This Has Gone on Long Enough

Today was not necessary, but it is exactly what the stock market does.  When sentiment gets out of whack, either way, the market place corrects the imbalance very naturally.  When it’s all said and done, the sane walk away with a few pesos in their pockets, scratching their head at the mysterious and random acts of violence the market exhibits.

We crazy folk make a month’s pay in 2 hours.

I was mostly selling today, salvaging some the February premium I laid out.  Other bits still fly their pride flag, like FSLR and SCTY, monsters marching together in solidarity.

I finally scaled down to a TSLA earning’s runner.  I think it can keep squeezing ahead of earnings, given the float, but I am not being too greedy.  I booked my 52% gain and left a small piece to keep earnings interesting.

GRPN reporting Thursday afternoon presents a rather unique situation, does it not?  Given the weakness in the name, opex, and the potential for a lovely little lottery trade.  Anyone who is more versed in options that is willing to chime in on this idea please do so, I am all [green] ears.

I bought FIO amidst much fanfare and strength.  It farted and everyone laughed, and now it only smells and everyone walked away.  I am stuck with stinky, hoping for an encore.

I closed my GS calls, it felt like a shake out.

I closed my February Z calls and salvaged a bit of premium.  I still have March calls but this ugly chart may take more than a week to resolve.

I am back to about 10% cash here at the end of the day, after being a tad longer into the weekend.

Top pick into March is CREE.

Elroi is still stuck in the lab.  I can’t wait to see if all this CPU usage will be reflected in my electric bill.  Regardless, when he comes back, it will be with one of those little green hats with a helicopter blade on top used to chop up other algo onslaughts.

http://youtu.be/yuR1rVVf358

Speaking from an entirely unbiased position, I can tell you with unbridled certainty that the LED trade is about to be a huge mover for the remainder of Q1.

If you have read along over the years, you know I am bullish lighting grade LEDs on a macro level.  I see the opportunity to invest in a green technology as well aligned with the agenda of our current administration and a technology that is finally where it needs to be to allow enterprising folks to bring it to market.  Corporations have lots of cash on the balance sheets, and stock buybacks are only as effective as your last, and going green is cool—especially when it reduces operating costs in a meaningful way.

There has been lots of weakness in these stocks for months.  I have ridden out the entire consolidation from a position of power, a position accomplished by getting large in 2012.

My holdings in RVLT, CREE, LEDS, and OESX have eclipsed all prior exposure levels right here right now.  And I am in no hurry to sell.  It is time to sit back and let the trade work, slowly.

Full Disclosure: I hold a basket of LED stocks.  This is a concentrated, high risk position.  I may lose money.  If you buy any of these stocks because of this post, you may lose money.

http://youtu.be/tKi9Z-f6qX4

The NASDAQ futures went for a bit of a ride, trading 18.5 handles worth of range while we celebrate Presidents Day.  The futures were working lower this morning until eventually reaching some oversold conditions.  At this point a bit of responsive buying entered and sparked a squeeze.  This action resulted in us first breaking down from the uppermost profile distribution to now retesting that uppermost distributions value area low.

The question now becomes, do the sellers continue to assert their control of the short (overnight/day) timeframe by rejecting a move back into upper value, or do we see the intermediate term long waking up and making things a little less clear for the auction?

The long term timeframe is still nestled in the controlling hand of buyers.  Intermediate term, we continue seeing value migrate up with little in the way of a pullback.  The rally is becoming a bit aged, but one would be taking a difficult trade to attempt fading it before seeing sellers retain their early control.

After last Thursday’s strong trend, the market spent time coming to terms with the new index pricing by auctioning.  This process began Thursday afternoon and by Friday afternoon the consensus was to explore a bit higher for value.  Thus the intermediate term timeframe continued to press on for the buyer.

The long term timeframe is back into the steady hands of the bull camp.  This can be seen on a daily or weekly chart of the NASDAQ composite.  Overnight, prices have rotated a bit higher, in a drift of sorts.

The logical trade early on then, would be to press into that overnight inventory of longs, and see if lower prices can motivate selling/liquidation.  I have highlighted the relevant price levels that developed in a rather large and organized distribution atop our trend.  I will be keying off these levels, should they be tested, to gauge buyer confidence and response.  These levels and more can be seen below on the following market profile chart:

I love when people misuse a technology to the point of frustration until they criticize it as being broken or even stupid.  The results can be significantly more amusing when the technology is mechanical, like hands free faucet, because you get a very tangible experience of human failure.  I long ago swallowed the pill and accepted that we are servants to our technology unless we reach the status of robot overlord.  Once robot overlord status is achieved, one becomes something much more powerful—a small cog in the process, the invisible ghost who directs the technology with symphonic harmony.  This should result in my success in breaking the traditional 30 year work mold and liberating my time to explore other life interests.

Anyhow, I was frustrated with my computer processing power all week and trading naked and without robots.  The reason was a new bit of trading logic which I bolted together and unleashed on 2.5 years of data for backtesting/optimization purposes.  After 94 hours of peaked i7 quad-core processing I was delivered the output, which looked like this:

000000000000000000 00000000 0000000000000000000000000 0 0 0 000000000000000000 0 00000 0000000000000 0      0000000000000000000       0000000000000 0 0 00000000000000 0 000000000

I did it wrong.

And in that moment, rather this entire last week, I learned a lesson about coding logic and testing and life in general.  Before you strap on a jet pack and attempt to cross the Grand Canyon, go hop the drainage ditch in your back yard.  You can work the kinks out much quicker and safer.

I worked out the kinks and tested the logic on 20 days of data to make sure it was working correctly.  Now I am back in the lab, peaking out the processors.  This time, with a bit more thought and proper use of the technology, I can test out 2.5 years of data in 56 minutes.  LOL

Failing is learning, but if you want to shorten the learning curve, spend a few minutes talking with someone who has expended their life years already failing in the same field.

I had a pretty basic week in most aspects, earning a small stipend from the market for taking aggressive blows one after the next.  It has been an aggressive playing field, I can assure you.

Elroi has been in the shop all week.  I started an optimization study on Monday evening, not fully realizing it would take over 90 hours to complete.  Once it was two hours into the work, I figured I had gone too far like when you get to the end of your driveway without your cellphone and to, “let the computers work”.  Needless to say, I have been trading without my helper robots all week and I am not too pleased with the results.  You have no idea the edge you form, until you have traded alongside some algos forged from your own eye-blood, sweat, and tears.

I hope to have these new mods strapped on over the weekend.

I have a big book of call options set to expire next Friday.  Most of this premium will likely evaporate, but with a bit of mojo I just may salvage a few pesos:

ANGI 17.50

FSLR 55 & 60

ACAD 26

AAPL 560

GRPN 12

LULU 52.50

GS 165

Z 85 ( I have some March 90 too)

SCTY 77.50

OWW 7.50

To be quite frank, to hell with any evaporated premium at this point, they have already bled out and I have already fought viscously to re-earn the risk capital in other venues, like this EXK trade I am smashing.

Of course, none of this really matters, because all I want right now is to get on with my Valentine Day escapades.  If you are holed up in the arctic north with no sweet woma[e]n to spend time with tonight, occupy that time productively by reading through my market profile archives.

Have a good one.

I am feeling the sweat of 1000 eyeballs today while holding onto my harness as the Zill-o-coaster plunges lower.  Just yesterday, I was on top of the world with this trade.  I sold before earnings.  I bought the blood after earnings.  The chart looked ACE HOOD.   I generated a Spencer Rascoff meme, complimenting myself.  It seemed I would surely crush the shorts into month-end.

Nah, Trulia happened.  Unreal, these jokers, are the catalyst for a gut wrenching selloff.  Perhaps I should have just cut my small loss and moved on.  Then maybe I wouldn’t feel like there is someone reading my posts who decided today was the day to correct me.  However I did just the opposite, and bought MOAR Zillow, MOAR!

Since then the stock has triggered a circuit breaker.  The markets are rallying to all-time highs and I am engaged in a bitter fight with a concentrated pack of pissed off bears.  Sometimes, you have to pick your battles wisely.  This may not be the best place for me to make my stand.  Instead I should be dabbling in the nefarious world of OTC penny pot stocks, perhaps.  Oh, wait, I am doing that too.

They’re trying to muscle the Zillow shares around and scare people out ahead of a sold quarter.  I wanted to buy more yesterday but held off, expecting this type of noise.  Today I was not so patient.  I bought more Zillow blood.

More Later.

The equity futures markets were balanced overnight, however rather opportunistic given the large range and impressive volumes.  The actual auction that took place overnight was very organized and saw good participation from both the buyers and sellers who both seem to be willing to participate at these levels.  This suggests we are coming into balance.

However, there was no definitive point of value reached, as the resulting volume profile suggests a slight imbalance exists via the lack of a smooth, bell-shaped curvature.  Instead the profile shows a slight imbalance to the upside.  I have highlighted this imbalance as well as a few key price points and scenarios on the following market profile chart:

Yesterday was interesting and the morning vision work paid off in spades.  Inside 12631, I was taking through the profile development.  Within the first half hour of trade my entire upside scenario had been captured by a strong opening drive. This was OTF (other time frame) action, or the long term timeframe asserting itself on the marketplace.  OTF shows no regard for support and resistance levels seen on the daily and even intermediate term profiles, instead opting to plow money into the marketplace.  It did not take long to recognize the trend day activity and grab on and ride it until the wheels come off.

The NASDAQ seemed to play catch up yesterday, however, while the S&P put in a milder trend, almost static enough to challenge the trend day structure.  I will be watching the S&P today, to see if it can show strength.  Thus far in the AM, it has been diverging from the NASDAQ.  I have highlighted this divergence on the following market profile chart of the ES future:

Also, have a Happy Valentine’s day.  Be extra gay and sappy with your special someone.  But don’t forget about the industrial production numbers at 9:15am and consumer sentiment at 9:55am.  Carry on.

Good afternoon speculators, spectators, and readers of all kind.  The markets are ripping, still, set to print a V-shape more delicious and powerful then all preceding V-shapes.  V-shapes truly are beautiful, what with the symmetry and all…I hope the action has treated you well.

Everything was up today.  There is not much more to say.   The stocks that weren’t up, like Zillow, eventually went up.  I do not always nail every trade, but I can put an official #NAILEDIT stamp on trading Zillow through earnings.  It all started yesterday, when I SOLD all my shares ahead of the announcement.  They beat across the board, yet prices were 5% lower at the open.  Seeing the NASDAQ off to an early charge, I gobbled up call options in Z, right about when we printed the low of the session.  Spencer Rascoff would be proud of my bargain hunting prowess.

The LED trade is about to make its move, finally.  I was early to this trade by about 1.5 months…no big deal.  It can be frustrating exposing yourself to the market for that long while you wait for a trade to set up.  Such is the price one pays (in time) when they decide to take a top down approach to stock picking.  The idea is solid—every lightbulb will be LED.  The marketplace of stocks however, is fickle, and only pumps when the stars are aligned for pump-o-mania.  I am happy to say, the stars are finally aligned for PUMP-o-MANIA 80’s style for LED stocks.  If we don’t pump this time, I am out and will use said funds to start my own damn LED company.

I like the solar trade to pair with my LED trade.  You generate the cheap electricity using the great powerplant in the sky, and you use said energy to fuel the energy sipping LEDs.  Doesn’t that sound like a better world?  Then again, everyone eating health food sounds like a better world but WFM is dead and CMG is the future or instant gratification.  Again, it is tough to invest in ideals unless you buy and walk away for years.

I bailed on Facebook yesterday because a video is going viral showing the fake ‘likes’ people are buying from FB.  Lo and behold, the catch me if you can trade continues on.  Now I have to wait on the sidelines for the correction so I can get back in.  Same with Twitter, all I have is a small stake when I got fickle and sold the shares I bought for $50.02 last week.  I am fumbling the social media trade and question whether I am worthy of the Frank Abagnale avatar.  However, I am not motivated enough to change it, yet.

Elroi has been in the shop all week getting a tune up.  His preliminary update will be complete at 9pm tomorrow, then I hope to get his next mod completed over the weekend so I can take him back live come Monday.  He has work to do.

I have two pot stocks: PHOT and GRNH.  If I am going to dabble in OTC degeneracy, I refuse to pay more than $1/share.  I can get a way more potent position (pun intended) without being any more vulnerable to the shenanigans of OTC listed stocks.  Hence, I would not touch MDBX, CBDS, or any of these high priced illegal stocks.  Instead I may consider HEMP, or even MJNA if I must.  This is high speculation (pun intended) so tread carefully.

I had a piece of ANGI options left into earnings after scaling some off at a well-timed peak.  The small loss is being offset 10 fold by OWW, which is going bananas along with the rest of the travel industry.

I have too many side bets, I realize, after writing this post.  I need to concentrate down risk before the next correction.  And by concentrate, I mean take fewer, larger, positions.

Have a good one.