REFLECTIONS

                                Always Wear Your Safety Helmet

A frustrating day, month, and quarter in about that order. Gold is going nowhere; up a little, down a little, back to the middle after stops on both sides get taken out. Today a perfect metaphor for the quarter; a “paint the tape” $11 daily range.

The FWD showed up again today, and even the adjustments I have made to the algorithm couldn’t prevent a small loss. Very small ranges and moves to both ends will most likely result in a trading loss. Sometimes I am able to sidestep it and sometimes I can’t; today was a “can’t”.

Meanwhile in crude oil.

“Oyyyyy.”

Nice $1.25 / bll. drop in 30 minutes to end the week hey? This market right now is even more messed up than gold. And even with the drop, the day’s range is still only $1.36; heck, it was only $1.11 until the drop.

When crude was trading between $70 - $95 / bll [2009 – 2011] it had trading ranges averaging 287 ticks per day. Now, even with news, we can’t get but maybe 235. Most of the last month has been sub 200. Are the central planners at the Fed now in oil as well? God help us.

Going forward, if we can get rid of the “Flying Wedge of Death” things will look much more profitable. We have to be vulnerable to something, and the FWD is a very low probability event. That doesn’t mean you can’t have them 5 out of the next 6 days; what it does mean is that they are infrequent at best.

Have a good weekend everyone.

-vegas

BEWARE THE FREIGHT TRAIN

                                      Move Or Get Run Over

Before I comment on today’s action, in case you didn’t read my other post, please do so now over at http://vegasxau.blogspot.com

A pretty dull affair until the U.S. session got underway. A couple of hours into Chicago trading and gold still only had a $10 range. Then all hell broke loose in crude oil, and the runaway market freight train was on the loose down the mountain.

Sell stops hit everywhere in crude as the market broke its month support level at about 103.80 and helped put in the range of 355 ticks. Hopefully, crude can get its volatility mojo back and we start to see 250 + tick ranges going forward.

For most of the day being long gold meant losing money. I had 2 long positions that produced very small gains. Once again, slippage a factor getting in and liquidating.

And once again today, especially on the way up after 1 PM, it is so evident as you watch the market and the dealers, that active manipulation is taking place. Sure, you can pretty much expect them to always metaphorically kill sell stops on the way down.

But the mystery “Nibble Nibble BOOM!” down draft ticks that take place, after most of the days activity is over or winding down, are shameless. Within seconds it is right back up: the purpose of course is to get you to do something you don’t want to do.

The gold market can’t muster a rally all day long for more than 15 minutes and maybe a buck or two before heavy selling erupts sending prices lower. But take away the volume, and move to the lightest part of the day, and all of a sudden we start the “stealth advance” that has become so prevalent these last few months.

What to make of this?

Dealer buying into Asia to meet the retail demand expected when the new session starts tonight. You buy everything in sight, knowing full well nobody is going to sell in size and then fill the “Lemmings in Asia” at higher prices. What a nice gig. Going forward, expect us to be a part of this if I see it happening like today.

Have a good day everyone.

-vegas

GOLD ROLLS OVER

                                            Always Remember

What looked so good Tuesday that you wanted to mortgage the house to be long, suddenly doesn’t look very good after today. Welcome to trading.

Trading is about momentum and probabilities and staying out of trouble; it isn’t about brokerage house recommendations and personal opinions. And that is what makes it so hard for the average person to make money.

Today’s gold trade got ugly in the U.S. session, with sell stops getting hit and taking the market on a $20 downdraft. Two trades today, with small profits, as it was hard to generate any buying momentum for more than a couple of minutes. As I stated in my other post, if you aren’t early to the trade you’re going to lose.

Crude oil finally put in a range [225 ticks as I write this], and with all the news today on crude [all negative] it was mildly surprising the range wasn’t bigger. Still caught in the 104 – 108 range it has been in for a month.

Have a good day everyone.

-vegas

A BIG NOTHING

                                       Making Money Today

A very tough trading day. We never really know until the day is over what exactly the FWD is going to look like. Today was a classic death wedge.

You had to know the market was in trouble when even the “Lemmings in Asia” wouldn’t buy it and take it higher. After about 9 hours of trading, gold had a whopping $4 and change range. By the time the U.S. session opened the range was still only about $10.

It doesn’t take much to hit a new high/low when at this time of day the range is so tight. Add in stops and you have a very nervous market trading scene.

The algorithm will most likely not do well on days like today because it can’t be fast enough to handle the swings at the extremes and there is no range to speak of that can absorb slippage and still make you money.

I still made money today, and considering this type of trading day is by far the biggest nemesis of the algorithm, if you had told me yesterday this was going to happen I would be ecstatic at being up $0.01.

The modifications I have made in the algo, in the wake of the type of trading conditions we have seen in the last 8 weeks, allowed me to NOT lose money today. Going forward, as long as we don’t get extremely fast and violent spikes/drops, we should start to see better profitability.

Crude oil?

I’m beginning to think that until Iran is taken care of, one way or another, that crude is going to be less volatile than normal. Normal trade simply isn’t in the market right now. Would be sellers ask why should I sell until Iran is decided? Buyers are bid at every downtick. Not much of a market, and today’s range of 118 at 2:15 PM proves it.

Have a good day everyone.

-vegas

EVERYTHING HAPPENS IN A MICROSECOND

                     Let’s Debase The Currency Grow the Economy

Same old crap – different day. Spikes to the hearts content.

“Go ahead, blink your eyes and make a wish.”

It started off with a spike to the high and then about 10 hours of eroding prices that took us to the low. The first algorithm buy signal got stopped out for a loss. The second buy signal came near the low and produced a small profit. The third buy signal got us long before a new high, and we got out at the exhaustion level.

Slippage again took its toll today on the long liquidation. I hit liquidate when the market was 1673.96 bid [exhaustion price in the algorithm model was 1673.63] and got filled at 1672.93. As bad as that was, within seconds it was in the 1671’s before basing and heading up violently again within a minute or two.

All in all, we made a few pennies, but as I stated in my other post, these extreme spikes/drops play havoc with the algo; and there isn’t anything we can do about it.

Gold actually was going down and looked like it was going to test the low before Bernanke’s released remarks set off today’s price explosion.

The “Lemmings in Asia” will most likely bid up gold tonight, and if I can get a decent entry price before the open in Asia, I’ll make the long trade. It looks like tomorrow’s trade will test 1700 at the least.

Crude oil?

A 112 tick range at 2:15 P.M. makes this market not even worth commenting on today.

Have a good day everyone.

-vegas