This market is into distribution.  I am like Atlanta, a hub for connecting sellers with buyers.  Only unlike Atlanta, my primary purpose for many days has been to stand put and be distributed on.  2/3 of the stands I make, joining the ranks of other scarred faces and forming a scrum, result in a geyser of distribution blowing me over.

Today’s wipeouts were YELP and AMZN.

Delta on today’s down move in the Nasdaq was the lowest I have seen.  What this market feels like, literally since the opening throws of The BABA, is someone trying to sell without spooking the market.  The problem is no matter how and where they sell, prices still move lower. Imagine you had an inventory of a few 100,000 futures contracts as a variety of stocks.  You made a fortune during the glory years of QE and with all these Chinese internet companies and political happenings you want out.  So you begin selling, the market goes lower.  It comes back up, you sell into it, and it falls lower.  You try selling pre market and it goes lower.  You try selling at the open and it goes lower.  You try selling at 3:30pm and it goes lower.  You don’t want it to go lower but every action you take makes prices head lower.

That is how the market feels.  Like someone who doesn’t want lower prices can’t help but push price lower by their actions.  Soon they may panic.

The afternoon breakdown marks a neutral extreme day, which is a high conviction directional close favoring the shorts.  It also cut deep into the deep V bounce on Thursday.  This truly was a ‘turnaround Tuesday’ for the bears who are flexing their firm grasp of the intermediate term timeframe.

I have little advice except to stay small if you play the long side and keep your risk defined.  It is hard to short the hole down here but it is looking like it will work out in the short term.  If you are keeping your position size in line then a winner should be good for three or four losers.

Stay thirsty, stay humble, and keep taking your trading pictures.

 

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Over the weekend I worked through another range study of the Nasdaq market which focused on up day daily range verses down day daily range.  It took me a while to sift through the raw data I piped in from the IQFeed servers, and I was feeling rather buggy yesterday after spending much of the weekend pouring concrete, however the numbers don’t lie.

When the motivated sell move swept through the marketplace at 10:30am, those motivated sellers started me on the process of defining low of the day.  It just so happens that the first standard deviation of range to the downside since the beginning of 2012 (yes, ranges have stretched a bit recently) is 42.25 points.  Take the HOD-4040.50, subtract off 42.5 and voila, stalk LOD at 3998.  I knew this by about 11am, what were you doing at 11 am?

How’d that work out? So far so good, I was able to buy some YELP and AMZN along with playing the move in the futures.

The bummer?  Today is a down/flat day after gapping higher into the week.  Also, these stocks I bot are not doing anything and no action is LOSING when you buy duration paper.

The vision?  That today printed a higher-low job on the intermediate term and marks the trough low for the next 1-2 days.

When am I wrong?  A definitive break of LOD.

Until then, we dance.

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This first week of October was designed to put your willpower to the test.  Equity index prices have come back to life and with them bring the promise of opportunity.  There are still sellers in this market, strong ones, who have had ample opportunity to take some profits on the recent move and retreat to their shelters.  Bull, pressed right to the edge of the abyss, falling off the cliff, then clinging with one hand to the loose rock managed to claw two hands into grip and sneak a shoulder onto the rock.  As we go into the weekend, here they are, alive, with a strong grip and fire in their eyes.

What is in store for them should they gain footing is quite another battle indeed.

My day featured very little action, some sell scales on a few winners who emerged from the rubble and I started a long about 8% higher in VSLR.  The market is not thrilled to have another solar stock in its ranks, what with oil tumbling and all.  A dangerous man who I keep contact with informed me two Mondays back about the Rockefeller Fund pulling out of oil and gas.  I thought, “This certainly must mark a bottom.”  Apparently not, and that tough guy hedgie (his name escapes me, very pompous) who Bloomberg recently lambasted must be a real pleasure to be around this weekend.  The biggest rift I have with VSLR is how they are competing with my good friend Elon’s cousins over at SCTY.  A clash of titans for the solar rooftop space which will certainly benefit mankind on the net.

Buyers showed their hand today and potentially expended lots of energy.  Come Monday they have a volume cliff to defend and a higher low to print.  And not some pathetic higher low job, something with purpose or it will be bunker bombed by this potent sell flow of late.  I have an interesting study I would like to produce this weekend but I also have a sold 20 hours of labor ahead of me so we shall see if the data is produced.  Overall, grand trading environment, best to you over the weekend, and let’s hope for some more action next week.

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There aren’t many (if any) signposts you can point to and say, “oh hey look, that precluded this vicious viscous venturesome move.”  However my dearies, there was one simple occurrence which kicked this whole “process” into ACTION.  If you can bear this excessive use of emphasis then you stand to learn something.  It actually has an axiom:

From failed moves come fast moves – Plato (not really)

For some reason, I am rather keen on observing and presenting key contextual pieces yet doing little to prepare for the move.  It is like for some reason when my Shenanigan play didn’t pan out I abandoned the idea we would ever correct, like some kind of dicknose.  Listen here, internet, I am no dicknose.  The failed auction may have sizzled my anus this time but once is enough to learn me proper.

Anyhow, here’s a picture of the failed auction:

Don’t let these go wasted in the future.  They happen on all timeframes in all instruments.  Think of the powers behind it.  Some stop hunter goes after swings, take it out, finds no order flow, just crickets, says, “oops”, cuts and runs, and the market has shoveled a few bulls onto the head of the gravity hammer.  LEARN WITH ME.

And be well.  Until tomorrow, adieu

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This is the world we live in and it is built on hard work and a bit of luck.  All of these quirks of industry come crashing down when they take away your health.  My friends, that is exactly what is happening today.  The poisonous Ebola virus has breached our shores and we are now susceptible to 10s if not 1000s of fear dealers on cable news channels.  Thank goodness I do not have the cable.  But it gets worse, I am scheduled to obtain cable next week.  The horror!

With fear totally peaking there is only one intelligent move you can make.  Lock your doors and seal your windows.  Retrofit an air intake onto your home with carbon scrubbers and ozone generators.  Mount solar panels to your roof.  Guns, many guns.  And finally, any modern doomsday prepper’s setup isn’t complete without the latest two mods:

Natural gas generators and Tesla electric cars

As you can see, Elon is preparing to show us the D on October 8^th.  I imagine the sight of it will cause women to blush and men to turn green with envy.  Let them kill one another for their oil, your car will run on electric from your solar panels.  And just in case the sun never shines because you live in Detroit, the no brainer move is a large scale home generator from GNRC.  Natural gas is practically free.  If you dig deep enough in Michigan you find the stuff everywhere. Plus your neighbors will love the ambient hum.

This post is a call to action.  It is also a long winded way of telling you I started buying GNRC.  The short reason is the stock price has been obliterated, winter arctic vortexes are near, natural gas is cheap, Ebola is just another fear device, and no one is really hype about generators right now.

As you were

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I had the pleasure of sitting on my hands most of the day after stopping out of a few names and poking a quick trade with the @ragincajun.  Equity index prices imploded in the most orderly fashion imaginable.  The sell flow simply arrives at any and all attempts to rotate higher.

The blood is opening up opportunities for the patient and liquid trader.  The key and emphasis must be placed on patient.  There is no need to rush buy orders into the liquidation until you see the real heavy lifters enter.  We produced a most wonderful wave today in the Nasdaq, and although was hardly prepared to take advantage of it, the mere observation of the swing nature allowed a rather calm feeling to stay with me all session.

Have a look:

Also making for an interesting sideshow was the tumultuous move in this Ebola TMKR.  Nothing says capitalism like making a few bucks on feverous panic.  There was really nothing else garnering my interest.  This is a market that wants to head lower and its doing a good job of it.  Although we completed our wave lower intraday, I am just hanging out and waiting for a bit more purposeful buying.

Top of my priority list- buy some more TSLA shares.

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There you have it, anther quarter in the books and it was a doozey.  We saw everything from new tech to the uprising of our fellow man in China, the hands who build new tech.  Yet there is still more to come, another freight train barreling down the tracks.  Are you in its way?

Said train is your ego, the source of your emotional indecision and impulse.  The more you begin to understand it, the better you can see how big a beast it is compared to your more logical and academic self.  You ego can curb stomp your intelligent face with its elephant boots.

These are fast market conditions at quarter end.  The macro tides are bigger than you might have ever seen depending on your experience level.  Now is not the time to increase your average trade size.  In fact, reducing trade size might be enough to knock your ego down a few pegs and start your back on the path to operating these markets.

I have done very little this week and last.  Committing to anything longer than a few hours is a challenge.  Look at yesterday’s pick, Zillow, poof, practically dead out the gate.  Perhaps the same will happen to today’s pick, AMZN.  I can’t worry about these external events because I have no say in how they pan out.  I can control risk and continue taking the trade setups that have worked for me in the past.  The rest is fate as they say.

The Russell looked exceedingly weak all session.  There is a new happening about the market where rips are fantastic opportunities to liquidate upon.  Every rally has been met with strong supply.  Someone wants out.  You call it ‘rebalancing’ I call it, get me the F out of the stock market.  Fortunately it has only resulted in one highly correlated dump off so far.  Tomorrow could change that.  Or, it could do the exact opposite.

Listen, I will discount any and all fear mongering associated with Israel, Uncle Vlad, or the USA.  But when Hong Kong unrest heats up, I take note.  These people are untested for many 100 years.  They always bend the knee to their commie overlords.  What if they don’t this time?  Every skirmish of my lifetime would pale in comparison to an Asian battle.   Meanwhile they all ‘enjoy’ watching Jack Ma earn more than the last 200 generations of their friends and family.  Some will feel empowered, others rebellious.

Thus, I am cautiously neutral.  Funds have been shifted into my futures account where I intend to be much more intraday until we see some resolution.  As for my October risk, it is Martha Stewart committed, if that makes sense.

Stay nimble my friends.

 

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Today the stock price of GoPro, an American innovation in wearable technology, went apeshit to the upside.  This euphoric action ushered the simple class onto their soapbox to decree from their mountain of Twitter followers.  At this point in the cycle, you are either in the “camera on a stick” or “late to the party but screw it there’s blow” category.  And that is okay, this is how markets are made.

You might think I feel a sense of missing out.  After all, I sold just shy of seventy two.  This assumption couldn’t be any further from the truth.  I made a call months ago, executed it, and participated in the lion’s share of this gain.  However, I am a long term bull on GoPro and look forward to the day you decide to cast these shares into the dumpster and declare them broken.  There I will be, like a greasy banana peel, slipping you to the ground and ensuring I milk another 2% out of your liquidation.

And in the meantime, I will spot the next big thing before most.  My first GoPro was procured from an infomercial on Nickelodeon.  My ear is always to the streets bro.

Yes, there is competition flooding into the marketplace and playing catch up.  If you do not expect that, then you have never witnessed the birth of a fantastic product.  Copy cats have to chase the early market adapter while they innovate to bigger and better widgets.  Or in the case of wearables, smaller, much smaller.  I know most of you homos love your American Football.  Just imagine the boner you would obtain from watching a point-of-view helmet cam on your fantasy quarterback man crush?  It’s coming baby, will you?

As GoPro refines their product to smaller and smaller scales, the company will grow revenues to a robust, almost surreal size.  They are innovation in technology, never discount that.  As for applying valuations, good luck.  Wrapping your mind around the total addressable market (TAM) is a fool’s guess.  Don’t be a fool.

If you are chasing this sucker higher, have some risk in place. I salute your form and wish you good fortune.  Make the ‘intelligent’ short sellers walk the plank, mate.

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Waves really kick up at quarter end, and as much as I am yearning to be back in the index futures arena, these conditions could vanish.  In the past when conditions perk up, I abandon my intermediate term stock swing strategy for long term while my energy is focused on day trading.

This time around I intend to do a little of both.  There are essentially two types of day entries to trading.  There is the longer swing trade, which can occur intraday, and then there is the scalp.  When working a hypothesis, that is a swing trade.  The entry into a swing starts with a price level in the hypothesis.  As we travel further from the entry and closer to the target, all you can do is scalp.  My plan is to have 3-4 setups in stocks I am watching for the day and when an intraday swing is setting up, enter both the stock and futures.  Too many times a hypothesis move occurs but the stock I choose does not participate.  Conversely, many times a stock I choose will start to work while my futures entry stops out as the market continues.

This is the proverbial chicken before the egg conundrum.  What moves first?  Stocks then the market or vice versa.  One would think stocks would move first then the index because stocks are the underlying value of the index but it does not always work that way.

Today I picked up Zillow once the buyers emerged.  What turned out to be a wonderful swing hypothesis (see primary hypo-morphed-to-hypo 2) was wasted.  It was the proverbial kick in the butt to return to active futures swing/scalping.

When the tide shifts, it is our job to read the currents and adjust.  If the Nasdaq keeps this speed up one would be negligent to not pursue the opportunity abound.

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Much of what I write is a test of sorts to query the subconscious of like-minded peers who carry on similar pursuits to my own.  Put simply, we communicate.

After not giving my BABA trade enough risk space, I was stopped out about 0.05 from the current all time low.  Now I watch from the sidelines a bit like Smeagol.  Late in the afternoon I put forth the proposition that someone needed to 300 the ‘Jack Ma’ offer at $90 per share.  Regardless of whether the seller at $90 was Jack Ma, this is a perfect demonstration of round number psychology.  And this one is huge.

Our friends in the Far East are vital.  Grossly outnumbering us, owning all of our debt paper, they’re beating us at our own game.  But we still have something they don’t—the best financial system, a real stock market. This is biggest IPO [sic].  People are suddenly realizing you don’t have to buy a shipping container’s worth of goods to outsource that shit.  Cotton is headed lower, they know it, where else do you anticipate us purchasing are clothing from?  Los Angeles?

Eyes are on BABA, busy eyes who can only monitor bigger ideas, like $10 dollar increments, especially an increment just below the wonderfully curved $100.

This is how psychological levels work.  Nothing I stated above matters.  The world exists however we choose to project upon it.  But trading with good form is just cold, dead, numbers and us, we are just bags of rotting flesh.  Try to see it.

Have a great weekend friendos

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