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Articles by Evil Speculator

The Futility of Predictions

February 5, 2017

Awesome Forecasts and the Unknowable Future
Back in late 2013 I wrote a piece on human nature which was in part inspired by the bullish exuberance exhibited by a MarketWatch article predicting the DJIA at 20,000 in the near term future. Yesterday afternoon, a bit over three years later, that prediction actually became reality and I’m sure the author of that article as well as many other like minded traders popped some champagne in celebration of their awesome ability to predict the future.
Now don’t get me wrong, I’m happy for those guys and for the Dow Jones. Assuming of course that everyone involved actually put their money where their mouth was back then – which ever few do. And that in essence was the underlying message of my post.
In yesterday’s update I briefly touched on hindsight bias and how we all have a knack for bending the past in our respective favor. Nobody wants to look stupid after all. And in hindsight, all of us would have liked to have bought the S&P 500 at 667 in 2008 and then traded it all the way up to just below 2300 today.

A trader from the (near) future.

Image via tumblr.com – Click to enlarge
Except of course that we didn’t (please raise your hand if you did).

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British Pounding

October 8, 2016

Flash-Crashed
Earlier this morning the British Pound suddenly found itself on the receiving end of a 6% flash crash during Asian trading hours. Some of the losses have been recouped since then, but that will be of little consolation to anyone who may have been long the GBP overnight.

Oops.

Photo credit: Time & Life Pictures / Getty Images – Click to enlarge
Now before you strike this up to some ‘fat finger’ or bot driven irregularity let me remind you that cable is the third most liquid currency pair after the EUR and JPY crosses, representing roughly 15% of the daily trading forex volume of US$5 Trillion.
We are not talking gold or even the S&P here – this is (supposed to be) an extremely liquid market. Which means that this type kind of dislocation should not be happening assuming a semi efficient market. And as such it either reeks of manipulation or worse – an early sign that things are becoming unglued on the currency front.

GBP-USD, 60 minute and daily chart.GBP-USD, 60 minute and daily chart. Overnight currency murder. – Click to enlarge
What surprised me the most however was the complete lack of response on the equities side. There wasn’t as much as a twitch and it appears that the E-Mini has been dropped off at long term parking near lot number 2148.

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Gold Siver Update for Purists

July 5, 2016

Net Lines
It’s that dreaded day after Independence Day. The weather is gorgeous and I don’t really feel like trading either. The thought of just phoning it in had occurred to me, but as the new month just rolled over I thought I may as well take another peek at our monthly charts. Which uncovered quite some interesting perspectives that I’m eager to share.
But no worries – we’re keeping it light and easy today. Consider this a purist’s approach to market analysis as we’re going to ignore everything but Net-Lines.
So what are Net-Lines? Before we get into the thick of it let’s quickly cover the concept of Net-Lines, which is purely price based and as such I don’t consider them ‘indicators’ in the traditional sense. There are in fact two types of Net-Lines, one for the buy and one for the sell side. The rules are pretty trivial:
Net-Line Buy Level (NLBL): Wait for three consecutive lower lows, then take the high of the first candle as your NLBL. The push above that high is your signal to go long.
Net-Line Sell Level (NLSL): Wait for three consecutive higher highs, then take the low of the first candle as your NLSL. A breach below that low is your signal to go short.

The picture for today’s Zen moment.

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Gold Silver Update for Purists

July 5, 2016

Net Lines
It’s that dreaded day after Independence Day. The weather is gorgeous and I don’t really feel like trading either. The thought of just phoning it in had occurred to me, but as the new month just rolled over I thought I may as well take another peek at our monthly charts. Which uncovered quite some interesting perspectives that I’m eager to share.
But no worries – we’re keeping it light and easy today. Consider this a purist’s approach to market analysis as we’re going to ignore everything but Net-Lines.
So what are Net-Lines? Before we get into the thick of it let’s quickly cover the concept of Net-Lines, which is purely price based and as such I don’t consider them ‘indicators’ in the traditional sense. There are in fact two types of Net-Lines, one for the buy and one for the sell side. The rules are pretty trivial:
Net-Line Buy Level (NLBL): Wait for three consecutive lower lows, then take the high of the first candle as your NLBL. The push above that high is your signal to go long.
Net-Line Sell Level (NLSL): Wait for three consecutive higher highs, then take the low of the first candle as your NLSL. A breach below that low is your signal to go short.

The picture for today’s Zen moment.

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Rule Britannia

June 24, 2016

A Glorious Day
What a glorious day for Britain and anyone among you who continues to believe in the ideas of liberty, freedom, and sovereign democratic rule. The British people have cast their vote and I have never ever felt so relieved about having been wrong. Against all expectations, the leave camp somehow managed to push the referendum across the center line, with 51.9% of voters counted electing to leave the European Union.

Waving good-bye to Brussels!
 It goes without saying that this historic vote will have long term implications all across the rest of Europe, as resistance to a increasingly authoritarian, wasteful, and bureaucratic European Union has steadily been growing across the Euro zone over the past few years. The dominos are just now starting to fall. Minutes ago David Cameron announced that he will step down as Prime Minister , stating that the country requires fresh leadership
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 South of the border we already are hearing calls for a Frexit referendum from Marine Le Pen, leader of the conservative EU-skeptic Front National party. In light of this unexpected victory other nationalist leaders across Europe will certainly now be considering their options. Without doubt it is going to be a very hot summer in Brussels.

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