THE POINTLESS TRADE

                                   Sums Up Today Pretty Well

First Crude.

“Oyyyyy.”

A double reversal day with a 135 tick range? Yup. What makes this a trading disaster is the fact that each high and low [when penetrated] extended the range by no more than a few ticks. If you got caught the wrong way, you had no chance of making the money back. If you traded this today, I’m betting you wish you had the “pointless button”.

I could tell from the trading action to stay away and that’s what I did. Pointless.

Now gold.

I was kind of surprised to see gold extend itself all the way to the 1703 level in the European session. Shows the extent of shorting that took place below 1785 earlier in the week Every time they took it higher in Europe, I kept wondering to myself, “OK, what are you leaving for the U.S. session?” [Hint: nothing.]

The algorithm never generated a fresh buy signal from the Asia open until the U.S. session. Europe was a straight up grind for about 7 to 8 hours. Now, the reason I didn’t take the U.S. session signal was because I thought the market had nowhere to go. Meaning, we were very likely as we headed deeper into the U.S. day that conditions would be very choppy. Remember, tonight we have Greek event risk and tomorrow we have NFP; exactly where is the buying, or even the selling, going to come from to generate additional range?

I was pretty much right on target until after 2 P.M. when, like yesterday, somebody panicked and shoved the market into buy stops that the dealer community faded with reckless abandon.

As I stated on my other post, the lemmings in Asia tonight will probably extend the shorts pain by seeing what is up at the 1710 – 1715 area. Why should tonight be any different?

The good news is that I have decided to initiate new gold positions based on the algorithm. Conditions are getting back to normal, ranges are being extended [for the most part], and the spikes/drops candlesticks are settling back to almost normal.

While we might see some sporadic bursts of unusual activity, I’m going to adjust my volumes to balance this type of risk event. So, after about 3-4 weeks of horrific trading conditions for the algorithm, we are back to normal from my perspective.

You just never know how long these types of conditions will prevail in the marketplace. The last time things got this wacky [like the last 4 weeks] for the algorithm was in the financial crisis of October 2008. It too lasted about 3-4 weeks. Before that, there was a period in 2005 for about 7 weeks that presented problems for the algorithm.

Back then I became very careful and conserved capital too. What good does it do to lose?

Usually, the market gives us a day or two every few months; but as history shows, there are times when it extends for weeks, months, or years at a time.

One of the reasons I traded S&P500 futures for most of the 1980’s, currencies and crude in the 1990’s, was the fact that gold basically died starting in 1982. What nobody knew of course, at the time, was that gold would be basically dead for about 20 years. So, nobody knows until it’s over, but it appears to me things are getting back to normal.

Crude presented no opportunities today, and gold really had only one signal [around 10 A.M.]. So, while I didn’t trade today, things return to normal tomorrow in gold.

Be careful tomorrow grasshopper.

-vegas