We all have our reasons for voicing market opinion and sentiment to our peer group, the key is knowing your purpose. This is your boulder to lean on, especially when you turn out to be wrong, which we all inevitably will at some point.
I am here to figure out trading on a few levels, anticipatory swing trading and order flow obliging scalping. These styles suit my person after trying many. I also consider these styles to offer the most bang for the resources I have available.
This is a one man show for the most part. That means I have to journal all these trades, plan all these trade, execute all these trades, and measure the effectiveness. Methods have to be worked, reworked, and occasionally abandoned. This amorphous nature of earning money from the markets is what attracts certain types to the arena.
When I discover an idea that helps me perform better you are the first to hear about it because there is no risk of evaporating my edge. It is natural, like the laws of physics.
Check back this week for some of my latest styles.
I am still playing this environment slowly. The highlands require careful foot placement, else one may slip and return their person back a few weeks. I rotated money out of RWLK and into the crazy chicken. My only other considerations this afternoon are sales.
Fri Oct 31, 2014 2:26pm ESTComments Off on Cast Netting
I was never a big fan of pole fishing. It’s slow and I like action. Over time I suppose I may gain an appreciation for it but in the short term I prefer cast netting. It requires an athletic throw and snatch and puts stubborn biters in a more vulnerable situation to end up in my cooler.
They don’t have to take the bait. They become discombobulated and panic instead.
My book has a similar look and feel too it. I could describe each position to you but that would be very time consuming and I have pressing matters to attend to on this hallowed ween.
But I will disclose my risk profile. It is long, friends, again, here atop the highlands. It was long in the lowlands too. It has always been long (extra Grady).
75% of my port is positioned amongst common stocks of various industry. Just a tad over 5% is in November call premium. I want more, gentlemen, and will exercise my right to speculate in the path of power and rotation.
Believe me, I am on these charts looking for responsive sellers too. We started showing signs of finding one yesterday, but we also had a firm grasp of the third reaction, remember? There was a strong rotation down today, and it fizzled away, poof. There was a moment today where you could have a short bias, it came and went by 11am. There are few signals better than a failed hypothesis, IMO. It reveals the other side.
It is hard to initiate fresh index risk up here, which is why you hunt out a chart that is still basing along or not too far from the launch zone. When the long and intermediate term trend are up, you have to be nimble on the short side. You can be a short seller in this tape, I have seen it with my own eyes. But you need to wait for the big sellers to show up.
Momentum pockets are narrow and not every stock is a winner by any means. The market structure is overheating. There are still losers everywhere, especially if you dabble in the dark arts of short term duration. Twitter found a responsive bid today, about a buck before I wanted to add a slice. Eager buyers front ran my logical level and I could not chase. I bought FB yesterday afternoon based on 3rd reaction analysis and that was a dud, I cut the loss early.
I am not crushing right now, mind you, I am nearing where I left off before the great OPEX rout of 2014. Playing it old school, with these common stock positions son. I am trading well though. I traded well through the selling too but my teeth still were kicked in, it’s the nature of speculating.
Accept it, tie risk to every single trade you make. If I put you on the spot, right here right now, and ask you where trade XYZ is wrong, I expect an answer mother fucker. That is step one, put down the opium pipe and face the risk profile you have established. When you lay all the numbers out you might not like what could happen in the event of a goose hunt.
Know you risk, know you risk, knowyourisk.com
If it didn’t matter I wouldn’t annoy you all with it.
It is a pillar, you will lean on it, and it will give you confidence to engage these markets.
As for hoping the lack of Fed intervention will lead to another rug pull, they’re still intervening just in bigger and quieter ways. You don’t take the training wheels off the bike and then push the child into the road, you run alongside them whilest smoking cannabis.
I see the markets broke as I was penning this piece, very well, I must return my attention to work.
On a lighter note, Michigan is dreary about this time. If your land is also becoming dark and cold, why not join me for a few cocks and laughs at the First Annual iBankCoin Investor Conference? We can discuss auction theory live in person via aggressive hand gesturing. A true break from the click clack of the keyboard, yes?
I always have. Even as a child I recall my third year being my finest, it was such an enlightening age where the fog of sounds all started to become words and the words flowed off my tongue like a Shakespearian thespian. I could ride a bike without the trainers for the first time. Everything clicked.
That year has stuck with me and shapes many of my trading methods. As much as it may seem ‘top down’ to rely on something divisible by three, I have gone the opposite direction, working raw stats to extract probabilities, and quite often I return to the number three.
The 33 ema, for example, mimics VWAP surprisingly well. And a daily 99 ema, oh the jump you have on all the traders working the 100 sma is staggering. I leave them in the dust 9 out of ten times.
When a major news piece hits the market, like today’s 2pm Fed, I sit with laser focus and carefully indentify each reaction I see. The first reaction is usually simply, the second can be a bit slippery, and the third is where the babies are made.
The third reaction today took a strong bit of deliberation but ultimately was higher. It was by no means gregarious and certainly nothing to hang ones hat upon. However, here I was, sitting here, and I might as well make myself useful and share this information with any reader who had more pressing matters to attend to from 2-4pm. Corporate Raul would saw his leg off to have a source like me. I write for corporate Raul and street Raul eating MacDonald soda pops from the trash can.
On the Net, the Nasdaq printed an inside day verse yesterday. It shows a slowing of the auction higher. We found some responsive selling, but the prior day lows held. Tomorrow, as many of you know, is Thursday and the day after is Halloween and then a spooky weekend and then BOOM, a new month, new money to put to work.
So ask yourself, are we set for another month of outflows, or will the mutual funds put on their pony costumes and serve up a proper mutual fund Monday, new ATH and all?
A discrepancy between the closing price and settlement price on the Nasdaq futures resulted in an odd no-volume push lower. This may or may not have something to do with the big drop in Facebook shares after their earnings report motivated participants to sell the stock down significantly in after hours trade. However, that action will slowly move to the back burner as we enter US trade. Set for announcement this afternoon are several Fed data points. We also have crude oil inventories at 10:30am.
The price spans our market has traversed lately are huge. This is not an environment we have traded in, velocity and rotation size-wise, since perhaps 2011, more so like the 2009 bottom. Put simply, the market is acting either like prior major bottoms or like an inflection point. You can thus see how these recent events might be unsettling to speculators. The directional ramifications these conditions typically preclude are major.
I am keeping my bias with the market’s biggest punch. This is helps me accept conditions and adjust as the market dictates. Currently, the uptrend is steep long term and the largest most recent rotation is up. There are warning signs around, but I will reserve caution for when I have proof in the price action that sellers are regaining an edge. What are my clues? Retracements, especially the 50 percent retracement. I have noted the 50% retracement as well as a few other observations on the following daily bar chart of the Nasdaq futures:
If you were to ask me one week ago today whether we would be templating the volume profile printed on the day BABA went public today I would suggest it was very unlikely. Yet, here we are observing the key price levels left behind on the swing high volume profile. I have noted these levels, as well as other carefully selected levels on the following volume profile mash up chart:
There are certain market conditions that will force you to the sidelines. There, I said it.
Thus, to begin this discussion, the trader pedigree is divided into three very distinct grades, the scalper, the swinger, and the investor. The next question to be approached concerns the pedigree of internet-trader law and the latter’s natural affinities. There is a real stink about a person who is in every move and magically free of the natural process of losing. Arguably more painful is seeing someone press a method that is not bearing fruit. This comes back to knowing your risk.
You must embrace change because the market will ultimately ensure you do—or leave with a frustrated look about yourself.
I have not done much to capitalize during the latest movement in stocks. The only shares I was brazen enough to procure during the #knifeparty were shares in GNRC. Those have rewarded me handsomely, but I assure you the trade was executed on smaller size due to overall market conditions.
The best traders I know have conditions they sit out. This is a huge part of their edge. I know a fantastic day trader who is bored and meditating most of the time when the market enters a grind up. I know another trade who whips that move 10 different ways and extracts milk and honey. I know traders who crush swing trades when price action becomes fast and furious, keen on price levels and legging into their trades as part of their management.
Monitoring continuation is without question my strong-suit. I am not a knife catcher, I have many deep scars to prove it. I enjoy the anticipation trade with a touch of predominantly favorable order flow. Being that the bulk of my trading career is post 2011, most of my experience is on the long side. I need to improve my short game, even on the intraday scalping level.
Something about the nature of support after a thrust is much more in my wheelhouse then working a resistance even though the behavior is a symmetrical inverse. Perhaps I will take up standing on my head while I trade.
Needless to say, this grind-piece of an auction is where I thrive. I measure midpoints, I buy dips, I scale, all very methodical and profitable. This week has been about making hay while the sun shines and the weather stays oddly elevated over 70 degrees in the murder mitten.
I managed to win today, even while losing in TWTR common. CLR, purchased the day before the gut check, came back a bit for me. GOGO, hangs in there, consolidating inside of consolidation, not moving, causing much a tension! The drama! I kid, I love this type of compression. BLOX, and old swing hold, again is knocking on the gates of a big-ass gap. It might not rip, but it might. And Elon decided he had shareholders’ backs which was the proverbial cherry on the pumpkin cheesecake
In short, I am grateful for these conditions, armed with a few new tools for faster conditions, and comfortably in some cash ahead of the popped-corn Wednesday Fed event.
Mon Oct 27, 2014 4:32pm ESTComments Off on Momo Taking Heat
They are selling Twitter in the afterhours market, a place inhabited by traders who deem the company insufficient in the manner of earning. Price is moving just enough to give short sellers some hope at making a profit. However, I would imagine the opportunity may be a short lived one, especially given Tuesday’s Facebook earnings and Wednesday’s FOMC business. If you look at a chart of trade since the IPO of TWTR, you will see no real movement has occurred over the last year—just a sine wave through time.
I put some broad strokes on the chart, and essentially any trade confined within these levels is to be considered noise. A conviction break and hold below ~$45 allows the bears an early advantage in initiating discovery. After hours it has traded as low as ~$42. It will be interesting to see how this trades come cash hours in the manana. Until then, and even if I had been on the winning edge, it is best to save dancing the tapioca until after you have booked the trade.
In other news, the beaten back buyers inside of today’s /NQ_F could not be overwhelmed and as a result we saw a late day push higher. The order flow became very clear just before noon New York when opening swing high, overnight low, and the daily midpoint all converged at 4027-4026.50. We traded down into the level, found an initiating buyer and the rest was history—clean rotations higher suggesting the intermediate term buyer from last week is still active. The only caveat is we printed a P-shape profile suggesting a short squeeze but no real initiation. And with a busy week ahead, month-end, and the massive V-shape in our wake, price might want to test a bit lower come tomorrow. However, the sellers are tasked with making an aggressive push at this point after merely reacting and absorbing today. Buyers are innocent until proven guilty.
The scene under the sheets was a bit different. Each rotation lower in the Nasdaq, even the minor ones, managed to put heat on momo stocks. However, from the heat CYBR came blazing higher. It was a bit of a mixed bag with correlations lower then we saw a few weeks back, but overall participants were not rewarded for assuming risk in aggressive growth names.
My Tesla looks weak too, very much a proper looking continuation lower chart.
Tomorrow morning looks to feature a few gut shots. It comes with the territory of swing trading. Earning season is fun, yes yes?
Fri Oct 24, 2014 3:47pm ESTComments Off on 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).
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.
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.
