If you are confined to a desk as others decidedly “slack off” into the holiday weekend, then why not turn on your radio? Why not beat those assholes by picking the fastest horse for next Tuesday’s event? Build, build build, an event might rear its head! Or nothing happens.
Well, something happens. There will be winners in this pragmatic contest of wit—stocks who prevail amidst a downturn. It is your job to find them and wrap a proper risk profile upon them.
I have made my bed with a slew of candidates (extra R. Kelly). I bought the KNDI liquidation or dilution, depending on your perception and added to P. Other top picks into the holiday include ONVO, GLUU, and the WB.
Of course I am long all of these, and more. Godspeed
If your positions are swelling in value, appreciating amidst this rally to all time highs, you are in a unique position ahead of the final month of the third quarter. You are leading the pack, out front of the wave of money swelling beneath you, and your job is to catch that wave and ride it.
This market is demonstrating more of a ‘when’ than ‘if’ uncertainty if you are in the right charts. The key is purchasing enough time if you choose to use options or sticking patiently with the common if this is your choice. Do not tighten your stops unless you know exactly where you are in the market ebb, otherwise you are likely to be taken out by noise flow.
Deciding when to enter a position is in your control. Determining how much risk you are willing to commit to an idea is in your control. How you manage your position is in your control. Once the position is on, your fate is out of your control. Being right or wrong is now a matter of the direction of price and to commit much energy to this activity, an external event, is a waste. There is no point. Instead exercise willing acceptance, of all eternal events, right now at this very moment. That is all you need.
Focus on your process, your plan, your method of entry, your risk exposure, your profit targets, and then review your actions and reassess your plan. Do this over and over again to cultivate an continued learning experience. This will save you from damning the ‘they’ and any other force which moves the market.
If you are just barely ahead of the game, use your patience, take pride in your plan, and let time work for you.
I did not buy anything today, but I really like the look of a few of my current positions, notably P. I also love the negative sentiment surrounding my ONVO, what a dump of a stock 🙂
This final week of summertime has been fruitful thus far, and I am harvesting more of the work from last week. I am happy to report my wins are outstretching my losses nearly 3-to-1 meaning every one win cancels out three losers. With a bit more patience that number could stretch to 4 or even 6-to-1. This is a trading style that works well for me.
Also from the fronts, my shares of TWTR, a position dipped and ripped and then submerged under water for months is nearly back to par. I have said before, when returning to par on my largest position, that I intend to continue holding this position well into fresh all-time highs. I know a good thing when I see it. Like Go Pro, another long term investment.
Shots are popping off across the momentum complex. Today is our first Nasdaq gap down in ELEVEN sessions and it has been the most fruitful day of the entire rally. So nasty, these conditions are, when you fight the tape.
What RSH is doing to shorts this week is brutal. That dog of a stock is feeling its oats. We have one more trading day, a summer Friday, then a holiday Monday, then mutual fund Tuesday. It is about to get interesting in here. I already have a roster of stocks I am salivating over. But instead of buying today I am enjoying the scenery. Patience, it may leave be in a cloud of dust, but it’s a virtue for a reason.
By the way, I love talking market profile hypothesis with you guys. Even if you have any general questions or feel intimidated by the material, just ask. There is no shame in being curious.
During these slow mid-week days there can be a tendency to become impatient. At least, such is the case when I trade. The Nasdaq is coming into balance and higher prices did not entice buyers into the market. Instead, it was quiet at the highs, a mini failed auction, and then a late afternoon swoosh lower.
I bought some PCLN yolo earlier today, likely not purchasing enough time, however I did little else until just recently when I bought some FNMA.
Once the opening swing was determined and the initial balance expanded upon by bulls, I turned my attention to correcting body symmetry. Did you know most injuries can be prevented by properly diagnosing and correcting muscular imbalances inside your core? These are things I have to consider as I ripen yet continue to play spots. I keep one eye on the market, but these slow summer days are perfect to nourish yourself with other activities you enjoy.
My book oscillated quite a bit today, and but overall remains constructive as we head into the tail end of the week. My focus remains on proper management of longs and extreme selectivity on new risk. That PCLN yolo was a bit edgy, and when it turned on me I took the slight hint to back away from the computer.
Remember these days, oh market speculator, for they are the most loaded with milk for you to drink. The first few innings of a swing are great, a sense of relief if you will, that your read on the overall market was verified. You make some wins, they are hard earned.
Then the rally ages, and as it ages, the hits start coming left and right and the biggest problem you have is knowing when to take profits. It truly is an incredible position to be in—taking profits and looking for the next chart set up behind.
I cannot say I have played it flawless thus far, my goodness no there are always improvements to make, but the wins are outstripping the losses at a rapid rate. The second problem, a very real problem, is rushing to increase your position size and forcing into many more positions. You have done well, you were here early, and you have earned the right to become exceedingly selective. Use it today.
On the day I bought GOOGL YOLOs, they’re not participating. I bought another week of SCTY calls in case this chart doesn’t break, but bakes me nonetheless. Aside from that I took some profits across the board. I cashed in most of my MBLY, leaving a runner in case it wants to sock bears in the belly:
That’s Mowgli (MBLY) punching Baloo in case, nevermind…
I brought C down to a runner and closed out YGE, FTW, ahead of earnings. I do not feel the need to participate in such specter as Chinese earnings, especially after that World Cup ad campaign which could not have been cheap.
Maybe Google will decide to join the rally this week. Maybe it won’t—it’s a yolo move, to hell with it.
Or ride a bike, or whatever it is that felt right besides being at your trading desk. I took the cue late in the morning when two business calls received voicemails. I opted for a 35 miler. During this ‘free time’ you could avoid any angst which you might experience from a downdraft.
The key was knowing the daily context, and today’s context was ripe for a neutral print. I will say my expectation was for a more vigorous revision higher into the bell. Instead our VPOC shifted lower right near the close. The move subsequently introduced a bit of selling into the marketplace during settlement. However, with this introduction of doubt, I still consider it wise to give the benefit to the intermediate term timeframe until they have lost that privilege. In short, today might have been the weekly high, the start of a correction while no one is looking. But let’s give it a day or two to play out first.
On the day I did very little. I bought some risk in ONVO and stalked EXK.
There were some clues we would go neutral, and if I was more actively stalking futures then I would have stuck around to participate. The first clue was this poor low we printed on top of a gap higher. Are we becoming so spoiled on the long side that we expect such low quality structure to sustain? See below:
Then there was the anything but normal range of the initial balance. It was only 5.75 points wide, much more susceptible to a neutral print. Hindsight, I could have hedged and earned a nice time of day entry. For some reason, I instead took the signs as a signal to go outside and ride it out while enjoying the weather. We shall see if that was frivolous come tomorrow, yes yes yes? The market is the ultimate humbler.
Today’s move in the Nasdaq Composite was sufficient enough to push us to the halfway mark of a price gap we have been monitoring which dates back to early 2000. When the dot com bubble began to bust we left a big gap open on between the months of March and April. Can you imagine starting the second quarter of a year like that? With a huge gap lower? Quite the contextual development, to say the least.
Here we are, 14 years later filling the gap. The question on my mind is whether the half gap will be enough for now and will be an aggressive entry point for sellers. Otherwise we have quite a bit of upside left for a complete gap fill, see below:
We did see a sharp responsive seller emerge this morning, and thus far their presence is begin confirmed. To negate the selling wick which showed up today we need to press higher and sustain trade above our initial balance at 4055.25 on the September contract. Keep this level in mind as we enter the afternoon.
Some momentum stocks stalled out today and others like WUBA downright took a hit, yet the broad tape continues marching on. The Fed minutes were expected to yield a muted response and sure enough they did. More and more Fed members were shown to increase their hawkish tone meaning they want to slow the asset purchases (the ‘free money’) and raise borrowing rates. They are citing improvements in the labor markets. Thus good labor numbers will likely be bad for stock prices going forward.
This is all very obfuscated, and to overanalyze Fed actions can be a waste of time. I want to know how participants are acting right now, and right now they bought little dip.
We are still searching for a conviction seller. The rally continues until we find one.
All I did today was buy the HOD in GLUU and I am about to take this hit on WUBA ahead of earnings. Aside from that I am excited for day three with the After Hours with Option Addict crew where we will be taking all of our newly minted terminology and market profile logic and analyzing some markets.
Many folks are having their last kicks with the kids and the sunshine before we hunker down and get back into the grind of work, school, and fall. The market is behaving similarly, lingering up here at annual highs is a low volume float the likes of which occurs when very little gravitational pull exists.
This is price discovery, up like a balloon, down like an anvil.
The opposite is where the markets are the rest of the time, balanced, with a violent act of tug-of-war taking place throughout the day.
On these hot air balloon rides, less is more, the view is splendid, and there are only a few pieces to monitor as you enjoy your coffee or whatever else it is you do with your time.
I have done little today except buy some MBLY calls dated for September, the month we really go back to work.
The rest of my book is very long but not achieving targets just yet. I will wait for said targets, even if it means taking on a hedge either today or tomorrow.
These are my only thoughts for you today, loyal readership. The After Hours with Option Addict crew and I will be blowing the book open this afternoon and all week, digging into the fascinating topic of Market Profile. A little summer school warm-up before these markets get serious again, if you will. There is still time to join in. Please do, I promise to make this simple topic fun and engaging so you can add it to your trading repertoire.
If I hedge, it will be with TZA, and I will let you know.
