I haven’t made any trades yet on the session, and hopefully I won’t have to. News sensitivity on OPEX is grounds for me to make trading mistakes, thus I will keep my distance until the bell. We have room below wight this volume pocket still in play:
May you be safe and free from suffering on this summer Friday.
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The market has been on a tear this week, and if you focused your energy and time resources on wrapping your mind around geopolitical conflicts and their effects on the markets, well, you may have wrongly positioned yourself ahead of this move. There is no guarantee in trading, and there was no guarantee the consolidation would break higher. There were clues…
The PPT flagging oversold
The NYMO hitting annual lows
The “excess lows” we printed in the Nasdaq
The constructive behavior of momo stocks
The natural flow of funds at the start of a month
And while these clues were building up, many of us built up longs and today I began harvesting my crops. Harvest season is a swell time, reaping the sown oats and filling the tables with foods. It’s a feast and famine lifestyle at times, this trading. I still have some longs but I have reduced my exposure a bit ahead of tomorrow’s OPEX and perhaps one of the last fine summer weekends here in the north where the winds have already begun carrying a noticeable chill with them.
I would like to give a big shout out to The Option Addict, his call on X, a gain I just booked well over 1100% was a huge confidence booster while we navigated the curves of last week’s consolidation. There may be some meat left on that bone, but I am more than satisfied with my portion.
Into next week, I like how WFM is shaping up and WUBA. If it wasn’t for those pesky earnings I would like WB too. I like the letter W, in short.
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I will be away from my desk at the open again today not by choice but for civic duty. Keep the below pocket in mind today as we trade. This thin volume zone can produce fast price swings in both directions. The early expectation following the trend day yesterday is some follow through. This might be sold into shot term but look for clues of pressure continuing to the upside because there was a huge energy buildup before this move.
The upside discovery process taking place this week is being led by the Nasdaq. Perhaps this is the reason why I have been successful this time around—I study the Nasdaq like an obsessed stalker. There is an industrial reason why the Nasdaq is out performing both The Russell and the S&P. The index is not bogged down by the lagging financials. Did you know that? The fact that no financials are housed in the Nasdaq is one of those little details that no one really emphasizes but is important to know.
You should never assume a detail to be too minuet, especially if it furthers your knowledge of a pursuit. If you already knew this about the Nasdaq, GOOD, let’s move on…
Volume pockets, we love them. Those unaware of their existence and location chalk up vertical moves to news events at best and often times other mental masturbation like manipulation or galactic alignments. We are trading inside a thin volume pocket today after over a week, about 9 sessions, of serious compression. This pocket is likely to be traversed a few times, but right now the order flow favors longs.
My actions on this blog are for the explicit purpose underlying the ethos of this fine web domain, gregarious winship for the betterment of learning traders worldwide. I used to pander for approval, panhandling for your votes and such, but since have focused on what I am doing and why I choose to do it and how it furthers my goal of being a champion trader. I knew some of you might struggle holding risk through the weekend but that is exactly what needed to happen to have a sweet entry into this move that is currently underway.
All of that value compression last week built the energy needed to fuel this move. The only question you should be asking yourself going forward is, “Is the market done finding sellers?” Think about that question, find ways to answer it. Look at the way a high is formed, for example. Look at where the market is trading relative to the price action on our left and formulate an idea. Then stick to it, you don’t need me or anyone else to be happy–you need a plan.
On the day I scaled off a few wins, bought some DDD next week calls and added some time to my bust WUBA long.
I see no reason to be overly concerned about this Nasdaq move yet, it hasn’t even pulled back yet. We have no frame of reference until it does so, IMO. We take this one day at a time. And if financials decide to join the party, those C calls I bought yesterday are looking nice.
Stay sharp, alert but not tense.
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I will not be around at the open today (or tomorrow) nor do I have much time to address you, good readers of this blog. Futures are up, the Fed is talking this afternoon, and you only need to keep a few Nasdaq price levels in mind. The Nasdaq is leading the tape, at least it was yesterday…these type of things change all the time. This price action is the poster child of leaving balance but we need to sustain above 3900 and put your guard up if we trade sub-3886:
First off, I booked the rest of my TNA position today. The position had a timer, and although I cashed out right about where we are closing today, I stuck to my plan. There is a joy about sticking to the plan and doing your job. It really is the only thing a trader should excite themselves about.
I also closed out my August YELP calls, pull in some of that premium. It was the worst performer in my August book and earned a seat on the bench.
I called for the left handed relief of September C calls. Later I bought some ZU as well. ZU was a very dull chart today even while everything else behaved a bit more erratic.
I was concerned with the lack of follow through this morning. We had a very strong push early, and it looked like prices wanted to explore higher. When they reversed instead, I suspected we might flush back to the mean. Later in the afternoon, when such a flush did not occur, when instead we formed excess lows, I put some risk back in place. Simple, but not easy.
You can see demand exists at 3886. Why? Perhaps last week’s short is clamoring to cover before the seams are ripped off this market and we bust loose. See below:
Thus one could presume last week’s seller is currently putting a bid in this market. Until otherwise noted, let’s push on him.
May you trade well, even if you are playing the other side of the tape.
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Context is king when trading. Everyone builds context their own way. Mine is a cocktail of watching the best looking stock charts, interpreting the auction behavior with market profile on the Nasdaq and sometimes the ES, order flow or the speed and size of rotations, talking to other traders, and PPT data.
This afternoon I was suggesting we key off the “mid” or the midpoint of trade for today’s /NASDAQ session. It is a simple reference point, one rarely discussed and often overlooked. USE IT on all of your intraday assessments and thank me later.
All context matters but you have to make sure you can separate the “I feel” and “It feels like” from your assessment. Objective observation is best done through journaling measurable data like opening swing, initial balance, PPT score, etc. The sentiment is more like a caveat, and REALLY depends on who is saying it.
Then there is news. I have a love/hate relationship with news. It can blow me out of a position or it can propel me higher. The nature of news is beyond my control and rarely actionable. Ideally we know when it is released like economic data or a scheduled press conferences. For breaking news I sometimes use a squawk, but I find it very stressful and distracting so I turned it off a few weeks ago.
As we roll through the final hour of trade, we found a bid and money is rotating into some risk elements like YELP. In our current position, time favors the longs. The longer we hold last week’s sellers under water, the more heat they will feel. A dull market, you know?
Stay sharp, this also might be some sort of complacency lull before the hammer is dropped.
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Nothing has happened in this market but a solid week of ruthless grind. For every rally there is a seller who perceives opportunity, for each liquidation a buyer. Three neutral prints in five days, oh my.
My bias flipped to medium bear on Wednesday morning after being neutral Monday and Tuesday. Starting the day Thursday my bias was even lower, the lowest it had been in weeks. However the market performed a thorough exploration of lower prices, the cycle showed signs of completion, and we seem to be starting the corrective pattern up to close out the week.
I know it is difficult to stay long into the weekend, what with the holidays you want to enjoy, wars on the horizon, and hurricanes threatening our distant territories, but now is not the time to be meek. The bear is on his heels again, in this battle for market dominance, and they will be put to the test. All of the labor and sweat must now be channeled into brazen courage if you want to grab the golden key.
A big gap up Monday, to start the week, how frustrating does that sound? A month worth of indecision, melted away, by a hot market gap, oh the humanity.
I’m staying, finishing my hot coffee (no iced), because good citizens fought so I could enjoy this little slice of freedom.
Drop by over the weekend, won’t you? Let’s discuss theory.
Comments »Some very specific price levels were mentioned earlier, price levels which without doubt “brought the action” if you will. This tells you the methodology is effective. Initially, I though losing such levels would be a reasonable indication that my longs should be reduced, and perhaps they should have.
But there were a few observations which kept me in-
When faced with these observations, there was little choice but to stick with the course I have plotted. My TNA long sits unchanged, how bad is it out there, really?
The negative news cycle is as pronounced as we have seen in months, maybe years. I remember a wave of selling hitting the tape at any mention of Euro Zone weakness, how soon it was all forgotten? Now we lose 9 Nasdaq points on a Russia/Ukraine piece, any piece, yet a bid remains in growth. Observe, and mind you perceptions.
How many of you, with your own eyes, have observed the Russian troops amassed on the Ukrainian border? With your own eyes, not stock frottage from CNN of fucking tanks driving around. Imagine a big group of Russian men, tenting out in the wilderness with combat gear and vodka, being Russian. Who are they even threatening besides themselves and the local wildlife?
We have a seller. The seller has conviction and shows up every time we press over our composite VPOC. If this seller is put on their heels it would be a massive amount of fuel for upside. If they drive lower, they can take profits and reload on the next rip. They have not had much of an opportunity to book gains yet, just as the bulls haven’t. The two forces are very much clashing until we have a victor.
Until the market goes decidedly red, dragging bull carcasses around the ring while a mariachi band plays, there is a bid in this market.
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