I TRIED TO STAY AWAKE

                          The Definitive Opinion On Gold Today

“Oyyyyyy.”

I can’t remember the last non-Holiday trading day that had a smaller daily range. The algorithm had no signals today so we didn’t trade. In short, it was one of the worst trading days [in terms of action and range] I have seen in a long, long time. In the overnight Asian and European sessions there were times I thought the trading platform was down; forget even getting outside the bid and offer, there were minutes the quote never changed.

When the U.S. session got underway around 7:20 A.M. Chicago time, there was a little flurry of trade that lifted prices a couple of bucks, but that was it. A dealer induced smack down of price a few minutes later put a chill on the market.

Bulls tried again an hour later but got the same result.

There isn’t anything I can do when gold has an $8 range for the day, except maybe lose money. You can’t trade and expect this kind of range to hold; take 1,000 trading days and maybe 2 are like this. Obviously, the algorithm gave no signals in gold today and rightly so; this was a mess. And lest you think some other market provided any opportunity, guess again; EURJPY and AUDUSD had tight ranges as well.

Just chalk it up to one of those Friday’s when nobody really cared.

Below are the daily cycle charts. [Daily charts at 1:30 P.M. Chicago time]

XAUUSD

I didn’t fill in the colored box because we don’t know yet what the final outcome of the count is going to be. Either today was day 6 in a down cycle [maybe 8 days] or the down cycle ended yesterday [Thursday] and this was day 2 in an up cycle [maybe 3 or 5 days]. In any event, we will need to see what happens next week in order to get the correct count.

EURJPY

It looks like today was day 8 in an up cycle. I put the white box in, but if we get a rally on Monday, I’ll redo the box.

AUDUSD

Here, like EURJPY, it looks as though AUD has finished an 8 day up cycle. I put the box in, but we’ll have to wait and see what happens next week.

Have a good weekend everyone.

-vegas

LEARNING THE LESSONS

                                Pattern Recognition Starts Early

When somebody tells you something, you don’t remember much of it over time. When somebody shows you something, that’s a different story, and you pick up the important details rather quickly and retain the knowledge.

As I have stated here before, trading is simple but never easy. Pattern recognition and probability distributions are our advantage.

We had a hair less than a 1% gain today on a good buy signal from the algorithm. We got long on the signal and then liquidated slightly above the upper aqua line.

I want to focus on the fact that the algorithm was updated and revised to take advantage of the manipulations I write about on my other post: either learn and adapt or die.

Make no mistake, government is not going to go away and back down; until the Ponzi structure is torn down and replaced with free markets, you can expect them to be a permanent market player into the future.

We can’t beat them as traders, they have more money and don’t care about profits, but we can learn their methods and adopt strategies so that we can take advantage of them. That really is what the algorithm is about.

Nobody who plays the game is perfect; no matter how much money and influence you bring to the table your efforts have to have a weakness. Governments [i.e. manipulators] arrogance and heavy handedness ultimately will take gold much, much higher.

This is no different than realizing that the big, intimidating kid guarding you, while playing basketball, can’t stay with you when you take him left. When you figured that out the advantage went to you.

Have a good day everyone.

-vegas

JEKYLL & HYDE MARKET

                                      Fast Up & Fast Down

I had one trade today that produced a small profit. Slippage is still an issue in the marketplace on fills and there isn’t anything I, or anybody else, can do about it. Position squaring ahead of tomorrow’s European events has influenced the market today.

From minute to minute, gold is becoming like the infamous Dr. Jekyll. No price level is safe, and once the momentum of a move, no matter how short in duration, is over you can expect fireworks in the other direction.

What looks good one minute looks terrible the next; price is moving rapidly in an environment where traditional technical indicators, that give traders a sense as to direction, are utterly useless.

The main reason I revised the algorithm is due to this phenomenon; buying breakouts or relying on momentum isn’t going to work when large traders [legitimate or manipulators] are on the “hunt” and look to influence prices in the short term. Today’s range [as I write] of $16 seemed a lot bigger due to the very fast ups and downs throughout the U.S. session.

What’s amazing is that in the last few weeks Asia and Europe have gone AWOL from trading. Extremely small ranges have become common as we enter the U.S. session, thus giving no hint of what is to come when trading starts to get active around 7:20 A.M Chicago time.

Part of the reason today seemed choppy and somewhat muted is the fact that tomorrow is a big day for Europe. France and Spain are auctioning worthless 10 year Government notes tomorrow in what is perceived by the market as very important for investor confidence.

Spain especially is facing a debt crisis that the Euro can ill afford to go awry now that Greece is off the front page. A bad auction [higher interest rates] from both and the “risk off” crowd will be out to sell every asset class in sight [including gold]. Expect the Central Planners to do everything possible to make it appear these auctions are successful. After all, the Ponzi must live.

Have a good day everyone.

-vegas

DEALER GAMES: TUESDAY EDITION

                              Computer Is Sick, But I Feel Better

If any of you were trading since last night, you would have noticed the HotForex liquidity provider in gold [XAUUSD] was playing games. All through the night and into the U.S. session I had a $0.70 - $1.00 spread in gold in my order box. Normally it is around $0.35.

I’m not handing free money to the dealer evahhhhhhhh.

The problem was eventually fixed, just as the gold market started to break on cartel European Bank selling [see my other post for details]. After the low was put in, we caught a little of the upside after the algo gave the “buy signal” with a normal spread, but once in this first position, the spread immediately widened again to about $0.70. I immediately exited the position with a small profit because I had no idea if we were going back to stupid spreads, and if the market had broken lower again I didn’t want to be forced out with a large spread.

Thankfully it was anomaly, and spreads stabilized around $0.35 within a minute or two. Meanwhile though, gold was racing higher by the minute. When I sensed an assault by the dealers on the high to take out buy stops, I got long again and sold a few minutes later at a small profit.

For 6 days we can’t get the gold market to touch the aqua lines, and now within 50 minutes it touches the bottom and top aqua line. Thank you Central Planners.

I’m still seeing red over the crap I had to deal with today; I’ll get over it and move on but I’m worried my hard drive might take it personally.

One thing about being a professional trader for over 30 years; that is the humungous number of times you look skyward and ask God if the circus is hiring. Thankfully, there not.

Have a good day everyone.

-vegas

WELCOME COMRADE

                                   Markets Stalin Would Love

Somewhere, the old Patriarchs of the Soviet Union are cheering. The market manipulation going on in all the financial markets is staggering. Not just gold and silver, but equity indices, specific currency pairs, etc.

A $16 daily range that felt like it was twice that. Of course when you put in the FWD [Flying Wedge of Death] it’s gonna feel like the range was bigger. Once again, in the early hours of the trading day, we came very close to getting an algorithm buy signal in gold [missed by about a $1] at the low. We did eventually get long and sold only a few cents off the high of the day for our profit.

EURJPY had a crazy day, no doubt due to ECB manipulation via French repatriation issues, as it went to the extremes several times. Seems there need for dollar liquidity is almost at panic levels. AUD by comparison was rather calm in this mess.

As I stated on my other post, manipulation is a big part of the market these days; it’s the new paradigm. The biggest reason for the revised algorithm is because of this phenomenon.

As always, staying out of trouble is a big part of the process, and when we can’t get the prices I want, we do lower volume to reduce risk.

Have a good day everyone.

-vegas