Higher Timeframe Activity Pushing About

Nasdaq futures are lower over the duration of the globex session with the bulk of the selling occurring yesterday evening.  We seem to have found a buyer around the time Europe opened and we are since trading back at the mid of the overnight session range.  Today’s economic calendar has Existing Home Sales at 10am.  Also, Mario Draghi is scheduled to speak in Brussels at 9am, and the entire week features a variety of Fed speakers (no Yellen) speaking at a several of events.  On Friday we have GDP stats set for release.

Intermediate term, although we see this timeframe in balance with these longer timeframe participants actively establishing a value through their actions, we can also see the difficulty we are having establishing intraday value.  This suggests two things.  First we are participating in a market with active longer timeframe participants who push price around with their actions.  Second, we are not very complacent nor certain that current prices properly represent value.  As this value matures, now 24 sessions old, the likelihood of transitioning into price discovery increases.  I have noted the key price levels of our intermediate term on the following volume profile chart:

09222014_intterm_NQ

I have marked up the market profile chart with the levels I find interesting going into today’s trade.  The lack of value areas recently makes for an interesting landscape of peaks and valleys for the market to explore.  Where we ultimately locate price acceptance will be telling to start the week.  See below:

09222014_marketprofile_NQ

Risk on The Forefront

Knowing where a trade is wrong is something you need to decide before executing a position.  Setting this up, clearly, before you use your mouse to click into a position is important to the process.  Once you have committed to a trade and you money is on the line your limbic system is likely to kick in, and it is powerful.  At this point you are managing strong emotions and if you have not made your plan before this happens, your judgment is likely to blur.

This is any trade, short or long duration.  Have a plan before you enter.  Even if you do an OKAY job of this, you will benefit immensely from the process.  If you are following someone else into THEIR trade, then it is even more important that you formulate your own plan.  Your plan will be your boulder to lean on, not some HOPE in a stranger on the internet.

I think we emphasize this extensively on this blog.  And it’s worth being reminded of consistently.  If we want to achieve success in trading we need to carry the right mentality, the right area of focus, and improve our execution.

A few of my positions made nice moves into the weekend.  Today felt like a trend day down through lunch in the Nasdaq and the SPX with the Russell leading.  We found our first buyer response fairly deep into yesterday’s Nasdaq range.  However, when they did strike, they did so with a reasonable amount of tenacity.  The morning was about feeling the revision burn, and the afternoon kept us up in the upper quad of intermediate term balance.

In short, this was a long week, and the third quarter is nearly complete.  If you have not already done so, it is time to tighten your game up and stack some wins up into quarter end.

Regarding BABA, this is a 1/2 position based upon sentiment.  This think opened high, ripped, pulled back to the open, tested lower, and then returned back to the open.  My plan is to give the trade 10% risk to from my entry.  Targeting a $100 roll to $120, do I think it’s possible?  Yes, and I am willing to accept being wrong.  Trading is much simpler when you don’t convince yourself you are right.

Look for some fun theory over the weekend on the ole’ blog. Have a great weekend while it is still officially summer.

Lunch Is Served

I procured and fastened a few shares of BABA to my plate.  Nomb nomb nomb…What are you guy’s having for lunch? Anything good?

BABA

Topside

Nasdaq futures ticked higher overnight and peaked out around midnight before settling back to about the midpoint of the session.  Interestingly, we made a new swing high overnight and the swing high is rarely set outside of normal market hours.

The economic calendar is quiet today.  We have the Alibaba IPO set to price out today and also Leading Indicators at 10am.

Revisiting the weekly chart, you can see the strong responsive buy that occurred throughout the week which resulted in a long tail on the composite index.  What we need to wonder is whether buyer expended all their energy in this response, or whether they will be able to make a fresh push higher.  See below:

09192014_WEEKLYlongterm_NQ

Intermediate term, we are in the precarious position of hanging out on the fringe of intermediate term balance.  As we saw Monday and Tuesday, the gravitational force of the mean can cause a rapid revision.  As we press the upper boundary, we need to be cautious.  Keep in mind however, this balance is old, and the market is likely to begin exploring soon.  I have highlighted the intermediate term balance and some key levels within it below:

 

09192014_intterm_NQ

 

I have noted the short term levels I will be observing on the following market profile chart:

09192014_marketprofile_NQ

You Think This Is Bad?

GOGO3
I haven’t even begun dropping bombs.  You have only seen the tip and below an iceberg lurks too cold to melt.  You came into the game and started shorting momentum stocks, like the world owed you something because you are so god damned brilliant.

Well we’re all brilliant until they lodge a 10 bagger straight into your derriere.  Goodness, this post has already degraded to your level, to sodomy.

Do you see what happens when you let the wolf out of his cage?  They had me running across town thrice today, for some next level matters that oddly enough had to occur Thursday OPEX like what?  I just have to work this today?

I have enough nearly worthless paper to buy a modest sedan yet by some egregious feats of winship this book of mine is still green on the month.  Disgusting, I have so much work to do, figuring out how I could have avoided taking a few of these trades before my body decays another month.

For now, all I managed was a small scale of my September GOGOs (I still have a few Septs and some Octs) and buying more time in P.  Believe, not like Seal, well a bit like Seal, but also a bit like R&B sensation R.Kelly, that I intend to ride this position like a golden unicorn straight to Gomorrah.

If I do not report immediately to some heavy metal there is a serious option of violence.

May you be safe, healthy, and have ease of being…for you and me, now we dance

Balance Vision

Nasdaq futures are up a bit as we approach cash trade in the US.  Each session this week, whichever party appears to have controlled the overnight session has been unable to sustain their edge throughout the session.  Thus this gap higher is suspect to a fade lower and perhaps even a down close.  However, just as soon as we suspect we find a pattern it often diminishes.

The economic calendar is quiet during today’s session.  We had Building Permits, Housing Starts, and Continuing and Initial Jobless claims at 8:30am which on the net did little to affect prices.  Traders are likely to pay attention both the BABA IPO and the Scottish independence vote taking place today.

Below you can observe the intermediate term balance.  These conditions are frustrating to many day traders who are having trouble with chop and indecision.  However, swing traders can revel in this environment for as long as it remains in place, up here near the high of the year.  I have highlighted the key levels inside this zone, including the MCVPOC at 4066.  If around 3,500 more contracts trade at this price, then we will see a major VPOC shift on the net composite profile.  The current composite VPOC is down at 3889.25 (not pictured).  If this occurs we need to be keen on who it entices into the marketplace.  Price and value will always converge.  It is our job to discern who it motivates to act.

09182014_intterm_NQ

I have highlighted the short term levels I will be observing on the following market profile chart.  Note also that I split yesterday’s profile at the TPO where The Fed response began:

09182014_marketprofile_NQ

Wake Me Up

The Fed and Yellen press conference that followed were enough to jar the financial complex where the dollar went on a rally and equities printed some big neutral sessions.  Under the surface some momentum stocks are running, others are not.

The key is staying focused on price action, the auction, and using the information as best you can to predict future market movement.  Anything ‘bigger’ than this, like extrapolating fundamentals onto a 4 day trade is sheer lunacy.  Focus on price action, volume, and leave the rest for the pundits.

We are back in the middle of balance, the dip was bought, and there is still Scottish independence to price into the market.

QE infinity

Before You Go

The action leading into the fed was close to lockstep with the primary hypothesis.  Once the information hits the wires conditions are likely to change.  This might sound a bit loopy but, I am looking for the third reaction to provide some direction.  That is, the reaction to the reaction’s reaction.

Try to keep up.

Talking book, I bought some more time in GOGO because that daily chart is just how I like it, and I joined the NMBL trade.

No one knows quite how much noise The Fed wants to make today, so keep an eye on your risk.

Godspeed mates!

Quiet Fed Morning

The overnight session was quiet as we head into a busy end-of-week.  The NASDAQ printed a below normal 9 point range ahead of CPI, which served to expand the range a bit after a lower than expected increase in CPI was released.  Overall, the range is still tight as we approach cash trade.

On these Wednesdays where we have FOMC announcements in the afternoon, we tend to see one or two actionable moves very early in the session and then a pause as the markets waits for the new information to release.  Anything can happen, of course, but having a hypothesis or expectation for the early trade means if something else happens we are seeing unique behavior which warrants our attention.

I opened the topic of intermediate term balance to the open forum Sunday afternoon because its starting point was a bit grey at the time.  Consensus was 08/25 seemed a proper start date and with that information the downside imbalance became abundantly clear.  The fast move lower and subsequent retracement higher yesterday settled the imbalance, but they also stretched out intermediate term balance.  Now I have pulled in data going back to 08/18 which gives the lower half of balance a bit more information.  Yesterday confirmed our hypothesis that intermediate term we remain in balance when we revised back to the mean at 4066.  I have noted the key intermediate term levels below:

09172014_intterm_NQ

I have noted the key price levels I will be observing on the following market profile chart:

09172014_marketprofile_NQ

[Select] Yesterday, Edit->Undo

When you have a key piece of market profile context, a model if you will, and you use it as part of a forecast, this is a process.  There are many other processes and plans, but market profile is mine.  Without me it is useless, but together we are effective and helpful for navigating the markets.

There is a big element of luck in trading.  Professionals might claim otherwise, but for as much skill as the activity requires, it also benefits from the hand you are dealt.  I have always found the harder I work, the luckier I am.  Staying humble and accepting that you can only focus on the process and be happy no matter the outcome is the core mindset needed for trading.  Today China juiced the markets, tomorrow the Fed might yank more juice than we expect, this is the flop, if you will.

If you do your job well and lose money, you can still be happy with yourself.  Periodically, check the numbers, and make changes to your methodology.  This should always be done outside of market hours otherwise you are likely to be swayed by emotions and pulled many different directions.

When the markets become fast traders have a tendency to break rules.  When they break rules they lose money, when the lose more money than they intended they either are knocked out of the game or put on tilt.  You need to work on yourself more than you need to work on understanding the latest indicator or macro correlation.  Take trades, keep good stats and recording, learn, adjust, and keep taking action.

All of that said, here we are.  We knew intermediate term balance had not been breached, and why should it BEFORE all the major news comes out?  Then we had this beautiful long liquidation profile yesterday, a temporary phenomenon of order flow, temporary.  These words are chosen very carefully when communicating with you, finest people of the interwebs.   Patrons of iBankCoin, I humbly submit my actions to you today: nothing, a nap.

It took every bone in my body to restrain from buying this morning, just as it took many of those same bones to grin and bear yesterday’s furnace of losses.  I can look at my performance over these last two days with a big ear-to-ear, wondering if in fact R.Kelly will make a proper appearance before Friday.

That is all.

Godspeed and kisses,

Raul

Higher Timeframe Activity Pushing About

Nasdaq futures are lower over the duration of the globex session with the bulk of the selling occurring yesterday evening.  We seem to have found a buyer around the time Europe opened and we are since trading back at the mid of the overnight session range.  Today’s economic calendar has Existing Home Sales at 10am.  Also, Mario Draghi is scheduled to speak in Brussels at 9am, and the entire week features a variety of Fed speakers (no Yellen) speaking at a several of events.  On Friday we have GDP stats set for release.

Intermediate term, although we see this timeframe in balance with these longer timeframe participants actively establishing a value through their actions, we can also see the difficulty we are having establishing intraday value.  This suggests two things.  First we are participating in a market with active longer timeframe participants who push price around with their actions.  Second, we are not very complacent nor certain that current prices properly represent value.  As this value matures, now 24 sessions old, the likelihood of transitioning into price discovery increases.  I have noted the key price levels of our intermediate term on the following volume profile chart:

09222014_intterm_NQ

I have marked up the market profile chart with the levels I find interesting going into today’s trade.  The lack of value areas recently makes for an interesting landscape of peaks and valleys for the market to explore.  Where we ultimately locate price acceptance will be telling to start the week.  See below:

09222014_marketprofile_NQ

Risk on The Forefront

Knowing where a trade is wrong is something you need to decide before executing a position.  Setting this up, clearly, before you use your mouse to click into a position is important to the process.  Once you have committed to a trade and you money is on the line your limbic system is likely to kick in, and it is powerful.  At this point you are managing strong emotions and if you have not made your plan before this happens, your judgment is likely to blur.

This is any trade, short or long duration.  Have a plan before you enter.  Even if you do an OKAY job of this, you will benefit immensely from the process.  If you are following someone else into THEIR trade, then it is even more important that you formulate your own plan.  Your plan will be your boulder to lean on, not some HOPE in a stranger on the internet.

I think we emphasize this extensively on this blog.  And it’s worth being reminded of consistently.  If we want to achieve success in trading we need to carry the right mentality, the right area of focus, and improve our execution.

A few of my positions made nice moves into the weekend.  Today felt like a trend day down through lunch in the Nasdaq and the SPX with the Russell leading.  We found our first buyer response fairly deep into yesterday’s Nasdaq range.  However, when they did strike, they did so with a reasonable amount of tenacity.  The morning was about feeling the revision burn, and the afternoon kept us up in the upper quad of intermediate term balance.

In short, this was a long week, and the third quarter is nearly complete.  If you have not already done so, it is time to tighten your game up and stack some wins up into quarter end.

Regarding BABA, this is a 1/2 position based upon sentiment.  This think opened high, ripped, pulled back to the open, tested lower, and then returned back to the open.  My plan is to give the trade 10% risk to from my entry.  Targeting a $100 roll to $120, do I think it’s possible?  Yes, and I am willing to accept being wrong.  Trading is much simpler when you don’t convince yourself you are right.

Look for some fun theory over the weekend on the ole’ blog. Have a great weekend while it is still officially summer.

Lunch Is Served

I procured and fastened a few shares of BABA to my plate.  Nomb nomb nomb…What are you guy’s having for lunch? Anything good?

BABA

Topside

Nasdaq futures ticked higher overnight and peaked out around midnight before settling back to about the midpoint of the session.  Interestingly, we made a new swing high overnight and the swing high is rarely set outside of normal market hours.

The economic calendar is quiet today.  We have the Alibaba IPO set to price out today and also Leading Indicators at 10am.

Revisiting the weekly chart, you can see the strong responsive buy that occurred throughout the week which resulted in a long tail on the composite index.  What we need to wonder is whether buyer expended all their energy in this response, or whether they will be able to make a fresh push higher.  See below:

09192014_WEEKLYlongterm_NQ

Intermediate term, we are in the precarious position of hanging out on the fringe of intermediate term balance.  As we saw Monday and Tuesday, the gravitational force of the mean can cause a rapid revision.  As we press the upper boundary, we need to be cautious.  Keep in mind however, this balance is old, and the market is likely to begin exploring soon.  I have highlighted the intermediate term balance and some key levels within it below:

 

09192014_intterm_NQ

 

I have noted the short term levels I will be observing on the following market profile chart:

09192014_marketprofile_NQ

You Think This Is Bad?

GOGO3
I haven’t even begun dropping bombs.  You have only seen the tip and below an iceberg lurks too cold to melt.  You came into the game and started shorting momentum stocks, like the world owed you something because you are so god damned brilliant.

Well we’re all brilliant until they lodge a 10 bagger straight into your derriere.  Goodness, this post has already degraded to your level, to sodomy.

Do you see what happens when you let the wolf out of his cage?  They had me running across town thrice today, for some next level matters that oddly enough had to occur Thursday OPEX like what?  I just have to work this today?

I have enough nearly worthless paper to buy a modest sedan yet by some egregious feats of winship this book of mine is still green on the month.  Disgusting, I have so much work to do, figuring out how I could have avoided taking a few of these trades before my body decays another month.

For now, all I managed was a small scale of my September GOGOs (I still have a few Septs and some Octs) and buying more time in P.  Believe, not like Seal, well a bit like Seal, but also a bit like R&B sensation R.Kelly, that I intend to ride this position like a golden unicorn straight to Gomorrah.

If I do not report immediately to some heavy metal there is a serious option of violence.

May you be safe, healthy, and have ease of being…for you and me, now we dance

Balance Vision

Nasdaq futures are up a bit as we approach cash trade in the US.  Each session this week, whichever party appears to have controlled the overnight session has been unable to sustain their edge throughout the session.  Thus this gap higher is suspect to a fade lower and perhaps even a down close.  However, just as soon as we suspect we find a pattern it often diminishes.

The economic calendar is quiet during today’s session.  We had Building Permits, Housing Starts, and Continuing and Initial Jobless claims at 8:30am which on the net did little to affect prices.  Traders are likely to pay attention both the BABA IPO and the Scottish independence vote taking place today.

Below you can observe the intermediate term balance.  These conditions are frustrating to many day traders who are having trouble with chop and indecision.  However, swing traders can revel in this environment for as long as it remains in place, up here near the high of the year.  I have highlighted the key levels inside this zone, including the MCVPOC at 4066.  If around 3,500 more contracts trade at this price, then we will see a major VPOC shift on the net composite profile.  The current composite VPOC is down at 3889.25 (not pictured).  If this occurs we need to be keen on who it entices into the marketplace.  Price and value will always converge.  It is our job to discern who it motivates to act.

09182014_intterm_NQ

I have highlighted the short term levels I will be observing on the following market profile chart.  Note also that I split yesterday’s profile at the TPO where The Fed response began:

09182014_marketprofile_NQ

Wake Me Up

The Fed and Yellen press conference that followed were enough to jar the financial complex where the dollar went on a rally and equities printed some big neutral sessions.  Under the surface some momentum stocks are running, others are not.

The key is staying focused on price action, the auction, and using the information as best you can to predict future market movement.  Anything ‘bigger’ than this, like extrapolating fundamentals onto a 4 day trade is sheer lunacy.  Focus on price action, volume, and leave the rest for the pundits.

We are back in the middle of balance, the dip was bought, and there is still Scottish independence to price into the market.

QE infinity

Before You Go

The action leading into the fed was close to lockstep with the primary hypothesis.  Once the information hits the wires conditions are likely to change.  This might sound a bit loopy but, I am looking for the third reaction to provide some direction.  That is, the reaction to the reaction’s reaction.

Try to keep up.

Talking book, I bought some more time in GOGO because that daily chart is just how I like it, and I joined the NMBL trade.

No one knows quite how much noise The Fed wants to make today, so keep an eye on your risk.

Godspeed mates!

Quiet Fed Morning

The overnight session was quiet as we head into a busy end-of-week.  The NASDAQ printed a below normal 9 point range ahead of CPI, which served to expand the range a bit after a lower than expected increase in CPI was released.  Overall, the range is still tight as we approach cash trade.

On these Wednesdays where we have FOMC announcements in the afternoon, we tend to see one or two actionable moves very early in the session and then a pause as the markets waits for the new information to release.  Anything can happen, of course, but having a hypothesis or expectation for the early trade means if something else happens we are seeing unique behavior which warrants our attention.

I opened the topic of intermediate term balance to the open forum Sunday afternoon because its starting point was a bit grey at the time.  Consensus was 08/25 seemed a proper start date and with that information the downside imbalance became abundantly clear.  The fast move lower and subsequent retracement higher yesterday settled the imbalance, but they also stretched out intermediate term balance.  Now I have pulled in data going back to 08/18 which gives the lower half of balance a bit more information.  Yesterday confirmed our hypothesis that intermediate term we remain in balance when we revised back to the mean at 4066.  I have noted the key intermediate term levels below:

09172014_intterm_NQ

I have noted the key price levels I will be observing on the following market profile chart:

09172014_marketprofile_NQ

[Select] Yesterday, Edit->Undo

When you have a key piece of market profile context, a model if you will, and you use it as part of a forecast, this is a process.  There are many other processes and plans, but market profile is mine.  Without me it is useless, but together we are effective and helpful for navigating the markets.

There is a big element of luck in trading.  Professionals might claim otherwise, but for as much skill as the activity requires, it also benefits from the hand you are dealt.  I have always found the harder I work, the luckier I am.  Staying humble and accepting that you can only focus on the process and be happy no matter the outcome is the core mindset needed for trading.  Today China juiced the markets, tomorrow the Fed might yank more juice than we expect, this is the flop, if you will.

If you do your job well and lose money, you can still be happy with yourself.  Periodically, check the numbers, and make changes to your methodology.  This should always be done outside of market hours otherwise you are likely to be swayed by emotions and pulled many different directions.

When the markets become fast traders have a tendency to break rules.  When they break rules they lose money, when the lose more money than they intended they either are knocked out of the game or put on tilt.  You need to work on yourself more than you need to work on understanding the latest indicator or macro correlation.  Take trades, keep good stats and recording, learn, adjust, and keep taking action.

All of that said, here we are.  We knew intermediate term balance had not been breached, and why should it BEFORE all the major news comes out?  Then we had this beautiful long liquidation profile yesterday, a temporary phenomenon of order flow, temporary.  These words are chosen very carefully when communicating with you, finest people of the interwebs.   Patrons of iBankCoin, I humbly submit my actions to you today: nothing, a nap.

It took every bone in my body to restrain from buying this morning, just as it took many of those same bones to grin and bear yesterday’s furnace of losses.  I can look at my performance over these last two days with a big ear-to-ear, wondering if in fact R.Kelly will make a proper appearance before Friday.

That is all.

Godspeed and kisses,

Raul

2014 iBankCoin Investors Conference