Lumpy but Robust
[ed note: this article has originally appeared at the Evil Speculator and was written by trader and ES contributor Scott. We provide a link to Scott’s past articles below this post for readers who want to get more familiar with his ideas and/or any unusual terminology used in this article]
One continual theme in my trading is that every time I think I have it figured out, I get punched in the face by an unexpected problem. The tendency is to go more complicated, but often the solution is a degree of acceptance with respect to the nature of the game. Sometimes my edges work, sometimes they don’t. Sometimes they stop working for long periods of six months or more.
Financial markets – multi-layered like onions
Awesome Forecasts and the Unknowable Future
Back in late 2013 I wrote a piece on human nature which was in part inspired by the bullish exuberance exhibited by a MarketWatch article predicting the DJIA at 20,000 in the near term future. Yesterday afternoon, a bit over three years later, that prediction actually became reality and I’m sure the author of that article as well as many other like minded traders popped some champagne in celebration of their awesome ability to predict the future.
A trader from the (near) future.
Image via tumblr.com
When it comes to interesting charts or marginally promising setups I’m pretty much scraping the bottom of the barrel right now. Not surprising really, given that the few remaining market participants (bots! cough cough) are firmly set in a holding pattern after a one year sideways churn and an impending Presidential election on November 8th which is thought to have the potential to be the catalyst for changes in the financial arena. I for one hold very little hopes on that end, no matter which of the two candidates will be sworn in come January.
There’s always the loonie though…
Photo credit: Fantasy Films
Earlier this morning the British Pound suddenly found itself on the receiving end of a 6% flash crash during Asian trading hours. Some of the losses have been recouped since then, but that will be of little consolation to anyone who may have been long the GBP overnight.
Photo credit: Time & Life Pictures / Getty Images
A Rare Apparition
An old friend suddenly showed up out of the blue yesterday and I’m not talking about a contributor who had washed out and, after years of ‘working for the man’, decided to return for another whack at beating the market. Instead I am delighted to report that I am looking at a bona fide confirmed VIX sell signal which we haven’t seen for ages here.
Hello, old friend. Professor X and Magneto staring each other down in the plastic prison.
Fractal Geometry of the Markets
You probably wouldn’t know it but I have actually been extremely busy over the past few months resurrecting a previous creation of mine. It all started about two years ago, in early summer of 2014, when I wound up diving head first into more advanced topics such as machine learning, artificial neural networks, support vector machines (SVMs), as well as fractal geometry of financial time series.
A fractal Zen moment.
Image via hdstockphoto.com
Mid Summer Momo Update
It is hot and it is humid over here in Valencia. You want to know how hot? The other day a poodle’s tail caught fire just waiting in the sun. The more frantically he was wiggling his tail the brighter it burned.
A time for quiet contemplation of the bright blue sea… while next door, the poodle burns!
Photo via piktpool.com
It’s that dreaded day after Independence Day. The weather is gorgeous and I don’t really feel like trading either. The thought of just phoning it in had occurred to me, but as the new month just rolled over I thought I may as well take another peek at our monthly charts. Which uncovered quite some interesting perspectives that I’m eager to share.
But no worries – we’re keeping it light and easy today. Consider this a purist’s approach to market analysis as we’re going to ignore everything but Net-Lines.
The picture for today’s Zen moment.
Photo credit: istock
A Glorious Day
What a glorious day for Britain and anyone among you who continues to believe in the ideas of liberty, freedom, and sovereign democratic rule. The British people have cast their vote and I have never ever felt so relieved about having been wrong. Against all expectations, the leave camp somehow managed to push the referendum across the center line, with 51.9% of voters counted electing to leave the European Union.
Waving good-bye to Brussels!
Do or Die
I think I speak for everyone involved if I say that it’s way past high time for this market to either breach the wall ahead of SPX 2150 or finally accept defeat and relieve itself to the downside. It’s become a war of attrition at this point as we have been suffering through this deadlock of a market for more than a year. And may I say – it’s getting not just boring but increasingly annoying.
Image credit: Home Box Office (HBO)
Dismal Number Bombardment
The May NFP jobs just dropped half an hour ago and the numbers were was so dismal that it left a smoking impact crater across equity futures. Apparently we added 38k jobs which was several standard deviations below the median forecast of 160k.
Someone just threw a hand grenade M33 into the trench – and as is well known, that grenade can have a strong effect on morale
Photo credit: AP
Most read in the last 20 days:
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- Gold – An Overview of Macroeconomic Price Drivers
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- Doomsday Device
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- Credit Contraction Episodes
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- Mea Culpa – Precious Metals Supply and Demand
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- The Cost of a Trump Presidency
Opportunity Cost Rears its Head Last Thursday’s wanton attack on a Syrian air field by the US and its bellicose actions toward North Korea have brought the real cost of candidate Trump’s landslide victory last November to the forefront. It didn't take long for Donald Trump to drop his non-interventionist mask. The decision was likely driven by Machiavellian considerations with respect to domestic conditions, but that doesn't make it any better. Unlike...
- India – Is Kashmir Gone?
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- French Election – Bad Dream Intrusion
The “Nightmare Option” The French presidential election was temporarily relegated to the back-pages following the US strike on Syria, but a few days ago, the Economist Magazine returned to the topic, noting that a potential “nightmare option” has suddenly come into view. In recent months certainty had increased that once the election moved into its second round, it would be plain sailing for whichever establishment candidate Ms. Le Pen was going to face. That certainty has been...