Futures are set to gap higher again this morning, and value has gone exploring higher.  Last night I was tired and expressing my disdain for the barrel of monkeys my portfolio has become.  Today I love said monkeys and wish to harbor them into the day.

One of the biggest mistakes swing traders make is over thinking a trend and bailing on it too soon only to look back mouth agape at the profits they left on the table.  I didn’t do that with The March of The Chickens (PPC) and it made my year.  Now I intend to do the same for any degenerate position who wants to continue to run.

The market is going to have to really force me out, either by definitively breaking the 9EMA or by closing below it.  Otherwise, we’re going on a gorilla raid of the shorts.

TAKING TO THE PROFILE…I’m so glad people enjoy this.  As you can see, the S&P 500 has gone exploring for sellers, and price will continue higher until a stronger force of selling is met, because most short term resistance has been cleared.  We want to see buyers hold their ground at yesterday’s high first and foremost, but that could be wishful thinking an excessively bullish. Next level is 1432.25 value area high, if this areas breached we have to be on the lookout for a rotation down to the point of control (highest volume traded at price yesterday) at 1430.75 then things get slippery down to 1427.  It would be clear the sellers have stepped in hard if they can sustain trade below 1427 and could be your cue to raise cash if you’re very long.

Otherwise, if we continue higher have some fun, pop into RaginCajun’s bomb and squeeze screens and find something that fits you for inflicting pain on short sellers.  These are simple market times, simple but never easy.  Stay nimble because we have The Fed speaking today too.

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Into the close of last week, charts were setting up everywhere.  Before I knew it my portfolio was inhabited my monkeys, hard set on escaping the barrel they resided in.  Want to see the setup?  It was everywhere last week and in some cases paid handsomely.  EBAY took on the characteristics today, and I bought.  Behold:

What I especially like about this setup is the interplay between the two CCIs.  I keep a long CCI to give my eye a picture of where the intermediate term trend is and the short one to detect pullbacks in said intermediate trend.  You could do the same with the momentum indicator of your choice.  Simple Right?  Remember, no two trades are ever the same and the key is always risk management.

Back to my current situation, a barrel of degenerate positions like ATML, ADTN, FB, and TSLA, I want rid myself of these names.  Names traders are playing hot potato with ahead of the market’s cliff reaction.  They’ve been trading up so I’ll keep playing along, taking scales at logical targets (places where people clearly draw lines like old swing highs and such) knowing I will dump them all on weakness.  I want higher cash levels and, should it end the week STRONG, more shares of your favorite Senator’s investment house, Goldman Sachs (GS).  Current cash level is 22%.

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As of 8am, ES Futures are priced to gap above last week’s high at 1423.  The question now is whether bulls will step in and make a big thrust higher, or if we’ll see another tepid afternoon of mixed trade.  One item of note from the profile that I’ve continued to emphasize in this tight price range is the ability of the auction to take value higher every day since the slap the p fade that occurred on the first trading day of December.

Essentially, anyone who bought the hype going into December is now whole, and beyond that has watched value creep higher each successive day.  Value looks ready to go exploring higher.  There are too many buyers at these levels.  At least that is my interpretation of the current value shift.

When I refer to value “shifting” I’m referring to volume at price.  The price that trades at the highest volume is the most accepted price traded in any given day.  The value area represents ~ 70% of the trading volume.  Note its march higher:

Watch for bears to capture 1418 then yesterday’s low which closely corresponds last Friday’s volume point of control at 1414.  Caution if either level is recaptured.  Otherwise, blue skis for Santa’s sleigh.

Aside: I’m building my next multi-quarter thesis.  I’ll give you a hint: it involves yesterday’s purchase of MLNX.

http://youtu.be/Zde6APNQiV8

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Late last week, I started seeing several charts setting up in a manner I prefer, and with the docile behavior of the S&P I began buying up shares in names like ZIP, F, ATML, FB, and DDD.  These stocks were added to my other wiry positions: VHC, PPC, and TSLA.  Having a portfolio of these types of names can be more fun than a barrel of monkeys. But anyone who’s ever kept a pet monkey will attest to the fact that at some point the monkey will challenge you.  You’ll come home, and that cuddly pet will have grown into a fucking gorilla, perched on your china cabinet with a fucked up look in its eyes.

Last week’s buys took my cash levels down to 25% and I intend to rebuild that cash level at the slightest sign of weakness.  Top of my list to sell include: DDD, TSLA, FB, and ZIP.  If their behavior demonstrates weakness they will be cut.

Should the ground the market stands on (profile) begin to look shaky, I want to be back to my core holdings (GS and AWK) with a much smaller portion of degeneracy.  However, should said degenerate stocks continue to hold their respective nine day exponential moving averages I’ll ride.

Looking back at the profile from last Friday, we can see the early NFP numbers had us opening above all respective value areas for the week.  Again the sellers stepped in and smacked the penis lower, recapturing much of Thursday’s value area before we found buyers and spent the rest of the day methodically auctioning higher; a slow grind if you will.  The resulting auction succeeded in pushing value higher for a third day, but failed to place value above the important 1415.50 level (142.15 SPY).

We’re set to open right on this key level again this morning.  Bulls want to see 1414 hold, otherwise 1412.75 value area low.

Upside targets include Friday’s high, 1420, then last Monday’s above 1422.

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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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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:

A chicken in every pot, a loaf of bread on every table, and a pumpkin on every porch. #americanfall

— Raul (@IndexModel) October 26, 2012

$PPC will squeeze all thanksgiving

— Raul (@IndexModel) October 31, 2012

$PPC above Friday's high for the sqeeze. pic.twitter.com/yIdw2mXE

— Raul (@IndexModel) November 6, 2012

Shhhhhh….the chicken is still coming. $PPC pic.twitter.com/arzt2f1f

— Raul (@IndexModel) November 7, 2012

$PPC has been doing the turkey trod for weeks, opting for the die slow short squeeze.

— Raul (@IndexModel) November 19, 2012

$PPC just.wont.quit. SHORTS: now you's can't leave ARISE pic.twitter.com/JGZLkV0o

— Raul (@IndexModel) November 21, 2012

Scales 1/3 $PPC pic.twitter.com/OgblJY0N

— Raul (@IndexModel) November 23, 2012

Oh my chicken, shorts getting their SPINES BUSTED SLOWLY in $PPC ARISE! pic.twitter.com/BCY4UWhZ

— Raul (@IndexModel) November 26, 2012

I am 1/3 left in $PPC, what a rip.

— Raul (@IndexModel) November 27, 2012

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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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:

Invest @ least 20% of your assets in $GS, once you do I'll tell you why.

— Raul (@IndexModel) November 28, 2012

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 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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Anyone who embraces modern computing understands we create a gigantic amount of data through our daily internet interactions. As traders, we have intimate knowledge of big data, the more the better. Market stats, performance stats, fundamentals, volume footprints; the list is endless. If you’re serious about trading, you love data, period. I’ll stick to letting my gut decide what’s for lunch.

Also, we’re ushering in the age of small devices accessing the cloud. Gone are the days of needing all your memory in one place. RAX is my favorite cloud storage play, and they’re approaching their busiest time of the year as they ramp up service to sites like AMZN for the madness of Cyber Monday.

Late to the game as I usually am, Mellanox (MLNX) came to my attention after smashing earnings last July. I was immediately intrigued by the Israeli firm’s product line: the pipes that make the cloud hum. Since then I wanted to build a position in the name. However, it never pulled back and offered me entry during its late summer ramp. The gap left behind troubled me also, as nature abhors a gap. Unnatural as today’s markets may seem, they’re the purest place left in the world. Gaps left below have two forces, nature’s desire to fill gaps and gravity, working against them.

I’ve kept the name on my radar, and have watched as it spent the remainder of the year in no man’s land until finally falling back into the gap. What we’ve seen since returning to the gap is a healthy auction. At this point, price has auctioned the area well, and buyers and sellers appear to be in agreement where the value of this stock resides. Now we have some well-defined goal posts as I’ve noted below.

And traders should practice one of our better traits at this point, waiting for price to tip its hand, and let us know where we head next.

May you have a warm Thanksgiving, spending your time exactly how you see fit

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The morning commentary from Twitter and blog traders has identical sentiment from bulls and bears alike: this is a relief rally and may last a few days but will eventually run out of steam.  This sentiment is echoed by some of the more noble people I read.  Actually, it’s echoed by too many traders.

I see the following two scenarios most likely as we enter Monday afternoon:

All short-timeframe traders will begin front running each other and we’ll have a weak close

or

We close firm, with markets closing above their midpoint on the day

I’ll use today’s close as a hand tip, and my expectation is we see one of these scenarios play out, listed respectively to the above outcomes:

A Weak close leads to weakness throughout the short week, and then we go higher

or

We go mildly higher this week, than much higher the week after

I know and accept that markets rarely give such binary outcomes and I keep an open mind to the possibility of a sharp clawed bear market. Many trader’s favorite charts are broken.  However, I currently hold a portfolio of strong charts, and they look ready for another leg higher.  Have a look:

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