PRESS THE BOOT

I’ve come to live by one saying in today’s markets and it’s, “get it while it’s here, boy.”  Because in complete honesty, any spectacular hype surrounding pockets of momentum won’t feel the same next year, week, or even hour.  When a stock is hot, it’s hot.  Higher highs, higher lows, and cocaine dances.  When it’s not, it’s National Bank of Greece.

We are undergoing a slight bounce back after a brutal five percent correction.  Did you blink?  You may have missed it.  As investors peer out of their bunkers, weary from the bombs dropped on their person, they see a strange sight.  It’s Sir Raul, dressed in ceremonial red marching regalia, tap dancing through a mine field.  The sight is so unexpected, so beautiful, they don’t even reach for their gun, they simply watch.

Just as I clear the field and hunker down into a foxhole with many women and Chairman Mao! You come to your senses attempt to clear the field.  You saw the path I took, you see how effortless it was.  You go for it.  Only at that very moment a B-52 bomber blankets the entire field with liquid hot napalm.  You’re dead.  Keep that in mind.

I’m nearly filled to the gullet with high spec, high momentum names.  Names like YGE, FSLR, DDD, YY, LEDS, and more.  I’ll either party all week long with The Chairman, or suffer the very possible drone strike after the NSA hones in on my cell phone whist I order pizza.

It appears the market has gone completely stagnant as I write. Regardless, PRESS THE BOOT!

The only stocks sold were those that will not aggressively appreciate in value.  I cut AAPL and TSLA.

We’ve been strong the /ES futures ever since gapping lower Sunday evening, the main feature of the session being a steady rotation higher off Friday’s value area low at 1634.  Should we trade back through Friday’s value, trade could quickly press through this level and then set its sights on taking out the single prints left behind of Friday’s early drive higher.

This would suggest a major change in character, as it would drastically reduce the confidence of anyone who initiated new longs into Friday’s strength.

Up above, we’ve left behind many reference points including naked volume points of control which make excellent targets.  Nearby we have the 5/29 NVPOC at 1647.75, only one handle above the current overnight high, should we breach the overnight high, a test of this NVPOC is likely.  This same session marks value area high at the 1650 mid-century mark.  So any trade within this value area should be closely observed to see which force (buying/selling) is succeeding in driving vertical development.

No, not my gain/loss, but my swing portfolio.  You see, I like these Chinese Burritos right now.  They’ve had strong years, yet they shrugged off this entire week’s weak weakness.  The stocks of my brothers from the Far East are poised to pump with great pomp and vigor.  They sport pristine balance sheets, approved by the general secretaries and chairmen of China.  The board of board of directors will not lose (sic).

I also took down WETF today because, there’s nothing like a millennia-old rivalry to get the energy going.  WETF is my Japan exposure, YY and HMIN represent China.  You know what? Let’s throw LEDS in with China too, no one knows what the hell they actually do, like China.

This is a game of Risk gentleman, position yourself correctly and you may find yourself chairman one day too.

Into the weekend, I’m holding the line, dressed in Red regalia, saluting you and yours.

I wasn’t able to trade the futures this morning as I was never able to give the market my full attention.  In hindsight, we had a gap-and-go open, sometimes referred to as a pro gap.  Traders shy away from fading this type of open due to their strong directional conviction.  Therefore, if we close near the low of the day, that’s unexpected, and reason for concern.

New longs were initiated today in WETF alongside The Fly and LEDS alongside RaginCajun.  It’s not that I don’t have any quality ideas, but sometimes a ticker gets brought up that I’ve been stalking for a long time, I revisit the chart and see a clear level of risk and I take the position.  The key is to own the trade and take full responsibility for managing it.  It’s astonishing to see someone follow a trader only to cross their fingers and get high on hopium.  It seems to be occurring quite a bit lately…

You can hire brilliant analysts with the best tools in the industry but you can’t win if your decision making and execution are weak.

Enough of that, TOP PICK:

Right here right now HMIN – this stock gets legs over 30

The overnight session is balanced thus far and starting to pick up activity as we await the high impact jobs data at 8:30am.

I’ll reserve calling any forecasting, like declaring price won’t stop at 1600 (it essentially did on its first test).  Instead I’ll highlight the key levels I’ll be taking my cues from and let the market do the talking:

The first time I went on a sea voyage was aboard a CCL vomit comet.  I remember a storm tossing the boat about and enjoying running down the long hallways, maniacally, whist others hugged a wall and resisted the urge to purge.

I’m not quite to that level of confidence yet in the futures, but I was happy to hold my own today and earn a meager bit of coin.  Keep in mind, this could have been a very swell day, but I shorted into the hole and it took 4 handles to find out.  Big seas.

I traded a lot, 27 round turns, 16 winners and a sore neck.  I closed the day a slight hue of green both in the face and in the books.

I would imagine most people seeing all this work return so little and throwing in the towel.  However, I continue to make mistakes, and they continue to cost me money.  Once I iron out a few small issues this entire process becomes another income stream.

The market rejected the SPX gap aggressively, impressing upon many the feeling that we may be gearing for a bounce higher.  Several of the more studied traders resisted the urge to participate this afternoon, opting instead to save their cabbage until after we see the data tomorrow.

My swing portfolio was up today, lead forward by HMIN, IMMR, and CREE.

It has been a very interesting week in the markets thus far, and the bounce we saw off the lower gap gives us a sense of the demand present for equities.  I don’t like many charts out going into Friday, but a few stand out.

I bought shares of TSLA – I want to see the stock rise soon as we’re dealing with a momentum situation.  Without momentum this name gets dangerous fast.

I like China stocks of the burrito variety.  They shrugged this correction off well as a whole.  My favorite is HMIN and I bought more.

I’m still about 50 percent cash, but I want to get involved in case the market decides it wants to test the all-time high again.  Hey, I’ve seen crazier.

Futures are modestly higher and the overnight profile shows signs of a possible roll higher, but certainly lacks the symmetry of a balanced session.

Typically, we see the market digest a big directional day by setting up value near the prior day’s close in an orderly fashion.  Considering the precarious position yesterday’s action put us in, I’m prepared for a quiet day or perhaps a day a violent indecision.  I would consider the former to be more challenging to trade.

Note: I’ve split yesterday’s action into its two key components, the selloff and the violent D-shaped distribution.

I’ve also notated the volume profile chart below with clues to the gap existing below and how it may play out as support.

We’ll revisit the implications of this chart the morning:

On losing days, my old routine used to be calling up some buddies and having a few beers, chalking it up as another hard lesson from the market.  I can always have this mentality because the money, I don’t depend on it.  I’ve always been told consistent profitability in the markets requires a low stress money situation.  I agree.  I absolutely can’t imagine being in a financial pinch and trading.  As for the jumpers, they’re simply cowards who can’t swing the poor life, thrift shopping and such.

Today really wasn’t as bad as I’m making it out to be, but frustrations were quickly compounded and before I knew it I was going ‘Full Gibson’ beating people over the head with rocks and such.  I played back the tape of my futures trading just now and the mistakes didn’t start until I made it about me.

I made it about me.  Not the markets, because some crazy shit went down that rattled me.  Let me explain:

I took planned trades, trades with statistical advantages.  The first two win.  Good start.

The second trade takes off as soon as I get it in, looking great, gets to my exit, prints my target a few times, I don’t get filled and it slams down and takes me out break even.

At this point things are looking REALLY choppy and moving REALLY fast.  For the next 30 minutes all hell breaks loose, Raul taking funky ass unplanned trades.  Good God, it looks like I fired a machine gun at the screen.

Funny thing is, my last trade, a long…something was still firing in the old noggin…my exit looks like the most beautiful short entry you’ve ever seen.  The floor fell out seconds later for five handles, then many many more.

This all happens very fast you see.  I lost sight of the market.  I started having a very real and very strong feeling that the algorithms knew exactly where my stops and targets were, and they were fucking me. That’s paranoia…fear based nonetheless. Me, me, me, that’s what my internal dialogue sounded like.

Recognizing this, I cut almost all my risk out and pressed my cash to 65 percent.

Some names I just couldn’t let go of.  Here they are, presented by size (biggest-to-smallest):

AAPL, CREE, IMMR, RGLD, HMIN, DANG, and FB

I also hold some cheap lotto tickets in HPQ weekly calls and NFLX.

My fate as a trader lies entirely on backing off when conditions don’t favor my style of trading.  It’s something everyone has wrestled with I’m sure.  It’s never hit me this hard in my life, even though I’ve taken much larger financial blows.  I was furious.

It’s a learning experience as always, but this one left a lasting impression.

BOTTOM LINE: ALWAYS LIVE TO FIGHT ANOTHER DAY