PRICE IS ALWAYS RIGHT
In spite of what this bonehead who authors this blog as well as a few other well respected traders are thinking right now, the band plays merrily on. Here is the VIX and in spite of it not always being right, I do still think it is the best stand alone tool for picking swings in stock prices. Generally speaking, once it moves into either Bollinger Bands or Standard Deviation bands, stock prices reverse. The reversals are not always big, but they are predictable about 80% of the time. That does leave us holding the bag on the other 20% like now! If you look back in prior posts, I showed the Vix and indicated I thought it would take some type of poke through look, to generate a short term reversion. I don't think I used those exact words, but I referred to a clear penetration of the Bollinger Bands. We did just get that 2 days ago.
Early today it did appear it might finally happen, but there is quite a nice quiet bid under this market, and the price rebounded slowly throughout the day to close higher for the 5th straight day in the ES. If you want an explanation as to why go to CNBC. Some suite will undoubtedly be on there telling us we rose because grandma felt good about the prospects of the Greek debt crisis or some other such nonsense. I have no idea what causes prices to move every single day. The markets are full of random action. When we get a trend going this strong it takes volume to break it and we do not have volume anywhere in sight.
Just remember, The Price is ALWAYS right in our game show here. If we are not in sync with it we are wrong. At the moment it does not appear the VIX action is having any effect at all in the price action. However, we do need to be aware of this because at some point this is going to matter.
I have been tinkering with my stock trading and doing some more of it. I am hesitant to make a strong push to the short side here just due to the pure strength of this trend. Even though using the overall trend of the market has no effect on the stock system results, my gut tells me it should. As a result, I am not fully committed to shorts here. I am doing some day trading and below is a chart of one I did today in Crude Oil that was a perfect trap pattern I love to wait for.
I missed two big swings first, then caught the third one down when that false breakout quickly reversed. Day trading is so tedious I admit I lose my patience with it all the time, especially when the markets are this slow intra day. However, this was a decent one I caught today. After I missed the first two moves and caught the third one I called it a day. My Synthetic does not work worth a crap in this market intra day, I should not even have it on the chart. A few markets that I have mentioned as setups recently moved today, the Yen and Cocoa. Hopefully some of you made some money in them. They did move in the directions I mentioned to look, but as is typical with setups, the moves did not happen right away. They usually don't.
That is all I have for tonight. I am still trying to find my way into the energies but no go so far. In tonight's teachable moment I learned once again it is time for me to share with everyone as directed by President Not. This kid just has one play and he just calls it over and over and over again. Shared sacrifice.......aye carumba! The good news is that the markets seem to be numb to him in either direction now which is a good thing.