I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,255 Blog Posts

Key Levels into Friday’s Trade

I’m looking for buyers to take a more active role in today’s tape. They’ve been getting tossed about quite a bit this week by some rather large sell flow.  But overall we seem to be in some rough, choppy waters.

I’m hesitant to give the bears an edge here, although I do give an edge to volatility.

Early on we’re up 3.5 handles from the close yesterday.  I’m looking for sellers to enter and try and close the gap back down to 1539.50.  If buyers don’t show up then a critical test of 1538 will result.  This level saw large reactionary buying that was able to stop the sellers in their tracks yesterday.  I plan to lean on these levels and try some longs.  However, if it is lost, and trade sustained below, I will raise cash into the weekend.


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The General Goings

This week has been a comedy of sorts for the book of Raul.  I’m churning my book around quite a bit, sloshing around in the choppy waters of this shallow dip. 

At times I want to be all cash, other times beta neutral, and now today I’m about 55 percent exposed.  My exposure is long equity 50 percent and short yen 5 percent via YCS which is an ultra-short, meaning I get about double exposure.  It’s very grand and nice.

I’ve cut some of my big winners free, as a sacrifice of sorts to the stock gods.  As such, they’ve granted me AWAY, which is propelling my book higher today.  I took a modest 1/3 scale already, after the stock appreciated 5 percent overnight.  I don’t always scale at 5 percent profit, but it’s a nice fixed target if you’re back testing a strategy (you’re welcome new coders, I hate you).

I cut TIF after it went 2 percent against me, I was quick to cut HUN and and HOV on Monday too.  I’m not giving longs a ton of room to run against me, as any one of them could be a jack-in-the-box scrotum punch.

CREE won’t quit.  Will it ever?

I miss my Zillow and Tempur-Pedic already.

Is Ford gay, or do they want to win?

Heckmann (HEK) looks pissed and ready to rip, more than any other stock.

The above snippets are major themes in my ongoing internal dialogue.

Finally, fellow blogger network gent @capitaloverlook aka YoungGun put out an interesting tidbit on online gambling today.  You should read it.  It’s a nice piece of anecdotal evidence behind the Zynga play.

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Keep Moving


Yesterday’s tight range managed to auction the value area from last Friday (annual high water mark) and successfully find sellers who were willing to send price tumbling back down to value.  The overnight session has been quiet and as we approach 8:30am the markets are unchanged.

Early on my expectation is for sellers to reenter the market and probe lower for buyers.  I’ll be looking for signs of a buyer reaction first at the high volume node from Tuesday’s upper distribution then at the value area high.  Should the sellers press through the value area high, I’m expecting them to press down to 1538.

To the upside, any sustainable trade above the 1550 zone highlighted above could be considered constructive for the bull camp, especially on a closing basis.  There were several traders on Twitter yesterday suggesting a possible island reversal on the SPY, trading up to these levels would firmly negate that price theory.

Should price sustain above 1550, I will measure bullish conviction by the size of their rotations and the price levels they’re able to accomplish, especially a clean break of the highs set last week.


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Don’t Get Steamrolled

I’m looking for some responsive selling off the open, looking for sellers to present themselves at the 1552 level.  However, the last two days and the erratic pumps higher show greater risk of being steamrolled if short.  A caution long bias or cash are the best positions.


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Batten Down The Hatches!

We’re heading into some stormy weather people.  As I pen this piece the SPY is making new lows after a nasty thrust lower this AM.  I used the pullback after the thrust to get large in SDS, a hedge of sorts.

As we pressed lower I stopped out of many names, including ANR, INVN, and morning initiated longs HOV and HUN.  I sold them all.

My current longs are (by size):


All together the above represent 42% of my holdings.  Most are faring decently into this storm, but I swear no allegiance to any of the names and will cut any that get too loose.

You have to get big in a slowpoke like SDS for it to have any effectiveness.  Right now it stands at an 18 percent position.  That leaves me 30 percent in cash waiting for the next high probability trade.

Try to stay dry out there folks!

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The Bull Foot(hoof)print

For me, the time when we’re trading within the range of a previous auction is where my edge is the sharpest.  The reason being I can get close to the action and laser focus on where participants have made themselves known.  With that in mind, and to tune out unnecessary noise, today I present only the previous two sessions of trade.

I’ve highlighted below what can only be described as an aggressive reaction by the buyers.  They woke up Monday with the futures bouncing off their Sunday lows and they came to the market with buy orders.  It wasn’t until we reached Friday’s value area low that the flow of sell orders was enough to stop the liquidity march higher.  The afternoon attempt to dictate price lower by the sellers was shut down, and another aggressive buying reaction footprint was left on the profile.

Should the buyers not behave in the same manner at the levels highlighted below, that tells me something has changed.  What has changed?  Don’t care bro, something.  The sentiment of the buyers has changed in a material way and they’re backing off their bids.

Up above, the sellers cleared were a greater force and stopped price in its tracks.  Keep in mind, however, that this was after a 14 handle intraday rally.  Today is a big POMO day with $2.75 – $3.50 billion in outright Treasury Coupon purchases (source: ZH).  Should all that liquidity find its way into equities, we need to closely monitor price behavior within last Friday’s range and act accordingly.

Trade well, be water.


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Another Day of Indecision

We continue to hover around the highs after a brief overnight scare of the European variety.  Unlike the super intelligent bulls and bears who are confident on their directional conviction, I feel like a dark pool of water, waiting for the river to take me away.

I’ve embraced this uncertainty with a high cash position, currently hovering near 40 percent.  I also put on a hedge Friday, in $SDS, it was a 15 percent position that I’ve taken down to 10 percent.  I find hedges work best when they’re cashed out as soon as they’re in the money.  Otherwise they just sort of evaporate away and then they’re an anchor in the port when the market sets sail.

I sold out of CCJ and ANGI, both winners.  I sold the former because the chart pattern is sloppy and I don’t want to be in sloppy charts in an indecisive-frothy market.  ANGI was sold to lock in the huge gain and free up some money to rotate into my new position.  What’s my new position?

It’s Ford!  ‘merica

I like how quickly the stock rebounded this morning and where price currently resides on the daily chart.  I have a few other names I’m stalking, but nothing screams ‘buy me’ like they were the last few months.  Many setups are on pullback #3, which has the lower probability of success.  Therefore I have to either pass on the setups, or apply a tighter risk management either through a tight stop or smaller position size.

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We’re heading into some turbulence this week, with the S&P futures gapping down over ten handles.  The overnight session saw price over 20 handles lower before buyers stepped in and stabilized price.  Since around 2:30am (near the European open) we have seen the price of the index rebound 10 handles.

My profile is looking haggard because the contract data did not roll properly from March, so it may be a few sessions before it’s all cleaned up.  However, I do see 1544.75 as a key level for bulls to recapture if they intend to assert control of the tape.  Otherwise, I expect to see consolidation type trading where we recheck some past levels for significance (see if they become support).


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