Tue Jan 8, 2013 7:42am ESTComments Off on Well Behaved For Now
The pullback yesterday occurred in an orderly fashion with the market finding support at the first key level below Friday’s range. It wasn’t important that we traded inside of Friday’s range. Had we done so that could have cued us to an impatient bull. Instead we want to see now is price tighten and coil into a range. This will give us a tight set of profile characteristics to cue from.
Below I’ve noted the chart and my expectations should we trade above/below certain price levels. Should we enter the below “slip zone” it will be vital that bulls defend the support down at 1445. The area is home to heavy initiative buying and losing the level puts many positions initiated into the New Year under water.
We mostly talk stocks in this surreal environment and occasionally the halls are overrun by bullshit politics. You’ll toss off to hours of politics instead of spending your time with your children or contributing to society. And this is perfectly fine. It’s simply another time-waster that will result in me finding the next innovation b3fore the distracted masses.
Some people enter these halls with the proper intentions of managing real money and watching others manage real money live. I believe enterprising up and comers should work diligently to develop multiple residual income sources. We have no pensions. Some of our best are rotting in corporate mediocrity or studying their asses off for a higher earning slave shift. But others have thrown up a big middle finger to monotony. If you’ve taken this route and intend to stay on it you must build businesses. Businesses, so when one goes stale another one flows ensuring your continued freedom.
As a trader, you can create several businesses. Maybe you call them strategies. Mostly we manually trade stocks. Even when following systematic trades like trading a particular ETF based on PPT scores, we enter the trade manually and follow a set of rules to set (again manually) our profits and stop losses. We analyze indices but mostly to gauge the context we’re trading in.
Perhaps you haven’t been reading the market profile work I’ve been doing daily and I couldn’t care less if you’ve decided it isn’t suited for you.
“But won’t The Fly cast your charred caucus in the dumpster come March?”
Yes, that’s the deal I’ve made with Le Fly and blogging is a business. But I’m telling you as sure as 2013 is my busting out year, that thrusting my game onto the interwebs have sharpened it. To me the biggest disgrace would be to sully these halls with lackluster advice. We’re here to bank coin. The profile work is putting coin in my purse. And soon it’s going to be putting much more.
Enter Hybrid Trading:
My biggest problem with day trading is the idle time staring at the computer waiting for my high probability setup to emerge. The best setups vanish so fucking fast and most days only have three or four dips from the well to grab a drink. But what if you could assess context, key off of critical levels, then turn on a robot to diligently hunt out an entry with a high probability of reaching your first scale point? This dramatically reduces the time eyes must be glued to a chart. Once your context presents itself you simply turn on your robot and continue your business until a fresh trade is fed to you. Then you manage the trade manually. Voila! Hybrid trading.
And that’s exactly what I intend to build this year. A new business. If you’ve ever built such a mechanism and care to chime in sage bits of advice please comment. I’ll always trade and talk stocks. Swinging for yachts, if you will.
Mon Jan 7, 2013 5:37am ESTComments Off on Know The Levels To Stay Constructive
First key support on the /ES at 1451 where Thursday’s single print buying tail starts and converges with Wednesday’s value area high. Should trade sustain below this level we can expect a retest of the value area low and naked volume peak down at 1445-1446.
A rotation to these lows would represent a giveback of all last weeks gains and a blow to buyer confidence. However I will remain constructive on my longs if we remain above this level.
Directing all our attention to Friday’s profile, you will notice three distinct peaks in the volume. I’m giving the most weight to 1458.75 which is also the volume control point and the final settlement price of last week. However, I’m pivoting from the lowest high volume node at 1456.25, which is where price has traded most during the globex premarket.
Anyone who is truly a fan of my blog or twitter stream gets bombarded with a lot of talk. As amusing as it is for me, and let’s be honest this whole blog game is for my own betterment, it’s not easy to read my posts and swim upstream to find my trades and timestamps. And I like my readers and I entirely expect you’re reading my carnivorous internal dialogue with the intent to bank some coin of your own.
By no means am I suggesting you buy or sell anything with me, but by reviewing actual trades an actual trader makes you may build your own understanding and thought process.
Without further commotion, here are my trades of the week and why:
New Year’s Eve the market fired a cannon pointed square at the faces of shorts. I had two cute short positions with a cute thesis wrapped behind them: short Macy and Saks. I had a shit entry on Macy and it wasn’t hard for the market to squeeze me out. I buckled (no BKE) and covered Monday. This loser was a result of a bad entry and I knew it as soon as I put my position on. Macy’s below $39.50 is still a short in my opinion.
January 2nd came and my long bias had me stoked:
Let's do this, ring the fucking bell RT @RaginCajun: Copper still going
I wasted little time, buying up shares of Zynga and Citigroup before 10am. Remember early and often on the pumps, that way we can scale on the rip and lower our basis.
Into Tuesday’s close, I didn’t like the squeezing I was receiving in Saks so I covered. This stock doesn’t appear as directionally biased lower on the charts, but it’s still a short worth considering on weakness. Both Macy‘s and Saks are part of my thesis on disappointing consumption activity by the upper-middle class.
No trades, but Ragin and I were eyeballing tickers starting with the letter Z. Being at the late end of a rally, we were looking at the Zee stocks because they rally last (I’m kidding). But I’m not kidding about watching the Zee’s:
I sold my ATML. I joke and say it’s a sacrifice to the rally gods, and in many ways it was. But also this stock has been a beast. When it was showing weakness during a strong day I closed out my runner on the name +23% from my December 11th purchase. I still think the stock want MOAR, much more so I will keep my eye on it over the next few weeks in search of reentry.
Next I scaled 1/3 of my Zynga position. We hit a logical level of resistance, an area where we should always fire a bullet at the market. If you’re only holding a runner (final 1/3 after scaling) and you’re downright bullish you can keep the piece on just be sure to assess your risk.
Finally we saw Zillow make its move, tossing up a big middle finger to the shorts and jerking higher into the bell. The stock pulled back just enough to let me in during the final minutes of the session. My phone was running slow as shit while I rode a taxi through tunnels but I managed to buy the $29.40’s and ride a rip into the close. I like being long this name into the gap even though the overall markets are insanely overbought. It may get worse before it gets better on this trade, but things can get slippery inside gaps.
Those were my moves and the thoughts behind them. Now I’m off to find a speakeasy, good day.
After getting completely obliterated by “the wrong agent” over at $SAVE this morning (may your grave be cold and wet asshole) and tossed into a wretched holding pattern which set my day back, oh about seven fucking hours, I received a blessing from the stock gods.
Perhaps it was my morning rally sacrifice, hoping to find favor in the eyes of Zenu:
Perhaps it was chasers getting their chase on, perhaps it was buying high probability chart patterns with sexy seasonality patterns and #SHOMPOLOGY stats. Really none of these things matter. What does matter good people is the fat ass pile of coin I pursed today.
After putting my feet back on the ground, I did what all to often has led to losses—I started trading from the back of a taxi cab. But fuck I had too. The plan going into today was to get in front of my computer premarket, that got fucked! Do I moan and cry or adapt? Exactly, I made a sacrifice and started iPhone trading.
Every time I checked my phone $ZNGA was up. I wanted to scale, but there it was flirting with its daily high, so I let it simmer while I slept on the foulest shit scented carpets in Detroit. Then I flew the fuck to the only city worse than mine, Baltimore, turned my phone back on while we drove around on the runways, again Zynga is HIGHER and so are my banks. Zillow was sitting still but looking mean.
Then I finally get to my destination around 3pm and find myself with a few moments to actually gather my thoughts. Mind you $ZNGA has become a #TENBAGGER at this point. I manage to scale a piece off three cents from the highs. Then I buy Zillow and it rips into the close. All.too.good.
Maybe I could lose sleep this weekend? Negative, sleep not on the docket. I may get poleaxed Monday by these gay short sellers getting cute with INSANELY OVERBOUGHT SHITTY BANK ticker $C, but fuck them.
All I know is the market isn’t this easy often. When it is, you press your fucking positions and bleed these fucking turnips dry. Use the 9ema, it’s our good friend. Enjoy your weekend and assume I’m enjoying mine enough for the whole fuck lot of yous.
Despite overbought conditions and some anti-QE jawboning from The Fed yesterday, most of the market continues to grind higher. A pat on the back form Goldman was enough catalyst to lift shares of Citi Group to even loftier overbought levels. And overall the financials continue to behave well and it could be keeping a steady bid in the marketplace.
I’m losing coin on my LULU shares and zooming out to the weekly chart it looks like momentum is slowing to the upside. I may regret not selling today, but I want to see about getting better prices early next week.
We’re not seeing the island reversals many expected and the small caps continue to rock higher suggesting risk tolerance. My only action today was to sell my ATML runner as a sacrifice to the rally gods.
Completely Aside: Spirit Airlines went out of their way this morning to catch my spirit and funnel it into their clunky jet engines, rendering me without flight. The kind people of Southwest who seem to love me have shoveled my remains off the tarmac and sent me on my way. Rot in hell Spirit Airlines, trade to zero.
Today’s trade was looking very constructive early morning, taking out the important resistance I highlighted this morning and building value higher after a progression of TPOs marching higher. Early AM longs were working and solar was ripping dicks, which is a highly speculative sector. The charts were setup something perfect and the fact I didn’t even turn them an eye in this administration is somewhat disturbing.
Let’s be frank with each other, this market is overheated. The dick ripping shorts received yesterday was not medieval torture, it was a 100 degree samurai sword simultaneously de-cocking and cauterizing the wound with surgical precision. We may have to check with @HalfBloodPope but I don’t even think antibiotics are necessary. And come on, The Fed had to pump the breaks into the fast approaching weekend.
I think this market “wants higher” but I also think people who want in are sidelined and ready—charts all marked the fuck up. Lunchtime buyers are the bag holders until proven otherwise, here’s where the inventory is priced. Good day to you:
The overnight session traded almost entirely in the low volume void of yesterday’s profile from 1452.50-1454.50. Overnight digestion up at these levels tells me nothing occurring overnight throughout the rest of the world was of greater impact than our political theater.
Levels we can monitor and cue off of from yesterday include the high volume node at 1457 where the market squeezed up to into yesterday’s close to gauge as resistance and the reactionary aggression of the sellers.
Below, should price sustain trade below 1451 we could expect a quick trade back to the middle of value at 1448 then a test of the volume peak at 1445.75.
Seeing today’s price digest yesterday’s gains within the range (inside day) would be impressive. More importantly, I want to see how today’s profile shapes. I’m looking for cues of balance, seller aggression, or the coveted initiative buying. Let’s see who wants to work these areas hardest. I’ll play my positions accordingly.