Wed Jun 12, 2013 7:42am ESTComments Off on Drilling Into Yesterday’s Candle
The overnight session has been strong, pressing the S&P into the upper quadrant of yesterday’s action. We’re nearly 10 handles above yesterday’s close. We’re certainly seeing a market climate loaded with chop and large gapping action.
Yesterday’s auction was a battle for control as we auctioned inside the thinly traded zone from 1632 – 1617. The sellers came to the market early in the afternoon and leaned against Monday’s VAL as resistance. A clear victory for the bulls today would be building acceptance back above 1640.
Sellers want to press price below the value point of control set at 1625.50 yesterday. From there, a push down to 1614 becomes a distinct possibility.
I’ve highlighted this level and other key price zones below:
We’re very weak overnight as sellers entered the market aggressively around the European open. The selling action has taken price over 15 handles off the close yesterday.
The compressed profile yesterday was located entirely within Friday’s value and stalled in the afternoon. This type of acceptance of Friday’s value gave the suggestion that we would at the least retest the low end of Friday’s value. Price cascaded through Friday’s value area low after it initially held as support overnight.
If the bulls can manage to retest the 1634-1636 range today, that would be an impressive recovery. However, the more likely scenario is an auction of the otherwise neglected price levels ranging from 1632 – 1614.
If you’re positioned aggressively long (like me) and have some cash remaining, your best bet here is to be patient before adding long exposure. Wait to see if the market will test back down to 1615 area.
I’ve noted this range and other important areas of support/resistance below:
Mon Jun 10, 2013 7:35am ESTComments Off on Monday Morning Market Context
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.
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:
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.
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.
We’re not looking to strong in the S&P globex session, starting with the rock solid resistance overnight at 1630. It held on a series of three lower highs overnight and resulted in a snap of the 1625 level, if only temporarily. Both of these levels are important today.
I zoomed back on the balance zone from about 1631 – 1622 to get some lower levels to watch in case we see a liquidation occur.
The next levels of potential support are 1618.50 a significant low and then 1616. Finally I see 1614 on my radar as possible.
I will use the following market profile chart to define upside resistance. Note: I’ve split yesterday’s session essentially in half, where the conditions changed:
Something is happening to me, something I’ve planned and worked toward all year long. The budding ideas are beginning to bloom. I’m becoming a multi-pronged trader. The tape, it only needs to move, and I’ll be there, making money from it.
I do things, quite majestically. Take for example my NFLX weekly option trade. I bought two units early, scaled one off for profit during that precarious double top intraday, and held one through a bit of a drawdown. This option now stands to make a great deal of money in the morning. The profit taking gives the confidence to stomach the pullback, at least for me.
My Google runner, I sold it. It was worth more, and it may rip tomorrow without me, but I avoided turning it into a loss.
This LULU long may still be a loser. I’ll keep quiet about that seeing as I nearly top ticked it with 3 calls. You’re never supposed to lose on the internet.
I made money in the S&P futures today. I can’t post these trades live as they require 100 percent focus and risk management.
My swing portfolio lost money today mostly, but it boasts a large cash position and some green shoots. Not just pure red. NBG is my current biggest loser. New longs include JKS and FSYS. Cash resides at 33 percent.
New long JKS was practically a mechanical entry. PPT upgraded it to buy, the hybrid score shot up, and it has a look I know and love.
The green Tuesday streak is over, but I still stand to make a great sum of money tomorrow. The fade exhibited on my longs only serves as proof that the sellers are in fact afraid and behaving overly aggressive.
Notice: As fast as these buds bloom they can be chopped to bits by a careless lawnmower operator. It would not be the first time I’ve had fresh ideas minced by the motored blades of the market. No one ever said it was a safe journey!
I only entered into the S&P futures once today, buying a pullback and attempting to inflict pain on the short sellers. The trade earned two handles on two contracts but once the sellers defended their territory, the land north of 1645, I backed off the action and simply observed.
I had a trigger right at the open to go long, but I was distracted buying weekly calls in NFLX and LULU. They’re both about flat currently, and I have the distinct feeling I may take some heat before these trades can play out.
I closed out that aching ACHN position, it could still pull off a Hail Mary bounce recovery, but I really don’t feel like sticking around to find out in this overall choppy tape.
I took a 1/3 scale in DANG up here near recent swing highs.
Now I’m essentially sitting on my hands, waiting for the market to play out.
