THE FED DECIDES

                            The Federal Reserve Decision Makers

There’s almost no trading anymore; everybody just waits for the Fed to manipulate intervene and reacts from that. Today is total evidence of that.

As I stated on my other post, for the first 15 hours of trading today we didn’t even have a $5 range. Then, in one second [literally] gold got hit $15 to the downside. The market recovers; the algorithm gives a buy signal; we get long; the market chops for a while before heading higher; we get out on a minor price spike and make a little money.

I realize the market rallied farther up, but you can’t count on a reversal day every single time gold goes lower.

A lot of traders got hurt today; I can tell from the action and the way it traded after the manipulation from this morning. There seemed to be more than the normal price spikes and prices jerked upward rather quickly each time, telling me people were reversing.

Trading is a mess right now. Nobody is willing to trade overnight because they know of the potential carnage that may possibly come when the U.S. opens; that leads to a very tight range. Since the range is so tight, it doesn’t take much to hit a new high or low or both within minutes. Make no mistake; this is the havoc the Fed wants in the gold market.

The market lacks follow through; all you have to do is look at the all of the candlestick tails on the daily chart over these last months. It is difficult to judge this flow, as one second it looks good and the next it looks like a death trade.

In any event, all that really matters is money. In that regard, we added some incremental returns today.

Have a good day everyone.

-vegas

MARKET CONFUSION REIGNS

                                       Welcome To My World

Gold was almost comatose prior the Fed report.

Gap down and then a reversal; that pretty much summed up the market after the Fed report.

The algorithm gave a buy signal on the turn up, but wide spreads followed by huge slippage cost us some today. The spread almost doubled after the report, and then after I submitted my buy order, we got filled about $1.75 away from where I entered the order.

Yea, it sucks, but there isn’t anything you can do because things are moving so fast. Liquidation got us too, as I hit the button above 1640.50 and got filled at 1939.76.

In a normal market environment I’d be screaming bloody murder to a partner, but in this mess after the Fed report, your screams will fall on deaf ears at the brokerage house; they don’t want to hear about it.

So, we take our profits for the day and wait for tomorrow’s opportunities.

Meanwhile, it was as if the currencies were closed today. A 53 pip range in EURJPY and only a 41 pip range in AUDUSD; we had bigger ranges on Christmas Eve. I had my eye on EURJPY most of the night waiting for a move and an algorithm signal, but obviously it never had one.

Have a good day everyone.

-vegas

NEWS FLOW DOMINATES

                                              Read It & Weep

A bunch of market moving news items out of Europe over the weekend failed to move gold in Asia. Then, in a few seconds at the European open, the damage started. In total, it was short term bearish for gold, but long term bullish.

The algorithm gave a buy signal off the first low today, but since the range was so low I ignored it. The second low put in during the U.S. session gave another buy signal and we got long, but the dynamics in the market ahead of Wednesday’s Fed meeting are putting a damper on rallies. Risk on the trade was acceptable, but slippage was an issue again today, as the dealer clipped us over $0.50 getting in the trade.

We still made some money today, although not a lot, as the market chops within a few bucks of where we liquidated the trade.

We have to be careful down here near 1600; stops below this level are gigantic, and if broken I have no idea where gold will level off and stabilize. A Central Planner raid, while nobody is looking for it, is a definite possibility as is a very sharp drop down from somebody who wants to be the first one out of the boat if water starts leaking.

Last night I was looking at EURJPY for a sell signal to get short, but the market never rallied much and just leaked lower.

Over all, since I made the necessary updates to the algorithm, it has performed well in all of the markets.

Have a good day everyone.

-vegas

THE MELT UP

                                          Liftoff In 5…4…3…

Well, thank you “Weimar Ben” for striking the gold match yesterday and getting us [hopefully] out of the low volatility environment we have been finding ourselves in for the first few weeks of the new year.

Nothing like a nice $60 rally in afternoon New York trading to get the party-hardy Asian traders back from the eternal celebration. Now, if we can only get the Europeans to follow suit: well, I can dream can't I?

Yesterday’s explosive move after the Fed minutes [which by the way were released early] quickly took the algorithm from “sell mode” in to “buy mode”. We got our first buy signal at 12:15 AM [Chicago time] at 1710.79. Stop was initially placed at 1707.70.

After spending a few candlesticks holding steady, the market moved up to a high of 1714.64 [bid] before backing off. After moving above 1714, I raised my protective stop higher to 1712.29. I therefore had a “free trade” going in the early stages of trading.

With the explosive move in gold the day before, I knew at some point today some profit taking would be inevitable, and I wanted to insure at the very minimum I would take $1.50 out of the market.

With the very next candlestick, the market started “leaking water” and my stop got taken out. Gain on the trade was $1.50 / oz.

Now I have a decision to make. Do I go back in later on another buy signal [if we get one] or do I stand pat with my $1.50?

It’s an easy decision. I accept the grind that is trading most days. I know “The Power of $1.50”, and I do not want to give back anything to Mr. Market after this big move in the last 24 hours.

I simply don’t care if gold is at 1710, 3310, or 310 an oz.; what I care about is "buying 1 and selling 2” so to speak. I don’t care about “missing something” in terms of price action: exactly what am I missing? I don’t care about price action, I care about making money for the day! I know from experience NOT to get caught up in buying or selling frenzies that distract me from my goal: the systematic accumulation of cash in ever greater quantities each and every day.

Did the algorithm deliver?

“Yes, it did.”

“Now it’s time to do my job and walk! Like I said, an easy decision.”

Have a good day everyone.

-vegas

THE WAITING HUSTLE

                                         Waiting For The Fed

As if low volatility isn’t enough, markets are waiting for the release today of Fed minutes to give some kind of clue whether or not QE3 is in the works.

We came into the start of the day in “buy mode” Last nights action in Asia was almost non-existent, with very little interest in a closed Holiday session. Europe got going with some light selling that put today’s range in, and since about 5:00 AM [Chicago time] action in gold can best be described as choppy. Since 8:00 AM [Chicago time] we are in “sell mode”. Then, out of nowhere, we get the obligatory short-covering rally to shake out those who thought they could go into the Fed report with a winning short position. Chop-chop at its best.

With a change in intermediate trend, volatility low, and markets positioning themselves for the Fed at 1:15 PM [Chicago time], it should be no surprise we had no activity today. Tomorrow is another day.

Have a good day everyone.

-vegas