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I turn dials and fiddle with knobs to hone in on harmonic rotations

Telecoms Showing Signs of Wear

The weakness today from shares of Verizon (VZ) and AT&T (T) today is pronounced and showing signs of acceleration, especially AT&T. Both companies had strong performance over the last three years, and the iPhone no doubt contributed to their strength. While I am by no means calling for a top in either name, it’s worth noting their weakness recently.

Be cautious of a flush lower in both names over the next few weeks.

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Fetch My Looking Glass and Let’s Examine This SPYder

When the daily price bars start to tighten up on the SPY ETF, I like to take out my magnifying glass and take a closer look at the auction activity. Looking at a chart of the cash trading hours (9:30am-4:00pm EST) shown in market profile accomplishes this task.

We started the month this Monday with a euphoric gap higher and price was quickly knocked down and with enough steam to blast price below the value established at the end of last week. Price gapped too high, and the sellers reacted by smacking the penis or whatever it is Rhino likes to do.

Tuesday formed a very balanced, Gaussian curve of activity. Look at the shape of the profile, a very uniform bell curve. Balance was reestablished after the bears controlled price Monday. The buyers were back. Then yesterday morning (Wednesday) the bears showed some aggression and tested lower. Shortly after a vicious short squeeze ensued, giving us the familiar “P” shaped profile.

A short squeeze profile during a downtrend usually indicates a temporary market imbalance, and a continuation in the trend lower is likely to resume. However, during this indecision, after a V-shaped recovery, it can be the spark to get a rally started. Today’s action was tight and contained mostly within Wednesday’s value area. It sat put, while the euro dollar went off a cliff.

I glean bullishness from this closer examination. What firms my stance? Key levels above need to be captured ASAP by the bulls:

Wednesday’s high: 142.16 SPY
Monday’s VPOC: 1415.50 ES_F (right near Wed. high)

Sustaining trade above these levels gets the bears on their heels.
Watch for a flush if we spend too much time below today’s value area 1408-1405.

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Tesla Model S, Musk Are Ready for 2013

Picture from motortrend.com

Tesla Motors was recently awarded the coveted Motor Trend Car of The Year for the Tesla Model S. It was a landmark move by the magazine and has received more than a fair share of criticism on the internet. However, it may have served as a catalyst for stock price, which has been on a tear.

It’s one of my current longs, and is butting its head against a significant resistance level. I’ve taken a small scale in the name because my rules dictate taking profits at logical price levels (levels that when long present significant resistance). But I only scaled ¼ of the position, where I normally take a larger third. It’s hard to defend a level multiple times. It gets harder every time. My thought is always to assume a resistance will hold the first time, make it prove itself every time after that.

As you can see on the weekly chart, the battle line is clear, unlike the opaque future of electric cars:

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Forged From The Financial Crisis

I read this site for over three years before mustering the nerve to comment.  It wasn’t fear of criticism or banishment, but rather respect for what I had found.  I was fresh out of college, had taken two jobs in the financial service industry, found each to be equally vile, and was desperately seeking someone to teach me something.  Academia won’t get you far in this game.  The sage words of battle-hardened traders will.  So I read backward to the inception, and have gone forward daily since.  Fly axioms began to stick.  Words from his wise elders like, “If it sounds too good to be true, it’s a fucking god damned lie.”  Still, I insisted on learning many lessons on my own.  In regard to trading stocks, most of the recent journey has been chronicled within the blogger network where I’m Raul3.  However, I wear many hats.

I won’t bore you with a lengthy autobiography, but will instead tell you who I currently am.  I am 27 years old and without children.  By day I am an accountant in a corporate setting.  Much of what was once tasked to this position I have fully automated.  Instead of touting my accomplishments to upper management, getting some bullshit raise and saddled with more meaningless work, I chose to continue appearing as if I do manual work to keep me busy.  This opens up my eyes to watch the markets.  They love me.  

Outside of my day job I own a business.  It’s more lucrative than my accountant gig and is almost fully automated.  My current and most ambitious project is the development of a portfolio of algorithms that automatically trade future contracts around the clock.  When you’re at home being a good father, I’m tinkering with these bots while listening to flamenco.  They are not HFTs of the dark pool variety, but rather order-flow scalpers using small position sizes of 1-4 contracts to take advantage of statistical arbitrage. 

I own many books, most of which I’ve read.  From the latest hot writers like Nate Silver and Tim Ferris to philosophic Greek scrolls heralded during Rome’s fall, I glean market knowledge from it all.  I’ll read a book on gardening and it will state something like, “A good tool holds its edge…” and I’ll think of my faithful EMAs.  My mind rarely deviates from the markets.

It all boils down to business acumen.  I won’t emulate The Fly like I did in my early blogging.  I will simply offer my views on the market, stocks I’m watching, and the reasons why.  I will toss in some Gaussian analysis of market profile, specifically in the /ES and /6e.  I will keep the opining to a minimum, and focus my efforts on objectivity as much as humanly possible.  Also, this will be my last campaigning post. Enough time has been spent!

Going forward, with our without a paycheck from iBankCoin, I’m going back to writing about what I love. 

Finally, an endorsement from any of the current iBC members would be a supreme honor.  If I’ve added value to your trading life, let it be known to your fellow readers.

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A Sales Pitch? Are You A Salesman?

Believe me, I’m a people person and jokes, oh I love jokes. The funny thing like telling a joke about a clown like Young Gun whose intent is to abandon her third-tier blog and shower us with long paragraphs and sappy R&B is the irony. Capital Overlook is running on a platform that says iBankCoin needs “fresh and new life.” Am I the only faithful reader who thinks iBankCoin is as fresh every visit as the blood spilled today by the fat-fucked investors in Darden Restaurants (DRI)?

Young Gun, I hope I haven’t lost your vote by calling out your subtle words of treason. When the polls open up on Thursday, be sure to cast your vote for a blogger true to the brand, true to the reader, Raul3.

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My Style on iBankCoin

When I’m riding a winner, I’ll mostly taunt the opposition.  For me, the taunts are a way of saying, “I still like this position, in case you’re wondering.”  When I’m in a loser you’ll know where I’m wrong way beforehand, so you’re not left holding the bag.  Case in point, by most recent beast win: PPC.

Pilgrim Pride was highlighted by Fly near the end of the summer.  The media had sold you the story that corn was fucked because news blogs saw how many clicks their corn famine stories received.  Then they did slide shows expanding the sites view count exponentially.  IT WAS A HOT STORY.  And corn prices shot higher and have mostly held the gains.  It was all enough for their stories to hold water, unlike the exhausted soils of corn huskers in Nebraska.

Pilgrim Pride was taken to the woodshed because they had a few tough quarters and with one of their input costs skyrocketing, it seemed a layup to short them into oblivion.  Short interest was high going into earnings.  I had a small position.  I play multi-quarter positions very small (2-3%) until they start to work.  What happened next?  They crushed expectations and the stock gapped up huge.  The shorts were all.fucking.trapped.  It was time to mock said shorts, and build a massive position.  The mocking has continued for weeks, and we may have finally seen the last squeeze today.  Yet I will retain a small, novelty position in the name to remember the de-cocking I partook in.  ARISE!

Some excerpts from Twitter:

It can be challenging to hold winners. Pressing a large position is one of the keys to earning money in the markets. Sometimes a sick sense of humor fits the bill for staying power. Sense of humor and a nine day EMA BEHOLD:

The coin was banked as is to be expected, and was done in the style of our founders: with honor and dignity for the fellow reader while crushing the spines of the opposition.

“I eat more chicken than any man ever seen, yeah” – Jim Morrison, Back Door Man

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Could There Be a Better Popular Vote?

iBankCoin is a beacon of truth in an otherwise thick canopy of click-whore campaigning by media monsters like @seekingalpha. It’s harmless to call out their blatant hack journalism because they add no value to our republic. However, one must take a softer approach to criticisms of equally ad hungry sites like Business Insider. Their staff is connected and adds occasional value to our site. Hence we may scoff their click hungry headlines, but respect the game. To even broach the question of iBankCoin’s loyalty to readers is grounds for immediate banishment, treason in the highest degree. Fly makes a point to kindly tell advertisers who attempt to “correct” his colorful commentary to kindly take their dollars elsewhere and fuck off. Show me a site matching such brilliance, I insist!

If you’ve resided in the mahogany lined walls of iBankCoin long enough, you know insolence toward the members will earn you a short trip to BANNED. This is by design. Through these actions Fly serves us all in building a place where ladies and gentlemen are held to their own merit; a Galt’s gulch of the interwebs but without the ad nauseum lectures on virtue. Instead we bump Mabach music.

Please consider this my formal request for inclusion in the tab battle.

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The Cup, The Handle, The Cliff, The Sach(s)

Earlier this week I tweeted something that, like most everything said on twitter, should have been consumed, and since not immediately actionable, forgotten like a good ADD-riddled twitter user:

I have 15% exposure to Goldman and will ratchet exposure up to 20% if they show strength early next week. My reasoning behind the position is three fold.

Reason 1: First and foremost Goldman “fuck off and pay me a bonus” Sachs rules the world. Yea yea, they do. Don’t succumb to the vanity of politicians or religious leaders. They’re puppets put in place by the blobby bastards at Goldman, whose slacks bear blood and shit stains from years of rape and pillage. Who doesn’t want these corporate hit men on their team?

Reason 2: A simple portfolio allocation decision, I want some finance exposure. Financial institutions are the dog of the public eye, and their share prices were on the receiving end of a bludgeoning in the market for years. It’s an important piece of the allocation pie, in my opinion.

Reason 3: The weekly chart. To my eye, there is potential for a huge cup-and-handle formation. It could be too obvious, but should we see the $125.00 neckline revisited, bears will have to prove valiance big time to avoid a huge breakout. Note: This is my most important reason, I was jerking your tail calling reason one chief. BEHOLD:

And may we have many more full moons of excellent trading action, have a great weekend

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Royal Has Today ONLY

Royal Gold (RGLD) investors, I wholeheartedly understand building into this name and making it a cornerstone of your portfolio. But if you’re long with a three to eight day timeframe I suggest you give significant weighting to today’s tape.

Price looked bullish into the beginning of November, putting in a rounded bottom support. I’m going to assume I’m not the only person who bought into the held support and is down 2-5% on the name. Read supply. Bulls held the critical $80 level once, the second time they’re going to have to prove themselves.

The $HUI index isn’t adding any benefit to the bull case, setting up for a flush too. Knifing through $460 means a throwback was in order, but be on the lookout for sellers to return to the scene.

Finally and quite possibly your earliest flush bellwether is the AM action in US Dollar futures. So far, it’s weak. Wednesday could have been either aggressive selling or seller exhaustion, and price momentum suggests the dollar bulls may go for a pump. No equity bull wants the pump.

Don’t discount the bulls too much. Let the day play out. The markets may be a bit thin and a late day surge could be the juice the bulls need to spark a spine-busting multiday squeeze.

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