Coming into the week, we have three days of overlapping value to use as bias for direction into the week.  Last week featured a very similar overlap of value and seeing acceptance of price above the big value gave us conviction to the long side all week.

The same weight should be given to the three days of overlapping value this week.

The overnight session has been flat thus far.  The only notable development was the rejection of Friday’s HVN on the upper volume node at 1664.50 which I consider the only line in the sand stopping more upside.

Here’s a markup of the other important S&P levels:

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The overnight session has seen the S&P index as much as seven handles higher from yesterday’s close, putting in two rather methodic rotations higher.  The resulting volume profile is wide however, which paints a more neutral picture of the session.  We may need to see more profile development before we’re able to build any context from it.

The key feature of yesterday’s profile is when price “fell out of bed”.  A liquidation took place at 2pm and price tumbled 9 handles lower before recovering off the lows by about 33 percent.  The resulting action left behind an excess low at 1647.50.  Someone, aka they, found the price such a bargain, they snatched them up with aggressive reactive action.  Should we trade back down to this level and the market doesn’t receive the same aggressive reaction from the buyers, we can take it as a sign that something has changed, and position for lower trade.

I’ve highlighted this excess low and other key levels in the volume profile look, enjoy:

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The morning session is balanced, and somewhat choppy.  The rotations don’t seem to make much progress and I got caught up in the noise with several trades.

I went 5/14 giving me a win rate of 36 percent.  My best trade was long into the 11 am hour catching a drift higher that earned 2.5 handles.  My two worse trade were chop along the VPOC each carving out 1.75 handles on two units.  Net-net I was down on the session.

My best position was shorting into the 10am Philadelphia fed number.  The market was bid up into the number, ran some stops and then reversed lower.  I covered far too soon, taking only 1 handle out of the 7 handle move.

Biggest area for improvement is waiting for a bit more conviction before trading from the middle of the value area to the outside.

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Another quiet overnight session, forming the familiar bell-curve within yesterday’s fat value area.  This tells me there haven’t been any significant developments overnight.

The ten handles swing lower seen during the ES afternoon suggests emotions are building up in this tape, but hardly suggests complacency.  When price knifed lower to the scene of the early breakout, it was met as a huge buying opportunity.  The low volume node left behind at 1648.75-1648.50 is an interesting byproduct of that swift rejection.  Should the bulls not defend this level in the same manner on a retest, I’ll take it as a cue that sentiment has shifted.

Early on, perhaps even premarket, I’ll be looking for a test of the 1648.50 level mentioned above.

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I had a solid session in the $ES_F.  I was working a long trade inside the VPOC.  On my first trade, I earned 1.5 handles on one piece and then scratched the net +2 ticks.  Then I re-entered and earned 1.5 points on my first piece and 5 handles on the second.  Nice little victories to have, all according to plan.

I jostled my portfolio up a bit, selling another 1/3 of my ANGI after the housing stats.  The housing numbers came out in-line/better than expected and ANGI had a nice morning move.  When it didn’t pump alongside the overall market, I took the cue to scale some profits.

I also started buying JRCC.  There’s a lot of good guys in this trade, for various reasons.  I’m in it for the little 5-10 percent, you know that.  That being said, I want to see this trade get moving soon as it hasn’t quite turned the momo corner.  Developing…

Look at Ford, wow, good American breakout.  I’m taking a step back this afternoon and smelling the roses.  I want to see some afternoon action before deciding to buy more stocks or sell down what I have.

http://youtu.be/f5L140YRFpg

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One of the key elements to yesterday’s trend that should have kept me from fading early on was the opening type.  Yesterday we saw a classic opening drive: the market opened above the value area highs spanning four days and didn’t look back.

Today we’re seeing a more balanced session overnight, with the action taking place within yesterday’s upper volume distribution.  I’ll be keying off the price action inside the upper boundaries of the P-shaped profile.  The single prints below can get slippery, should price trade back down into them, I’m playing for a swift move through them; a crushing blow to the bulls.

But mostly, I’m looking for digestion of yesterday’s move.  Should price consolidate within this upper distribution, we could see individual stocks fare very well.

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Today was really interesting as a student of the markets.  Believe me when I tell you, there’s gold in trading the S&P futures at the open.  I just can’t seem to harness it yet.  I have streams of data over all types of markets supporting such a thesis.

I grabbed onto the $ES_F not long after the open.  I got an ace entry just above 1630.  As is par the course, I got my first scale at 1.25 points profit.  I scale at 1.25 because my setup achieves this goal with a 70 percent win rate.  Then I let the other units run.  In theory.  Currently I’m trading a two lot.  I’ll keep trading this tiny position until I get the type of profitability my statistics suggest, and then my goal is to work up to trading 50 lots like the best.

Anyhow, I get the 1.25 and there’s no sign of sellers.  But these positions require my full attention.  More attention than I can give when I get the phone call for an impromptu morning meeting.  WTF?  I booked the other piece a 1.75 points profit and scuttled to a meeting.  Returning to my abode, I watched patiently as the move progressed, and when I got a short entry I took it—then got steamrolled.  That’ll teach me to fade all-time highs.  Had I kept my runner, it would have earned 10 handles without even looking back.  I know—I’m really good at hindsight trading.

While my future’s game is of the little league variety, my stock swinging game is clipping away with major league win rates and profitability BUILT IN.  Mostly everything won today, but ANGI and GS were both solid con #timestamp for the good people of iBC.

I did quite a bit of transacting today, let’s run through it quickly yes?

I added to my GS long early on, and then later sold it when we neared the 155 target my plan called for.

The remaining long in BBRY was closed at break even, after squeezing some profits out of this turnip yesterday.  Blackberry is a big, stupid, Canadian turnip.

I grabbed OptionAddict’s coattails via JOEZ.  It’s not nearly as homo as putting ones hand in another man’s jean pocket.

I scaled a little bit of ANGI off.  Why not take 5 percent before your catalyst?  I still like it into tomorrow’s housing stats.

HAIN was bought into the bell, as it flagged along into the final hour of trade.  My order was followed by a little squeeze which gave the daily chart a lovely look.

All this shuffling took my cash down to 40 percent.  I’m standing atop the mountain on a small piece of rock, being propelled higher by liquid hot magma.  This mountain is in fact, a volcano.

Trade accordingly.

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Very solid market this morning for the $ES_F.  This is the type of action that comes after a huge consolidation like we saw over the last 4 or 5 sessions.

I took a long off the open that earned 1.5 points on two contracts.

Then I tried fading this mega move, taking 3 handles of heat on two contracts aka I gave it all back and more.

I’m not beating myself up over these losses, although I may go back to the drawing board to build in a caveat for fading moves after a long consolidation.

You can have a losing day according to your plan.  It’s the deviations that cause confusion, loss of confidence, and consistent losers.

The market is speaking clearly today.  It says, “Don’t fade me brah!”

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UPDATE:  We had some jawboning jerk the overnight market up, we’re now dealing with a double distribution on the 24 hour profile:

 

It’s been a quiet morning session, but certainly of a different character than we’ve seen since entering this large balance zone.

Since the neutral day on the 9^th, I’ve been watchful for the next move out of balance.  This morning’s profile suggests we may see it today.

What I’m referring to it the toothy characteristics of the volume.  Recent overnight profiles have been near-perfect bell curves.  This morning not so much, instead the profile lacks a clear point of control.  Price rejected yesterday’s high overnight at 1633.25 and swiftly rotated lower, with a current low right at the major confluence of VPOCs at 1626.50.

As we progress into the morning USA session, I’m looking for the market to rotate higher off of the major VPOC level and result in another quiet open with little gap to trade.  However, if the buyers don’t file in to buoy this index, I suspect we may explore lower.

 

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It’s been a solid morning so far for stocks as we continue to chug along on the value train mountain ride.  The question is are we about to begin a descent ala Thunder Mountain or will the engines continue to power higher using banks and Apple as fuel?

The morning offered me one setup that earned a single ES point.  I’ll take it to start the week.  The primary feature of the morning was a solid five handle rotation higher that buoyed many stocks along with it.  It filled the gap and now we’re watching the market consolidate so far above value.

It will be interesting to see if the market can hold onto this strength through the lunch hours.

I took some profits in YELP and BBRY this morning but still hold 2/3 positions in each.

I started a new long in ANGI, again.  Third time is perhaps the charm?

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