The ramp the market has experienced in shares of Goldman Sachs has no doubt been a contributing factor to the improved sentiment of our market.  They were early to the party and have been steady appreciating a solid six months after dropping several no-so-subtle technical clues.  In tones of near disbelief (I hear tones through twitter) someone commented, “Their MBS business is picking up.”

I’ve been in nearly the entire duration of this move, including a table pounding.  With that in mind, and appreciating anyone who has read the scrolls housed in iBankCoin’s poorly lit halls, I want to update the cup-and-handle swing trade.

The cup and handle is a measured move from the lip of the cup to its bottom.  Don’t sweat pennies, the move measures thirty five dollars giving us an ultimate upside target of $160 BEHOLD:

Am I sitting here, sipping gingerly from the cup of the Sach [sic] telling you price will go to one sixty?  MmMm, No.

If I could change one thing I’ve done during this trade it would be selling my shares prior to their most recent earnings.  I missed around 2% of the upside that day, but I bought right back in the next AM so I feel pretty good overall.  But here we are, having ripped and held overbought levels for some time.  This current move may have more gas in the tank, but to my eye not much.  I’m going to continue to move slow with this stock, making the market take me out, but I am considering getting very light in the name and positioning for a pullback.  Perhaps size it down to something relative the to the position I initiated in CREE today.

It’s still important to keep the final target of the cup-and-handle in our minds, especially since it aligns with an interesting level in price action.  The bulls completing this advance, and the time it takes is an important piece of market context.

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Yesterday and today I have been faced with the increasing challenge of keeping my cool during a missed opportunity.  I participate in the markets primarily as a trader who sashays in and out of high probability chart setups.  But I also like digging into a company or sector occasionally and getting a feel for their business.  This is exactly what I have been doing with Cree over the last two weeks.

It is one of the stocks I identify as aligned with our current administration.  We know our government is into wealth redistribution so we might as well try to position some resources on the receiving end.  Companies and municipalities can convert their existing lighting infrastructure over to LED at a relatively reasonable rate to place themselves in the grace of our Premier.

CREE is the pure LED play and their new technology is reducing the price point verses traditional lighting options.  And the increased efficiency per lumen is making the recuperation rate a much shorter duration.

I was going to put on a little teaser position into the close yesterday.  And I didn’t and they crushed earnings.  The stock was up big after hours.  I listened to the conference call and like where their strategy is and the way they communicate with Wall Street.  I planned to buy them today on the first dip.

The market opens up and the stock goes parabolic, +20% and I watch, waiting like a sun soaked lion.  It starts to pullback and I’m like, “Oh God, yeah.”  Now I’m just waiting for signs of buyers.  It keeps coming back to me, I keep watching, very happy about the development. 

10:23AM:  I’m loving the action, it’s come in quite a bit, and I’m waiting for the heavy lifters to step in.  *RING RING* “We need you in (insert bologna corporate agenda here) meeting right now.”  You’ve gotta be kidding me.

I oblige, we talk about nothing for a bit while a decrepit fossil figures out the projector, talk about what? Nothing, and I get out a little after eleven.  Instantly pull up a quote, up nearly 50 cents, awesome, risk=higher.  I reassess risk and buy as fast as my fingers can click like a good button presser.

Sashay, sashay, then a pump.  And here we are and I have a small 1/4 positon, fully willing to ride an entire gap fill.  Though I doubt we will see it.

Moral: keep your cool, always define risk, and one of my favorite Fly axioms:

When’s the best time to buy a winner?  Always.

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I started a new position in CREE. If you buy CREE because of this post, if you buy 20% pops in stock prices, you enjoy pain and may lose money.

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AIG is one of my current longs and I like the way it is setting up today.  I was impressed by the strength in the name last Wednesday and started my position.  Since then it has been flat/down.  However if it can hold today’s strength into the close the setup looks even better to my eye.

I like the alignment of the EMAs and the strong thrust through the 9ema.  It is showing promise for making a new swing high.  I may add to my position.

The chart has me hypnotized.  The company not so much, this is just a trade. Notice the prior behavior of price @ $35.50. Should we be unable to sustain trade above this level, I will cut the trade.

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I’ve sat idle today, watching my portfolio oscillate through 50 shades of green.  It’s currently settling into a modest forest green as MLNX wet blankets the advancement in chicken and donut stocks.  I’m stalking a few names into the close, but I’m not certain if I’ll pull the trigger.

Interesting trend of late in the foodie world is the donut connoisseur.  For them the doughnut (spelled in traditional long-form) is like a blank canvas.  It’s a vehicle for introducing tasty sensations from around the world to your palate.  Around here they crowd into bakeries Sunday morning clamoring over the newest delicatessens.  Then (and this part just drives me nuts) they eat the doughnuts with a fork and knife.  They fork and knife the whole thing like it’s a steak.  You can see them through the bakery windows, sitting at small round tables, sharing doughnut photos on Instagram then cutting the doughnut into fork sized pieces.  They eat maybe one and a half doughnuts.

It’s my opinion that all of this bodes well for DNKN as they ignore said trend and stick to banging out mass amounts of donuts and coffee for the working man.  The working man is serious and consumes no less than nine donuts whist guzzling down a canteen of coffee.  This is the crack that keeps our job sites humming.  They work hard until eleven in the morning.  Then they crash and feel guilt.  This feeling can only be cured with more donuts, more coffee.  DNKN keeps winning, forever and ever, amen.

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We saw an interesting session yesterday.  After gapping out of a multiday range and opening higher we immediately saw selling on the open.   The sellers drove price lower for the first half hour of trade and we had ourselves a weak morning gap being faded.  The buyers seemed to watch the morning activity play out and after letting the sellers bring price in they went back to work bidding up price.  They stayed active throughout the rest of the session.  It would only be ten handles higher when sellers were able to react and overpower the upward momentum.  We closed the session higher than the open and above the day’s midpoint.  Bulls won.

At this point the sellers have much work to do before regaining any semblance of control.  Given the progress higher, there is much room below for buyers to put in a higher low and remain in control.

For today’s session, I’m sticking with the bull and will be hesitant to cut names unless we lose yesterday’s value area low at 1474.  Keep in mind only my weakest would be cut below here.  Any new long trades would be trades only and mostly of the short squeeze variety.  I don’t intend to initiate any intermediate-term swings at these levels.

Top two picks going into today: PPC & DNKN (chicken & donuts)

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More often than I would like to admit, I make a solid call on the direction but my stocks hardly participate.  Today was one of these days.  My stocks are up modestly.  The portfolio is green which is always good.  But considering I’m 75% long I would expect a bit more juice.  Every time this happens I’m reminded I need to finalize my alogs.  They’ve been on the backburner for months, simmering, thinking, waiting to wage war on the world’s futures markets.

For now we must continue to bank our coin trading these stocks.  With the markets levitating higher like this, I’ve been quick to take profits on extended names and toss the money at fresh ideas.  The rotation is great and keeps the portfolio humming along like a well oiled Ponzi scheme but eventually I want to settle into a few companies as investments, not just trading vehicles.  I like the Japan thesis Fly built.  It was odd when my good friend who does big business in Japan but never invests asked me if I knew anything about EWJ and if it held good companies.  He wants to get it.  Apparently they’re loving Abe over there.

Whether or not this is a peak I’m not certain but we are getting to a level where I like to lighten up.  The trough is where I like to do my business.  We had a nice trough the second week of 2013 and we did work here at the Raul3 blog.

I may lighten up my long exposure tomorrow.

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What we are experiencing in the markets this year is extraordinary.  No amount of bad news can slow this market.  We’re about to make fresh highs.

Dump your weak and buy some STRENGTH.  Buy stocks that make people work harder (until at least noon) like DNKN.  You really don’t want to overthink a big move higher.  Simply find stocks you can define your risk in (using prior interesting levels or voodoo) and buy.  Then sit back and let the rising tide lift your boat.

There’s confidence in the banks.  That’s the cornerstone of capitalism.  It’s something we haven’t had for a few years.  Oh how well time can heal.

I highlighted the pump line this morning.  As I’ve done since the blogger network days, I put my money where my mouth (pen? keyboard?) is and took the bets.  Should we lose the pump line, many bets will come off and I will return to a more defensive position.

Actually even if we close strong I may dump some weak.  Why on earth are any of my stocks trading down?  Ridiculous!

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It’s all eyes on our banking overlords this morning as JP Morgan and Goldman Sachs report all the esoteric ways they fleeced us of coin last quarter.  They both crushed but the futures haven’t reacted.  I don’t know valuations or earnings metrics, but the technical picture on both names are running hot.  They’re running hot but they’re still pointing higher.  Go figure.  I suppose we will get the proverbial hand tip from both companies today.

An automated business is fantastic.  That is until something goes wrong and an inordinate amount of time must be spent “retooling” a situation.  Such was the case yesterday evening and as I result I’ve come into the morning having not done my evening research into trades for today.

When time is of the sweetest essence, I prepare most of my picks by poaching them from the generous folks here at iBankCoin.  You should too.

I like SD from RC’s 4 Wednesday Trade Ideas post.  It would pair well with my SU like a robust Bordeaux paired with ostrich.

I also like GPI from Redman59 over in the blogger network.

There was some talk yesterday in 12631 about ANR, I like it on strength.

UPDATE: DNKN looks good too

Digging further into apparel and retail given the strong consumer data yesterday (albeit normal given seasonality h/t Scott Bleier) I like that chart of PVH.  It’s near 52 week highs but is wanting higher.

Other thoughts:

I think people may still be afraid of FB today and perhaps the rest of the week.  Eventually, I’m going to add back to the name.  That is of course if an orderly pullback presents itself.

I’m hoping to not be sidelined on the banks too long but I have the feeling I won’t be jumping right back into GS until the earnings reaction plays out.

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After a gap lower today the market was mostly occupied with buying which kept the S&P on a tight grind higher throughout the entire session.  It’s had a slight algorithmic feel the entire session.  Despite the steady strength of the bulls, I spent most of my session lightening up current longs.  The only exception was my AM purchase of $MLNX, a longtime favorite stock of mine, that continues its dog like ways.

Tomorrow we get to hear earnings from JP Morgan and Goldman, two of the high velocity rockets that have been vital in lifting these markets higher.  They are both trading well into earnings with their stocks still showing positive momentum and even offering what could be considered an entry point today.  They’re almost trading too good to remain constructive on the names into earnings.

Now I could be wrong, and as Fly pointed out this morning traders don’t belong in the earnings forecasting game, but both Goldman and JP Morgue could announce stellar earnings and profits and still sell off.  Should this occur it would be a soggy blanket on the entire rally.  The way the benchmark S&P has been trading in conjunction with a weak Apple and flat banks is impressive.  But I’m embracing the uncertainty of tomorrow’s news.

My cash levels are near 50% after selling out of GS.  Obviously now I welcome any pullback.  I feel a little underinvested, so I will be digging into the charts this evening to flush out some potential longs I can grab should we continue pumping.

I still like meats.  I still like Textile and Apparel.  I had no idea my “Amalgamation” pick (SU) would trade so slowly but I still like it.  Everything else is subject to whimsical liquidation.

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