Solid Linger into Week End

Perhaps a false sense of security, this market Is hanging on as we approach the closing bell.  It has been one of those Octobers where the scary clown came out of his van, poked and grinned, and now sits behind the bushes in your backyard staring in the windows.  Yet here we are, ‘normalizing’ and getting back to business.

The open was inside yesterday’s value, we tested higher and found responsive sellers, tested lower and found responsive buyers.  This is the type of chop we expected about 3 minutes after the opening bell.  We discuss open types and how they behave and what we can glean from them.  Today was all about waiting for the market to tip its hand via a major rotation.

Buyers showed up, made the rotation, and it made more sense, intraday at least, to be hunting the long side.  But don’t get me wrong, the big picture is spooky clownish ghoul and uncertain.  Should we fear uncertainty?  Should it elicit emotion?  No, death is just as natural a change as birth.

I am playing my book so slowly right now it takes about 2 meals per decision.  I reentered the GOGO today, hehe.  This latest ebola spook didn’t last very long.  It’s losing its potency or we are building up a tolerance.  Like any drug, fear needs to be ratcheted up as the use increases.  I joined Le Fly in CLR today, willing to build into another leg lower as long as I see buyers plying a bit of defense along the way.

Perhaps I will eat these words come Monday, but the overall scent of relief rally has emboldened my spirits.  As have the ritualistic activities part and parcel to a cleansing.

The key to fast markets is not trying to catch every move and not fighting the big waves.  Just take it all in, stay limber, and hit your notes when the Great Conductor waves his baton your way (take your trades).

Eyeballing These Setups

That’s about all I can muster the strength to do, with these long setups, is give them a good eyeballing.  Stare as I might that is not how babies are made.  I took one shot long today, in the afternoon, via the GOGO, but then Ebola hit the wires and I bounced.  Planes, internet, Hazmat suits, extended pounce by the Nazzy—it is all too much to bear being bullish on airplane wifi.

Stupid Ebola, messing up my longz, lol.

I here crazy stuff like this all the time, cursing external events.  Let me bestow a gem from Marcus Aurelius.  This one applies so tight to trading you would think this guy scalped spooz for a living:

Objective judgment, now at this very moment
Unselfish actions, now at this very moment
Willing Acceptance, now at this very moment, for all external events.  That is all you need.

Cultivating this mentality, this little piece of stoic acumen, might be the change you need to clear a trading plateau.  Make a plan, use your logical mind.  That is what makes us human and superior to other mammals.  But remember that your emotions have the strength of a bucking elephant, and can take you on a wild ride plan or not, unless you strengthen your inner peace consistently.

Still struggling?  Lose a vice for a bit.  Just don’t press to hard or you might end up in the old padded room.  But be honest, are you working hard enough today?  You might not like the real answer.

Some call it Midwest work ethic, others immigrant gumption.  I call it look at the alternatives because they suck.  An oppressive corporate structure is not a real life to live.  There was some disturbing stat on twitter this morning (has the be true because its own [sic] the internet) that Americans forgo (and here’s my guess) a few ten thousand hours worth of vacation days each year.  Ah, such commitment, but for what?  Your own worth or the Lord of the Manor?

I will leave this comically long tangent and return to my point—I am stuck in risk aversion.  Here I sit, shotgun in tote, not buying the nuts off this dip.  All this sitting made for an admirable comeback, I did not puke, but not fear profiteering.

I liked SPLK, watched it rip a 10 bag.  I loved SUNE at $14.25—up up and away.  I even fancied ‘the man’ himself, LNKD for a minute, a bastard stepchild of the HR department.

TZA stopped out fairly early.  GNRC is looking good, TWTR is trading like someone knows the earnings are weak, BLOX is still at work, and XON is a hungry looking beast.  But there could be more winship.

My goal into the weekend, pony up and find a chart to buy.  Hopefully it sticks or I will be out said chart in 20-30 minutes.  Perhaps strenuous exercise will quell this aversion spell.  Or smudging some thickets of sage across the mother ship.  Or a vigorous mopping.  I shall do all three.

Sellers Step Up and Connect

The essence of trading is having a plan.  The good thing about a plan is you have a theory about how price will move.  This theory is based upon a story you build.  My story centers around the ongoing 2-way auction in the Nasdaq.  It has guest appearances like a TV show, but the primary cast is the same.

The current guest causing a big splash is Mr. Jack Ma.  He has a character about him—one that brings a touch of drama to the sell flow in BABA.  Other guests currently in play are Oil, Rusty (The Russell), and le VXN.

But the primary plot today was to watch for follow through higher on yesterday’s strength which will find responsive sellers.  This happened, we nearly printed a neutral extreme (this settlement period buying is making an earnest attempt to make us neutral only), and that is how we found our seller.  Now the question is whether they carry the same tenacity and flow as their initiate move, or if instead we enter a churn.  No one  can say for certain, however I adjusted my book in the interim.

I sold half of my TWTR long—there I said it.  It was awkward because I have been with this long since about February.  I rode through the entire trough, being supportive and sharing ancient Roman and Eastern philosophies with it to build a strong foundation.  I made sure it had good nutrition and when it still acted up I would just coddle it and tell it everything will be okay.  But one must draw the line and I had to create a bit of separation.  This is good for both of us.  Twitter has a big event coming up (earnings) and I would rather be a side piece just in case it does not turn out as expected. In any case, I can always work my way back into the weighting I once had.

I also joined the 12631 crew on the TZA trade.  This is good.  I have a hedge in place now verses my other longs.  Speaking of which, GNRC caught a little upgrade this morning.  I like this company into the winter.  Their product runs on cheap natty.  No home is complete without a natty gas generator, IMO.  Especially in Michigan, where the sun seldom shines but a deep enough hole yields pockets of the sweet gas.  If the proverbial excrement hits the fan, you will likely find me digging deep, Kevin Bacon style, for gas to power the mother ship.

We will ride through earnings together, shotgun in tote.

Easy Go Easy Come

The market is the final arbiter.  This is something ChessNwine reminds traders of weekly in his strategy session.  If you find yourself becoming frustrated, euphoric, or BABA forbid panicked, then you are likely attempting to impose your will upon the market.  You are entering trades knowing they HAVE to be right because you are so god damned bright.

This is a fool’s game.  Well not quite.  It is a game for the humble sportsman (or sportslady?) who is tickled by the extraordinary.  And there is one thing you must impress upon your method if your method follows the tenants of momentum—your allegiance is to be sworn to the heaviest puncher.

The price action we are currently experiencing in the marketplace is peak abnormal, which, oddly enough, normally happens once in a while.  It is a good thing, a notch in the belt of survivors.  But think quick because you have not survived yet.  This is an ongoing extravaganza.

Equity markets are rallying hard today.  The Nazzy wants a 100 print after pulling the inverse last week.  Remember what I said last week?  About big waves?  You settle your heart by taking slow consistent breaths and allow it to take you as it desires until it throws you loose.  Then you begin to swim.

I am still doing very little, however, given the magnitude of the harmonic down, one was fortunate enough to back off the idea of hedging until a proper revision occurred.  Now it has, we are over the mid, and I am wondering if the bears jumped the shark with this move.

I know, it sounds crazy, perhaps fiduciary  questionable, but sitting and taking that sell flow to the nuts for a few weeks might have been the best course of action for longer term positions.  Again, this is all still TBD.

The rub?  They timed the rout about perfectly to zero out your October leverage.  Mine too, those fucks.  But sharpen your axe, purchase common on discount, and hone your strategy for another gregarious thrust.

You thought I was done thrusting, didn’t you?  You must know, Raul possesses the energy of 10 adhd afflicted teens.

All this to say I made no alterations to my book today.  This melt up was a gift however to my long term positions which are making admirable recoveries.  I still might dial them back.  However, this must be done very slowly, not all at once.

Think fast, move slow.

Pause and Assess

The market pace came grinding to a halt this morning after a strong push higher.  We are still operating in an environment which produces larger-than-normal ranges and slightly elevated volume.  However the bulk of today’s move occurred during the initial balance aka the first hour of trade.

It almost seems foreign, the benign intraday action, after enjoying 10-12 sessions of white knuckle racing across the price complex.  There are several charts setting up nicely intraday for longs, however each time I zoom out to an hourly chart or even a 15 minute chart I see slop.  This is what has prompted me to shorten my target distance and trade duration.  Little bounces up into resistance are the singles that I can currently manufacture to bring home some wins.

Into the weekend I gave serious thought to liquidating some of my longer term holdings including TSLA and TWTR.  Before taking any action and remembering how long I have been with said names, I took my person far north, deep into the Michigan bush where internet cannot be obtained.  From my perch atop the autumn trees the thought of giving ‘them’ my shares seemed a bit callous, like manually killing your prey when you can buy it from a farmer.

Now that call premiums have been cleared off the table slow game is back on the forefront.  Value is drifting higher as the market strings together three up days.  Stay nimble as we head into resistance.

Thou Shalt Not Love Thy Positions

I am looking to work out of some of my longer term holdings here, and not buying into this move.  There are strong bounces, there may be more strong bounces, but I am shifting slowly to the tall grass.  Don’t love them, not even sweet baby Elon.

Pace Change

Volume differentials are still running above average but there is a distinct change in the pace of market movement today.  It helps that the day is moving higher which tends to occur at a slower speed, however, on the net we are seeing smoother rotations in the index futures.

The opening was very important this morning, more than any other day because of the location.  When participants started trading this morning it was near the prior day lows.  I was keen to distill who was dominating the tape early because it had heavy ramifications for today’s trade.  Fortunately the buyers made their actions very clear, and continue to do so throughout the session. This can be seen as buyers ‘holding the mid’ and printing higher highs and lows.

The higher prices are motivating sell flow back into the tape after they sat back for most of the session.  I have shortened the duration of my stock trades significantly.  However I saw enough evidence today to increase long exposure a bit after sitting through the biggest wave of selling seen in years.

Oil appears to be the culprit, and also the opportunity zone.  The long trade in energy might only be for the bounce here, but even that little move higher has opportunity to manufacture some wins.

All together, I am sticking with the less-is-more policy, managing risk via scales, and looking for opportunities to raise cash, slowly.

Option expiration is upon us.  It has been a fast month, and soon these dead calls will vanish from my book.  Good riddance and RIP to – KORS, Z, VJET, AMZN …you have each taken a percent of my infinity pool fund.  Damn you all to the depths of an Opera guest chair.

The rub?  The market is too out of whack to take option trades now, so that risk cannot be recaptured for now.  Instead I am swinging slow, via the stocks, and that all depends on whether BABA stocks getting the whack-a-mole treatment. Each stock I currently trade requires my full love and affection, no side action, so I am keeping my position count limited.  After all, a trade is a trade and they are all sacred.  Don’t just toss you money into a flaming barrel of garbage for the thrill of seeing the flames rise. That is selfish to the laws of the universe.  Honor thy stock gods.

High Timeframe

One of the market characteristics we often discuss as part of auction theory is what ‘timeframe’ is interacting with the marketplace.  This can help guide us in our trading decisions, especially when deciding what price levels (market profile, volume profile, daily, weekly, etc.) to pay attention to.

You may have noticed I have been omitting a market profile chart from my recent analysis.  This is because we are operating with the high timeframe who are likely being forced into action this week.  Their effect when interacting with price throws the quest for value onto the back burner.  Instead what matters is price action on the higher timeframe.

They are not interested in intraday levels or discovering value as we typically observe it.  This action, especially in the Dow, is likely (if not already aware) to gain the attention of a very high timeframe.

In short, be aware that the likelihood of your price level being run over is elevated in this tape.  Let the price action (heavy reaction, rotation size, impulse, etc.) establish your bias.

On the day, in the /NQ_F, prices need to sustain above 3738 to consider the long side.

Playing The Clarinet

squid

My biggest goal in these fast times markets is to trade as little as possible.  I was reading through my archived works today, for example, to look at past follies.  The biggest gorilla has always been excess action.  I am a busy body, a hyperbola, one heavily influenced by watching teevee whilst gaming and talking smack in AOL chat rooms.  I have always surrounded myself with multiple screens which pump information at my person.

It all screams DO SOMETHING, if you are not careful you will do anything because you’re bored.  I find these conditions to be anything but boring.  They are more like watching a theatrical performance from the orchestra pit.  I have front row seats at the market where I can closely observe the action on the stage and the audience reaction.  Occasionally I toot out a few notes on my little clarinet, little pieces of sound that compliment the grande display.

This morning was all about the turnaround.  Actually first it was about smashing out some sell orders into the early market demand.  Remember, someone is liquidating when they can, not when it is ideal.  Some big ass exodus where you need demand to sell into.  Can you imagine how challenging it must be to find reasonable demand to sell into?  This morning’s gap was perfect.  Sold.  Next, it was turnaround Tuesday time.  It was that simple, our protagonist stepped forth and unsheathed her sword for all to see.  It was long and swung with confidence, a buyer.  ‘Toot toot’ buy something.  Here comes lunch ‘toot too’ sell it.  Late day neutral print then CRICKETS, oh the suspense, FADE IT ‘toot toot’.

And so the day went.  It was a good day.  This is the duration I am working at right now.  I can’t trust these things for more than a few hours, sometimes minutes or even dastard seconds.  Speed is the name of the game and if you are too slow you are drinking mist.  Are you able to rush and go slow at the same time?  If not, then it is even more simple, stand aside for now because these are fast times.  It will slow about soon enough and you will need good capital to operate at during the next phase.

All I did today was buy some short term AMZN and sell it, keeping a small runner piece for tomorrow.

FAKE RALLY

If you are long any high beta growth stock which is green today, rest assured, that number is a fake and you soon will return to your regularly scheduled bloodletting.  The gods are agitated, mere mortals.  You were given sufficient reparations for your dutiful market participation these last two years.  But you demand more.  The moon was painted red multiple times as a clear message to humble your ego.  Yet there you were, nibbling incessantly from the forbidden giblets of our most holy tree without keeping an eye on your arse, your risk.

Now you have been fixed to a proper boiling chair in the furnaces of hell and Beelzebub is your only friend.  He has advice like, “cut that flap of skin between your pointer and middle finger” and “channel your rage into moar trades”.

Your soul now resides inside the third ring of middle earth and it’s your job to retrieve it.  Fortunately these stories of ghouls are as fake as the ‘value’ transfixed to four letter acronyms across the financial complex.  Real work, adding value in a palatable and tangible way, continues to thrive.  Know this, the market could head into another crisis (GMAFB, fake) and there will be virtuous men and women who emerge from the ashes as brilliant innovators.  Are you going to do what it takes, risking everything you have to produce the next note in our grande symphony?  Or will you try paying someone else to do it for you?

The dead days of the summer were a swell time to check yourself, an offseason of sorts in the warm southern breeze.  Now it is cold, the days are short, and the rain is heavy.  Have you built your hut?  Your mind?  Use it now, at this very moment, to be objective in your judgment.

That sack of skin you inhabit, or those old fermented grapes you cherish, see them right now.  The market is no more complex, nor any commenter less bullshit then a sommelier.  See it for how simply it truly is.

Then observe how a farmer sells two train cars full of cantaloupe.  Now we can begin to talk about the movement of price.

When a market moves lower it is seeking information.  It wants to know where it needs to advertise price to entice a motivated reaction from buyers.  Once it does so we see an abnormal rotation.  Something like today’s in the Nasdaq.  However, the evidence suggests we have not done enough to thwart off the tide of supply.  Rallies are suspect and to be observed for signs of liquidation.  Until buying demand creates an event that sickens the lot of yous, the bigger punches are being landed by the sellers.

I side with the heaviest and most consistent puncher.  I sit on their back and hold the reigns as they buck and thrash.  Such is the life of following order flow.

 

Solid Linger into Week End

Perhaps a false sense of security, this market Is hanging on as we approach the closing bell.  It has been one of those Octobers where the scary clown came out of his van, poked and grinned, and now sits behind the bushes in your backyard staring in the windows.  Yet here we are, ‘normalizing’ and getting back to business.

The open was inside yesterday’s value, we tested higher and found responsive sellers, tested lower and found responsive buyers.  This is the type of chop we expected about 3 minutes after the opening bell.  We discuss open types and how they behave and what we can glean from them.  Today was all about waiting for the market to tip its hand via a major rotation.

Buyers showed up, made the rotation, and it made more sense, intraday at least, to be hunting the long side.  But don’t get me wrong, the big picture is spooky clownish ghoul and uncertain.  Should we fear uncertainty?  Should it elicit emotion?  No, death is just as natural a change as birth.

I am playing my book so slowly right now it takes about 2 meals per decision.  I reentered the GOGO today, hehe.  This latest ebola spook didn’t last very long.  It’s losing its potency or we are building up a tolerance.  Like any drug, fear needs to be ratcheted up as the use increases.  I joined Le Fly in CLR today, willing to build into another leg lower as long as I see buyers plying a bit of defense along the way.

Perhaps I will eat these words come Monday, but the overall scent of relief rally has emboldened my spirits.  As have the ritualistic activities part and parcel to a cleansing.

The key to fast markets is not trying to catch every move and not fighting the big waves.  Just take it all in, stay limber, and hit your notes when the Great Conductor waves his baton your way (take your trades).

Eyeballing These Setups

That’s about all I can muster the strength to do, with these long setups, is give them a good eyeballing.  Stare as I might that is not how babies are made.  I took one shot long today, in the afternoon, via the GOGO, but then Ebola hit the wires and I bounced.  Planes, internet, Hazmat suits, extended pounce by the Nazzy—it is all too much to bear being bullish on airplane wifi.

Stupid Ebola, messing up my longz, lol.

I here crazy stuff like this all the time, cursing external events.  Let me bestow a gem from Marcus Aurelius.  This one applies so tight to trading you would think this guy scalped spooz for a living:

Objective judgment, now at this very moment
Unselfish actions, now at this very moment
Willing Acceptance, now at this very moment, for all external events.  That is all you need.

Cultivating this mentality, this little piece of stoic acumen, might be the change you need to clear a trading plateau.  Make a plan, use your logical mind.  That is what makes us human and superior to other mammals.  But remember that your emotions have the strength of a bucking elephant, and can take you on a wild ride plan or not, unless you strengthen your inner peace consistently.

Still struggling?  Lose a vice for a bit.  Just don’t press to hard or you might end up in the old padded room.  But be honest, are you working hard enough today?  You might not like the real answer.

Some call it Midwest work ethic, others immigrant gumption.  I call it look at the alternatives because they suck.  An oppressive corporate structure is not a real life to live.  There was some disturbing stat on twitter this morning (has the be true because its own [sic] the internet) that Americans forgo (and here’s my guess) a few ten thousand hours worth of vacation days each year.  Ah, such commitment, but for what?  Your own worth or the Lord of the Manor?

I will leave this comically long tangent and return to my point—I am stuck in risk aversion.  Here I sit, shotgun in tote, not buying the nuts off this dip.  All this sitting made for an admirable comeback, I did not puke, but not fear profiteering.

I liked SPLK, watched it rip a 10 bag.  I loved SUNE at $14.25—up up and away.  I even fancied ‘the man’ himself, LNKD for a minute, a bastard stepchild of the HR department.

TZA stopped out fairly early.  GNRC is looking good, TWTR is trading like someone knows the earnings are weak, BLOX is still at work, and XON is a hungry looking beast.  But there could be more winship.

My goal into the weekend, pony up and find a chart to buy.  Hopefully it sticks or I will be out said chart in 20-30 minutes.  Perhaps strenuous exercise will quell this aversion spell.  Or smudging some thickets of sage across the mother ship.  Or a vigorous mopping.  I shall do all three.

Sellers Step Up and Connect

The essence of trading is having a plan.  The good thing about a plan is you have a theory about how price will move.  This theory is based upon a story you build.  My story centers around the ongoing 2-way auction in the Nasdaq.  It has guest appearances like a TV show, but the primary cast is the same.

The current guest causing a big splash is Mr. Jack Ma.  He has a character about him—one that brings a touch of drama to the sell flow in BABA.  Other guests currently in play are Oil, Rusty (The Russell), and le VXN.

But the primary plot today was to watch for follow through higher on yesterday’s strength which will find responsive sellers.  This happened, we nearly printed a neutral extreme (this settlement period buying is making an earnest attempt to make us neutral only), and that is how we found our seller.  Now the question is whether they carry the same tenacity and flow as their initiate move, or if instead we enter a churn.  No one  can say for certain, however I adjusted my book in the interim.

I sold half of my TWTR long—there I said it.  It was awkward because I have been with this long since about February.  I rode through the entire trough, being supportive and sharing ancient Roman and Eastern philosophies with it to build a strong foundation.  I made sure it had good nutrition and when it still acted up I would just coddle it and tell it everything will be okay.  But one must draw the line and I had to create a bit of separation.  This is good for both of us.  Twitter has a big event coming up (earnings) and I would rather be a side piece just in case it does not turn out as expected. In any case, I can always work my way back into the weighting I once had.

I also joined the 12631 crew on the TZA trade.  This is good.  I have a hedge in place now verses my other longs.  Speaking of which, GNRC caught a little upgrade this morning.  I like this company into the winter.  Their product runs on cheap natty.  No home is complete without a natty gas generator, IMO.  Especially in Michigan, where the sun seldom shines but a deep enough hole yields pockets of the sweet gas.  If the proverbial excrement hits the fan, you will likely find me digging deep, Kevin Bacon style, for gas to power the mother ship.

We will ride through earnings together, shotgun in tote.

Easy Go Easy Come

The market is the final arbiter.  This is something ChessNwine reminds traders of weekly in his strategy session.  If you find yourself becoming frustrated, euphoric, or BABA forbid panicked, then you are likely attempting to impose your will upon the market.  You are entering trades knowing they HAVE to be right because you are so god damned bright.

This is a fool’s game.  Well not quite.  It is a game for the humble sportsman (or sportslady?) who is tickled by the extraordinary.  And there is one thing you must impress upon your method if your method follows the tenants of momentum—your allegiance is to be sworn to the heaviest puncher.

The price action we are currently experiencing in the marketplace is peak abnormal, which, oddly enough, normally happens once in a while.  It is a good thing, a notch in the belt of survivors.  But think quick because you have not survived yet.  This is an ongoing extravaganza.

Equity markets are rallying hard today.  The Nazzy wants a 100 print after pulling the inverse last week.  Remember what I said last week?  About big waves?  You settle your heart by taking slow consistent breaths and allow it to take you as it desires until it throws you loose.  Then you begin to swim.

I am still doing very little, however, given the magnitude of the harmonic down, one was fortunate enough to back off the idea of hedging until a proper revision occurred.  Now it has, we are over the mid, and I am wondering if the bears jumped the shark with this move.

I know, it sounds crazy, perhaps fiduciary  questionable, but sitting and taking that sell flow to the nuts for a few weeks might have been the best course of action for longer term positions.  Again, this is all still TBD.

The rub?  They timed the rout about perfectly to zero out your October leverage.  Mine too, those fucks.  But sharpen your axe, purchase common on discount, and hone your strategy for another gregarious thrust.

You thought I was done thrusting, didn’t you?  You must know, Raul possesses the energy of 10 adhd afflicted teens.

All this to say I made no alterations to my book today.  This melt up was a gift however to my long term positions which are making admirable recoveries.  I still might dial them back.  However, this must be done very slowly, not all at once.

Think fast, move slow.

Pause and Assess

The market pace came grinding to a halt this morning after a strong push higher.  We are still operating in an environment which produces larger-than-normal ranges and slightly elevated volume.  However the bulk of today’s move occurred during the initial balance aka the first hour of trade.

It almost seems foreign, the benign intraday action, after enjoying 10-12 sessions of white knuckle racing across the price complex.  There are several charts setting up nicely intraday for longs, however each time I zoom out to an hourly chart or even a 15 minute chart I see slop.  This is what has prompted me to shorten my target distance and trade duration.  Little bounces up into resistance are the singles that I can currently manufacture to bring home some wins.

Into the weekend I gave serious thought to liquidating some of my longer term holdings including TSLA and TWTR.  Before taking any action and remembering how long I have been with said names, I took my person far north, deep into the Michigan bush where internet cannot be obtained.  From my perch atop the autumn trees the thought of giving ‘them’ my shares seemed a bit callous, like manually killing your prey when you can buy it from a farmer.

Now that call premiums have been cleared off the table slow game is back on the forefront.  Value is drifting higher as the market strings together three up days.  Stay nimble as we head into resistance.

Thou Shalt Not Love Thy Positions

I am looking to work out of some of my longer term holdings here, and not buying into this move.  There are strong bounces, there may be more strong bounces, but I am shifting slowly to the tall grass.  Don’t love them, not even sweet baby Elon.

Pace Change

Volume differentials are still running above average but there is a distinct change in the pace of market movement today.  It helps that the day is moving higher which tends to occur at a slower speed, however, on the net we are seeing smoother rotations in the index futures.

The opening was very important this morning, more than any other day because of the location.  When participants started trading this morning it was near the prior day lows.  I was keen to distill who was dominating the tape early because it had heavy ramifications for today’s trade.  Fortunately the buyers made their actions very clear, and continue to do so throughout the session. This can be seen as buyers ‘holding the mid’ and printing higher highs and lows.

The higher prices are motivating sell flow back into the tape after they sat back for most of the session.  I have shortened the duration of my stock trades significantly.  However I saw enough evidence today to increase long exposure a bit after sitting through the biggest wave of selling seen in years.

Oil appears to be the culprit, and also the opportunity zone.  The long trade in energy might only be for the bounce here, but even that little move higher has opportunity to manufacture some wins.

All together, I am sticking with the less-is-more policy, managing risk via scales, and looking for opportunities to raise cash, slowly.

Option expiration is upon us.  It has been a fast month, and soon these dead calls will vanish from my book.  Good riddance and RIP to – KORS, Z, VJET, AMZN …you have each taken a percent of my infinity pool fund.  Damn you all to the depths of an Opera guest chair.

The rub?  The market is too out of whack to take option trades now, so that risk cannot be recaptured for now.  Instead I am swinging slow, via the stocks, and that all depends on whether BABA stocks getting the whack-a-mole treatment. Each stock I currently trade requires my full love and affection, no side action, so I am keeping my position count limited.  After all, a trade is a trade and they are all sacred.  Don’t just toss you money into a flaming barrel of garbage for the thrill of seeing the flames rise. That is selfish to the laws of the universe.  Honor thy stock gods.

High Timeframe

One of the market characteristics we often discuss as part of auction theory is what ‘timeframe’ is interacting with the marketplace.  This can help guide us in our trading decisions, especially when deciding what price levels (market profile, volume profile, daily, weekly, etc.) to pay attention to.

You may have noticed I have been omitting a market profile chart from my recent analysis.  This is because we are operating with the high timeframe who are likely being forced into action this week.  Their effect when interacting with price throws the quest for value onto the back burner.  Instead what matters is price action on the higher timeframe.

They are not interested in intraday levels or discovering value as we typically observe it.  This action, especially in the Dow, is likely (if not already aware) to gain the attention of a very high timeframe.

In short, be aware that the likelihood of your price level being run over is elevated in this tape.  Let the price action (heavy reaction, rotation size, impulse, etc.) establish your bias.

On the day, in the /NQ_F, prices need to sustain above 3738 to consider the long side.

Playing The Clarinet

squid

My biggest goal in these fast times markets is to trade as little as possible.  I was reading through my archived works today, for example, to look at past follies.  The biggest gorilla has always been excess action.  I am a busy body, a hyperbola, one heavily influenced by watching teevee whilst gaming and talking smack in AOL chat rooms.  I have always surrounded myself with multiple screens which pump information at my person.

It all screams DO SOMETHING, if you are not careful you will do anything because you’re bored.  I find these conditions to be anything but boring.  They are more like watching a theatrical performance from the orchestra pit.  I have front row seats at the market where I can closely observe the action on the stage and the audience reaction.  Occasionally I toot out a few notes on my little clarinet, little pieces of sound that compliment the grande display.

This morning was all about the turnaround.  Actually first it was about smashing out some sell orders into the early market demand.  Remember, someone is liquidating when they can, not when it is ideal.  Some big ass exodus where you need demand to sell into.  Can you imagine how challenging it must be to find reasonable demand to sell into?  This morning’s gap was perfect.  Sold.  Next, it was turnaround Tuesday time.  It was that simple, our protagonist stepped forth and unsheathed her sword for all to see.  It was long and swung with confidence, a buyer.  ‘Toot toot’ buy something.  Here comes lunch ‘toot too’ sell it.  Late day neutral print then CRICKETS, oh the suspense, FADE IT ‘toot toot’.

And so the day went.  It was a good day.  This is the duration I am working at right now.  I can’t trust these things for more than a few hours, sometimes minutes or even dastard seconds.  Speed is the name of the game and if you are too slow you are drinking mist.  Are you able to rush and go slow at the same time?  If not, then it is even more simple, stand aside for now because these are fast times.  It will slow about soon enough and you will need good capital to operate at during the next phase.

All I did today was buy some short term AMZN and sell it, keeping a small runner piece for tomorrow.

FAKE RALLY

If you are long any high beta growth stock which is green today, rest assured, that number is a fake and you soon will return to your regularly scheduled bloodletting.  The gods are agitated, mere mortals.  You were given sufficient reparations for your dutiful market participation these last two years.  But you demand more.  The moon was painted red multiple times as a clear message to humble your ego.  Yet there you were, nibbling incessantly from the forbidden giblets of our most holy tree without keeping an eye on your arse, your risk.

Now you have been fixed to a proper boiling chair in the furnaces of hell and Beelzebub is your only friend.  He has advice like, “cut that flap of skin between your pointer and middle finger” and “channel your rage into moar trades”.

Your soul now resides inside the third ring of middle earth and it’s your job to retrieve it.  Fortunately these stories of ghouls are as fake as the ‘value’ transfixed to four letter acronyms across the financial complex.  Real work, adding value in a palatable and tangible way, continues to thrive.  Know this, the market could head into another crisis (GMAFB, fake) and there will be virtuous men and women who emerge from the ashes as brilliant innovators.  Are you going to do what it takes, risking everything you have to produce the next note in our grande symphony?  Or will you try paying someone else to do it for you?

The dead days of the summer were a swell time to check yourself, an offseason of sorts in the warm southern breeze.  Now it is cold, the days are short, and the rain is heavy.  Have you built your hut?  Your mind?  Use it now, at this very moment, to be objective in your judgment.

That sack of skin you inhabit, or those old fermented grapes you cherish, see them right now.  The market is no more complex, nor any commenter less bullshit then a sommelier.  See it for how simply it truly is.

Then observe how a farmer sells two train cars full of cantaloupe.  Now we can begin to talk about the movement of price.

When a market moves lower it is seeking information.  It wants to know where it needs to advertise price to entice a motivated reaction from buyers.  Once it does so we see an abnormal rotation.  Something like today’s in the Nasdaq.  However, the evidence suggests we have not done enough to thwart off the tide of supply.  Rallies are suspect and to be observed for signs of liquidation.  Until buying demand creates an event that sickens the lot of yous, the bigger punches are being landed by the sellers.

I side with the heaviest and most consistent puncher.  I sit on their back and hold the reigns as they buck and thrash.  Such is the life of following order flow.

 

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