Unrest into Quarter End

There you have it, anther quarter in the books and it was a doozey.  We saw everything from new tech to the uprising of our fellow man in China, the hands who build new tech.  Yet there is still more to come, another freight train barreling down the tracks.  Are you in its way?

Said train is your ego, the source of your emotional indecision and impulse.  The more you begin to understand it, the better you can see how big a beast it is compared to your more logical and academic self.  You ego can curb stomp your intelligent face with its elephant boots.

These are fast market conditions at quarter end.  The macro tides are bigger than you might have ever seen depending on your experience level.  Now is not the time to increase your average trade size.  In fact, reducing trade size might be enough to knock your ego down a few pegs and start your back on the path to operating these markets.

I have done very little this week and last.  Committing to anything longer than a few hours is a challenge.  Look at yesterday’s pick, Zillow, poof, practically dead out the gate.  Perhaps the same will happen to today’s pick, AMZN.  I can’t worry about these external events because I have no say in how they pan out.  I can control risk and continue taking the trade setups that have worked for me in the past.  The rest is fate as they say.

The Russell looked exceedingly weak all session.  There is a new happening about the market where rips are fantastic opportunities to liquidate upon.  Every rally has been met with strong supply.  Someone wants out.  You call it ‘rebalancing’ I call it, get me the F out of the stock market.  Fortunately it has only resulted in one highly correlated dump off so far.  Tomorrow could change that.  Or, it could do the exact opposite.

Listen, I will discount any and all fear mongering associated with Israel, Uncle Vlad, or the USA.  But when Hong Kong unrest heats up, I take note.  These people are untested for many 100 years.  They always bend the knee to their commie overlords.  What if they don’t this time?  Every skirmish of my lifetime would pale in comparison to an Asian battle.   Meanwhile they all ‘enjoy’ watching Jack Ma earn more than the last 200 generations of their friends and family.  Some will feel empowered, others rebellious.

Thus, I am cautiously neutral.  Funds have been shifted into my futures account where I intend to be much more intraday until we see some resolution.  As for my October risk, it is Martha Stewart committed, if that makes sense.

Stay nimble my friends.

 

Pushing Through Soft Data

Nasdaq futures are surprisingly firm despite bad economic news out of Europe overnight.  Perhaps taking a page from the QE playbook in the United States, index futures rallied overnight on weaker-than-expected CPI , Employment Change, and Retail Sales to name a few.  Volume and range are running at a normal clip unlike yesterday and prices are currently set to gap up and out of yesterday’s range.  On today’s docket we have Chicago Purchasing Manager index at 9:45 and Consumer Confidence at 10:00.  Fed’s Powell is set to speak at 10:45 but is likely to be a low impact event.  After hours we have China Manufacturing PMI numbers.

Yesterday we looked at the weekly candle chart and observed how the long term remains buyer controlled as we thoroughly auction an old gap zone.  Today let’s look at the monthly volume profile chart which shows an interesting structure on the month.  We tested lower to the lowest volume point on last month’s chart and sharply rejected away.  The overall structure of this month is a robust distribution of acceptance.  If we are to move higher from there, there would be a sold structure beneath us:

09292014_monthly_NQ

Even though we are questioning the longevity of intermediate term balance, it remains in place as we enter today’s trade.  For sellers to hold onto their edge inside this balance, we likely need to see prices roll over and take out yesterday’s intraday higher low at 4021.75.  This move would be the first step toward accomplishing a lower-lower trend continuation.  A range and price gap still remains below which might entice the move.  There MCVPOC is just above current prices at 4066.  This liquidity is likely to act like a magnet as we trade nearby.  I have noted these observations as well as key LVNs below:

09302014_intterm_NQ

Finally, I have noted the key short term levels I will be observing below:

09302014_marketprofile_NQ

Just Wait Until They Make Them Smaller

Today the stock price of GoPro, an American innovation in wearable technology, went apeshit to the upside.  This euphoric action ushered the simple class onto their soapbox to decree from their mountain of Twitter followers.  At this point in the cycle, you are either in the “camera on a stick” or “late to the party but screw it there’s blow” category.  And that is okay, this is how markets are made.

You might think I feel a sense of missing out.  After all, I sold just shy of seventy two.  This assumption couldn’t be any further from the truth.  I made a call months ago, executed it, and participated in the lion’s share of this gain.  However, I am a long term bull on GoPro and look forward to the day you decide to cast these shares into the dumpster and declare them broken.  There I will be, like a greasy banana peel, slipping you to the ground and ensuring I milk another 2% out of your liquidation.

And in the meantime, I will spot the next big thing before most.  My first GoPro was procured from an infomercial on Nickelodeon.  My ear is always to the streets bro.

Yes, there is competition flooding into the marketplace and playing catch up.  If you do not expect that, then you have never witnessed the birth of a fantastic product.  Copy cats have to chase the early market adapter while they innovate to bigger and better widgets.  Or in the case of wearables, smaller, much smaller.  I know most of you homos love your American Football.  Just imagine the boner you would obtain from watching a point-of-view helmet cam on your fantasy quarterback man crush?  It’s coming baby, will you?

As GoPro refines their product to smaller and smaller scales, the company will grow revenues to a robust, almost surreal size.  They are innovation in technology, never discount that.  As for applying valuations, good luck.  Wrapping your mind around the total addressable market (TAM) is a fool’s guess.  Don’t be a fool.

If you are chasing this sucker higher, have some risk in place. I salute your form and wish you good fortune.  Make the ‘intelligent’ short sellers walk the plank, mate.

GPRO_AMBA

Big Wave Series

Waves really kick up at quarter end, and as much as I am yearning to be back in the index futures arena, these conditions could vanish.  In the past when conditions perk up, I abandon my intermediate term stock swing strategy for long term while my energy is focused on day trading.

This time around I intend to do a little of both.  There are essentially two types of day entries to trading.  There is the longer swing trade, which can occur intraday, and then there is the scalp.  When working a hypothesis, that is a swing trade.  The entry into a swing starts with a price level in the hypothesis.  As we travel further from the entry and closer to the target, all you can do is scalp.  My plan is to have 3-4 setups in stocks I am watching for the day and when an intraday swing is setting up, enter both the stock and futures.  Too many times a hypothesis move occurs but the stock I choose does not participate.  Conversely, many times a stock I choose will start to work while my futures entry stops out as the market continues.

This is the proverbial chicken before the egg conundrum.  What moves first?  Stocks then the market or vice versa.  One would think stocks would move first then the index because stocks are the underlying value of the index but it does not always work that way.

Today I picked up Zillow once the buyers emerged.  What turned out to be a wonderful swing hypothesis (see primary hypo-morphed-to-hypo 2) was wasted.  It was the proverbial kick in the butt to return to active futures swing/scalping.

When the tide shifts, it is our job to read the currents and adjust.  If the Nasdaq keeps this speed up one would be negligent to not pursue the opportunity abound.

Sellers Take Control Overnight

Sellers dominated the globex trading session overnight by sustaining a downtrend throughout trade.  Sources suggest the unrest in Hong Kong may be weighing on investors’ minds as we start the week.  However what matters most is the fast approaching month end.  This month saw shifting tides across the macro spectrum and as that money sloshes around bigger waves occur.

If you recall, we discussed a gap on the Nasdaq Composite chart which dated back to April 2000.  When the dot com hysteria came tumbling down it included a quarterly gap down which never filled.  When we came into the gap at the end of last August prices ripped through to the other side in a scant two weeks.  Since then we printed three hammers with the wicks increasing in size as uncertainty grew.  Then last week we fell back down through the bottom of the gap before finding buyers in a zone where sellers were initially defending.  This is how an uptrend works, until it doesn’t.  I have highlighted these long term observations below:

09292014_weekly_NQ

Intermediate term, we have been monitoring a balance which developed, showed sell side imbalance, moved lower and corrected itself back into symmetry, made new highs confirming the balance but also possibly a failed auction, and since then we are showing signs of a downtrend.  If we make a new low, and especially if it entices more supply into the market, we could very easily transition into a seller controlled intermediate-term timeframe.  See below:

09292014_intterm_NQ

Finally, drawing our eyes in close to the short term auction, I had made some modifications to the profiles to show us a clear picture of the auction.  Thursday was the most sell flow I can ever recall seeing since becoming intimately involved with the Nasdaq futures around March this year.  It was 3 straight hours of relentless selling.  When responsive buyers did emerge, printing two impressive 12.5 point and 10 point rotations, each was sold into.  It took six more 10+ point rotations to stabilize the market.  However, the market did stabilize on the short term, and the resulting print is an enormous long liquidation, b-shaped profile.  Then Friday we popped out of the low balance and printed what amounts to a short squeeze P-shape.  As we come into cash open, the overnight sellers have rejected the small upper value and put us back inside the lower balance zone.  How we navigate this region early on will offer us objective clues into short term direction.  I have highlighted the key price levels below:

09292014_marketprofile_NQ

The ‘Jack Ma’ Offer

JackMAMuch of what I write is a test of sorts to query the subconscious of like-minded peers who carry on similar pursuits to my own.  Put simply, we communicate.

After not giving my BABA trade enough risk space, I was stopped out about 0.05 from the current all time low.  Now I watch from the sidelines a bit like Smeagol.  Late in the afternoon I put forth the proposition that someone needed to 300 the ‘Jack Ma’ offer at $90 per share.  Regardless of whether the seller at $90 was Jack Ma, this is a perfect demonstration of round number psychology.  And this one is huge.

Our friends in the Far East are vital.  Grossly outnumbering us, owning all of our debt paper, they’re beating us at our own game.  But we still have something they don’t—the best financial system, a real stock market. This is biggest IPO [sic].  People are suddenly realizing you don’t have to buy a shipping container’s worth of goods to outsource that shit.  Cotton is headed lower, they know it, where else do you anticipate us purchasing are clothing from?  Los Angeles?

Eyes are on BABA, busy eyes who can only monitor bigger ideas, like $10 dollar increments, especially an increment just below the wonderfully curved $100.

This is how psychological levels work.  Nothing I stated above matters.  The world exists however we choose to project upon it.  But trading with good form is just cold, dead, numbers and us, we are just bags of rotting flesh.  Try to see it.

Have a great weekend friendos

BATTLE SPEED

This market has been fast and that acceleration in velocity has been a tonal shift in and of itself.  Many of you do not like processes.  They are the red tape in life which separates the have’s from the have not’s.  What we are seeing today is by no means an all clear flag to pile back into longs, and let’s be clear, that flag doesn’t exist.  What is occurring today is a neutral print on the Nasdaq.  These start to show up near inflection points.  The market is making an earnest attempt to squeeze shorts into the weekend.

With all the fear mongering taking place on the news channels it would only be appropriate to release some pressure on a book which might have become ‘too short’.  The buyers started this move early which means they are now tasked with sustaining the action for another hour and 15 minutes.  Believe me when I tell you the closing bell can’t come soon enough for buyers.

The range is already abnormal for an upside day.  Extending from here would lead me to presume something indeed is afoot.  Someone is front running the grand scheme of beating the living daylights out of equity prices ahead of Q4 to boost performance metrics in the final quarter.  This is merely a cynic’s words.

IN short, this is not normal, it is a feather in the bull cap, and no matter which side of the fence you reside on, its best you wear a helmet.

Intestinal Fortitude

Nasdaq futures were already operating on slightly above average volume ahead of the 8:30am GPD release.  Prices were up ahead of the data and saw a slight selling reaction to the inline numbers.  There is also news of Bill Gross leaving Pimco for Janus Capital.  Since the news came out we have seen selling accelerate a bit and the news has also served as a disruption to the overall bond market.

Yesterday the sellers made enough progress on the Nasdaq to call intermediate term balance into question.  The boundaries of intermediate term balance as well as any bracketed-type trade are always a bit grey, meaning you cannot assign a fixed price level to them.  Instead we can use volume profile to see if activity dries up as we enter the extreme territory.  Also of importance is the price action leading into the extreme.  This move lower started with a failed auction, an attempt to make new highs where activity quickly evaporated followed by a fast move in the opposite direction.  It then printed a lower high and lower low suggesting multiple day seller control.  This balance is going on 30 sessions old.  Once they become this mature the likelihood of leaving them to explore new prices is elevated.  In summary, we are at risk of starting a discovery process lower.  I have highlighted these observations and more on the following intermediate term market profile:
09262014_intterm_NQ

I have noted short term price levels on the following market profile chart.  Note also, barely visible in the top left of the chart is the “solid structure” I discussed yesterday.  This multiple day support foundation was obliterated yesterday and is out of normal upside range as of our current premarket prices.  See below:

09262014_marketprofile_NQ

YOU ARE BEING LIQUIDATED UPON

That hot stream flowing down your shirt is the blood of dip buyers.  There is a definite tonal shift in the marketplace and each attempt to buy the Nasdaq was met with an overwhelming supply of sellers.  Someone knows something and is liquidating at every chance they see.  This is panic selling, fund raising, flight to safety action.

But why the hell is everyone so scared?  Is it the inflated multiples many stocks trade at?  It could be.  Is it quarter end re-balancing?  Perhaps.  Is it, “let’s have a nice entry point for Q4 so we can have a decent quarter and not lose all our investors?”  Is it our newest puppet installation, Haider al-Abadi spouting off about an imminent subway attack (dick)?  People are scared and it is showing up in risk asset prices, that is all you need to know.

Prices tend to overshoot, and one could make a reasonable argument that the intermediate term still barely hangs in balance.  That however, depends on tomorrow.  If we retrace some of this sell candle tomorrow only to see another strong sell day TOMORROW, then this intermediate term balance argument is officially toast. The sun, is going down, you dig?

Speaking of foods which coincidentally refer to my current condition, my nuts are on the proverbial chopping block after making some dip buys this morning.  I joined the KORS trade, it held up splendidly amid this sell flow.  I also bought NFLX.  It’s performance was not quite as impressive and truth be told it was maleficent.  It just sat there at the lows, brooding.  Do you see how I can personify the price action of a stock with a taste of fear and negativity?  It is very unhealthy for the trading psyche.  I do it simply to entertain you.  It is a narrow line I walk out here in the limelight.  The truth is this stock does not care if you bought or sold it.  It printed a b-shaped long liquidation profile, there were no afternoon sellers, this is all I can say with a reasonable amount of confidence.  Perhaps my duality will prompt someone to deduce I am on the LSD today.  Who knows what any of us truly have in store?

I suddenly feel like a rather brilliant risk manager from stopping out Visa and Nimble yesterday.  See how that goddamn feeling didn’t get in my way too long?  RISK, PLAN, LOGOs—these are your only real boulders.

If this game is about becoming really good at taking punches, then after 2014 I ought to be a regular Mohammad Ali.  Here’s to keeping my limber mind.  *clinks glasses*

Until tomorrow, vai con dios

Stable Structure

Nasdaq futures traded in a quiet range for most of the globex session before selling stepped up around 8am.  Since 8am there has been a steady flow of sell orders which paused only briefly ahead of the 8:30am durable goods order release.  Overall we are priced to gap down at the open of US trade.  Just after the open we will have PMI numbers at 9:45am, natural gas storage data at 10:30am, Kansas City Fed Manufacturing Activity at 11am, and Fed’s Lockhart speaks at 1:20pm.  Bank of England Carney is speaking as we head into US trade and the main talking point is interest rates which he says are close to rising.

The intermediate term timeframe continued its balancing act yesterday when it quickly traversed the point of control at 4066.  The velocity of the move might be attributed to the compression which took place prior to the breakout.  When balance begins to form inside of a larger balance, you know there is a coil ready to spring a big move.  Buyers will want to defend their progress and extend upon it soon, otherwise they risk calling the entire move into question.  I have noted the key levels I will be observing on the following volume profile chart:

09252014_intterm_NQ

On the below market profile chart, I have made some cuts and merges to best view the auction taking place.  Note the solid structure below our current prices.  This is comprised of trade from late Monday morning through to early yesterday.  On either side of it is the hard sell on Monday’s open and the fast buy yesterday.  I have noted the key short term levels I will be observing as well:

09252014_marketprofile_NQ

 

 

Unrest into Quarter End

There you have it, anther quarter in the books and it was a doozey.  We saw everything from new tech to the uprising of our fellow man in China, the hands who build new tech.  Yet there is still more to come, another freight train barreling down the tracks.  Are you in its way?

Said train is your ego, the source of your emotional indecision and impulse.  The more you begin to understand it, the better you can see how big a beast it is compared to your more logical and academic self.  You ego can curb stomp your intelligent face with its elephant boots.

These are fast market conditions at quarter end.  The macro tides are bigger than you might have ever seen depending on your experience level.  Now is not the time to increase your average trade size.  In fact, reducing trade size might be enough to knock your ego down a few pegs and start your back on the path to operating these markets.

I have done very little this week and last.  Committing to anything longer than a few hours is a challenge.  Look at yesterday’s pick, Zillow, poof, practically dead out the gate.  Perhaps the same will happen to today’s pick, AMZN.  I can’t worry about these external events because I have no say in how they pan out.  I can control risk and continue taking the trade setups that have worked for me in the past.  The rest is fate as they say.

The Russell looked exceedingly weak all session.  There is a new happening about the market where rips are fantastic opportunities to liquidate upon.  Every rally has been met with strong supply.  Someone wants out.  You call it ‘rebalancing’ I call it, get me the F out of the stock market.  Fortunately it has only resulted in one highly correlated dump off so far.  Tomorrow could change that.  Or, it could do the exact opposite.

Listen, I will discount any and all fear mongering associated with Israel, Uncle Vlad, or the USA.  But when Hong Kong unrest heats up, I take note.  These people are untested for many 100 years.  They always bend the knee to their commie overlords.  What if they don’t this time?  Every skirmish of my lifetime would pale in comparison to an Asian battle.   Meanwhile they all ‘enjoy’ watching Jack Ma earn more than the last 200 generations of their friends and family.  Some will feel empowered, others rebellious.

Thus, I am cautiously neutral.  Funds have been shifted into my futures account where I intend to be much more intraday until we see some resolution.  As for my October risk, it is Martha Stewart committed, if that makes sense.

Stay nimble my friends.

 

Pushing Through Soft Data

Nasdaq futures are surprisingly firm despite bad economic news out of Europe overnight.  Perhaps taking a page from the QE playbook in the United States, index futures rallied overnight on weaker-than-expected CPI , Employment Change, and Retail Sales to name a few.  Volume and range are running at a normal clip unlike yesterday and prices are currently set to gap up and out of yesterday’s range.  On today’s docket we have Chicago Purchasing Manager index at 9:45 and Consumer Confidence at 10:00.  Fed’s Powell is set to speak at 10:45 but is likely to be a low impact event.  After hours we have China Manufacturing PMI numbers.

Yesterday we looked at the weekly candle chart and observed how the long term remains buyer controlled as we thoroughly auction an old gap zone.  Today let’s look at the monthly volume profile chart which shows an interesting structure on the month.  We tested lower to the lowest volume point on last month’s chart and sharply rejected away.  The overall structure of this month is a robust distribution of acceptance.  If we are to move higher from there, there would be a sold structure beneath us:

09292014_monthly_NQ

Even though we are questioning the longevity of intermediate term balance, it remains in place as we enter today’s trade.  For sellers to hold onto their edge inside this balance, we likely need to see prices roll over and take out yesterday’s intraday higher low at 4021.75.  This move would be the first step toward accomplishing a lower-lower trend continuation.  A range and price gap still remains below which might entice the move.  There MCVPOC is just above current prices at 4066.  This liquidity is likely to act like a magnet as we trade nearby.  I have noted these observations as well as key LVNs below:

09302014_intterm_NQ

Finally, I have noted the key short term levels I will be observing below:

09302014_marketprofile_NQ

Just Wait Until They Make Them Smaller

Today the stock price of GoPro, an American innovation in wearable technology, went apeshit to the upside.  This euphoric action ushered the simple class onto their soapbox to decree from their mountain of Twitter followers.  At this point in the cycle, you are either in the “camera on a stick” or “late to the party but screw it there’s blow” category.  And that is okay, this is how markets are made.

You might think I feel a sense of missing out.  After all, I sold just shy of seventy two.  This assumption couldn’t be any further from the truth.  I made a call months ago, executed it, and participated in the lion’s share of this gain.  However, I am a long term bull on GoPro and look forward to the day you decide to cast these shares into the dumpster and declare them broken.  There I will be, like a greasy banana peel, slipping you to the ground and ensuring I milk another 2% out of your liquidation.

And in the meantime, I will spot the next big thing before most.  My first GoPro was procured from an infomercial on Nickelodeon.  My ear is always to the streets bro.

Yes, there is competition flooding into the marketplace and playing catch up.  If you do not expect that, then you have never witnessed the birth of a fantastic product.  Copy cats have to chase the early market adapter while they innovate to bigger and better widgets.  Or in the case of wearables, smaller, much smaller.  I know most of you homos love your American Football.  Just imagine the boner you would obtain from watching a point-of-view helmet cam on your fantasy quarterback man crush?  It’s coming baby, will you?

As GoPro refines their product to smaller and smaller scales, the company will grow revenues to a robust, almost surreal size.  They are innovation in technology, never discount that.  As for applying valuations, good luck.  Wrapping your mind around the total addressable market (TAM) is a fool’s guess.  Don’t be a fool.

If you are chasing this sucker higher, have some risk in place. I salute your form and wish you good fortune.  Make the ‘intelligent’ short sellers walk the plank, mate.

GPRO_AMBA

Big Wave Series

Waves really kick up at quarter end, and as much as I am yearning to be back in the index futures arena, these conditions could vanish.  In the past when conditions perk up, I abandon my intermediate term stock swing strategy for long term while my energy is focused on day trading.

This time around I intend to do a little of both.  There are essentially two types of day entries to trading.  There is the longer swing trade, which can occur intraday, and then there is the scalp.  When working a hypothesis, that is a swing trade.  The entry into a swing starts with a price level in the hypothesis.  As we travel further from the entry and closer to the target, all you can do is scalp.  My plan is to have 3-4 setups in stocks I am watching for the day and when an intraday swing is setting up, enter both the stock and futures.  Too many times a hypothesis move occurs but the stock I choose does not participate.  Conversely, many times a stock I choose will start to work while my futures entry stops out as the market continues.

This is the proverbial chicken before the egg conundrum.  What moves first?  Stocks then the market or vice versa.  One would think stocks would move first then the index because stocks are the underlying value of the index but it does not always work that way.

Today I picked up Zillow once the buyers emerged.  What turned out to be a wonderful swing hypothesis (see primary hypo-morphed-to-hypo 2) was wasted.  It was the proverbial kick in the butt to return to active futures swing/scalping.

When the tide shifts, it is our job to read the currents and adjust.  If the Nasdaq keeps this speed up one would be negligent to not pursue the opportunity abound.

Sellers Take Control Overnight

Sellers dominated the globex trading session overnight by sustaining a downtrend throughout trade.  Sources suggest the unrest in Hong Kong may be weighing on investors’ minds as we start the week.  However what matters most is the fast approaching month end.  This month saw shifting tides across the macro spectrum and as that money sloshes around bigger waves occur.

If you recall, we discussed a gap on the Nasdaq Composite chart which dated back to April 2000.  When the dot com hysteria came tumbling down it included a quarterly gap down which never filled.  When we came into the gap at the end of last August prices ripped through to the other side in a scant two weeks.  Since then we printed three hammers with the wicks increasing in size as uncertainty grew.  Then last week we fell back down through the bottom of the gap before finding buyers in a zone where sellers were initially defending.  This is how an uptrend works, until it doesn’t.  I have highlighted these long term observations below:

09292014_weekly_NQ

Intermediate term, we have been monitoring a balance which developed, showed sell side imbalance, moved lower and corrected itself back into symmetry, made new highs confirming the balance but also possibly a failed auction, and since then we are showing signs of a downtrend.  If we make a new low, and especially if it entices more supply into the market, we could very easily transition into a seller controlled intermediate-term timeframe.  See below:

09292014_intterm_NQ

Finally, drawing our eyes in close to the short term auction, I had made some modifications to the profiles to show us a clear picture of the auction.  Thursday was the most sell flow I can ever recall seeing since becoming intimately involved with the Nasdaq futures around March this year.  It was 3 straight hours of relentless selling.  When responsive buyers did emerge, printing two impressive 12.5 point and 10 point rotations, each was sold into.  It took six more 10+ point rotations to stabilize the market.  However, the market did stabilize on the short term, and the resulting print is an enormous long liquidation, b-shaped profile.  Then Friday we popped out of the low balance and printed what amounts to a short squeeze P-shape.  As we come into cash open, the overnight sellers have rejected the small upper value and put us back inside the lower balance zone.  How we navigate this region early on will offer us objective clues into short term direction.  I have highlighted the key price levels below:

09292014_marketprofile_NQ

The ‘Jack Ma’ Offer

JackMAMuch of what I write is a test of sorts to query the subconscious of like-minded peers who carry on similar pursuits to my own.  Put simply, we communicate.

After not giving my BABA trade enough risk space, I was stopped out about 0.05 from the current all time low.  Now I watch from the sidelines a bit like Smeagol.  Late in the afternoon I put forth the proposition that someone needed to 300 the ‘Jack Ma’ offer at $90 per share.  Regardless of whether the seller at $90 was Jack Ma, this is a perfect demonstration of round number psychology.  And this one is huge.

Our friends in the Far East are vital.  Grossly outnumbering us, owning all of our debt paper, they’re beating us at our own game.  But we still have something they don’t—the best financial system, a real stock market. This is biggest IPO [sic].  People are suddenly realizing you don’t have to buy a shipping container’s worth of goods to outsource that shit.  Cotton is headed lower, they know it, where else do you anticipate us purchasing are clothing from?  Los Angeles?

Eyes are on BABA, busy eyes who can only monitor bigger ideas, like $10 dollar increments, especially an increment just below the wonderfully curved $100.

This is how psychological levels work.  Nothing I stated above matters.  The world exists however we choose to project upon it.  But trading with good form is just cold, dead, numbers and us, we are just bags of rotting flesh.  Try to see it.

Have a great weekend friendos

BATTLE SPEED

This market has been fast and that acceleration in velocity has been a tonal shift in and of itself.  Many of you do not like processes.  They are the red tape in life which separates the have’s from the have not’s.  What we are seeing today is by no means an all clear flag to pile back into longs, and let’s be clear, that flag doesn’t exist.  What is occurring today is a neutral print on the Nasdaq.  These start to show up near inflection points.  The market is making an earnest attempt to squeeze shorts into the weekend.

With all the fear mongering taking place on the news channels it would only be appropriate to release some pressure on a book which might have become ‘too short’.  The buyers started this move early which means they are now tasked with sustaining the action for another hour and 15 minutes.  Believe me when I tell you the closing bell can’t come soon enough for buyers.

The range is already abnormal for an upside day.  Extending from here would lead me to presume something indeed is afoot.  Someone is front running the grand scheme of beating the living daylights out of equity prices ahead of Q4 to boost performance metrics in the final quarter.  This is merely a cynic’s words.

IN short, this is not normal, it is a feather in the bull cap, and no matter which side of the fence you reside on, its best you wear a helmet.

Intestinal Fortitude

Nasdaq futures were already operating on slightly above average volume ahead of the 8:30am GPD release.  Prices were up ahead of the data and saw a slight selling reaction to the inline numbers.  There is also news of Bill Gross leaving Pimco for Janus Capital.  Since the news came out we have seen selling accelerate a bit and the news has also served as a disruption to the overall bond market.

Yesterday the sellers made enough progress on the Nasdaq to call intermediate term balance into question.  The boundaries of intermediate term balance as well as any bracketed-type trade are always a bit grey, meaning you cannot assign a fixed price level to them.  Instead we can use volume profile to see if activity dries up as we enter the extreme territory.  Also of importance is the price action leading into the extreme.  This move lower started with a failed auction, an attempt to make new highs where activity quickly evaporated followed by a fast move in the opposite direction.  It then printed a lower high and lower low suggesting multiple day seller control.  This balance is going on 30 sessions old.  Once they become this mature the likelihood of leaving them to explore new prices is elevated.  In summary, we are at risk of starting a discovery process lower.  I have highlighted these observations and more on the following intermediate term market profile:
09262014_intterm_NQ

I have noted short term price levels on the following market profile chart.  Note also, barely visible in the top left of the chart is the “solid structure” I discussed yesterday.  This multiple day support foundation was obliterated yesterday and is out of normal upside range as of our current premarket prices.  See below:

09262014_marketprofile_NQ

YOU ARE BEING LIQUIDATED UPON

That hot stream flowing down your shirt is the blood of dip buyers.  There is a definite tonal shift in the marketplace and each attempt to buy the Nasdaq was met with an overwhelming supply of sellers.  Someone knows something and is liquidating at every chance they see.  This is panic selling, fund raising, flight to safety action.

But why the hell is everyone so scared?  Is it the inflated multiples many stocks trade at?  It could be.  Is it quarter end re-balancing?  Perhaps.  Is it, “let’s have a nice entry point for Q4 so we can have a decent quarter and not lose all our investors?”  Is it our newest puppet installation, Haider al-Abadi spouting off about an imminent subway attack (dick)?  People are scared and it is showing up in risk asset prices, that is all you need to know.

Prices tend to overshoot, and one could make a reasonable argument that the intermediate term still barely hangs in balance.  That however, depends on tomorrow.  If we retrace some of this sell candle tomorrow only to see another strong sell day TOMORROW, then this intermediate term balance argument is officially toast. The sun, is going down, you dig?

Speaking of foods which coincidentally refer to my current condition, my nuts are on the proverbial chopping block after making some dip buys this morning.  I joined the KORS trade, it held up splendidly amid this sell flow.  I also bought NFLX.  It’s performance was not quite as impressive and truth be told it was maleficent.  It just sat there at the lows, brooding.  Do you see how I can personify the price action of a stock with a taste of fear and negativity?  It is very unhealthy for the trading psyche.  I do it simply to entertain you.  It is a narrow line I walk out here in the limelight.  The truth is this stock does not care if you bought or sold it.  It printed a b-shaped long liquidation profile, there were no afternoon sellers, this is all I can say with a reasonable amount of confidence.  Perhaps my duality will prompt someone to deduce I am on the LSD today.  Who knows what any of us truly have in store?

I suddenly feel like a rather brilliant risk manager from stopping out Visa and Nimble yesterday.  See how that goddamn feeling didn’t get in my way too long?  RISK, PLAN, LOGOs—these are your only real boulders.

If this game is about becoming really good at taking punches, then after 2014 I ought to be a regular Mohammad Ali.  Here’s to keeping my limber mind.  *clinks glasses*

Until tomorrow, vai con dios

Stable Structure

Nasdaq futures traded in a quiet range for most of the globex session before selling stepped up around 8am.  Since 8am there has been a steady flow of sell orders which paused only briefly ahead of the 8:30am durable goods order release.  Overall we are priced to gap down at the open of US trade.  Just after the open we will have PMI numbers at 9:45am, natural gas storage data at 10:30am, Kansas City Fed Manufacturing Activity at 11am, and Fed’s Lockhart speaks at 1:20pm.  Bank of England Carney is speaking as we head into US trade and the main talking point is interest rates which he says are close to rising.

The intermediate term timeframe continued its balancing act yesterday when it quickly traversed the point of control at 4066.  The velocity of the move might be attributed to the compression which took place prior to the breakout.  When balance begins to form inside of a larger balance, you know there is a coil ready to spring a big move.  Buyers will want to defend their progress and extend upon it soon, otherwise they risk calling the entire move into question.  I have noted the key levels I will be observing on the following volume profile chart:

09252014_intterm_NQ

On the below market profile chart, I have made some cuts and merges to best view the auction taking place.  Note the solid structure below our current prices.  This is comprised of trade from late Monday morning through to early yesterday.  On either side of it is the hard sell on Monday’s open and the fast buy yesterday.  I have noted the key short term levels I will be observing as well:

09252014_marketprofile_NQ

 

 

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