Yes yes, I know, Twitter is absurdly overvalued.  The insiders are nerdy scumbags (the worst kind of scumbag) and are liquidating in droves as they no longer here the music.  The whole business is plum toxic, what with the easily replicated service and all.  I heard they even stopped offering free Cliff bars in the break room.  Here comes a glasshouse revolt!

These jackoffs can’t even make money.  Pathetic.

Traders who took the obvious position of shorting into lockup expiration were rewarded handsomely this week after shares of TWTR plunged.  Mom and pop saw the headline and trampled one another the following day to liquidate the ticker away from their person.

Now the questions start because we all know Twitter is some kind of media phenomenon.  After all, it was only two Super Bowls ago that ads never featured the hash tag.  Celebrities have accepted the product one-by-one, and most breaking news originates on Twitter.  CEOs use the service to promote and defend their companies.  Politicians drum up support and test slogans.  Robots follow hundreds of thousands of humans and then tell odd jokes.  This service is broadly used, useful for reaching likeminded conversations, and essential for branding.

Therefore I consider the company a going concern.  I have been long Twitter since IPO, at times larger than others and I have sold some shares along the way.  My position was full size going into this downturn, so you could consider me biased.  However, I will ride Twitter to zero.  That being said, I see this weakness as an opportunity to buy more shares.

Am I buying the current weakness?  Absolutely not.

What we are seeing is a news driven reaction in the market.  There is no telling how far this move can go.  We will only know it is complete when prices have gone much higher.  However, being a news driven move, it is very likely to be retested.  And when we retest these lows, either in weeks or months, I will be keen on buying more shares.  Until then, I brood.

If you really want to scare the last strong hands out of momentum, then blow the bird hole to smithereens.  The scene in most momentum stocks currently resembles Alfred Hitchcock horror.   Thousands of angry algos are intent on fleecing you of your favorite shares.  This was a very public dismantling and it is very effective in returning shares to their proper owners—banksters.

http://youtu.be/x4e53wnInX4

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Whist the waves lap the shoreline, creating a symphony of sound and the fog of salt, I sip upon cheap coffee and let the rising sun kiss my face.  Meanwhile, I am taking this peaceful solstice to survey the field and assess my ongoing intermediate term thesis.

Perhaps it’s the optimism of a Northman escaped to better places, but I feel like I am in a unique position to catch the momentum tiger by the tail in some of the biggest and most marquee stocks of them all.

Take DDD for instance, the dizzle, hotter than the sizzle on cast iron skillet.  It has washed out the masses, even gone out of its way to further eviscerate the knife catching class.  Yet here I am, down a mere 1.2% on a theoretical basis (the joy of scaling in and out, fiddler on the roof style) on a stock that has the potential energy to do 30% up in a few short weeks.  These last two days of price action resemble a favorite trade of our passed friend Madison Montana (RIP, sweet lady) “the pincher” where overzealous shorts pile into the hole expecting continued breakdown only to be faced with the cold reality of a sharp reversal.  The market collects speculative money into a tight, cone-like corridor and then forces said money to trample one another like overcrowded humans behave in primal moments.  In essence, someone is calling the markets bluff, fading the prevailing trend.  Now they must follow through to assert their dominance.  The key is not to be aggressive, but only to assert your dominance over this simple collective beast.  If buyers succeed today with some follow through, there is little to impede them from taking back lost ground.  Even without making a new high, there is plenty of meat to the upside.

In short, after a long swim, I may towel off and buy another allotment of DDD.  Facebook too my friends.  If you like trading from a base, something rudimentary to manage from either the long or short side, look no further than the price action in April relative to the overall context of the FB chart.  Easy to manage.  I am long from slightly higher, nut by no means with the size I intend to have in such a prominent feature of the social internets.  I have not given up hope as many of you have, but instead have chosen to hone it into the finest elements of technology and the future.

I added to TSLA from my iPhone on Tuesday while barreling down the highway in torrential rains.  As degenerate as it sounds, I could see the chart in my brain, and knew I would regret not buying another piece right here if my Nasdaq bounce thesis ensued.  It has not ensued yet, but that is a topic for another discussion.

I still like tier one momentum, even if my money is aggressively being routed away from such hotness.  You cannot shake a coconut off the ground.

Favorite current positions: TSLA, DDD, FB, and TWTR

I desire more shares of DDD, FB, and TWTR.  But I am in no rush, let us see how this short term balance resolves.

P.S. – I am not sure what LO is putting in those vape pens, but it is working.  I am up nearly 20% in my only old man pick.  It earned a nice dividend payment too.

P.P.S. – Look at how they shook me out of Zillow.  These stocks aren’t investable with such ultraviolent manners, unless you are prepared to assert your dominance without being aggressive.  Be cool through the chop and let your wave set up.

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I was on the road today and only checked in on the markets once or twice via truck stop news feeds, cable news channels.  I could have queued the action up on my 4g Apple devices or even setup a mobile command unit, but I opted to instead enjoy the rolling road and the insightful thoughts that ensued.

They made good sure to kill my ANGI calls, perhaps the last foray in hot money options, sending it to momentum hell with the rest of the mobile app comment board space.  This was a very small earnings gamble which I did not cash out 10 seconds into the pop.  More flotsam for the premium sales people I suppose.

I have one other option, RGLD, a chart as tight as they get.  Aside from that I have a few stocks and cash over 50% and no immediate desire to allocate it.

In short, I have escaped the north and broken the cold line.  I will be sparse this week until I establish my work station and even then I will be taking a very Pareto 80-20 approach to grasp conditions.  Even one working day away from the glow of my screens has my brain swirling with potential trades.

Hey bottom line is I side stepped LED lighting. I was over 30% into CREE and RVLT at one point this year. I am down but still in a prime position to extract pesos from the financial system.

Top pick this week: beach

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There were some odd prints going off in SINA into the close that spooked me out.  I closed SINA and took the loss.  I stopped out Z too, god damn, as if finally succumbed to the momentum weakness.  There was a very thin profile down below, I knew the risk was there, and I waited to see if it would rebound after filling the void.  It didn’t and I will be looking to re-enter this stock if buyers come back in.

The Nasdaq is looking better than it has in many weeks.  We are not knifing through my EMAs.  These EMAs are not concrete support/resistance, however they are a reference point.  This time, as we trade near them, price is slowing down.

Taking out SINA and Z boosted my cash significantly, now up to 55% which means I need to find some quality setups next week, and soon, to properly position into what I see as a Nasdaq that is setting up well.

I will be on the road Monday, but will be taking a look at the opening swings tomorrow morning.

Trade of the week was shorting NFLX near the peak, I scaled out well, but if I had more bullets to fire I would likely still be riding it down.  NFLX is in pain.  Me too.

Futures trading for the week earned 18.25 points.  Not bad, but after commission and a slippage factor that is a losing week.  This should have been a massive winning week.  However, I forged a new rule yesterday, a rule which helped this morning to avoid getting steamrolled.  Learning friends, never stop.

http://youtu.be/bii2L2RPGUM?t=14m20s

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They say you pay your tuition to the market either through time or money.  That saying makes sense to me and typically it takes a big loss to open my eyes to a chink in the armor.  When your trading live it is easy to get caught flat footed without a plan.  I gave back four days of (hypothetical, still in a test environment) earnings this morning attempting to fade the early drive lower.

If you have tuned in to the ongoing Opening Swing series, then you have seen how an early move away from the opening swing is often faded.  Via old school chart markups and spreadsheets I am building the probability out, but this takes time and in the meantime I want to experience the trade live to develop expectations and rules.

It is crystal clear this trade needs lots of structure and B+ execution at a minimum to be consistently profitable.  The potential reward for building such a plan is great enough to merit such focus.  Some of the rules can be coded directly into my charting package, but others including trade management, must be done on a discretionary basis.  For now, the following rules were added to this trading plan:

I will not attempt this trade inside a series of single prints.  Example from today:

The second rule is I will only make one attempt to fade this first move per value area.  If I stop out inside the first value area, then I will wait for the next value area and look for a setup to occur.

Here’s a look at what today’s market profile looked like verses the regular trading hours profile:

This above exercise was good because it kept me distracted from my live trading, which I rarely care to partake in during the opening minutes of trade.  When I saw the strong responsive buying happening, I quickly queued up my plan from yesterday and went to work acquiring exactly what I planned on.  My plan for this swing is one part intermediate term Nasdaq chart work and one part stock picking.  When the Nasdaq was telling me to buy there were 100 different tickers to choose from.  How does one decide which to buy and then execute in a timely manner?  Exactly, a plan.  Here’s the picture as I see it:

I ended up getting lovely fills in both DDD and SINA which dropped my cost basis even lower while I DO THE DIRTY, exiting my NFLX puts which served as a lovely momentum hedge during the move lower, and getting back on the Facebook trade.  I essentially only acted upon my book from 9:50 am to 10:25am aka the low of the day.  The only off plan trade was buying some RGLD calls.  However, I have traded RGLD for years and when gold was making a violent move I bought the position.  In hindsight, it may end up being a loser with the look of the daily candle.  I won’t know for a few days though.

Regardless, plan your trades and trade your plan.  This is priority #1.  If you think you can improvise in the heat of trade without some backbone of planning, good luck with that.

80% long into tomorrow’s tap. The market needs to bring the hurt to shake me from my low risk power stance.

DDD trade plan (note: earnings on the 29th):

http://ibankcoin.com/raul3/2014/04/09/swing-trade-plan-for-ddd/

SINA trade plan:

http://ibankcoin.com/raul3/2014/04/08/doubling-down-doing-the-dirty/

 

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I bought the dip, even though it was far too fast.  I basically did this:

“That’s the plan.  Let me restate the plan in case you lost track: buy FB, buy back the shares I scaled in DDD and SINA (fiddler on the roof trading), and brood harder then Ryan Gosling about this NFLX put.”

But I closed the NFLX put and added a (Royal) RGLD on the side.

This rally almost got away from me…developing…

Cash down to 20%

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I am from the school of thought that third time is always the charm.  Twice, I have bought the dip off a peak in the NASDAQ and TWICE I have been on the receiving end of a proper facial correction.  My greatest fear right now, as the market lets off its final throws is that I will have to buy a big gap up tomorrow.

I am afraid I am not long enough.  There I said it.

I was too long the other two times, and now I am not long enough to capitalize on my turn at buy the dip on the donkey.

You should have a list of high priority stocks, preferably ones who already reported earnings.  I want pure, uncut social crack rock so I will be e-stalking Facebook.  I need it to compliment my Z, ANGI, TWTR, and SINA.  My collection would be complete, like getting the Master Splinter slammer to complete you TMNT pog set.  It has to be done, even if it costs you a month’s wages.

I have to make a decision about this NFLX put too.  I will take luck over skill any day, but the harder I work the luckier I get.  HBO signed rights off to Amazon prime leaving everyone to wonder, is NFLX losing its clout?  Have they only built a House of Cards?  Groan all you want, I am not jiving this company at all.  It rubs me the wrong way more than any other momentum stock.  I scaled ½ my puts today.

ANGI reported very inline losses.  Bravo ANGI, you are really good at sticking to your forecasted numbers.  This may be enough to snap this old girl out of her funk.  If yes, then I stand to benefit.

I have some YELP calls which are about worthless right now.  They will be worthless unless the price of YELP is greater than $69 by Friday.  I am not sure any amount of hard work will produce the type of luck I need to see this play to victory.  Good news is I am trading well—I scaled ½ this position off when it went back to break even yesterday, after it quickly became a loser.  This is winning while losing.  It was at the same time I scaled some DDD and SINA which I now need to hurry up and buy back.

That’s the plan.  Let me restate the plan in case you lost track: buy FB, buy back the shares I scaled in DDD and SINA (fiddler on the roof trading), and brood harder then Ryan Gosling about this NFLX put.

Futures trading was red on the day, I lost -12 ticks or 4 points.  I am getting better my friends.  Much much better.  Of course once this simulated numbers are complete I have to lop off about 25% for slippage.  If this new strategy still stays green after this calculation, well then, it’s time to go live.  Great excitement!

Final note: if I seem a bit light in the loafers today, then it certainly is because I sidestepped the blood bath in CREE.  You may or may not know that a short week ago CREE and RVLT represented about 25% of my portfolio.  As of Monday afternoon, they represented zero percent.  Very nice, very clean.  I am still an LED man, but I will very carefully get back into these dorks.

What’s your top pick into my hypothesized rally?  I still like TSLA, but my top pick is stretched and resilient Zillow.

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I took a series of trades today which on the net reduced my long risk exposure, an adjustment I deem necessary as I hypothesize the path of the Nasdaq futures.  How I see it, we may be nearing the swing high of our current intermediate trend.  Since this is the first rip I have sold into since we started the process of lower highs and lows on the Nasdaq, the market is likely to continue ripping higher as the tier one momo gets rolling again.

Tier one stocks like TSLA, ANY SOLAR (Happy Earth Day), FB, DDD, NFLX, WUBA etc etc…

I own a few of those and today I bought puts on NFLX.  The move was my first bearish bet on the year (another reason this may be a jack the ripper rally).  It looked really good initially.  I was watching the open far from my terminal, an elected move.  I took a decent time of day entry into the put given the overnight gap context both here and in the Nasdaq.  I expected the Nasdaq gap to fill, or at least ½ fill.  It did neither and NFLX found a buyer.  Have a look:

 

 

Needless to say, this put is on a tighter leash than a Chihuahua in a turtleneck.

I scaled off DDD and some YELP calls I took yesterday.  The DDD was a scale at my original basis which cleanly lowers my cost basis on the position but also puts me in the precarious position of increasing my exposure somewhere lower than here before we go higher then here.  I know, this stuff is like rocket science.

The YELP was actually a bit of risk aversion on my part.  The trade is intact.  I closed FCEL because of my whole HIGH QUALITY shtick up above and I wanted a small win. It closed strong which gives you a sense of the risk appetite out there today.  I may be behaving too meek.

Just in case I was being too meek, I went out and did the dirty.  I flipped to the backpages and bought some ANGI calls as a pure, fully adulterated, gamboll.  Meek, pfffff…

Futures trading is going great.  My systems are running better than ever.

CREE is down a cool 7% afterhours.  I haven’t read why, but I suspect I already know.  Prices…they’re going down down down.  Good.  Happy Earth day.

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I prefer to base my decisions on data and I suppose there is some data I have been collecting lately to support my hypothesis, but mainly I cut CREE and RVLT today on gut instinct.  They say you should listen to your gut once in a while, especially when it is filled with high quality Easter leftovers.

Since these are moves that were somewhat unexpected, and I have bought a few new positions, I think a portfolio update is in order.  Here’s my stock book, largest to smallest:

LO, TWTR, AMBA, DDD, YGE, FCEL, Z, OESX, SINA, TSLA, GRNH

I scaled some SINA today at my original entry to bring my costs basis down and give me some dry powder to buy any weakness.  I closed RVLT and CREE and I also started a 1/2 stock position in Z and a new weekly option position in YELP.  My thought is, if YELP is going to squeeze shorts, this is the week to do it so why buy more time?  I am risking a little less than 1% of my book on YELP $69’s.  Cash is at 30% which is high for me, but I don’t have as clear a picture as I want so I am keeping my cash up.

/NQ_F simulation trading extracted 13.5 points of profit on the day.

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I sold out of both $CREE and $RVLT, ahead of tomorrow’s CREE earnings after market close.  This may be the one time CREE actually rips since the last three quarters it has sucked a wind bag.

I am still with OESX, for now

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