What has the market done?

Big gap lower overnight on fundamental news.  Open auction outside of range finds strong conviction responsive buying.  Nasdaq futures opened at a perceived discount to value.

What is it trying to do?

The market is now attempting to discover what the value of the contract is.  We are out of balance and thus we attempting to define key responsive sellers after a drive higher.  We are starting to see counter rotations lower since the close of the European session, especially before the low volume node at 3883.

How good of a job is it doing?

We are doing a good job bidding higher, the volume is average and the rotations are enticing the other time frame to participate.

What is more likely to happen from here?

From here we are likely to begin coming into balance.  The range on the NQ is already 50 points wide.  The short term trend is up making the possibility of a complete gap fill to 3886 distinct, especially if we trade through this LVN at 3883.  Otherwise we retrace back to today’s current  VPOC at 3868.25 and balance out into the close.

CHARTS:

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The /NQ is oozing with opportunity this week.  Big ranges and lots of intraday rotations mean plenty of ways for quality trade pictures to present themselves.  The issue for yours truly is sticking to only trading the most “sure” or quality trading pictures.  It comes down to impulse management, structure, and patience.

My trades were in the green today, but my performance is still below my desired win rate.  I see two opportunities where I can increase the win rate.  The first is being extremely selective when qualifying a trade and the second is recognizing when trade is “local-to-local” chop and if caught in said chop then giving my position just a bit more room once it is wrong which could allow me to scratch the position instead of it being a loser (see trades 5 & 9).  This tape reading skill, knowing when the action is other timeframe (OTF) verses local-to-local is rarely taught by the “educators” mainly because it is difficult to present on a chart or with words.  It is an order flow/tape reading skill few properly understand.  Definitely worth giving some thought to, but definitely not a ticket to loosen risk management much.  Developing…

Here’s my full disclosure trade set:

I joined @RC on the YGE long and bought a very small TSLA YOLO today, otherwise I stayed put.

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The action heated up in the Nasdaq today and the day was ripe with opportunity to trade.  This is the type of environment I will eventually thrive in as a trader.  For now, until I can consistently recognize my correct trading picture and only enter when my correct trading picture presents itself, I will simply struggle.

Today was so forgiving intraday, and so full of opportunity that I was still profitable.  That is until I took two poor trades and was slapped about in the closing trade.  This is embarrassing to post, especially on a day like this, but here are my trades:

If I cannot manage my impulsive order entry, then I cannot advance to the next stage of trading.  If I cannot advance to the next stage of trading, then I may find myself turning tricks behind the local Kroger.  In short, priority #1 is very disciplined trade recognition and execution to achieve a 70% win rate.  The profitability is irrelevant in the first stage.  It is merely a foundation for adding size and trade management.

My stocks took a hammer and I was down over 2.5% on the day even though I came into the session with over 50% cash.  Even the slow stuff took a hit, but the brunt of it was felt in Twitter.  Momentum is once again the target of fast selling.  Alcoa beat and ripped after hours, the Nasdaq found a bid, the Chinese are up to bat with PPI overnight, and we have FOMC minutes tomorrow afternoon.  It is about to be very interesting up in here.

Q3 FTW

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Somewhere I lost my footing and started taking unplanned trades today. It cost me 36 ticks and put me in the red to start the week. I have highlighted the impulse trades I need to back off from if I am to become consistently profitable below:

I was also flushed out of some calls I initiated in the morning in TSLA and FSLR. I may not be in such a hurry to take on new positions come next Monday because it looks like “a case of the Monday’s” over here. I am off to the dentist for deserved torture.

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I did very little today, but enough opportunity presented itself in the Nasdaq for me to turn a profitable today.  We are only working with a 1 lot in this first stage of the game, thus when a grind higher like we are seeing now occurs, I do not have the opportunity to milk it completely.  I simply hit my first logical target and bounce.  This is to prove out the trading methodology before increasing size.  It is a first stage I always skip over in my greedy rush to be a badass.  Not this time.  Supreme patience is one of the key attributes of a Jedi trader.

Here are my trades on the session, very nice:

I also am riding a TSLA YOLO trade right into the bell here, looking for it to go green for America, for glory.  The rest of my book stands into the holiday.

May you Coors Light cans stay cold mountain activated.  Saluti!

http://youtu.be/b8zO_DV09QE

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If consistent profitability as a futures trader was easy then everyone would do it.  Volatility is so low right now that most traders are frustrated by the dead index markets.  The more versed players have taken their trading elsewhere to crude oil and metals to hunt down some volatility to trade. I still like what is happening in the Nasdaq.

Swing traders are back in the captain’s chair, beguiled by the warm drift of the summer tape.  Meanwhile Janet Yellen has been watching us kick bears up slides inside the schoolyard.  She blew her whistle today, sending a few ADD addled speculators to the principal’s office.  The clever swingers are getting away with rolling bears up hills behind the gymnasium.  The downright shameless have taken to the trash heaps, having their kicks just beyond 4^th grade teacher Yellen’s watch.

This is the market we are in.  Today was the day after a trend day.  We had below average volume during the opening hour, we had an in-range open auction (scalpers paradise, the best days to fade extremes back to the mean, and just before I took trade #7 we one ticked yesterday’s high of the session.

Let all of that context settle in a bit, it really is a mind full.

Had I resisted just this one trade, trade #7, my day would have been profitable.  Had I exercised a proper flex of my contextual research, work I take great pride in, my win rate would have been 70% on the session instead of a failing 63.6%.

Here’s trade # 7:

In summary, although we are near record lows in volatility, am still 1 trade away from being able to turn a profitable trick.  I am pretty sure I can figure out one less trade to take with a consistent enforcement of context.

DEVELOPING…

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Today traded about exactly how we expect trade to occur the day after a trend day.  You typically see a few individual names stealing the show with some lovely follow through while the index goes nowhere, balancing along the upper quadrant of the prior day trend.

This is acceptance of the higher prices, at least in the short term.

I love doing my analysis, and understanding market profile, and how it allows me to have a sense of understanding as we navigate the markets.  The problem is always execution.  I need to be more mindful of my own analysis.  In this case, we opened in range, had an open auction opening type, and it is the day after a trend.  This is chop city paradise, where scalpers reign supreme.  Yet, here I was, trying to press momentum on the dap in trades numbers 6,7, and 8.  Trade # 8 earned a C letter grade because I do not hate the entry, however it was way out of context to expect downside follow through on the day.  I was ignoring context when I made that trade and it cost me 7 ticks.  Trades number 3,4,10 and 11 were the most quality, sure trades.

Here is the stats and the trades:

On the day I was up just a touch, despite GPRO and TWTR biting into me.  Long term holds are tough, especially if you do not separate them out into a different book, because you have to be more passive in your management of them.  I swapped out TSL for ONVO, bought some AFOP, closed RGSE, and bought some July GOGO calls.

Reminder, tomorrow is a half day with US markets closed for trade after 1pm eastern, and all day Friday.

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Nasdaq futures are trading a touch higher overnight in a balanced session of trade.  ADP Employment change came in better than expected this morning and there was a brief pop in the futures which was quickly faded.  This suggests yesterday’s price action might have been sufficient to bake in some optimistic economic data points.  We have US Factory Orders at 10am, crude oil, distillate, and gasoline inventories at 10:30, and a lecture from Yellen at the IMF in Washington at 11am.

Tomorrow is a holiday shortened trading session and the day is loaded with economic releases including an European Central Bank Rate decision at 7:45 am and NFP stats at 8:30.

As the Nasdaq Composite climbs into 2000 price levels, what jumps to my attention is March 31, 2000.  We closed the 1^st quarter of trade in 2000 with a big red week.  April started with a gap lower and the market never looked back, falling into the abyss for a good two years.  Nature is effective at filling voids or vacuums or gaps, and when the market left one behind for 14 years I know it drove a few speculators nuts to see this gap remain.  Well, here we are 14 years later, pressing back up into this gap.  This is a Nasdaq Composite Index price level, thus I do not have a specific future’s contract price level to reference, but I think it is likely we fill this gap up to 4572.83, see below:

On the intermediate term timeframe we can see the in-control buyers exhibited a high degree of confidence yesterday.  There order flow was crystal clear from the opening bell when they gapped up and drove higher.  It was essentially off to the races for the duration of the morning.  The market finally came into balance late into the session and the balance carried through into the overnight.  We are left with an interesting low volume node which aligns well as an early pivot point for today’s expected consolidation-type trade:

I have noted my short term observations on the following market profile:

 

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And although my primary goal is to become a professional futures trader, my focus was primarily on increasing my longs this morning.  This multitasking does not allow for timely trade entry in the futures and I was a few seconds behind on my attempts to get long.

My only trade was a loser, a short, when we 1-ticked the high just before the European session came to a close.  We often see a decent bit of order flow around the 11:30am mark and we were far enough from the EMA to attempt a short.  However, it was the more difficult and less sure trade.

Anyhow, you can see it below:

During the morning I bought more ANGI calls, closed my DDD calls +500%, added to FRO, and bought more WB.  We are squeezing up into dot com madness, and although watching an afternoon soccer match was my ruin last Tuesday, I believe to USA game is a good omen for this Duck of a day.

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Well the second quarter is in the books, and although a great many of you traded your asses off to get back in the green territory, and I congratulate you, I made my situation worse this quarter, tacking on an additional 8.28% in losses, pinning me at -16.51% YTD.

There were so many mistakes along the way.  There were also some tumultuous victories.  Net-net I lost money and that is not why any of you come to iBankCoin.  You come to see gregarious writers and traders who make money with poise and grace and a generous bit of panache.  These conditions during Q2 caught me pretty flat footed and when the time came to drop the hammer, well I dropped it only to scurry over to it and pick it back up before diving in my bunker.

To break the mistake loop I enacted some new rules, like maxing out at 12 positions.  This has already improved my focus and I am coming into the month with some nice positions in tote.  My cash is high, over 50% and I have a few places I want to stash said cash before all is said and done this week.

I have four investments I intend to hold through Q3 and perhaps Q4 – TWTR, LO, TSLA, and GPRO

I jumped on Senior Tropicana’s magic carpet at the end of May and have XOM shares purchased 46% cheaper than they are today. This position is also an investment of sorts, one that is mostly dictated by the good doctor.  I have some risk management in place, but with 46%  cushion I count this position as an investment as well.

I have July calls in DDD and ANGI.  Something tells me we will be rolling in Angela’s ashes before the month is over if you know what I mean.

The rest are trades – RGSE, WB, FRO, TSL, and GRNH

I intend to ride this steed, and other steeds to glory before the year is out, propelling my book to new heights and performing on the level of my internet peers and role models all nestled within the confines of iBankCoin.

May your cup runith over in Q3

http://youtu.be/2YcIgow6TDk

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