Trading Requires Careful Planning and Execution

They say you pay your tuition to the market either through time or money.  That saying makes sense to me and typically it takes a big loss to open my eyes to a chink in the armor.  When your trading live it is easy to get caught flat footed without a plan.  I gave back four days of (hypothetical, still in a test environment) earnings this morning attempting to fade the early drive lower.

If you have tuned in to the ongoing Opening Swing series, then you have seen how an early move away from the opening swing is often faded.  Via old school chart markups and spreadsheets I am building the probability out, but this takes time and in the meantime I want to experience the trade live to develop expectations and rules.

It is crystal clear this trade needs lots of structure and B+ execution at a minimum to be consistently profitable.  The potential reward for building such a plan is great enough to merit such focus.  Some of the rules can be coded directly into my charting package, but others including trade management, must be done on a discretionary basis.  For now, the following rules were added to this trading plan:

I will not attempt this trade inside a series of single prints.  Example from today:

NQ__MarketProfile_04242014_toughFADE

The second rule is I will only make one attempt to fade this first move per value area.  If I stop out inside the first value area, then I will wait for the next value area and look for a setup to occur.

Here’s a look at what today’s market profile looked like verses the regular trading hours profile:

NQ__MarketProfile_04242014_toughFADE_RTHprofile

This above exercise was good because it kept me distracted from my live trading, which I rarely care to partake in during the opening minutes of trade.  When I saw the strong responsive buying happening, I quickly queued up my plan from yesterday and went to work acquiring exactly what I planned on.  My plan for this swing is one part intermediate term Nasdaq chart work and one part stock picking.  When the Nasdaq was telling me to buy there were 100 different tickers to choose from.  How does one decide which to buy and then execute in a timely manner?  Exactly, a plan.  Here’s the picture as I see it:

NQ_IntermediateTerm_04242014_afterhours

I ended up getting lovely fills in both DDD and SINA which dropped my cost basis even lower while I DO THE DIRTY, exiting my NFLX puts which served as a lovely momentum hedge during the move lower, and getting back on the Facebook trade.  I essentially only acted upon my book from 9:50 am to 10:25am aka the low of the day.  The only off plan trade was buying some RGLD calls.  However, I have traded RGLD for years and when gold was making a violent move I bought the position.  In hindsight, it may end up being a loser with the look of the daily candle.  I won’t know for a few days though.

Regardless, plan your trades and trade your plan.  This is priority #1.  If you think you can improvise in the heat of trade without some backbone of planning, good luck with that.

80% long into tomorrow’s tap. The market needs to bring the hurt to shake me from my low risk power stance.

DDD trade plan (note: earnings on the 29th):

http://ibankcoin.com/raul3/2014/04/09/swing-trade-plan-for-ddd/

SINA trade plan:

http://ibankcoin.com/raul3/2014/04/08/doubling-down-doing-the-dirty/

 

DROPPED THE HAMMER

I bought the dip, even though it was far too fast.  I basically did this:

“That’s the plan.  Let me restate the plan in case you lost track: buy FB, buy back the shares I scaled in DDD and SINA (fiddler on the roof trading), and brood harder then Ryan Gosling about this NFLX put.”

But I closed the NFLX put and added a (Royal) RGLD on the side.

This rally almost got away from me…developing…

Cash down to 20%

Sure Is Quiet Around Here, Considering The Action

Nasdaq futures are quite a bit higher overnight, far outpacing the performance of all other major indices.  As of this writing, we are set to open about 50-to-60 points higher on the /NQ_F futures.  Pre market we had Durable Goods Orders and Jobless Claims which brought more buyers in, however most of the overnight strength is being attributed to earnings.

We are now above the midpoint of my proposed bracket range on the NASDAQ meaning the risk of being long is greater than being short.  At the same time, our intermediate auction continues higher.

These big overnight gaps can often create a frustrating day trade environment.  Risk is elevated because the market is clearly out of balance.  Often it is best to do very little, instead managing existing positions and carefully looking for rotation opportunities into stocks that have not run.

I highlight my primary upside target for the Nasdaq on the following intermediate term volume composite:

NQ_IntermediateTerm_04242014

I am using a 24-hour market profile this morning since we had so much overnight action.  I want to see the footprint this action left and look for high opportunity levels as well as envision how today’s profile may take shape.  I have highlighted these observations below:

 

NQ__MarketProfile_04242014

Time to Drop The Hammer

I am from the school of thought that third time is always the charm.  Twice, I have bought the dip off a peak in the NASDAQ and TWICE I have been on the receiving end of a proper facial correction.  My greatest fear right now, as the market lets off its final throws is that I will have to buy a big gap up tomorrow.

I am afraid I am not long enough.  There I said it.

I was too long the other two times, and now I am not long enough to capitalize on my turn at buy the dip on the donkey.

You should have a list of high priority stocks, preferably ones who already reported earnings.  I want pure, uncut social crack rock so I will be e-stalking Facebook.  I need it to compliment my Z, ANGI, TWTR, and SINA.  My collection would be complete, like getting the Master Splinter slammer to complete you TMNT pog set.  It has to be done, even if it costs you a month’s wages.

I have to make a decision about this NFLX put too.  I will take luck over skill any day, but the harder I work the luckier I get.  HBO signed rights off to Amazon prime leaving everyone to wonder, is NFLX losing its clout?  Have they only built a House of Cards?  Groan all you want, I am not jiving this company at all.  It rubs me the wrong way more than any other momentum stock.  I scaled ½ my puts today.

ANGI reported very inline losses.  Bravo ANGI, you are really good at sticking to your forecasted numbers.  This may be enough to snap this old girl out of her funk.  If yes, then I stand to benefit.

I have some YELP calls which are about worthless right now.  They will be worthless unless the price of YELP is greater than $69 by Friday.  I am not sure any amount of hard work will produce the type of luck I need to see this play to victory.  Good news is I am trading well—I scaled ½ this position off when it went back to break even yesterday, after it quickly became a loser.  This is winning while losing.  It was at the same time I scaled some DDD and SINA which I now need to hurry up and buy back.

That’s the plan.  Let me restate the plan in case you lost track: buy FB, buy back the shares I scaled in DDD and SINA (fiddler on the roof trading), and brood harder then Ryan Gosling about this NFLX put.

Futures trading was red on the day, I lost -12 ticks or 4 points.  I am getting better my friends.  Much much better.  Of course once this simulated numbers are complete I have to lop off about 25% for slippage.  If this new strategy still stays green after this calculation, well then, it’s time to go live.  Great excitement!

Final note: if I seem a bit light in the loafers today, then it certainly is because I sidestepped the blood bath in CREE.  You may or may not know that a short week ago CREE and RVLT represented about 25% of my portfolio.  As of Monday afternoon, they represented zero percent.  Very nice, very clean.  I am still an LED man, but I will very carefully get back into these dorks.

What’s your top pick into my hypothesized rally?  I still like TSLA, but my top pick is stretched and resilient Zillow.

Potential to Run Higher

Nasdaq futures traded mostly flat and balanced overnight until some early morning selling pushed us a touch lower.  As a result, the overnight profile shows two distinct volume distributions.  We have Flash PMI data at 9:45 and New Home Sales at 10:00 as well as some major Dow components reporting earnings before the bell.  Perhaps the most sensitive announcements pertaining to the Nasdaq come out after market close today, including earnings from Apple and Facebook.

What I attempt to do with a long term chart is speed read the context of the market long term and use the information for broad strokes of risk analysis.  Essentially, my vision is for the long term auction to come into balanced, bracketed trade.  This is something that has not really happened since mid 2012.  We are roughly above the middle or mean of this bracket, which makes risk of holding longs greater.  This still is occurring inside a very long term uptrend so I give the upside a slight benefit of the doubt:

COMPQ_04232014

On the intermediate term, my goal is to determine who is in control and when we may see a new intermediate term change.  Right now the buyers are in control of the intermediate term.  They are pressing prices higher since tax day.  We have come close to exceeding the prior swing high and the possibility exists that buyers can remain in control, further driving prices higher.  However, I took the stance yesterday that we may be nearing another inflection point and I made a few adjustments to my portfolio.  Yet buyers remain in control of the intermediate term swing, see below:

NQ_IntermediateTerm_04232014

We use the short term auctions to gauge the continuation of the auction, always looking for signs of aging like overlapping value or opposing wicks (responsive selling) or sloppy distributions of volume within the profiles.  Yesterday exhibited strong buyer control but also displayed a few interesting signs.  We formed a P-shaped profile which suggests a short squeeze erupted early on but new, initiative buyers were not strong enough to continue pressing the value higher.  In context, their passiveness in the afternoon makes sense; we made a ton of progress via a gap higher and a strong morning drive.  Buying at this point became difficult.  Yet, we did see some buyers dipping their toes in as another rotation did develop late in the day.  Overall, buyers still in control also by closing out the day near the highs.  This auction is likely to continue higher in the short term, especially if yesterday’s value area low holds as support.  Otherwise, the gap fill trade may kick in.  See below:

NQ__MarketProfile_04232014

The Market is Still Living on Mother’s Milk

I took a series of trades today which on the net reduced my long risk exposure, an adjustment I deem necessary as I hypothesize the path of the Nasdaq futures.  How I see it, we may be nearing the swing high of our current intermediate trend.  Since this is the first rip I have sold into since we started the process of lower highs and lows on the Nasdaq, the market is likely to continue ripping higher as the tier one momo gets rolling again.

Tier one stocks like TSLA, ANY SOLAR (Happy Earth Day), FB, DDD, NFLX, WUBA etc etc…

I own a few of those and today I bought puts on NFLX.  The move was my first bearish bet on the year (another reason this may be a jack the ripper rally).  It looked really good initially.  I was watching the open far from my terminal, an elected move.  I took a decent time of day entry into the put given the overnight gap context both here and in the Nasdaq.  I expected the Nasdaq gap to fill, or at least ½ fill.  It did neither and NFLX found a buyer.  Have a look:

 

NFLX_04212014_w.out_symm

 

Needless to say, this put is on a tighter leash than a Chihuahua in a turtleneck.

I scaled off DDD and some YELP calls I took yesterday.  The DDD was a scale at my original basis which cleanly lowers my cost basis on the position but also puts me in the precarious position of increasing my exposure somewhere lower than here before we go higher then here.  I know, this stuff is like rocket science.

The YELP was actually a bit of risk aversion on my part.  The trade is intact.  I closed FCEL because of my whole HIGH QUALITY shtick up above and I wanted a small win. It closed strong which gives you a sense of the risk appetite out there today.  I may be behaving too meek.

Just in case I was being too meek, I went out and did the dirty.  I flipped to the backpages and bought some ANGI calls as a pure, fully adulterated, gamboll.  Meek, pfffff…

Futures trading is going great.  My systems are running better than ever.

CREE is down a cool 7% afterhours.  I haven’t read why, but I suspect I already know.  Prices…they’re going down down down.  Good.  Happy Earth day.

Earth Day Nasdaq Roundup

The Nasdaq composite is up slightly overnight on a balanced session of trade. One of the economic releases I will be watching today is the 10am Existing Home Sales and whether it stimulates trade in my shares of Zillow.  There are no other major economic reports out today, but we do have a slew of earnings on tap in the coming days which may materially affect the manner in which the NASDAQ trades.

The long term auction is in the process of balancing via a bracketed trade.  My goal in these conditions is to locate bracket extremes as well as the midpoint and base my risk around these parameters.  Currently I estimate we are below the midpoint but far enough away from bracket lows to justify reducing risk a bit.  As this balance progresses, the parameters will become more clear.  This process is more art than science.

The intermediate term swing trade is buyer controlled.  I decided to change my interpretation of the intermediate term timeframe recently.  The intermediate timeframe is not something I measure in time, but rather by the swing trade occurring.  Buyers control the current swing but are tasked with either printing a higher low, a higher high, or both.  Thus even through the control the current swing, their control is still in question.  See below:

NQ_IntermediateTerm_04222014

The short term auction is buyer controlled.  We are seeing their force abate slightly as value begins to overlap.  However buyer participants came into Monday seeking lower prices and when they saw a perceived discount they snapped it up.  Look at the strong responsive buying tail we printed yesterday as well as the follow though initiating buyers who closed us near the high of the session.  This is a solid example of a buyer controlled market profile:

 

NQ__MarketProfile_04222014

 

Book Shuffle

I prefer to base my decisions on data and I suppose there is some data I have been collecting lately to support my hypothesis, but mainly I cut CREE and RVLT today on gut instinct.  They say you should listen to your gut once in a while, especially when it is filled with high quality Easter leftovers.

Since these are moves that were somewhat unexpected, and I have bought a few new positions, I think a portfolio update is in order.  Here’s my stock book, largest to smallest:

LO, TWTR, AMBA, DDD, YGE, FCEL, Z, OESX, SINA, TSLA, GRNH

I scaled some SINA today at my original entry to bring my costs basis down and give me some dry powder to buy any weakness.  I closed RVLT and CREE and I also started a 1/2 stock position in Z and a new weekly option position in YELP.  My thought is, if YELP is going to squeeze shorts, this is the week to do it so why buy more time?  I am risking a little less than 1% of my book on YELP $69’s.  Cash is at 30% which is high for me, but I don’t have as clear a picture as I want so I am keeping my cash up.

/NQ_F simulation trading extracted 13.5 points of profit on the day.

NO More #LEDEMPIRE

I sold out of both $CREE and $RVLT, ahead of tomorrow’s CREE earnings after market close.  This may be the one time CREE actually rips since the last three quarters it has sucked a wind bag.

I am still with OESX, for now

Big Picture Balance

As we enter the thick of earning’s season, it becomes more important than ever to not lose sight of both the big picture and the intricate short term picture which develops before us.  Overnight we saw an upward move Sunday evening which gave way to balanced, two-way trade overnight and into the morning.  As the USA comes online, we are seeing sellers creep onto the tape.

The long term auction is very interesting this week as we can see a notable change taking place.  For quite some time, it appeared the long term auction was buyer controlled where it now appears balance has taken hold.  Research shows the markets spend more than half their time in balance thus one must expect such an environment to return often.  The question is whether buyers can build upon last week’s responsive buying.  To me, it is not so important that these recent lows hold, but instead that we see equal force being applied on the market by both buyers and sellers.  Here’s the current long term auction:

COMPQ_04212014

On the intermediate timeframe, we can see volume totally dried up when we made new annual lows last week.  Speculators often look for explosive, high volume type action to confirm a swing high or low when really the exact opposite occurs at these levels.  What happens movement in the direction of the trend stops bringing new participation in.  In this case, sellers were not motivated to act by the new lows.  Instead we saw a buy response which was equally as strong as the selling move down.  Thus began an intermediate term swing higher:

NQ_IntermediateTerm_04212014

I am using my EMAs as well as the very low volume node just a tick above the very round 3500 price level as my intermediate term pivot this week.

The short term shows buyer control.  Value is migrating higher without much overlap and the profiles are showing healthy auction activity on both sides.  Whether this clean auction continues through an important week of earnings will be telling for the weeks to come.  See below:

NQ__MarketProfile_04212014

Trading Requires Careful Planning and Execution

They say you pay your tuition to the market either through time or money.  That saying makes sense to me and typically it takes a big loss to open my eyes to a chink in the armor.  When your trading live it is easy to get caught flat footed without a plan.  I gave back four days of (hypothetical, still in a test environment) earnings this morning attempting to fade the early drive lower.

If you have tuned in to the ongoing Opening Swing series, then you have seen how an early move away from the opening swing is often faded.  Via old school chart markups and spreadsheets I am building the probability out, but this takes time and in the meantime I want to experience the trade live to develop expectations and rules.

It is crystal clear this trade needs lots of structure and B+ execution at a minimum to be consistently profitable.  The potential reward for building such a plan is great enough to merit such focus.  Some of the rules can be coded directly into my charting package, but others including trade management, must be done on a discretionary basis.  For now, the following rules were added to this trading plan:

I will not attempt this trade inside a series of single prints.  Example from today:

NQ__MarketProfile_04242014_toughFADE

The second rule is I will only make one attempt to fade this first move per value area.  If I stop out inside the first value area, then I will wait for the next value area and look for a setup to occur.

Here’s a look at what today’s market profile looked like verses the regular trading hours profile:

NQ__MarketProfile_04242014_toughFADE_RTHprofile

This above exercise was good because it kept me distracted from my live trading, which I rarely care to partake in during the opening minutes of trade.  When I saw the strong responsive buying happening, I quickly queued up my plan from yesterday and went to work acquiring exactly what I planned on.  My plan for this swing is one part intermediate term Nasdaq chart work and one part stock picking.  When the Nasdaq was telling me to buy there were 100 different tickers to choose from.  How does one decide which to buy and then execute in a timely manner?  Exactly, a plan.  Here’s the picture as I see it:

NQ_IntermediateTerm_04242014_afterhours

I ended up getting lovely fills in both DDD and SINA which dropped my cost basis even lower while I DO THE DIRTY, exiting my NFLX puts which served as a lovely momentum hedge during the move lower, and getting back on the Facebook trade.  I essentially only acted upon my book from 9:50 am to 10:25am aka the low of the day.  The only off plan trade was buying some RGLD calls.  However, I have traded RGLD for years and when gold was making a violent move I bought the position.  In hindsight, it may end up being a loser with the look of the daily candle.  I won’t know for a few days though.

Regardless, plan your trades and trade your plan.  This is priority #1.  If you think you can improvise in the heat of trade without some backbone of planning, good luck with that.

80% long into tomorrow’s tap. The market needs to bring the hurt to shake me from my low risk power stance.

DDD trade plan (note: earnings on the 29th):

http://ibankcoin.com/raul3/2014/04/09/swing-trade-plan-for-ddd/

SINA trade plan:

http://ibankcoin.com/raul3/2014/04/08/doubling-down-doing-the-dirty/

 

DROPPED THE HAMMER

I bought the dip, even though it was far too fast.  I basically did this:

“That’s the plan.  Let me restate the plan in case you lost track: buy FB, buy back the shares I scaled in DDD and SINA (fiddler on the roof trading), and brood harder then Ryan Gosling about this NFLX put.”

But I closed the NFLX put and added a (Royal) RGLD on the side.

This rally almost got away from me…developing…

Cash down to 20%

Sure Is Quiet Around Here, Considering The Action

Nasdaq futures are quite a bit higher overnight, far outpacing the performance of all other major indices.  As of this writing, we are set to open about 50-to-60 points higher on the /NQ_F futures.  Pre market we had Durable Goods Orders and Jobless Claims which brought more buyers in, however most of the overnight strength is being attributed to earnings.

We are now above the midpoint of my proposed bracket range on the NASDAQ meaning the risk of being long is greater than being short.  At the same time, our intermediate auction continues higher.

These big overnight gaps can often create a frustrating day trade environment.  Risk is elevated because the market is clearly out of balance.  Often it is best to do very little, instead managing existing positions and carefully looking for rotation opportunities into stocks that have not run.

I highlight my primary upside target for the Nasdaq on the following intermediate term volume composite:

NQ_IntermediateTerm_04242014

I am using a 24-hour market profile this morning since we had so much overnight action.  I want to see the footprint this action left and look for high opportunity levels as well as envision how today’s profile may take shape.  I have highlighted these observations below:

 

NQ__MarketProfile_04242014

Time to Drop The Hammer

I am from the school of thought that third time is always the charm.  Twice, I have bought the dip off a peak in the NASDAQ and TWICE I have been on the receiving end of a proper facial correction.  My greatest fear right now, as the market lets off its final throws is that I will have to buy a big gap up tomorrow.

I am afraid I am not long enough.  There I said it.

I was too long the other two times, and now I am not long enough to capitalize on my turn at buy the dip on the donkey.

You should have a list of high priority stocks, preferably ones who already reported earnings.  I want pure, uncut social crack rock so I will be e-stalking Facebook.  I need it to compliment my Z, ANGI, TWTR, and SINA.  My collection would be complete, like getting the Master Splinter slammer to complete you TMNT pog set.  It has to be done, even if it costs you a month’s wages.

I have to make a decision about this NFLX put too.  I will take luck over skill any day, but the harder I work the luckier I get.  HBO signed rights off to Amazon prime leaving everyone to wonder, is NFLX losing its clout?  Have they only built a House of Cards?  Groan all you want, I am not jiving this company at all.  It rubs me the wrong way more than any other momentum stock.  I scaled ½ my puts today.

ANGI reported very inline losses.  Bravo ANGI, you are really good at sticking to your forecasted numbers.  This may be enough to snap this old girl out of her funk.  If yes, then I stand to benefit.

I have some YELP calls which are about worthless right now.  They will be worthless unless the price of YELP is greater than $69 by Friday.  I am not sure any amount of hard work will produce the type of luck I need to see this play to victory.  Good news is I am trading well—I scaled ½ this position off when it went back to break even yesterday, after it quickly became a loser.  This is winning while losing.  It was at the same time I scaled some DDD and SINA which I now need to hurry up and buy back.

That’s the plan.  Let me restate the plan in case you lost track: buy FB, buy back the shares I scaled in DDD and SINA (fiddler on the roof trading), and brood harder then Ryan Gosling about this NFLX put.

Futures trading was red on the day, I lost -12 ticks or 4 points.  I am getting better my friends.  Much much better.  Of course once this simulated numbers are complete I have to lop off about 25% for slippage.  If this new strategy still stays green after this calculation, well then, it’s time to go live.  Great excitement!

Final note: if I seem a bit light in the loafers today, then it certainly is because I sidestepped the blood bath in CREE.  You may or may not know that a short week ago CREE and RVLT represented about 25% of my portfolio.  As of Monday afternoon, they represented zero percent.  Very nice, very clean.  I am still an LED man, but I will very carefully get back into these dorks.

What’s your top pick into my hypothesized rally?  I still like TSLA, but my top pick is stretched and resilient Zillow.

Potential to Run Higher

Nasdaq futures traded mostly flat and balanced overnight until some early morning selling pushed us a touch lower.  As a result, the overnight profile shows two distinct volume distributions.  We have Flash PMI data at 9:45 and New Home Sales at 10:00 as well as some major Dow components reporting earnings before the bell.  Perhaps the most sensitive announcements pertaining to the Nasdaq come out after market close today, including earnings from Apple and Facebook.

What I attempt to do with a long term chart is speed read the context of the market long term and use the information for broad strokes of risk analysis.  Essentially, my vision is for the long term auction to come into balanced, bracketed trade.  This is something that has not really happened since mid 2012.  We are roughly above the middle or mean of this bracket, which makes risk of holding longs greater.  This still is occurring inside a very long term uptrend so I give the upside a slight benefit of the doubt:

COMPQ_04232014

On the intermediate term, my goal is to determine who is in control and when we may see a new intermediate term change.  Right now the buyers are in control of the intermediate term.  They are pressing prices higher since tax day.  We have come close to exceeding the prior swing high and the possibility exists that buyers can remain in control, further driving prices higher.  However, I took the stance yesterday that we may be nearing another inflection point and I made a few adjustments to my portfolio.  Yet buyers remain in control of the intermediate term swing, see below:

NQ_IntermediateTerm_04232014

We use the short term auctions to gauge the continuation of the auction, always looking for signs of aging like overlapping value or opposing wicks (responsive selling) or sloppy distributions of volume within the profiles.  Yesterday exhibited strong buyer control but also displayed a few interesting signs.  We formed a P-shaped profile which suggests a short squeeze erupted early on but new, initiative buyers were not strong enough to continue pressing the value higher.  In context, their passiveness in the afternoon makes sense; we made a ton of progress via a gap higher and a strong morning drive.  Buying at this point became difficult.  Yet, we did see some buyers dipping their toes in as another rotation did develop late in the day.  Overall, buyers still in control also by closing out the day near the highs.  This auction is likely to continue higher in the short term, especially if yesterday’s value area low holds as support.  Otherwise, the gap fill trade may kick in.  See below:

NQ__MarketProfile_04232014

The Market is Still Living on Mother’s Milk

I took a series of trades today which on the net reduced my long risk exposure, an adjustment I deem necessary as I hypothesize the path of the Nasdaq futures.  How I see it, we may be nearing the swing high of our current intermediate trend.  Since this is the first rip I have sold into since we started the process of lower highs and lows on the Nasdaq, the market is likely to continue ripping higher as the tier one momo gets rolling again.

Tier one stocks like TSLA, ANY SOLAR (Happy Earth Day), FB, DDD, NFLX, WUBA etc etc…

I own a few of those and today I bought puts on NFLX.  The move was my first bearish bet on the year (another reason this may be a jack the ripper rally).  It looked really good initially.  I was watching the open far from my terminal, an elected move.  I took a decent time of day entry into the put given the overnight gap context both here and in the Nasdaq.  I expected the Nasdaq gap to fill, or at least ½ fill.  It did neither and NFLX found a buyer.  Have a look:

 

NFLX_04212014_w.out_symm

 

Needless to say, this put is on a tighter leash than a Chihuahua in a turtleneck.

I scaled off DDD and some YELP calls I took yesterday.  The DDD was a scale at my original basis which cleanly lowers my cost basis on the position but also puts me in the precarious position of increasing my exposure somewhere lower than here before we go higher then here.  I know, this stuff is like rocket science.

The YELP was actually a bit of risk aversion on my part.  The trade is intact.  I closed FCEL because of my whole HIGH QUALITY shtick up above and I wanted a small win. It closed strong which gives you a sense of the risk appetite out there today.  I may be behaving too meek.

Just in case I was being too meek, I went out and did the dirty.  I flipped to the backpages and bought some ANGI calls as a pure, fully adulterated, gamboll.  Meek, pfffff…

Futures trading is going great.  My systems are running better than ever.

CREE is down a cool 7% afterhours.  I haven’t read why, but I suspect I already know.  Prices…they’re going down down down.  Good.  Happy Earth day.

Earth Day Nasdaq Roundup

The Nasdaq composite is up slightly overnight on a balanced session of trade. One of the economic releases I will be watching today is the 10am Existing Home Sales and whether it stimulates trade in my shares of Zillow.  There are no other major economic reports out today, but we do have a slew of earnings on tap in the coming days which may materially affect the manner in which the NASDAQ trades.

The long term auction is in the process of balancing via a bracketed trade.  My goal in these conditions is to locate bracket extremes as well as the midpoint and base my risk around these parameters.  Currently I estimate we are below the midpoint but far enough away from bracket lows to justify reducing risk a bit.  As this balance progresses, the parameters will become more clear.  This process is more art than science.

The intermediate term swing trade is buyer controlled.  I decided to change my interpretation of the intermediate term timeframe recently.  The intermediate timeframe is not something I measure in time, but rather by the swing trade occurring.  Buyers control the current swing but are tasked with either printing a higher low, a higher high, or both.  Thus even through the control the current swing, their control is still in question.  See below:

NQ_IntermediateTerm_04222014

The short term auction is buyer controlled.  We are seeing their force abate slightly as value begins to overlap.  However buyer participants came into Monday seeking lower prices and when they saw a perceived discount they snapped it up.  Look at the strong responsive buying tail we printed yesterday as well as the follow though initiating buyers who closed us near the high of the session.  This is a solid example of a buyer controlled market profile:

 

NQ__MarketProfile_04222014

 

Book Shuffle

I prefer to base my decisions on data and I suppose there is some data I have been collecting lately to support my hypothesis, but mainly I cut CREE and RVLT today on gut instinct.  They say you should listen to your gut once in a while, especially when it is filled with high quality Easter leftovers.

Since these are moves that were somewhat unexpected, and I have bought a few new positions, I think a portfolio update is in order.  Here’s my stock book, largest to smallest:

LO, TWTR, AMBA, DDD, YGE, FCEL, Z, OESX, SINA, TSLA, GRNH

I scaled some SINA today at my original entry to bring my costs basis down and give me some dry powder to buy any weakness.  I closed RVLT and CREE and I also started a 1/2 stock position in Z and a new weekly option position in YELP.  My thought is, if YELP is going to squeeze shorts, this is the week to do it so why buy more time?  I am risking a little less than 1% of my book on YELP $69’s.  Cash is at 30% which is high for me, but I don’t have as clear a picture as I want so I am keeping my cash up.

/NQ_F simulation trading extracted 13.5 points of profit on the day.

NO More #LEDEMPIRE

I sold out of both $CREE and $RVLT, ahead of tomorrow’s CREE earnings after market close.  This may be the one time CREE actually rips since the last three quarters it has sucked a wind bag.

I am still with OESX, for now

Big Picture Balance

As we enter the thick of earning’s season, it becomes more important than ever to not lose sight of both the big picture and the intricate short term picture which develops before us.  Overnight we saw an upward move Sunday evening which gave way to balanced, two-way trade overnight and into the morning.  As the USA comes online, we are seeing sellers creep onto the tape.

The long term auction is very interesting this week as we can see a notable change taking place.  For quite some time, it appeared the long term auction was buyer controlled where it now appears balance has taken hold.  Research shows the markets spend more than half their time in balance thus one must expect such an environment to return often.  The question is whether buyers can build upon last week’s responsive buying.  To me, it is not so important that these recent lows hold, but instead that we see equal force being applied on the market by both buyers and sellers.  Here’s the current long term auction:

COMPQ_04212014

On the intermediate timeframe, we can see volume totally dried up when we made new annual lows last week.  Speculators often look for explosive, high volume type action to confirm a swing high or low when really the exact opposite occurs at these levels.  What happens movement in the direction of the trend stops bringing new participation in.  In this case, sellers were not motivated to act by the new lows.  Instead we saw a buy response which was equally as strong as the selling move down.  Thus began an intermediate term swing higher:

NQ_IntermediateTerm_04212014

I am using my EMAs as well as the very low volume node just a tick above the very round 3500 price level as my intermediate term pivot this week.

The short term shows buyer control.  Value is migrating higher without much overlap and the profiles are showing healthy auction activity on both sides.  Whether this clean auction continues through an important week of earnings will be telling for the weeks to come.  See below:

NQ__MarketProfile_04212014

Previous Posts by Raul3
Still Alive
8 comments