With winter behind us and conditions still brisk in the north, I have that strong sense of optimism that comes with the return of sunshine.

Almost overnight moods have shifted and skirts have returned to the walking streets of towns and universities.

Meanwhile in the land of stocks, our supreme overlords at the Fed have surgically removed a toxic piece of minutia sending bulls into a feeding frenzy. Yes, the bulls resemble salmon, and yes, salmon is a bear’s favorite meal. But with the currents at our backs it makes catching us a most difficult endeavor. Perhaps the eagle is better equipped to land a meal.

WSS subs, who are without question cut from the finest cloth, I couldn’t help myself—I spent like 10 hours creating this week’s strategy session. There was a contract roll forward requiring 100s of price levels to be manually adjusted *shakes fist at Multicharts* and some key events I wanted to highlight. I hope you enjoy.

Outsiders, public school kids of the world, I am brewing up something fun for you, but in the meantime why not treat yourself to this week’s strategy session?

These markets can turn a nice guy into a jaded urchin. Most who try their hand at active management are relegated to role of barnacle, affixed to rocks, watching dolphins swim about devouring chicken of the sea. The barnacle instead suckles on little ocean floaties until it dies of starvation or human intervention.

Option expiration has a funny way of sorting the wheat from the chaff because mankind makes important financial decisions about four times a year. A trader’s marks are now subject to draconian judgment by the collective owners of risk capital.

In many cases it’s your own money at risk. You need to decide if your resources are properly focused. What trade type worked? What were the conditions?

I need to be able to justify every trade with a plan and a story. The story is what I think the market is trying to do and what hypothesis best fits that desire. The plan is using specific entry qualifications and trade management.

Then there’s risk…but alas it’s Friday and you want to get “turnt up”.  That’s a Wednesday kind of topic.

People, we are in transitory times. Soon watches will replace doctors. Cats will live gluten free organic lifestyles. Human life expectancy will stretch to 150 years. Are you on the right road?

The chase is officially on today, you can feel it. Momentum is running like the salmon of Bristol Bay. Goldman Sachs, a firm recently called into question during the Fed Bank Stress Tests, is trending higher.

Oil is running like a banshee.

How hard is it to buy up here? Remember how hard it was to buy two Wednesday’s ago? Today makes that moment seem like child’s play.

Not only how we are running, but what is running, will be enough to make under-allocated bulls nervous heading into the weekend.

This thing can push all day, but don’t be surprised if we see some shakeout shenanigans at some point. After all, quarters are being made here.

Although the winter could not succeed in overcoming my immune system with illness, it is evident I was plagued by boredom. Boredom is dangerous.

I have accomplished no less then 5x my normal productivity today. I chuckle when thinking back on how intensely absorbed in the minutia I became at times.

There is no reason to constantly be trading.  The data proves it is better to be trading only when a strong directional conviction emerges. I used to think I had to be plugged in at all times to capitalize on these moments, but now I realize it’s possible to extrapolate high opportunity moments using an objective read on the market.

Objectivity becomes a reality when you rely on quality data to guide you. Instead of buying a few good looking stock charts a week, why not only buy when The PPT is oversold? You know why it’s hard? Because it takes a Zen like commitment to patience.  You need patience like Aunt Janet.

I have tools at my disposal for knowing the best weeks to short the market as well as the best weeks to be long. Why work all the other weeks?

Work for the sake of work is the only reason I can come up with. It is time to go Pareto on my trading methodology. My goal henceforth is little bursts of excellence.

After the strong rally yesterday we have a benign market which is digesting the move via a sideways correction. Shorts working the range extension down were rewarded but only by 1.5 points before finding responsive buyers (responsive relative to the open, initiative relative to yesterday).

Despite the sellers winning the range extension battle, the best trades of the session have been from the outside-in. After a big up day markets tends to consolidate. On the surface, it makes sense to have a slight upward bias after yesterday’s neutral extreme print.

The hard part was buying what looked like an mid-day breakdown. Without a price level to lean on it’s not a simple trade to take. You could also do well shorting from the top-end of value as long as you managed risk when that push higher forced its way though most of the range.

This is a strong version of hypo 2 from this morning’s report.  Today could have been stronger had it featured a range extension up as opposed to down.  Now bulls are playing for neutral at best.

The key is knowing the context of the session and trading accordingly. Today you were better off working the extremes and essentially playing ping pong. Having spent many days being the ping pong ball, I can tell you without doubt it is more enjoyable being the paddle, even if only on one side of the tape.

I wish I had a screen shot from earlier, but the Nasdaq market profile told the story for working the short side today, despite the higher-time frame context slightly favoring longs. Have a look at the current profile anyhow:

Trading futures during contract roll forward is a frustrating endeavor. Volume metrics go haywire since some participants are still trading the March contract. Also delta is useless, and noisy shenanigans tend to take out stops on otherwise good trades.

Thus it was a strategic time to instead do something fun. Instead of wading through the bologna only to come out the other end a smelly mess of meat parts, I barreled down the side of gigantic mountains in a tee-shirt like a cowboy gunslinger.

Along the way I avoided 100s of thespians all hot about the word ‘patience’ …fuckers who successfully aligned the collective eyes of finance on one piece of minutia. What a pile of zero value added nonsense.

You know what was valuable? The PPT signaling oversold last Wednesday and hammering the swing low almost perfectly. Thus my life is rather bella stu gatz. I essentially manufactured the PTO my former overlords used to dangle over my parched beak. Alls I need to do is ring the register before the whole shit house goes up in flames again.

Plus I have the added benefit of stepping away and smelling the sweet scent of fresh ideas that comes from doing so—10 pages of maniacal scribbles all aimed at dominating the financial markets. I love coming back to work, do you?

I’m just going over my notes from last week’s Strategy Session.  The Executive Summary was pretty bang on, as was the Goldman Sachs entry zone plus risk profile.

Let me explain exactly what my goal is with the Executive Summary.  It takes every scheduled economic event, auction theory, rotations, or any other market influence and consolidates it down to 2-4 sentences.  The striving for brevity means every word counts.  There will always be written details to back my Executive Summary.  But come on–your ADD addled brain got you to the top, why are we even wanting to challenge the mechanics of it today?

Anyhow, here’s last Sunday’s Executive Summary and Goldman chart:

I. THESIS FOR THE WEEK

Bias score 2.55, Medium bear. Anticipate weakness early in the week—perhaps even some swift selling but look for an inflection point to form before Wednesday afternoon’s release of the Fed’s Bank Stress Test results. Look for strength in the US dollar to continue. Oil may be setting up to resume its downtrend.

Everyone has their reasons for pursuing an existence. You form a vision of yourself and you set out to achieve it. People market the allure of trading and the freedoms it promises. The truth is any entrepreneurial endeavor can gain you time freedom, they all take a heaping mound of work.

So if you work so hard for freedom, then why not enjoy it a little? In other words, Raul is hitting the road. That doesn’t mean I intend to fuddle around in the mountains without putting speculative funds to work.

Gentlemen I have procured long exposure on the Nasdaq and OIS. I have fixed my risk in place and am going to enjoy some freedom. This is a hands off the rudder trade anyhow.

Godspeed mates,

https://youtu.be/YnwfTHpnGLY

There are several compelling reasons to be hesitant about buying into today’s trade. There are several compelling reasons to be stalking a swing long into today’s tape. Some traders find the ability to separate day-time frame mentality from the swing. Others don’t.  But if you organize your working day to think through both, you may find the result to be a better contextual feel.

We went range extension down by about 10:45am which threw up the caution flag that says we’re playing for neutral at best. But I don’t hate the way we’re trading.

Developing…

Oil is holding the low end of value. And unless sellers can push below 47.50 with some conviction my bias would be to play this low end of a well defined bracket to the long side.

I waffled out of my long at these prices yesterday afternoon, but it still looks good.

Oil inventory stats later this morning could be your trigger.

See below: