A Few Clues to Keep You Bullish

The NASDAQ session was weak overnight prior to the early morning, when a rally ensued after buyers rejected an attempt to move price below yesterday’s RTH low.

Although we saw indecision in yesterday’s tape, there was no clear victory by the sellers.  In fact, several footprints were left in yesterday’s profile which suggest buyers still hold control.

Yesterday’s profile has three bullish characteristics:

A buying tail

Range extension higher

A poor high

I have highlighted these features on the following market profile chart:

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I have been very busy this week, making exhaustive preparations for what will unquestionably be the greatest holiday seen in la casa de Raul.  Garland, mistletoe, lights, and cookies—hundreds of cookies prepared to feed my diabetic friends and family.

Let me tell you, Martha Stewart is a dangerous woman.  She is the godfather of mass cookie production while looking fine for a white girl with a prison rap sheet.

I had a strong feel for the market today, based upon my perception of our placement in the sentiment cycle and some hound sleuth market profile work.

Anyhow, I sold AMBA but I will revisit.  I used these monies to promptly start a new long in GRPN.

I sold some YELP.  I took a 10 percent gain on 1/3 of a full sized position.  This is scaling and makes the psychology of swing trading much easier for me.

I sold shares of RVLT which I bought in September.  I am managing my way out of the ugliest chart I own.  This chart is so ugly, I am losing faith.  There I said it.

I sold ONVO.  Something about knowing the fickle retail base present had me looking for the exits.  I closed my runner our, +71 percent.  I quite liked seeing these types of returns, which has me weighing the thought of running an option book…this is still a seed thought.

The net result of above was taking my book from 100% long to a paltry 90% long.  I had a really difficult time selling anything, but I forced myself.

Solar caught a bid, with the Chinese burritos of the solar world catching a particular bit of strength intraday.  It will be interesting to see if follow through occurs.

Should I feel the need to get longer tomorrow, ZNGA is high on my to buy list along with SINA and perhaps I can catch a nip on one of the fuel cell beasts.  ZNGA daily chart is simply perfect.  Otherwise I will look to add to my existing longs, many of which I want more shares.

I must now return to the stove.  Good day market wizards.

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Sellers pushed into the marketplace early this morning and continue pressing into the NASDAQ.  Although a news bite may be the culprit, let us instead focus on the price action.

As I write we are making new overnight lows and they are carrying a bit of velocity.  Should the algorithms sense buyer blood we may see trade down to 3511 – 3509.75 range, pressing any long initiated yesterday during RTH underwater.

It would make sense to test the sentiment of the buyers early on after they lacked any real follow through on their rally yesterday.  Should buyers not show up at the above range our next levels of support are the LNV at 3505.50 then the value area low at mezzo-century mark 3500.

Below the mezzo century we open the door to a 12/5 retracement, when an open gap still exists down to 3478.25.

However, I am still calling for a rally off these highs.  Overhead I will look for signs of selling around 3519 (VPOC and gap fill) and yesterday’s high of 3525.

These levels can be seen on the following MP chart:

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We are fast approaching one month of static returns for the book of Raul.  November 18^th my book peaked in tandem with the swing high in ONVO and turned lower.  Still much a drunken off my superfluous hot streak, I bought WLT with funds from cashing out of AAPL (note: this required me buying said shares a few days later.  It was a sublime exit and reentry, traded like a true scalper, but perhaps more than necessary for a swing book) and cut losses on SFM and YGE.

A few short days later I bought the dip in GOGO and more CREE.  The GOGO and AMBA are who returned me to prior portfolio highs and propelled my book gingerly above prior high mark last Wednesday…you know, back when the market was going down and I was 90% long.  Then starting Thursday the bulls stampeded higher.  SOL also sent a chill across the collective spine of solar stocks, especially the YGE I have been so eagerly accumulating, effectively sending me back to Mid-November gains.

So much progress forfeited in the name of MOAR. The worst part is I like solar stocks even more at these prices.  Goodness, if my book had any cash lying around I would have been buying FSLR today.  Am I sick?  I do not believe so, when I observe the FSLR weekly chart (I know, stretching my timeframe to justify a trade) I see exactly the type of conditions I thrive in.  Have a look:

So I may forego hitting my 33% return goal on my swing portfolio, darn…I really need that money January 1^st to buy tacos and such.  I suppose what I am saying is I do not answer to anyone, this is my money, and I like my odds over the next few weeks.  It is the god damned holidays anyhow, who wants to be ferreting for giblets when they can play Edward ham hands?

I doubt however that I could play this trade as slow as LED.  That trade has been violently dead since the summer.  Net-net they are a very green shoot in my annual performance, but we have been operating on the wrong side of the chart for quite some time.  I suppose the shear age of this correction and my optimism for the industry as a whole is what has me currently positioned more aggressively now than I have been since early March.

Final thought, the NASDAQ is up 3% since November 18^th.  I am unchanged.  This means nothing to you.  It means everything to me when I glue my brain to NASDAQ 2-6 hours per day.   Here’s me verses the indices:

I am still 100% long.  I tried doing something, anything today, and no matter how hard I tried I could not justify selling anything.  I feel good about that.  Selling for the sake of selling, driven mainly from emotions associated with wheel spinning, seems like work for the sake of work.

When something breaks I will fix it, and I can’t sell YGE down here.  I can sell it lower.  I can sell it higher, but I can’t sell it here.

 

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The equity markets opened Sunday evening only to find buyers interested in increased exposure.  Since then price has behaved orderly, consolidating the overnight gains and positioning price outside of Friday’s price range and value.

Should prices on the NASDAQ composite sustain trade over 3511 into the opening bell, we are opening out of balance, and the risk of a violent move is high.  However, if I have correctly identified where were are currently trading within the sentiment cycle, we are deep in denial, which may produce muted trade.

The S&P is currently trading only two handles above Friday’s closing price which leaves the door open for a gap fill lower.  Early on, perhaps even pre-market, we may see sellers coming in to close the gap.  More important contextually than the gap however, is the low volume node we printed on Friday’s S&P volume profile at 1802.50.  This price level set value area low several times in November and on Friday the action from buyers was dynamic enough to leave a low volume, fast moving footprint.  Should the sellers quickly reject us back below this level and sustain trade for over an hour, we may be in store for further downside.

The NASDAQ is currently trading eight handles above its closing print showing greater strength early on.  I will be watching the overnight swing low at 3506.75 to measure bullish appetite early on.

Overall, the action looks ripe for a rally however it is paramount we stay objective in our analysis and accept and define price levels which may negate our thesis.  I have highlighted the low volume zone on the S&P on the following market profile chart:

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You need to be keeping fuel cell technology on your alternative energy radar. With TM talking about fuel cell cars in Japan 2015 and USA 2016, PLUGs optimism this week, and more and more technology companies installing the systems at their headquarters it is time to put these names on your radar.

Courteously of The PPT search function, I was able to quickly cue up the players in the space. Look at these charts, things are definitely heating up:

Here’s a link to the charts in finviz

Let me know any thoughts on the old school NASA technology, slowly creeping into our lives.  Will big oil allow it?

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Being young has its perks: strength, vitality, ease in courting, and lots of time to capitalize on disruption.  Disruption takes time because it must combat stubborn old folks, hell-bent on preserving their precious cash cows.

My book is a snapshot of the biggest disruptive forces right now.  Let’s have a look, shall we?

LO – electronic cigarettes, big tobacco

CREE & RVLT – LED lighting, 9 billion aging lamps

YELP – food and service review, Zagat and Google and traditional advertising

TSLA – electric cars and the supporting infrastructure, big auto

TWTR – I have no idea what twitter is, disruptive

AMBA – high definition cameras for cheap, expensive cameras and professional filmmakers

AMBA had a solid beat on earnings yesterday, but is getting the fade treatment today.  Just this morning I procured shares near the highs.  They are off a quick 4 percent.  The question is, do I care?  It is always a good time to buy a winner.  It will go lower.  I will take heat from folks on the internet, buy more at some sweet inflection point, and then ride into the sunset on the bucking bronco.  It is always a good time to buy a winner.

I am all in, 100% long for the time being.  There are other names—companies much less disruptive then the above who I hold as trading vehicles (cough cough solars) that compose the rest of my book.  But I am 16 longs, 0 shorts.  I have now made my bed atop a pendulum high on the upswing.  Can it levitate higher, or will I fall off when it swings lower?  TBD

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The markets auctioned very methodical all week ahead of what is likely to be an interesting Friday.  We tracked the control of sellers which began on Monday and came into question Wednesday with a violent neutral session.  Thursday the market told us it accepted the current prices by balancing out inside of the large neutral day and is waiting for new information before exploring elsewhere.

Overnight the NASDAQ divided itself into three micro sessions by auctioning then breaking a bit higher, auctioning then breaking higher, and finally auctioning as the USA come online.  The action overnight suggests buyers have the early edge.  However they have also pressed us into very short term overbought conditions.

Taking a look at the longer term via value migration, you can see the relative strength of the NASDAQ verses the S&P:

 

Early on we have employment data which may better set the tone for our session, but the following reference points will still be relevant in determining whether the market is breaking out of balance to the upside or the downside:

 

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