ELEVATOR DOWN ELEVATOR UP

                              Feels Like Your Typical Gold Trade

Six hours straight down followed by 3 hours almost straight up. Pretty much sums it up in gold today, as position squaring for the weekend almost guaranteed stops on both sides of the market would get taken out and shot.

I continue to pick my spots with low volume given current market conditions. While boring, incremental gains beat losses hands down. This too shall pass. Meanwhile, we move the proverbial ball forward.

So what’s the deal with crude? Again today, we have a market that is almost comatose; stuck in a very tight range until the end of the day when they squeeze weekend short positions to put in the range. Getting long and hoping they squeeze the shorts at the end of the day isn’t a strategy.

Have a good weekend everyone.

-vegas

TRADING TROUBLE

                              Some Days Are Worse Than Others

“Oyyyyyy”.

As I detailed over on my other post, markets today were in the FWD mode. Take your pick: crude or gold.

First Crude.

Thank you Chalky Soetero for the “I’m releasing oil from the SPR” to 35 minutes later the White House releasing a denial. Can you say floating a trial balloon and in the process screwing a ton of retail specs.

Remember the first rule of trading: nothing the government does is for your benefit as a trader.

Sure, crude put in its range [240 ticks], but today size didn’t matter. Looking at the way the range was put in only courted disaster. First dropping $2 / bbl in 5 minutes, then rallying most of that back on the White House denial; if you made any money at all in crude today, thank your lucky stars.

With all that happened, the one positive of the rumor is the gap on the daily candlestick has finally been filled. If today’s low is taken out in subsequent days, it could spell a whole lot more weakness than you have seen in the last month or so.

Now gold.

Nothing really happened until 11:30 A.M. [Chicago time] when gold went on a straight up $20 tear as Europe was closing, before backing off.

The trade has become very difficult, not from an algorithm standpoint, but from a dealer standpoint. Spreads are widening, and slippage is increasing, as it should be obvious to all traders that dealers want more income to compensate for extremely quick moves. They aren’t going to risk their income so that they can give you a good fill.

As I stated yesterday, if you’re buying on the way up or selling on the way down, you got a real problem from slippage.

Once again, during the “busiest” times of the day when both Europe and the U.S. sessions are concurrent, trade is very choppy or completely one-sided. The algorithm is in “buy mode”, and I had a “free trade” going until it came back and I took a small profit. Incremental gains again today.

While I would prefer to let algorithm signals take me out of a trade, market conditions at the moment mean slippage of maybe as much as $5 - $10 / oz. if the market turns before the algo responds. That is not something I am willing to tolerate; therefore the sometimes “quick flip” in the trade.

Have a good day everyone.

-vegas

BUNKER TRADING

                                          How I Start The Day

Any chimp can throw money at a trade. It’s what happens after you click the button that matters.

To say that trading has been tough these last weeks is a huge understatement. One thing that should never waver is your commitment to proper risk management.

When conditions manifest themselves into this hyperbolic mess you need to do 2 things: 1) reduce your trading size and volume, and 2) pick your spots and be very, very quick on the trigger.

First Crude.

Crude finally got its range today [200 ticks], thanks to painting-the-tape on both the high and low. Take these phantom BS ticks away and you have about a 140 tick range. Fifth day in a row this market has been a joke.

Now Gold.

Insane trading; what else can I say?

I wouldn’t be surprised if tomorrows range was $150 or $15.

If you strictly followed the algorithm today, it would have been a disaster. Why? Because the market is moving too fast for the algorithm.

While it is very good at giving entry signals in almost all market conditions, liquidation in fast markets will always be a problem. I picked my spot today and incrementally gained by being long. Money is money and in this environment of gold moving $0 - $50 within seconds, I simply cannot wait for the algo to give me an “official” liquidation signal.

Because of the way dealers make the market, your only hope in getting a decent fill is to sell when gold is moving higher and buy when it is moving lower. Even then, you can still see them play games with the spread.

But if you sell as it turns over and starts going down, may the force be with you.

Finally, are conditions right for the “Lemmings in Asia” [LIA] to capitulate and throw in the towel, and finally sell gold in the Asian session? A nice $15 - $30 drop near the open would do wonders for bullish sentiment and probably get the European and U.S. sessions propelling higher. [Not predicting, just some thoughts, although …..]

Have a good day everyone.

-vegas

A DAY OF PROBLEMS

                                 Not As Bad As This, But Close

First Crude.

What’s the deal market? Again, a day in which the range [166 ticks] is far lower than normal; this is the 4^th day in a row. With gold flying all over the place, crude sits and dawdles. Yuck.

Now gold.

How did everybody like that post 2 PM  $15 stop hunt screw job in less than a minute? Well, if that wasn’t enough for you, how about the eight [yes eight – count ‘em] rallies and declines of $8 - $15 within minutes from 1 PM to 2:30 PM?

I had my own problems today; first with the gold dealer and then with electricity. I should have an adjustment tomorrow on a fill, but I’m not holding my breath. In any event, in the scheme of things it is irrelevant. I also had an electricity outage that prevented me from being online for about 3 hours. Other than that just another day in paradise.

We will see tonight if the “Lemmings in Asia” [LIA] buy the market off the recent lows, or whether they set off sell stops below 1660. There should be a ton of stops for some aspiring young gun running an Asian hedge fund; can they run the stops tonight?

Have a good day everyone.

-vegas

JUST ANOTHER DAY

                                     No Matter Where You Are

First Crude.

This was the 3^rd day in a row of lower volatility in the crude market. As I write this, the range is 178. Quick knee-jerk moves with no follow through have been the norm lately. Volatility needs to pick back up to get me back in this market.

Now gold.

I came into today’s trade expecting some more upside action. Actually the day was set up for further gains rather poorly by the Sunday night open. A $5 gap higher followed by a sell off really set the tone in Asia. With no fresh long buying, the market started to drift lower.

As I said in my other post, the algorithm did give some good entry signals; the problem was no follow through on the upside. The only decent rally came in the U.S. session; the fast algorithm signal never came, and the slower algorithm signal came after the $10 rally. After that, not much of anything happened the rest of the day except some back-and-forth chop.

I finished the day again with incremental gains; not what I wanted obviously, but today’s algorithm signals on the whole would have been about break-even at the end of the day. So, I out performed the algo, which I will take any day.

The market feels like it is stabilizing and building a base from which to move higher. It probably will take a few more weeks, but something is gonna give here, either at 1725 or 1675. Expect extreme fireworks on both sides.

As always, expect dealers to widen spreads, run stops, and give you fills that make you want to throw up [slippage]. So what else is new?

Have a good day everyone.

-vegas