iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,311 Blog Posts

Zommed Out and Measuring These Balance Zones

We have two major price zones to use as guideposts if this market continues to put in large ranges.  The balance zone above (which coincides with a possible gap fill) from 1657.25 – 1653 is our barrier to the upside, and the lower zone, our major support, spans from 1628 – 1623.  It’s best to view these areas on the volume profile charts to see their significance.

In between, we have a low volume slip zone that the overnight session had some fun sliding down and up through.  I’m not going to inject much bias into this piece, I’m simply defining interesting reference points, and seeing how we behave today.

I want to see if they can form any semblance of a gap fill.  How well that goes (or doesn’t) will be telling.

ES_VolumeProfile_05232013

 

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This is a Lovely Room of Death

AceVentura

Guys, there must be down days.  And when we’re in the stratosphere, atop the treacherous K2, guided by our Sherpa—gentleman Ben—and a group of extorting Sherpa come and kick your pack mule down the mountain and demand monies…there’s going to be some casualties.  You may need to hunker down low and take some hits.  You need to be ready to sweep the leg.

As traders, we’re paid to take daily beatings from the market.  It hardens you.  HDGE was my worse loss of the year, trimming a cool three percent off my high water mark.  Guess what?  I crested my portfolio over that mark since then, and now I’m off my new peak by two percent.  It happens fast.   You have to keep your wits about you.

This may be the start of a peak-to-trough environment.  This can last weeks.  WEEKS!  Oh the humanity.  But before we can say that with any kind of confidence we need to see price acceptance below TWO, you heard me right TWO major areas of balance which are way above where this market could pull back and still be considered VERY constructive.

I’ll look at the primary and most actionable balance distribution in the morning.

These Stocks:

I booked some winners that were lingering, some losers that were fingering, and some scratches that were carrying curious implications.

YELP was cut early.  It was crowded, that’s how crowded flag breakdowns play out.

RGR was an early sale too.  I caught the swing low, it’s been dead fish forever, when that first crazy sell frenzy happened in the spooz this morning I booked it.

I sold JRCC as it butted up against resistance.  The Plan says I must sell logical price levels, even if it’s my last piece.  I can always buy it back at a better price, at least that’s my mentality.

I booked GS because the devil’s been shorting it, I had 6 percent plus gains, and the daily candle looked nasty.  Financials have been a big driver of this move, we could rotate out of them and still see the tape flat/higher.

I sold SCTY late afternoon, after adding to my position early.  Net-net I make over 10 percent playing this crack rock.  Awesome, except it was good for over 20 percent at one point.  A win is a win, I suppose.

I added to my CREE investment.  They’re a great company.  Remember, this is a multi-quarter hold after booking massive gains in the name trading style Q1.  I’m wearing my investor hat on this one.  That being said, it also printed a nasty daily candle.

I caught the breakout in IMMR early.  It’s this type of aggression that allows me to not experience much emotion when the breakout sputters out like this one did.  It has Fly power behind it, so I’m giving it room.

Bottom line: you’re surrounded by algorithms wielding meat cleavers, protect your neck with profit scales and stop losses.  My cash pushed way up into the bell, damn near 50 percent.  I don’t like lazy cash so I’ll be hunting tonight.

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That.Was.Awsome

These morning markets, I come to them every morning.  Much like The Zen Hunter alluded to about surfers, it’s an obsession—every day hunting waves to ride.

I put up these profiles, looking for where the waves can kick up.  Boy did a wave kick up today!  I have wins on both the long and the short side, easily my best day ever, earning 10 S&P points.  It was fun too.  And I stuck to the plan all but once.  My one deviation, an attempt to knife catch that free fall, was my only loss on the day.  So be it.  Stick to the plan or lose money.

Anyhow, that’s why we do all this work, for days like today.  They’re calling this the blow off top already.  I’ll hold my judgment for now, but I did cut my RGR and YELP longs in case the afternoon gets a little Nightmare on Elm Street.

Let’s look at these stocks and see what’s working.

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The Levels Precluding Our Next Break

Yesterday was essentially a completion of Monday’s auction.  The charting software I’m currently using won’t allow me to merge these two profiles together, so we’ll have to visualize it for today.

Notice the very fragmented, low quality trade that occurred in the upper 1/3 of Monday’s profile.  Now notice how much of Tuesday was spent thoroughly auctioning those prices.  Interestingly enough, yesterday was also a neutral day, featuring range extension in both directions, signaling a lack of directional conviction and the possibility of a change in the market conditions.

We’re still above the large balance distribution from last week, the overnight session is balanced within our current profile, and we’re essentially waiting for the market to tip its hand.

Here’s the levels I’ll be monitoring to gauge which way the market is trying to go, and how good of a job it’s doing:

ES_VolumeProfile_05222013

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Getting Faded

It’s been another action packed day, albeit in a more concentrated bit of stocks.  I almost looked wrong in boasting about my sub $50 RGLD purchase when the morning dipped briefly below.  It should be noted that this was again a buying opportunity.  Although we’re not out of the woods yet on this long position, it has constructive written all over it.

YELP started flagging nicely just below $32 around lunchtime.  I added to my long thinking, “this is a good looking flag.”  When I took to twitter to blast out my actions to the world I saw no less than four traders talking about the exact same breakout.  The move was faded.again.  This trade could flush lower, just be aware of that.  We are all seeing the same telegraphed pennant at 52 week highs.  Build a solid risk profile.

I thought my reasoning behind staying long JRCC was interesting, but it received zero airtime.  If you’re into market dynamics, check it out.  I scaled a piece around the three handle and have a 1/3 runner left on the books.

I closed out CRZO because it printed an ugly daily candle.  I’m looking for constant gratification up here in the froth.  I’m not looking to wait out and peak-to-trough foolishness in names that I have zero conviction in beyond price.

Ironically enough and completely contrary to the prior paragraph, I held my SCTY runner and watched it melt like a cheap ice cream cone down 12 percent.  The position is still 8 percent in the green due to a sweet entry and there are gains booked to back it up.  I’m not going to let one down day scare me out of the cocaine party.  It will take at least two.

Final thought:  A cheap ice cream cone?  Does an expensive ice cream cone exist?

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Morning Future Trading Report

Lots of movement today, as a result there were several trades in the $ES_F.  Ten contracts were traded in total, 6 winners, 4 losers. I want to get this more like 8 winners, 2 losers.

All the trades came on the short side today, with the best being a sale at 1669.25 and riding down to 1664.75.  The worse was a sale into the hole at 1661.50 which didn’t stop out until 1664.25.

The total activity netted a small gain of $100 dollars and a grey hair or two.

Repetition is key in the futures market.  I was talking to a friend of mine who works closely with Special Forces.  I asked what they do in their off time.  He said train.  He said they have layouts of the buildings they plan to raid and run through mock up copies in simulation over a 1000 times before the real deal.  That’s real deal awesome, and why they have high 90 percent win rate.

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Talking Market Dynamics in $JRCC

I like situations like JRCC. The setup appeared on no news, but I could see buy flow coming in.  Then you get a major development, one favoring your position and you get instant gratification.

But should you sell?  I always do, but not the whole thing.  The event completely throws the stock price out of balance.  Their slate was wiped clean of a looming going concern.  I don’t even know if they had a going concern statement in their financial statements, but they were teetering on the brink, no doubt.  So now what’s the company worth?  I couldn’t tell you, nor could I care less.  I know fundamental guys, debt gurus, hedgers, and directional gamblers all have to come to market a duke it out to determine value.  And that means we’re going to see vertical development, both ways.

Once I’ve cushioned the position with nice booked gains, I can sit back and see who prevails in the fight.  I can cheer for my side, but I swear no allegiance.  I’ll just as soon cut if the sellers prove a more formidable force.  For now things are looking good.

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UPDATED: Fragmented Volume on Top, Balance Zone Underneath

dr_evilThe overnight session has seen sellers trying to gain a foothold.  Most of their overnight attempts have been thwarted but they appear to be gaining a bit of traction as I’m preparing this analysis.

We’re still above the major three day balance zone I highlighted yesterday morning.

The behavior of volume on the upper half of yesterday’s range is fragmented and signals a lack of trade facilitation.  It’s odd really, it wasn’t a sharp reaction from the sellers but more running out of buyers.  Either way 1666.75 was left behind as a near no volume node and is the primary resistance to the upside.

It’s looking like we may test the balance zone today, and along with it my expectation is for some choppiness.  Buckle up.

UPDATED NOTE: We put in a double bottom at 1661 overnight.  It’s close to yesterday’s low 1660.  A test of this area seems likely and important.  A break of 1661-60 should have us looking for swift trade back to the balance zone below.

ES_VolumeProfile_05212013

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Tell Your Kids about Raul’s $RGLD Buy

http://youtu.be/xpxd3pZAVHI

It’s important when raising children to not only highlight victories but also exemplify the winners.  You do this because, well, you want to live out your golden years vicariously enjoying the benefits of a successful child.

Some of you want your kids to excel at sports, so you point out athletes.  You’ll be like, “Son, look at Joe Montana, he never kissed his biceps and he has four Super Bowl rings.”  But I know there’s a small group out there, likely reading iBankCoin, who want their children to have a strong market hand.  Skip the Wizard of Oz tonight.  Instead pull out this post and show them how $RGLD traded below fifty dollars for a short time.  Point to the chart and tell them a wise man named Raul bought those sub fifty prices.

Tell them how special that is and how rare surgical precision is.

Here’s the targets. I’m risking about 10 percent:

RGLD

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Is The Music Over?

We’re seeing reversal action in some of the pockets of strength, including solar.  But it’s not lights out yet.  We’re still above the major bias line highlighted this morning.

I’m still considering the $ES_F range from 1654.75 – 1657.25 as the bias zone.  We can turn out a few lights if price is accepted below here.  Until then, swing away.

http://youtu.be/yfv9z23lu9E

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