’ I.N.S.A.N.E. right …  now can you!?”

You know to leave it alone, when the first M1 out of the open has almost a 100 

point range … you know to leave it alone when M1’s are clocking 40 - 70 point 

range moves … FINALLY, you know to leave it alone when you get a 550 point 

range in 19 minutes, and the week’s 20 Day MA is around 475 points 

… “where the hell does it go now? How do I capture an expanding range now”?

Of course, the “Chicoms” pulled a fast one last night … allowing USDCNH to 

go up approximately 500 PIPS [Yuan lower] in about 35 minutes around the 

open, then letting it stabilize somewhat until Lunch … and then after the 

1 hour market Lunch break, the Chinese state owned banks come in and 

pound the living hell out of USDCNH [Yuan higher], as it promptly goes about 

900 PIPS lower, in as grand of  style “Thelma & Louise” as you are likely to 

ever see, in around 4 hours. “Talk about getting “played”, traders now know 

what violins sound like when they get carried out toes up”!

It is critically important, you understand the “dynamics” of “meth addicted, 

bat shit crazy, criminally insane markets”! The daily range, and more 

specifically, the 20 Day MA value of a market’s range, play two [2] crucial 

functions you have to understand and use to your advantage when trading this 

market.

Each Sunday night, I’ll be giving before the Hang Seng Asian open, the 20 Day 

MA values for our primary market, the H33HKD, and the other 5 market I’m 

covering in a secondary capacity … primarily, this number is important, cuz it 

gives us a roadmap of the “insanity” this market travels along during its 

trading day. “Come hell or high water, somewhere around this value, the market 

is gonna see this value of a range at some point during the day … on its way to 

that range, there are gonna be buy/sell signals [hopefully], and when you find 

yourself up in a position and the market is trending in your profit direction, it’s 

vitally important to know where price is potentially heading according to the 

20 Day MA … this is how you get “pony rides”!

The second function is one of pure volatility to help make back early trade 

losses, should they occur … “when the ranges are extraordinarily large, you 

pretty much always have the potential for rallies and breaks, that come out of 

nowhere and trap longs/shorts, and thus can give you ‘OPPORTUNITY” to 

make profitable trades and recoup losses … where do you stand a better chance 

of recouping losses, than a market that has, on average, almost a 500 point range 

every day? Do you get this in other markets”? … Short Answer: “You sure as 

hell don’t, except on rare occasions”!

Turning to today’s Hang Seng market … “well, that escalated quickly didn’t it”? 

I’m watching the first hour, and we came within 2 frickin’ minutes of a sell 

signal that would have gotten us short, right before the “Thelma & Louise” epic 

waterfall that went lower 550 points in 19 minutes … “Oy vey, comes to mind, 

but I’m reminded throughout my many years & decades of trading, that shit 

happens and not to let it bother me … still, “Oy” in spades”!

“So, now what? … we just saw the 20 Day MA range in 19 minutes, with no 

signal … where/how do I make money in this with any signal coming up? … if 

it’s on the upside, where’s it gonna go, given the damage done already, and the 

low probabilities of a reversal [which of course, we did see!] … and from the 

downside, new lows put us down over 900 points from Friday’s close, so I’m 

supposed to believe “a thousand & something” is in the cards, and 2X the 20 Day 

MA”?

Trust me, there isn’t a damn thing you can do here … leave it alone. We got the 

dual problems of 1) catch up cuz Monday the market was closed, and 2) “we’ve 

all become Yuan traders now”! Neither is an option that appeals to profits, 

simply cuz the reward /risk profile is as “F’d UP” as it’s ever going to be in 

trading, at this moment … touch a button, you’re going to regret it!

Only one trade today … PAMM up a few pennies, “scratch city”.

I want people to realize just what happened today … first up, USDCNH 

[Reminbi] rallied 500 PIPS, and then got slammed 900 PIPS! “When’s the last 

time any of you EURUSD or USDJPY traders ever see a 900 PIP range in 4 to 5 

hours, and more importantly, would you be around the next day or headed back to 

the “Pudding Biz”, with some deep emotional scars for the effort”? Secondly, 

prices in the Hang Seng are moving so fast, they look like the meter in a 

New York taxi … don’t like the price? … wait 30 seconds and it’ll be at least 50 

points in some direction … rinse, repeat the first few hours, and this shit makes 

“insane” look very respectable.

Fact is folks, when markets get like they were last night, they come very close 

to “tilt status”, and then the frickin’ system breaks down and everything goes to 

hell in a handbasket … we were almost there. Forget profit, this is for survival!

That takes us to Lunch, and an hour break, and right out of the gate, here 

come the Chinese state owned banks, and USDCNH goes redux  

“Thelma & Louise”, only with a much bigger cliff … 4 hours and 900 PIPS 

later, the damage is immense and widespread, not only in FX, but in the 

Hang Seng as well … add it all up, and the wild rides = approximately 1300 

points, on a massive reversal day, that once reversed went nowhere … “kill the 

longs, kill the shorts, then go back and take the rest from the longs, call it a day”!

Leaving the day up a penny … anything, cuz it doesn’t matter … just surviving 

the insanity and moving on to tomorrow, is a victory. This market, and the 

USDCNH when it gets going, make everything else on the board look like oat 

spreads. Would have been nice to get an algorithm sell signal early … didn’t 

happen … not the last time this market sees these kinds of moves … hell, 

tomorrow is only hours away … “just another average day in the trading insane 

asylum”.

No U.S. markets tomorrow, but that isn’t gonna matter to Asia … more  

“rock & roll” on the way tonight, although I would expect things to settle down 

somewhat, and see early moves more restrained than what we saw last night 

… we’ll see, BUT the more restrained “insanity” should make for some good 

algo trades, when we get ‘em. The algorithm today did a fantastic job of 

keeping donkeys out of trouble, and bypassing “false positive” Cloud breaches 

for loss … sure, some of them were good, but they only paid for the ones that 

weren’t. So, on to another day … and with that, I’m outta here … until 

tomorrow mi amigos … “the future’s so bright for us in Hong Kong, I gotta 

wear sun tan lotion to bed in the Caribbean, not to get burned”! 

... Onward & Upward!!

PAMM spreadsheet directly below.

 

Have a great day everybody!!

-vegas

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