Hanging Out at The New Party

The overnight session traded almost entirely in the low volume void of yesterday’s profile from 1452.50-1454.50.  Overnight digestion up at these levels tells me nothing occurring overnight throughout the rest of the world was of greater impact than our political theater.

Levels we can monitor and cue off of from yesterday include the high volume node at 1457 where the market squeezed up to into yesterday’s close to gauge as resistance and the reactionary aggression of the sellers.

Below, should price sustain trade below 1451 we could expect a quick trade back to the middle of value at 1448 then a test of the volume peak at 1445.75.

Seeing today’s price digest yesterday’s gains within the range (inside day) would be impressive.  More importantly, I want to see how today’s profile shapes.  I’m looking for cues of balance, seller aggression, or the coveted initiative buying.  Let’s see who wants to work these areas hardest.  I’ll play my positions accordingly.

In a constructive market, I’m seeking the following Q1 allocation:

Traders who came into today’s trade net long are celebrating a massive move higher.  We’re seeing overbought conditions and traders scaling long exposure all across twitter.  Traders who joined the party after the open are mostly flat, and maybe a little nervous.

Saks (SKS) started firming up into the closing minutes and I closed out my short position for a small loss.  Small position, small loss.  Overall I’m still not constructive on department stores but I’ll wait for their technicals to deteriorate.

Aside from dumping my short, my only other actions were to buy C and ZNGA.  Neither name banked any intra-day coin, but I’m betting short term ZNGA will and intermediate term C WILLx2.

I was up over 10% on CEDC this morning only to see half of those gains erased and also caught a large fade in SINA , but I’m not sweating it much.  This may be a sell the news event and I may get stopped out, but I’m working to build into some core positions and HOLD. Then I’ll take the guns out and gun sling using only 20% of my portfolio, tap dancing across mine fields whilst smoking a COHIBA for your enjoyment. 

I like 2013 so far.  It’s my busting out year, I’m not sure I’ve brought this to your attention yet, but it’s divisible by three.  And years ending in “13” are only divisible by three every three hundred years SO YOU’S BETTAH USE IT WISELY. Take flight, be water. Take flight, be water. Take flight and be water, like a blizzard cloud.

The strong gap higher this morning pulled back once and pumped higher in a very violent manner.  Since then, we’ve seen the S&P gently fade off 8 handles from the high.  I used the early morning dip to purchase shares of Citigroup and Zynga.  Both of these buys have moved below my basis, but have provided no reason to sweat.

The morning chatter has all focused on this gap and hypothesizing how others are positioned.  It’s really good fun to speculate on the positions of other investor’s books and it’s an interesting piece of context.  I’m still cueing off the SPY chart I posted this morning, and where we are.   This gap is pretty ugly and gaping, and it makes the chart look more like an individual stock’s earning surprise than an entire index.  It’s very possible we work to backfill these levels, but first the bears need to recapture 143.50 on the SPY, a price which would reclaim about 50% of the candles from the prior swing high.  It’s my bias line for the time being.

Buying Citigroup up high here today is at risk of riding peak-to-trough, thus I only bought a half-position.  I won’t know if I’m wrong on the swing unless we lose $39.00 so I had to position accordingly.  This also gives my dry powder to buy more should we see a pullback materialize and stabilize.

Interesting weakness in department stores and other apparel companies like LULU who saw their early pop faded hard.  I’m not making too much of these developments, nor any developments until I see how the afternoon trade pans out.

As a swing trader, the close is everything.  It finalizes or negates any chart setup on the daily timeframe.

Happy New Year and it’s time to address the important matter of a market with a deal.  I’m currently 40% long, 2.5% short, and cash heavy.  The stance made sense considering the headline risk coming into today’s trade.  Now I must pick spots to add long exposure.

The anatomy of this move could have many participants caught short or downright underexposed.  Pare that with the jostling of many allocations and the environment is ripe for some big moves higher.  I’m using a Keltner channel on the SPY ETF to give me an idea of the range we could see in the intermediate term.  Expecting an open near 144.50 I see room to the upside:

I’m not going to get too fancy, I have a few names I like and most of them are my current longs: ATML, CEDC, FB, GS, LULU, and SINA.  I intend to ratchet up my net exposure by adding to a few of these names, while searching out a decent entry on C and few short squeezes.  I also have to manage my way out of this SKS short.

The cash market hasn’t had a chance to react to this market, so I’ll watch the first half hour of trade to determine aggression.

http://youtu.be/WtqS4WX4urg

Media will continue to report mundane news with a big surprise pitch.

Algorithmic trading will dominate the market more than last year.

The occasional glitches will be scolded, unless the market jerks higher.

Winter will be hard to shake in the Midwest and Northeast.

Cats will continue to dominate video and page view counts on the internet.

Tea will get way more popular.

Synthetic drugs (think bath salts) will make national news, again.

My 2013 stock of the year, Citi (shitty) bank, will perform an esoteric defiance of gravity: