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Silent Service Method

  • #13,061
  • Sep 16, 2011 8:30am Sep 16, 2011 8:30am
Quoting Soca
[font=Arial][size=3]I don't post here often since I prefer intraday scalping as a strategy, but an occasionally big trade appears on the horizon that I'll go for a longer drive on. Actually I believe it leans more on what should be called "a transfer of wealth."

Recent developments within the EMU and ECB have me looking to short the EUR/USD. Methinks at present without a Euro bond or common treasury the EMU is virtually forcing the ECB to sell non-paper assets for collateral on the P.I.I.G.S. debt. Buildings, businesses, airports, islands,...

From a technical perspective, this trend line break is most certainly major, and as such - I think you are correct! These types of trend lines don't give way just any day, so you must at least try to make it work for a larger trade - in my opinion that is. It will only take one of these trades going several handles to make a large portion of a decent year's gains.....
  • #13,062
  • Sep 16, 2011 1:05pm Sep 16, 2011 1:05pm
And looking at the big picture......
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  • #13,063
  • Sep 17, 2011 8:15am Sep 17, 2011 8:15am
Quoting clockwork71
From a technical perspective, this trend line break is most certainly major, and as such - I think you are correct! These types of trend lines don't give way just any day, so you must at least try to make it work for a larger trade - in my opinion that is. It will only take one of these trades going several handles to make a large portion of a decent year's gains.....
I agree, and your video notes on the pair from Thursday further underscore that it's in a convergence zone of formidable supply (most obvious around the 1.4 handle) which is indeed looking ripe for a short of multiple figures. However, after a lackluster close to the NY session to end the week, where it stands now if we get a run-up to it from here, we should get a nice pinbar from its backward-bounce off that trendline in pretty short order next week. At-any-rate the area remains prone to heavy selling on the decimal level.

Nevertheless a technical thing or two I don't like about this trade is the sheer amount of time price spent rangebound in that gargantuan 1.4 to 1.45 block and just how wide that range actually is. It could suggest less resiliency for seller follow-through if bought on the upside, especially since it was forged on Summer volume. That said, I do like how and from where it left the area and at-the-time it did, though just to be on the safe side I'd keep an eye out for any hints of a push to 1.43.

Still I'd say the probabilities of that happening are considerably less than its fall from hereabout. The ECB/Fed are different animals now than they were back when we saw sub-1.2 last year... See more wounded and backed into a tighter corner. (And yes, I do think price can make it there in six months or less as well, which marks a threshold to wholesale prices I believe.) This time round they probably won't let this thing unwind to that point so easily again, but then again, what took two months to build took two weeks to decimate of late... So we'll see.

It's also worth noting what most everyone by now has probably heard that PIMCO is forecasting 1.2 in three-to-six months. Like you said, it's trades like this that you wait for to pay... Where taking a few small losses on entries to catch a little drive can be worth it. Funny you dug up the S&P chart... I've been watching since it snapped its uptrend in early August, still waiting for a decisive plunge down into the 900's before hitting the bid. Ditto on some Dow... Got some GLD @ $142.5 back in April and holding, waiting to add around Gold $1665/oz..
  • #13,064
  • Sep 17, 2011 9:12am Sep 17, 2011 9:12am
For credibility sake here's some documentation on that GLD ETF position of mine as aforementioned. I went long in early April after a breakout/pullback into the range with intent to hold the position for the long-haul. Of course my entry wasn't exactly on a pinbar, but as you can see a decent pinbar later formed right off the demand level where I'd entered because of how deep the bid block was/is there, which I leaned on again to increase the position in early May.

I'm currently waiting for a deeper pullback, as I said before and perhaps lower to increase the position...
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  • #13,065
  • Sep 17, 2011 10:51pm Sep 17, 2011 10:51pm
Quoting Soca
For credibility sake here's some documentation on that GLD ETF position of mine as aforementioned. I went long in early April after a breakout/pullback into the range with intent to hold the position for the long-haul. Of course my entry wasn't exactly on a pinbar, but as you can see a decent pinbar later formed right off the demand level where I'd entered because of how deep the bid block was/is there, which I leaned on again to increase the position in early May.

I'm currently waiting for a deeper pullback, as I said before and perhaps lower...
I think we could see that pullback, I mean after all - this market is overbought. But I also feel that we are just as likely to go sideways in a $200 range, between $1,700 and $1,900. The only scenario I haven't thought of is down, simply because I don't want to be short of gold, no matter what. To be honest, I would love to see gold fall to $1,000 and find support - I would be all over it. (Depending on how fast or slow it fell that is.) None the less, I can only buy or be flat of gold. Selling this market is a quick way to serious pain.

Chris
  • #13,066
  • Sep 19, 2011 6:24am Sep 19, 2011 6:24am
Gaps down in the EUR and GBP. Could prove to be an interesting week as the continuation of the down trend looks to be in place.....
  • #13,067
  • Edited 7:56am Sep 19, 2011 7:17am | Edited 7:56am
Quoting clockwork71
And looking at the big picture......
Chris,

After taking another look at the S&P 500 chart this weekend, then flipping over to Europe and the U.K. this morning I saw a tag. So I'm telling a short story, but I think it makes enough sense and could be lucrative. It's a timing play more than anything, but one I'll be watching closely for a bid on the DOW/S&P if it hits. The idea is that it could help gauge the potential of an equity bid if/when it comes to the U.S.. (This isn't meant to be exhaustive, just food for thought...)

Posted below are charts of major equity markets DAX, FTSE and DOW. Note the two trendlines on each chart. Apparently these markets began their uptrend back in Summer 2009 and each broke it at nearly the same time last month. We know the German's have been pummeled by the headline risk of a Greece default and the shaky state of the Euro. They're probably in for a hard landing, which seems to be largely priced into the DAX already. Price has already bounced from the highlighted demand zone... See first chart atop.

Next we have the FTSE, bearing the U.K.'s struggle to keep employment numbers in the black and banks from unwinding in the Grecian debacle. They're in for a medium landing in the short run... Price hasn't broke down into the highlighted demand zone, but it's flirting.

Lastly, we have the DOW, still hopeful the U.S. can get its QE like the spoiled child it was back in '09. What with the financial levers the Fed can deftly employ, it inflates sentiment more than in the European markets; this could very well happen soon. It's effect would probably reflate stocks well beyond the highs of this year. However, it seems the U.S. is a backseat driver in the European/U.K. affairs for now, in risk-off mode before doing anything that could be construed as counter-party risk by the markets. See price remains well above the highlighted demand zone, which appears that we're in for a light landing for the medium term as the storm rages across the pond...

Putting it together, starting with the DAX, FTSE, then DOW we have something appearing like a domino effect of price falling into the highlighted demand zone: starting at-the-top chart 1-2-3. I'm watching DAX like a hawk because I believe it will go far in foretelling how the FTSE will probably move before jumping across the pond to the DOW on a potential reversal from the demand zone(s). I want to see the strength of these moves and monitoring each of these markets - in sequence - could be a bankable insight for times to come.

Aaron
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  • #13,068
  • Sep 19, 2011 9:30am Sep 19, 2011 9:30am
A lot of people will be worried about being short the EUR/USD, and as a result, will forget there are other places to sell the Euro if needed. The Singapore/Europe cross has been in a massive downtrend over the last year or tow, and as a result has has a nice bounce. For those of you that have never traded it, the spread is decent - about 6 pips or so. I am watching the area on this chart for a possible short to resume the trend. This is a good example of waiting for the market to come to you:
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  • #13,069
  • Sep 19, 2011 9:34am Sep 19, 2011 9:34am
Quoting Soca
[font=Lucida Sans Unicode]Chris,

After taking another look at the S&P 500 chart this weekend, then flipping over to Europe and the U.K. this morning I saw a tag. So I'm telling a short story, but I think it makes enough sense and could be lucrative. It's a timing play more than anything, but one I'll be watching closely for a bid on the DOW/S&P if it hits. The idea is that it could help gauge the potential of an equity bid if/when it comes to the U.S.. (This isn't meant to be exhaustive, just food for thought...)

Posted below are charts of major...
Fair enough, but there is one part of this that I don't necessarily agree with. Traders know that QE 1 and 2 haven't actually worked. My suspicion is that we would have a bounce for a day or two, followed by a plunge. The main reason for this is that I think the question will be asked: "Just how bad are things now?"

Remember, a lot of the traders live in NY, and therefore have no idea there is a world outside of Manhattan. They are always surprised by the way things work in the real economy.

However, it is just a thought at this point. But to be honest, I would be more than willing to sell that rally, assuming I get the price action that is....
  • #13,070
  • Sep 19, 2011 7:47pm Sep 19, 2011 7:47pm
New video on blog......
  • #13,071
  • Edited 6:21am Sep 20, 2011 12:00am | Edited 6:21am
Quoting clockwork71
Fair enough, but there is one part of this that I don't necessarily agree with. Traders know that QE 1 and 2 haven't actually worked. My suspicion is that we would have a bounce for a day or two, followed by a plunge. The main reason for this is that I think the question will be asked: "Just how bad are things now?"

Remember, a lot of the traders live in NY, and therefore have no idea there is a world outside of Manhattan. They are always surprised by the way things work in the real economy.

However, it is just a thought at this point....

Fair enough... Staying with that thought let me clarify why I wouldn't go short in the major equities as a long-term contra QE strategy. Keeping in mind the yet unclear, actual efficacy of QE 1 & 2...

On account of my GLD trade, I agree, QE hasn't worked and probably never will in a fiat currency system. That said, I wasn't clear in stating that stocks would reflate in spite of any QE or what's really QE on-the-sly by the Fed like we're seeing now in Europe and the U.K. as well. They merely secured a fire hose to the Fed's liquidity pump, which provides Bernanke further means to devalue the USD in the futile effort and overarching theme of monetizing the U.S.'s real debt. He's an erudite man and very skilled at his craft. In fact, I think he's doing a stellar job at his post, fully operating the system in accord to its design. He's displaying its might and flaw in spades.

Anyway, to the question of "just how bad is it;" I believe it'll be the one asked so often by most in the media that (unfortunately for those tethered to it) will end up like the proverbial frog who boiled to death in a pot starting from nothing more than lukewarm water. In other words the world was in a recession long before it was broadcast as such. This charade simply has a limit, but that limit won't be reached until a new monetary system is officially introduced. I doubt most traders are thinking about that inevitability at-this-time and we certainly couldn't function if possessed by it day-to-day. However that's no excuse to fail in preparation... It demands a response, not a reaction.

History shows that when a country's currency is gravely devalued their stock market reflates because the underlying asset of the stock is rightly perceived as a real store of value. In real economic terms stock price simply moves to reflect that dynamic as money flows from bonds and other paper assets into what amounts as a hedge (stocks' asset) against the issuing government's inability to pay its debt with valueless paper, which is what it was all along. In effect, stripping the populace of their life savings like-a-thief-in-the-night for the greed of the few in order to control Earth's natural resources for an obvious reason: Anarchy isn't far when stomachs grumble in unison. Governments fear it like nothing else.

The highlighted demand areas on the charts signify a planned response in order to prepare for taking advantage of that eventuality. I'm not waiting for price to fall, then merely react to its reversal ex post facto, though you could. It decreases the profit margin and increases risk. It's an obvious demand level, which I believe deep enough to be a wholesale bid for establishing that long-term hedge... Pinbars are created from such levels. Again that's why I'm closely monitoring the DAX and FTSE for a prime DOW/S&P bid. Those markets are collapsing or will collapse into game changing bids while Asiatic markets can only sit-and-watch (hungrily).

Sure, you can short, but why fight the Fed? Almost everybody in the world wants to bury it alive. Let it destroy itself. To me the question isn't, "Just how bad is it?" The question is, "Where are the orders?" For when the news is screaming bloody-murder and red candles are paving the way to hell... That's the time to buy. So I say pick your spot to the moon on this one, but it'll be a pretty lonely ride for awhile. Most simply don't have the emotional fortitude to stand in-the-way of a speeding rocket (in either direction). It's also why they tend to be consistent losers in the market... I know I was until cutting the crap and focusing on order flow.
  • #13,072
  • Sep 20, 2011 3:21am Sep 20, 2011 3:21am
Quoting clockwork71
I think we could see that pullback, I mean after all - this market is overbought. But I also feel that we are just as likely to go sideways in a $200 range, between $1,700 and $1,900. The only scenario I haven't thought of is down, simply because I don't want to be short of gold, no matter what. To be honest, I would love to see gold fall to $1,000 and find support - I would be all over it. (Depending on how fast or slow it fell that is.) None the less, I can only buy or be flat of gold. Selling this market is a quick way to serious pain.

Chris...
Haha, I know... How many times have I seen "Chris's lucky number ($1K/oz.) on Gold!"

I wouldn't rule it out, but who paid attention to my post back when it was around $1,100? I wasn't smoking anything... It was a full-blown setup on a daily pinbar (post #8135) on April 18th, 2010. I was a "red" bull with FF's trader sentiment on it for a year straight from there.

When it blasted through $1,600 I decided to end my subscription, which was up for renewal anyway; I could see retailers sucking people by droves into the forming parabolic highs we've seen. I was content with my positions. Still a lot of trapped money up there... I smell a liquidation sale coming. I also believe we could stay in that range you mentioned for a bit, but I think it has to come down for a drink.

And no, thanks... I won't be the poor schmuck selling to your bid! Somebodies got to do it, though ... may as well be the P.I.I.G.S.. We'll see... I'm prepared to keep buying-and-holding this thing to $5,000 for starts. Gauging real debt on-the-books it would have to go much higher than that to sufficiently monetize the U.S.'s, let alone the world's. So "risk-on" in the equities and commodities is coming, but not yet.
  • #13,073
  • Sep 20, 2011 3:24pm Sep 20, 2011 3:24pm
From a Zerohedge article today: http://www.zerohedge.com/contributed...ce-fixed-again
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  • #13,074
  • Sep 20, 2011 9:05pm Sep 20, 2011 9:05pm
Quoting Soca

In effect, stripping the populace of their life savings like-a-thief-in-the-night for the greed of the few in order to control Earth's natural resources for an obvious reason: Anarchy isn't far when stomachs grumble in unison. Governments fear it like nothing else.


Sounds like the "Arab Spring" I keep hearing about.

As for any boom in the stock market, like I said.....it could happen, and you are right in the sense that if the USD isn't worth the paper it's printed on, you want to own something besides USD. Stocks are one such possibility, but I think it makes something even more enticing than stocks to buy: grains.

There is nothing more important than the grains. (or food in general) I think gold will rise as well, but it's almost getting to the point where it is parabolic. I think it really comes down to how "shock and awe" they go, but the truth is we could see a lot of destruction to companies and their profits soon because of the economy.

Hell, to be honest.....I would probably buy wheat, a little gold, and probably some corn too. Of course, there are stocks for that too......I haven't checked Monsanto for a while now that I think of it....

Chris
  • #13,075
  • Sep 20, 2011 9:06pm Sep 20, 2011 9:06pm
Quoting Soca
Haha, I know... How many times have I seen "Chris's lucky number ($1K/oz.) on Gold!"
You will never truly understand how sick that trade.....or lack of makes me sick. Ugh.......

Someday.....in about 20 years at this rate.
  • #13,076
  • Sep 20, 2011 9:29pm Sep 20, 2011 9:29pm
I have started a blog section on my site where I am going through the thoughts of my trading session, day, week, whatever.....it really comes down to the thought process and decisions as well as general observations. It isn't analysis so much as a random thought outlet.

Anyway, it's in the "blog" section.

Chris
  • #13,077
  • Sep 20, 2011 11:58pm Sep 20, 2011 11:58pm
Anyone looking to sell a break of 85 on Oil? or Long its proxy USD/CAD on a break of 1 (I guess)
The Oil trendline has been broken as far as I can see?
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  • #13,078
  • Sep 21, 2011 6:42am Sep 21, 2011 6:42am
Quoting mypipbull
Anyone looking to sell a break of 85 on Oil? or Long its proxy USD/CAD on a break of 1 (I guess)
The Oil trendline has been broken as far as I can see?

I am looking at selling, but only if we drop below $80. The main reason is just that the market has been so strong, considering all of the bad news out there. Oil has been a tough short lately, so I am being just a bit more cautious.

You might want to look at Brent Crude prices as a guide as well. The contract in the US is listed as COIL. If we break below the $100 mark - oil in general falls I believe.
  • #13,079
  • Sep 21, 2011 7:38am Sep 21, 2011 7:38am
Quoting clockwork71
I have started a blog section on my site where I am going through the thoughts of my trading session, day, week, whatever.....it really comes down to the thought process and decisions as well as general observations. It isn't analysis so much as a random thought outlet.
Good move... Bring it more "in-house." Not to put words in your mouth, but I've observed that forums in any venue tend to draw two types of people: 1) newbies and 2) those who prefer to live in the shadows of unchallenged analysis for better or worse.

The markets are unforgiving and forums like this can be a refuge for new traders to ease into their learning curve, which I believe should be fun in the beginning. So, my hats off to you, Chris for cultivating such a fun and encouraging thread. It's a gift! While I don't have to tell you that most, like myself, come in thinking we have to make it big the first year (or less). The stress was unbearable. ...for awhile I wanted to kill James Dicks, or at least prove I could make it without his no refund, shitface green/red arrow system I unintentionally stuck myself with for $3K. That, wasn't fun; more like getting mugged on-the-way to the first day of school.

Oh, what the heck, looking back even at that gold trade I wrangled you over just a little from last year wasn't that good of a setup... But it was a pinbar that withstood (in a clear uptrend) and I took it off support whilst everyone else just farted around! $1,200 came soon after. It may be a stretch, but at that moment I'd quietly graduated from being a newbie and started growing my wings -- fast.
  • #13,080
  • Sep 21, 2011 7:57am Sep 21, 2011 7:57am
Quoting clockwork71
Sounds like the "Arab Spring" I keep hearing about.
Where? (Haha.) I'm guessing the "strictly theoretical" difference would be that they have an oasis of limited oil, but we have global reserves in unlimited dollars... er, something. So how's about them foodstuffs?
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