Good Morning and welcome to another work week, we have quite a gap higher to manage this morning.  The +20 gap that occurred when the market opened last night is a perfect example of something not being priced into the market.  This is the risk we carry when we hold positions over the weekend.  The 20 point gap also doesn’t mean the news is priced in.  Instead it has thrown us out of balance, which provides opportunity, as we auction our way back into balance.

The overnight action is currently forming a head and shoulders pattern with a neckline at 1698 and left shoulder at 1701, head at 1703.75, and right shoulder at 1702 give or take a few ticks.  The downside target of the move is 1692.25 which is one tick above where we opened yesterday evening, and also showing other confluences of support.  This is a huge level to monitor today, and one that is likely to offer excellent trading opportunities.

We’re also coming into the market action from the first days of August which gives us a few handy reference points, a value area high and volume point of control a point apart at 1696.50 – 1695.50.  Keep these levels in mind, if the bulls make short work of establishing value above here, we may be in for a fast and furious move higher.

Otherwise, my expectation is for profit taking type selling to enter the market early on and back fill the single prints from last night a bit.  I’ve highlighted this scenario, important price levels, and more on the following market profile charts:

I came into the day completely unprepared for all the volume to roll into December contracts.  As a result, I spent the morning getting all of my charts built.  By the time I completed this task the only opportunities of the day had come and gone.  After watching the tape for a bit, I ordered an oversized lunch and stared out the window while eating it.

There just isn’t much for me to do today.

RBCN caught an upgrade but some the bounce if being faded off.  I get the sense this stock is setting up to offer long speculators another correction, but I’m struggling to justify selling my shares for any other reason. I will stick around for the flop Monday.

I can’t justify selling SKF either.  Aside from the Goldman Dow inauguration, financials have sucked wind all week while tech goes on a no holds cocaine bender.  Look at WFC, BRK/B, C, BAC, and the butt grabbers at AIG.  They all performed rather lame.

It helps me carry high beta through the weekend, too.

I will stick with EXK into the weekend.  It could either carve another 6-7% off me or rip tits higher.  I like that type of binary situation.

Enjoy the final throws of summer this weekend.

The overnight session has been very quiet and balanced with little to report in the way of new development.  Price action on the S&P is coiling up tight as we approach the Friday trading session.  Given the overall trend higher, even at this potential inflection point, my expectation is still to see some early strength.

To my eye when looking at this price consolidation on the bar chart and through the market profile lenses, 1684.25 looks to be the pivot point today.  That means I’ll be forming my intraday bias based upon how we trade relative to this level.

I’ve noted this level, a few possible scenarios, and other price levels of opportunity on the following market profile charts:

The strength we saw in the S&P going into the close carried on into the early overnight session, pressing up to new highs after the market closed.  This serves as an interesting piece of context because it is very uncommon for a swing high to be made outside of regular trading hours.

The overnight profile is balanced and features a poor low at 1685.25 seen as a triple TPO down at the lows.  This area coincides with yesterday’s VPOC which was able to migrate above the most of the key reference points we discussed yesterday morning.

I’ll be watching for a push to new swing highs today, and I’ll also be closely watching support from 1681.25 – 1682 should we see some selling come into the market.  These levels look like solid support currently, so seeing them break would be significant.

Overall, the market looks pretty strong this AM, let’s see if it can carry through into RTH.  I’ve noted some scenarios and key levels on the following profile charts:

Sometimes we find ourselves wanting the market to behave in a certain manner.  When I went over all the charts this morning, my first thought was this rally is getting a bit long in tooth.  Then I observed a few more charts which firmed up my expectation that we may see a bit of a pullback materialize today.

But then I wanted the dip.

There is an old lesson in this thought process.  You can build expectations, but to want is to impose your will.  Imposing your will, or demanding, that the market conform to your expectations is like being mad at the ocean for washing your home away, irrational.

Anyhow, as much as it’s my expectation that today we see a pullback materialize, the market could just as easily continue climbing the wall of worry or trade sideways.  The overnight profile is top heavy but mostly balanced and we’re coming into significant resistance at 1682.50.  It didn’t surprise me to see the market stuck just below 1682.50 which represents the value area low of the distributions left behind in early August. This level is huge today, along with 1684.50 (VPOC).  If bulls can show price acceptance above these levels, we’re back into this upper value, and may rotate through it sooner rather than later.

Otherwise I’m looking for a pullback.

We had a poor low yesterday seen on the profile as a double TPO print.  If that gives way, I’ll be looking for gap fill trading to come in, pressing down back toward Monday’s high at 1671.75.  How much of this gap the sellers are able to fill (if any) will be an interesting piece of market sentiment as we close out the week.

Note: Today is contract rollover meaning many future traders switch to the December contract.  I will be watching the volume on both contracts and migrating over to the December contract when it trades move volume.  The above price levels are in reference to the September contract.

Last week I was trying my best to call out my futures trades in the 12631 chat room because I often get the value added benefit of hearing other members’ take on the position.  However, it became increasingly stressful to provide timely updates on my positions and manage the trades.  I thought I traded last week in 100 percent accordance with my plan.  As a matter of fact, I did not.  Upon reviewing the tapes of my trading, I found a costly mistake was made during the fast markets on Friday.  It was my largest losing trade of the week.  It was managed properly, once entered, but it was not in proper cycle sequence.

I decided at that point to keep my futures trades to myself.  I do this for two reasons.  First to benefit me by giving myself a more clear mind when trading.  Second, I want to build my confidence in the trading cycle before I present it to the good people of iBankCoin.  My colleagues all provided the finest value added commentary, and I want to provide the same.

Today was a quiet session after gapping higher in the indices, but I was able to extract 3 handles of profit from the /ES using Bossram.  I extracted another 0.0012 in the /6e, so overall I had a pretty solid day in the futures.

Onto stocks, I built a pretty solid day in my swing portfolio.  CLF showed solid follow through today, but I took a scale, reducing my long to ½ size.

I finally closed out END, toward the end of the day, when the momentum ended.  This was a huge position of mine, one I wanted to parade down the warm streets of victory lane.  Instead I chewed off the bits of meat left on the bones and tossed the carcass into an alley.  I made five percent, at one point nearly nine percent, and expected to make twenty.  But with international sweetheart Vladimir Putin putting a damper on the war, my thesis is eroding.  I took money while it was still there for the taking.  I like MHR better anyhow.

I was watching the live bloggers at CNET cover the AAPL WWDC and when they mentioned Apple would be using sapphire in their latest iPhone’s fingerprint sensor. I queued up GTAT and RBCN.  I like both very much as part of my hedonistic desire to own all things LED, so the AAPL news was more an excuse then a pure catalyst to put sapphire back in my book.  I took down shares of RBCN mainly because I like the chart better.  GTAT is coming into longer term resistance here at seven as I mentioned yesterday.  RBCN has a nice pocket of volume above and a simple-to-define risk.

My final move on the day was pure stock market vagrancy: I bought a stupid amount of MJNA shares.  The ticker came to mind during a discussion with The Rhino.  He was discussing Funyuns which reminded me of Half Baked and before I knew it I went down to the corner and bought MJNA.  The chart looks interesting to say the least.  To say the most I see really heavy volume coming in.  Perhaps Doctor Phil is about to discuss the benefits of cannibals for bored housewives or something…

I’m down a smidge today, I kept my SKF on, and I’m still about 25 percent cashish.

Markets are ripping higher overnight, pressing the /ES nearly to the top of the gap left behind on 08/15.  By the looks of the overnight tape many buy stop orders we triggered and a stop run ensued.  The question now is, will the buy flow continue to push the market higher, or will we see a big selling reaction to a perceived premium in the marketplace?

The S&P is currently trading ten handles above yesterday’s high, and nearly twelve handles above the closing print.  Therefore we are in pro gap territory where it is very difficult to play a gap fill trade.  However, we should keep the context of the gap fill trade in mind today if we see sellers start to recapture areas of support.

An interesting zone of price overnight is from 1674.50 – 1675.75 where price moved so fast, nearly no volume took place.  Price could revisit this area and give it a proper auction.  Should this occur, the subsequent move from the zone may give us some insight into who is more active today, the buyers or the sellers.

Given the distance the market covered overnight, my intial expectation as we approach the cash open is to see selling enter the market.  Initial downside targets are 1677.50 then 1675.75 and a possible gap fill to 1671.  On the upside, we have the lowest distribution from when we gapped lower with resistance at 1682.25 (VAL), 1684.25 (VPOC), then 1686.50 (VAH).

I’ve highlighted these levels and drawn out a few scenarios on the following market profile charts:

I was not actively trading the /ES today, but my algo was able to take two trades.  One earned 1.75 handles and the other was breakeven.

My portfolio had a very strong day today, up nearly three percent and putting me back near my high watermark of the year.  I’ve been trading my butt off to finance these investments in RVLT and CREE.  As a result, when RVLT and CREE go up, I have big days.

Let’s discuss RVLT a bit.  If we consider the sentiment chart idea, we find ourselves within the panic bounce.  To me this means any rally we see over the next few days/weeks is likely to fail.  How do you like that?  I’m telling you right now that my largest position is involved in a failed rally.  And that’s okay because my timeframe on this position is multi-year.  Let’s hope I’m correct so we can have better opportunities to buy even more shares.  Another anecdotal piece of evidence calling this rally into question is one of its origins: a {cringe} Seeking Alpha report.  The bozos at SA (as the hipsters call them) were greased to help somebody get out of a seriously underwater position.  This is just a theory, but their track record is eroding though the diligent work of iBankCoin Chief Market Strategist “The Fly”.  It puts a foul stink on the whole move.  If it wasn’t a pleasant twenty percent pressure release valve I would be even more ornery.

However, CREE reported they have retrofitted the NASA headquarters and done so quite successfully.  Hmm, Cree really knows how to land the big fish, yes?  Wrong!  The biggest fish tend to be the wisest fish—having survived years of fishing and boat propellers.  If/when these gigantic fish encounter a situation where their lighting is called into question, the data will unequivocally point them in the direction of LEDs.  Any entity that weighs the financial impact of any business decision will see the cost benefit of retrofitting their existing light structure with LEDs.  And CREE, RVLT, OESX, AIXG, RBCN, and GTAT will benefit.  Look at GTAT…shorts better pray to their demon lords that sadistic seven holds as resistance.  Otherwise the light, the good, shall prevail.

Other big winners today were TRLA, CLF, and END.  Readers, I’ve been clear with my calls.  It’s up to you to wrap risk around them.  I scaled a small piece of TRLA off because I take profit when the markets giveth.

My SKF has gone red by about three percent.  Tomorrow it comes to an interesting fork in the road where I’ll either buy more, do nothing, or scratch the trade.  I was hesitant to add to the position today when the SPY absolutely refused to roll over.  Checking back in just now, it appears it did manage to roll, BARELY.  Until I see more confirmation, I’m not loving this trade.

END needs to rip, I mean, come’on now, we’ve been flirting with the idea of going all the way for weeks. Why not get past this game of just the tip as @chessNwine often references?  I think we do, hence why I haven’t scaled any off yet.

CLF is tricky.  It has been dead money for so long and now it shows signs of life.  Do we trust it?  Or do we take our six percent and dump this cheap trick?  TBD

In closing, I kicked my cash up to 25 percent and could like to see some market weakness to buy my favorite stocks sitting on my wish list—names like Z, SFM, GOGO, AMBA, ADHD, and VPCO.

Looks Boolish:

Hello and good morning.  The globex session spanning from Sunday evening and into the early hour of Monday has been a quiet one, stable, and without much by the way of new developments.  The S&P printed a nice bell curve distribution overnight within the upper 1/3 of Friday’s range.

Both Friday and Wednesday left the very visible footprints of reactive buyers.  These show up as long buying tails.  We often speak about the big money being away during the summer, which is debatable, but last week certainly saw signs of heavy money flow.  Whether it was due to the new month or the pros coming back to work, I’m not certain.

What I do know is if we see the market trade back below these buying tails this week, that is going to put all of that aggressive reactive buying under water.  If price sustains above the buying tails, we may see a bit of confidence returning to the market.  The buying tails are key piece of information to measure sentiment against early this week.

I’ve highlighted several areas of opportunity on the following market profile chart.  I’m particularly interested in the confluence of support nearby from 1652.50 – 1653.  If the market cannot sustain trade above these levels today, the reactive buying on Friday comes into question as we enter the thin volume portion of the profile.  My expectation is for buyers to hold near these levels.