I sold into today’s strength, booking wins in VA and LULU. I have the hardest time making these decisions, but I wanted to free up some capital to start rotating into energy.
So far, my plays are pure, like the white powder finally coating my home and yard. I paired UWTI with UGAZ to form an elite cadre who will lead my initial offensive strike. Then I intend to cause chaos by abandoning them in the middle of the field, making them look vulnerable. When the opposition draws down on their naked position they will be blind to my flank unit advancing via PDCE.
Finally, all of this commotion makes room for me to roll in the juggernaut XLE, and park it deep in my own territory. From there it will spend the rest of the year lobbing heavy shells while I develop more run and gun tactics elsewhere.
There are many battles taking place here. Stay sharp, spot the winner and join their ranks. We swear no allegiance. To the victor go the spoils—this is war mates.
Equity markets pressed higher at 8:30am after the US posted stronger than expected NFP data to the wires. Just after the bell at 10am we have Wholesale Inventories and Trade Sales and at 1:20pm Fed’s Lacker is delivering a speech on his 2015 economic outlook. We also have two ongoing hostage/terrorist situations in Paris.
Prices are still on the move in the globex market but as we approach cash open we are trading right around yesterday’s high of the session. We spent the overnight session trading above the mid of yesterday’s big range before taking out the highs on the NFP data. The two pushes above Thursday’s range have found responsive selling.
Yesterday the market went gap up and started the session above the prior two day’s ranges and half-way into Monday’s range. Shortly after the open a strong driver came in and pushed the market higher. Toward the end of the session prices came into balance resulting in a P-shaped profile. This type of print suggests a short squeeze took place.
In the context of a downtrend, a P-shaped short squeeze profile often occurs at-or-near the end of a counter rotation higher. However our current context is not a downtrend. Our current context is intermediate term balance and it is comprised of all trade dating back to October 31st, see daily chart below:
For high level prices to keep in mind, I am sticking with the daily chart and highlighting the key Nasdaq levels below. Note the three distinct volume distributions separated by two volume pockets. This is vital information while navigating this big chop.
One of my biggest takeaways from the First Annual iBankCoin Investor Conference was the talk from Howard Lindzon. It stuck with me how he demonstrated our ability to live in the future. The cliff note version is you stay current with industrial and social trends via interacting with the right people.
Like seeing the S.A.M. shift into hyper speed and pick apart the oil tanker contango trade real-time.
When you live in the future you earn the privileges, like beating the rush. Other things start to happen. Perhaps you acquire your average peer’s quarterly salary in two days and opt into a gym trip at 1pm—before the New Year New You crowd flood and taints the facility, you know what I mean? Privileges.
Because people doing lunge laps around the god damned bench presses while you’re working on a ridiculous pump is too much nonsense.
Living in the future costs money. Why do you think The Rhino accepts $1.6 million as the going rate for a two bedroom, one parking spot apartment in San Francisco?
These angel investors don’t only wield powerful checkbooks. They also shift perceptions and drive change. For example, Peter Thiel just announced 75 million reasons to take a serious look at the cannabis industry [via Wired, click here]. This is not like mining 10,000 Bitcoin when they were worth 0.005 cents each, but more like converting a million US dollars-to-bitcoin at $100, before the Chinese. Or the Russians.
You’re still ahead of the curve if you devote resources to cannabis today. As a trader you can wrap some risk around GWPH. As an entrepreneur maybe you try to out-brand this Bob Marley line of weed Thiel invested in. Seriously, nobody thinks Jamaican weed is better than the disturbing genetics produced by master indoor growers.
Look, you all have the tools to live in the future. My most indispensible are The PPT and 12631. Next is Twitter. Believe it or not, phone calls still work pretty well too.
I am piped into the future from the cold depths of Detroit. Just imagine if you or I lived in New York…London? Find a way to put yourself closer to the action today.
While I struggle to build the ultimate Crude Oil chart, a chart that will literally split the space time continuum and reveal the auction in all of its naked glory, the Nasdaqs are making an edit->undo move for the week.
Yes this post is likely to stop the rally in its tracks, because everyone knows my words carry the weight of a 10th story grand piano, but bear with me while I walk under a few ladders.
We are entering a major paradigm shift. Up is the new down. Breakout charts are prime shorts. Breakdown charts are the juiciest longs. Your books on charting, cast them into the toilet and force flush them to hell. The tape, your crew, and emotionless robots are your only hope at navigating these choppy waters.
Fret not. I will have navigation maps back online when the gods see fit. Let the fools have their fate, we shall create our own!
The velocity of order flow on this up day is punk in comparison to the heavy hits sustained on the way down. In the battle of 2-way chop sellers are the stronger force.
The tape was frantic yesterday, at times erratic. The DOM looked like Barry Sanders, making big jukes, noise, to the tune of 4.5-5 points in seconds. It was not for the faint of heart.
Today, the faint hearted could participate. We are going upward, slowly.
There’s a big negative for the world to digest. You have to separate it away from your decision making process. You can have compassion, you can even be angry, but if these emotions are painting the lenses you use to view your trading then it might be a good time to stand aside.
Part of this quiet move could be attributed to Friday morning’s NFP news which is now lingering right on the horizon. It is close enough to put a stop-pause on the action. Keep this in mind, as it is the second most influential economic release currently.
Then we have oil. I have spent hours building a chart to view this market objectively and am still not happy with the results. We need an objective read on the short term price action over here, and I intend to produce it.
We may see slow trade again tomorrow, especially an hour or two into the session. Just be aware that cash is a position too, at least until some of this short-term uncertainly clears up. The rub? You might miss a big, mean-revision type thrust higher.
I am off to tear my muscles off the bones for no less than three hours. There is no better decompression than strenuous exercise followed by a sauna meditation. Well perhaps sex, sex too.
This week is reaching defcon 4 trading risk. Your charts are important in these conditions but even more critical is your patience.
Ranges are elevated and headline risks are dialed up to full tilt. We are now subject to stock price movements driven by oil and central banks with a side flare of terrorism.
You need to stay sharp, adhere to preplanned risk profiles, and take your trades.
Keep in mind this afternoon’s FOMC minutes. We have weekly oil/gas inventory stats and eyes are already on Friday’s NFP report.
Less is much more in this environment. Less well focused and concentrated positions, less capital moves, and smaller position size.
I’ll be back later today with some levels on oil futures. Yes, we’ll be monitoring the oil auction closely in 2015. We have no choice!
If you go back and read my recent 2015 predictions you can find mention of a Euro-zone based negative news cycle. I suppose I was not expecting it to hit on the 5th day of the year, but these are the facts on the ground. We have an important economic release at 10am today (ISM Non-Manufacturing Composite). Keep in mind tomorrow afternoon’s FOMC Minutes too. These could lead to some choppy-directionless trade.
Heading into US cash open the Nasdaq futures market is flopping around the unchanged line after a busy evening. Volumes are elevated but normal and the price range was contained to the lower half of yesterday’s RTH range. The primary feature of the overnight session was a strong range rotation that occurred from 5:30am to 7am.
Sellers took us back to the scene of the crime yesterday while extending their down-day winning streak to four days. The gap left behind after the Fed rate decision in December was filed before we way signs of responsive buyers coming in. Heading into today’s session it will be interesting to see if sellers are able to take out yesterday’s lows and continue probing into large daily session from 12/17.
My primary expectation is for a choppy open, likely an open auction in range then a push higher to test 4167. This level was a big battleground yesterday but eventually resistance. If we can sustain trade above it then I will look for a test of the overnight high 4172.50 then MCLVN 4179. Any trade sustained above 4179 may signal a shift in the character of the auction from short term seller controlled-to-buyer controlled.
Hypo 2 is a push lower toward the overnight low 4149. There is a big high volume node just a tick below yesterday’s session low at 4144.75. The area was met with a buyer response yesterday and returning to it would likely mean we push through HVN and test the other side of this value which is 4135.25.
Hypo 3 is an early drive higher that spikes through overnight high 4172.50 and tests 4179.00 early. We find responsive selling higher which takes us back down to 4167 where buyers defend and press us back up to test Monday’s session high 4207.25.
You can see these levels on the following volume profile chart:
