Today I placed my first index hedge since this bull run started at the beginning of August. There has never been a transient reason to don protection prior to today, and to be clear I prefer transient reasons for most any market action. It is simply my nature.
However, we must always explore outside our comfort zones, and doing so has been good to me. Look at these investments, GPRO and TWTR, the former quickly nurturing my book and the latter finally beginning to bear fruit. These positions are funny, two of my largest, and I do not keep an active chart for either. They are investments. I observe them occasionally inside the newspaper, old school. Oh, how I have digressed.
You guys truly run wild sometimes, carnivorous animals hunting out your next meal. Sentiment says otherwise, that we are all cowardice leaf eaters who lie in tall meadows waiting for better days. The group’s speculative fervor is something I never claim to have a firm handle on, but I can attest to my own. It is running hot. My book is juiced up like Arnold’s tits in 1986. Something had to be done.
Thus I juiced in the other direction, buying weekly calls in TZA, FTW, lol. Because I expect a very transient CORRECTION, you got it? I don’t need 10 stinking days of protection. I need one, tomorrow, because according to my god damned almanac, the apostles creed for all intents and purposes, there shall be shenanigans of the highest order tomorrow.
May said shenanigans take the form of an egregious gap-and-grind-up, rendering my protection dry and stale, and my juiced up book all the richer, amen. IF NOT, well at least I can pull a downside trick.
NEUTRAL EXTREME DOWN YESTERDAY, NETURAL EXTREME UP TODAY, CRAZY OUT THERE! Keep your wits, focus on what you can control-your risk, your mind, your plan.
Neutral days are some of the most potent market profile prints out there. They suggest jostling for position by the other timeframe. They extend both sides of the initial balance, suggesting the bigger, institutional money is not only active at the start of the day, but also intraday. They are watching the tape and adjusting.
There are a few things working against today’s rally:
Internals are showing risk flow, yes, but large caps are lagging more than we have seen in several days
A poor low on the /NQ
Neutral prints in the /ES and /TF
Tomorrow is the Thursday before OPEX WEEK
OPEX has a way of sniffing out the piker money and brutally boning it with the proverbial “African Spear”. With that in mind, and a crew of edgy call options all huddled around me, I bought a weekly TZA call, lol.
My discussing heretofore must be brief as I was swept into the hype that was the Apple event and now only have a few minutes before traversing across town to my local torture purveyor, the dental surgeon. It is difficult to have a clear read on today’s session right now without seeing the close. Nasdaq went neutral print when we made new swing highs, found a strong responsive seller, and as I type we are working lower, likely to test the MCVPOC at 4066 [update: done]. The difficult read comes from not knowing where this will close.
A close on the lows would be the first neutral extreme print to go out on the lows since I started tracking day-types in June. This type of close would carry strong directional conviction likely to carry through to tomorrow and result in testing the other edge of intermediate term balance (see prior post). The fresh risk I initiated in WYNN is being dismantled, and my options book is buoyed simply from having WB in its cadre. WFM is dead money even after three dedicated shout outs at the Apple event. How? How after being such a big part of such a big event!? The price action today is as fast as we have seen even including Fed days.
The issue as I see it, is whether this is a singular data point or some major shift in sentiment. It appears they have chosen today to put the bulls’ heels to the proverbial coals. Indeed, a fine day to have to report to the dentist, because it is forcing me to eat a sandwich while this noisy day plays out.
Nasdaq futures were up modestly this morning before giving up the gains as we rolled into 8am. There are no economic events which align with this selling. Instead it appears to simply be some early sell flow. As we approach US cash open the Nasdaq futures are flat on a compressed 16.5 point range of trade.
Buyers pressed away from Friday’s range early yesterday morning before finding responsive selling back inside the range. At this point expectation was for a move back to the micro composite volume point of control at 4066 but instead we found buyers who rejected the idea. These buyers took us back up above the daily midpoint in the afternoon. Overall price and value migrated up relative to Friday.
This is occurring inside intermediate term balance. As this balance matures, now going on our 13th session, expectation of a break increases. As we head into Tuesday’s trade, we are priced in the upper tail of balance. If buyers are not strong to initiate trade away from this area, then we are likely to go explore the lower boundaries of balance in short order. I have highlighted the intermediate term balance below:
With that in mind, I have noted the key price levels I will be observing on the following market profile chart:
Day-by-day, when you become emerged into a product and methodology, you begin to better understand “where” you are intraday. One of my favorite developments as a trader has been understanding what the market tells me when my hypothesis is wrong. For example, today I had an afternoon hypothesis we could trader lower and target the MCVPOC at 4066. When the selling wave rolled through at lunch, I was expecting the second wave to push us lower than it did. This made sense with my recent range study because it would have produced a 39 point down day for the Nasdaq. That would be in line with the average down days according to the study.
When instead I saw a sharp responsive buy, eight and a quarter points wide (not normal), my trader antennas picked up on a change. The afternoon hypo was negated and the other side became clear. At this point I placed risk in CRM, GOOGL, and DANG. I nailed the intraday move, citing a contra play back to the VPOC, which eventually shifted down to price right around closing prices. My intraday eye is becoming sharp as I prepare to reenter the futures realm.
Something else happened, though.
Perhaps eating an entire chicken for lunch was excessive, for when I attempted my 3pm “power nap” to 3:30pm, I overslept and missed the closing bell. Now I have a bit more risk than I really wanted (eek). My plan was to cut something to make way for this fresh batch of risk. All I managed to close was FEYE weekly calls which might not have even been the right move. I have a bit too much weekly risk already, and it is Monday. May the warm breeze of late summer drift us just a touch higher to allow a rotation out of shorter duration and into longer duration, amen.
To top it all off, I have to go under the knife after market close tomorrow, very routine dental procedure, but a bug in my head nonetheless. Needless to say, I will have some interesting decisions to make tomorrow morning.
So what is working? My long term investments are treating me exactly how I expected they would. I think people are waking up to the huge lead Go Pro has in the wearable market. You would be short sighted to consider them merely a “camera-on-a-stick”. If they can use their momentum properly, then they should continue to outpace any competition in the tiny HD-video arena. With panache I might add. I stand by my $72.00 profit target which is calculated using the valuation Apple gave to Beats during the buyout. Twitter added a “buy” button to tweets apparently and now we are headed for new all-time highs. Now, next year, or five years, I will own Twitter until the fabric of electronic society radically changes. LO is sort of dead after the merger news but whatever, money is parked and earning a coupon. Today might have been the day to add to XON, but I want a bit more information before adding.
Everything else is subject to liquidation. I am like a cat on a hot tin roof up here frying eggs. The timing is everything.
Yes, sure, there is something of a correction going on in the equity markets. Some of my entries last week and into this week seem early. P is in the toilet. WB flashed its zoobies at me only to rabbit punch me. FireEye is not ripping, clearly it is broken. KNDI has not been so dandy.
The market has accelerated and the tone made a notable shift in pitch and vibration to start September. There are lots of moving parts right now, macro waves rippling across the financial complex like the stroke of a monarch’s wings. There are experts who will tell you their prediction and I respect a few of them.
My job is to understand the auction today and how it might affect about the next three days. My looking glass is a bit foggy beyond that horizon. However, one can be dangerous in such a limited duration if they pick their battles wisely.
I do belive I have some of the finest candidates should a flood of money decidedly turn risk on.
A few stocks who might have offered hints this week were WYNN and PCLN. These longer term consolidations in risk assets pressed lower. If they continue to entice sell flow, it could mark a shift in risk appetite. Also watch GOOGL. It is flirting with swing highs, lingering well, and “should” make a new swing high. A failure to do so would be unlikely and odd.
On the topic of unlikely and odd, we are 45 minutes away from printing the elusive “neutral extreme” on the Nasdaq. Such a structure suggests strong directional conviction. Bears need to show up ASAP. Thus, as we close out the week, with two red candles on our charts and three hard nights of trade, perhaps you could envision a new high and how it might change your perception of this market?
I am taking my final swing at SINA, via the September calls. This might not resolve soon enough, or it will, and the derelict will come to the town square with a fresh tunic ready to party. I am in some NBG too.
In the meantime, Go Pro seems to be the hottest wearable since Beats. I am in no hurry with this one, a good slow idea for a young gent.
The past two sessions have had a certain way of knocking me around a bit, but overall you can see what is occurring here. There are macro currents sloshing around, big callers, big ballers positioning themselves into the end of Q3. This is big money and it pays to stay out of big moneys way. Better yet, join them.
Tomorrow morning we hear the monthly NFP data. This number is one of the primary indicators The Fed is pinning their decisions to, or so they have said in their pressers and meetings. Thus it appears some positioning ahead of that number is occurring.
The action is fast on the Nasdaq, and that can be a bit intimidating, but what has it done? We are still in balance up here. We had two down days after about fifteen up sessions. And the kicker about today? Value migrated higher and never followed price. Look at this:
I did very little today. Less consistently proves to be more in this elevated tape. I tried a PCLN day trade using some weeklies, it did not bounce as expected and I pulled back some of the premium. I also bought some FEYE risk, short dated to next week. The internet is a wild place and your ass is liable to end up on 4chan or reddit unless we all surrender to the might powers at FireEye, Barracuda, Splunk, and other dastardly named companies.
Thus I am long risk elements, without protection into 8:30am tomorrows event. Anyone who brews popped corn and eats it at such an early hour is unfit to discuss matters of finance with me. We will be enjoying poached egg in a cup and water.
Go Pro, one of my investments, is under pressure this morning after being downgraded by J.P. Morgan. I am not caring so much, price target for GPRO is $72.
Tue Sep 2, 2014 3:32pm ESTComments Off on A Little OTF
Money has been flowing toward the marquee momentum stocks to start the month. The Nasdaq is a touch higher after finding a responsive bid. The Nasdaq has been hesitant all day to play along with the S&P and Russell weakness. Instead it is flexing its apple bottom and holding the weight.
I have done little aside from observe the markets very methodical movement and buying some GOGO. I am watching my investments perform well to start the month which are allowing me to hit the ground running.
It has been summer-like trade since lunch. As you were.
Somehow my atomic alarm clock with battery backup fails to wake me at my customary time. The iPhone backup chimes are muffled after falling off the bed and under a pile of blankets. The air conditioning coil froze into a four inch block overnight and the house is a sultry eighty one degrees.
Forced to forego my methodical morning, I opt for a glass of water and a slice of untoasted bread smothered in ghee and almond butter. I take said rations via tray to my desk and spill a bit of water on the mouse. The mouse is fine but all the signs are there, it will be a day determined to challenge. After taking my first bite of bread I power up all three monitors and accidentally smudge peanut butter on my second screen.
My eyes struggle to focus on the screen because I have slept with my contacts in by mistake effectively caking my eyeballs with thin plastic sheaths. Nasdaq futures are deep in the red, down over 45 points after printing an abnormal 60 point range. I cannot adjust my chart to show current prices until I wash the nut butter off my sticky hands. We are off the lows which are another 10 points lower. My intermediate term composite tells the story, it looks something like this:
Rushed, I mark up the market profile levels in haste and struggle to locate all the key price levels from back on 08/22. I barely have time to write my hypotheses and hit send on the hypos as the opening bell sounds. Just at that moment, my secondary computer which houses key intelligence including news feeds, The 12631 power group, The PPT, twitter, blogs, and stock charts forces a shutdown. I overlooked the 15 minute countdown to finish installing the god damned latest Windows 8 update.
Over the next 15 minutes, while the computer slowly reboots, the market open drives lower. The order flow meter is screeching the whole way down, my portfolio is a sea of red, down well over 4% by now, and the overnight low has been breached, sending us into the land of low volume pockets below—levels leap frogged in the preposterous gap-and-grind higher swing. I have no time to scan the week’s economic calendar and miss noting the ISM manufacturing number at 10am which turns out to be a reasonable excuse for another wave of selling to push into the marketplace.
Twitter announces they have prices a secondary offering, effectively shaving 8% from the share price overt the weekend.
By 11:15 the market is down 70 points and my book just a touch over six percent. I am forcing myself to ignore the empty pit that is my stomach, foregoing nourishment and staring like a deer caught in headlights. I am wearing purple underwear, why the hell am I wearing purple underwear? Of all the days to wear such royal garments, gluttonous fool.
Famished, I react and throw on some risk, more than intended because panic has set in and all planning is now subject to abandonment. The plan is shelved for reliance upon old fashioned survival hormones which are coursing through my veins.
Part of me wakes up and I step away for lunch. I slide cold leftover meat off skewers while swilling down the lukewarm glass of water I never finished from the morning. Still hungry, I eat a large plate of spaghetti and a piece of chocolate cake. 20 minutes later, I am clinging to conciseness after my spiked glucose crashes through the floor.
I nap, for the love of nourishment.
I wake, now 3:30pm and my book down just a touch over ten percent. We snap off the lows as the President makes an impromptu announcement from the White House. The message is obfuscated but mentions ISIS and we rally. Emboldened and overrun with patriotism, I press more risk into any chart I can find. I feel pretty good because the market is holding its snap off the lows. In the final 10 minutes a real liquidation wave of selling swells into the market and takes me with it. The Nasdaq has lost over 100 points of value and is now trading inside of 08/15’s gnarly neutral print. I stop out my winning positions in a last second attempt to ‘right’ my ship, ignoring the new risk which has managed to lose forty percent of its value since the morning.
The market closes, I read philosophy books and eat McDonalds on the couch. Unable to sleep, I make a third attempt to watch The Grand Budapest Hotel and fall asleep sitting up, fast food bag in tote.
For some awful reason you cannot seem to shake this song which is stuck and looping in your mind:
