iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,377 Blog Posts

Huge Move Overnight – Important Levels to Gauge Sentiment

The overnight market continues to be corrective and volatile, swinging the S&P futures around 20 handles.

The key price zone above today is 1579.25 – 1580.25 which marks yesterday’s high and the value area low of the major distribution printed last week.  If price gains acceptance above this level, the probability increases of us working our way through to the other side of value, up to 1589.50.  In between these prices we have a thick VPOC at 1584.25 which will may slow the market.

I’ve split yesterday’s profile into the two occurring events, first the early long liquidation, printing a b-shape, then the short covering rally.  The sellers were finally met by a force greater than their own at this point and an auction higher began.  Price gave up the progress late afternoon but still held above the VAH at 1564.25.  This level as well as other levels I’ll be judging sentiment from are noted in the following profile chart:

ES_MarketProfile_06252013

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A Few Adjustments as The Market Gets Smoked

While stocks are diligently working to syphon money away from my person, I am doing likewise to the futures market.  The game of cat and mouse going on around the world with Robert “Carmen Sandiego” Snowden playing catch me if you can with the US government is much like the run and gun jabs I’m taking.  How do you eat an elephant?  One bite at a time.

But for real, my equities are getting completely poleaxed in this environment.  All the dirty money I made trading momentum pumps is gone.  All redemption of coin depends on this market finding footing, which it started to do for a while, but they’re giving it up into the bell.

I sold RVBD for a loss and bought ENPH.  That’s all I’ve done.  ENPH did a pretty good job springing a bear trap on Friday, IMO.  Any upside velocity in the overall market could produce a squeeze here.

I’m still on #teamBTFD, now I need to get lucky and stop getting risk bombed on every swing.

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All Selling Overnight-Could Abate Right Here

The S&P futures have been under significant selling pressure since opening Sunday evening, producing five significant rotations lower.  The sellers are exerting their control on vertical development as the market continues to go down easier than up.

As I type, it appears the market is running stops on Friday dip buyers, pressing into their positions.  I strongly suspect we’ll see stabilization take hold in this 1566.75 – 1564.50 region.  If not, we could be in for much lower prices.

My profile data is being buggy this morning, so I’m only able to present you Thursday and Friday’s profile.  We balanced out Friday afternoon, but only to the extent of printing a D-shaped profile.  Although the resulting curve resembles a Gaussian bell-shape, it lacks the same significance.  Mainly, it lacks any directional conviction, so we should respect the intermediate direction, which is corrective and lower.

I’ve highlighted some levels (resistance only) that I’ll be keying off of today:

ES_MarketProfile_06242013

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We Need a Good Chinese Bovine Injection

cows
YUM! MILK!

The S&P is trying really hard to form a tradable range here.  Talking ETF SPY, the brackets would be 158.50 – 165.50 give or take.  The mouth pieces are trying their best to help, coming out of their smoky offices and jawboning in the middle of a quad witching.  PPT wants a range low too.  Everything is pointing to a range low—except SHIBOR rates and suspender-wearing bond traders.

In the spirit of our gaptastic, have fun sleeping, stock market, we need some ridiculous headline out of Asia over the weekend that wastes no time, gaps us above the midpoint of our range, catches everyone out of position, and forces your hand to buy at a higher risk.

It would be fitting given the recent nature of this choppy courrrection.

I could see us coming into the office Monday to a huge gap lower too, that’s the environment we’re in.  That’s the environment Chess objectively describes to members on Sunday night when gentlemen take to their studies and make preparations for the week.

So I’m keeping position sizes smaller, cash higher than I would like to, and limiting the number of positions I hold.

I took a SODA long this morning.  It’s looking really good.  It’s only half size.  If it goes lower, I’ll double down.  If it gets to $74 I’ll scale ¼ off and let the market pay me.

I’m a proud bag holder of $423 dollar AAPL shares.  I bought them in the middle of the FED announcement yesterday.  I was completely swept up in the hype.  $420 is an important price level for AAPL because the degenerates who trade it think Phish plays good music.  Maybe they should stick to Chief Keef.

I’ve decided to stick with TPX through this indecision.  I hold a ½ position here also.  I want to make it 2x I love these beds, especially as the adjustable bed market continues to boom.

Holy Mt. ZION is trading well as are many other regional banks.  Holding.

It’s finally summer hallelujah.  We shouldn’t even be holed up on our computers but there are moves to be made.  Get your pasty ass outside and don’t forget the sunscreen.

 

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Overnight Session Recaptures Long Liquidation

The overnight session featured three clean rotations higher, propelling the S&P futures as much as 20 handles off yesterday’s low and over 15 handles above yesterday’s close.

The key take away from the dynamic action is it erased the large liquidation break we spoke about yesterday afternoon, erasing all the progress it made.  This adds to the likely hood that the move lower seen yesterday afternoon was in fact long liquidation and not new shorts being initiated.  However, anyone overconfidently starting shorts into the move lower now finds themselves in the hole for a quad witching op ex.

Both of yesterday’s profiles are b-shaped, added additional visual confirmation to the move being long liquidation more than short initiating.

We’re currently priced right at the mouth of the liquidation which features a VAL price mark for us to gauge sentiment with.  The VAL from yesterday’s first distribution sits at 1593.25.

I’ve highlighted the above price level and other key reference points in the following profile:

ES_MarketProfile_06212013

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The Market Is Correcting Me So Hard

My swing portfolio wrapped up methodically giving back all second quarter profits today.  I don’t know how closely you follow along, watching Raul get crazy on the tape, but when I stand outside the fish bowl and see myself the sight is horrific.

Stupid greedy bastard little fish.

But I replay every trade I take.  I take notes, I brood.  I make plans to take over the world.

All this I say like some kind of awkward apology if you’ve hitchhiked onto any of the MANY losing trades I’ve taken recently.  I’ve been ADD trading, buying every tip, rip, and slip in the market.

No mas.

The overarching theme to my losers is bad entries.  High risk entries to be more precise.  It fucks with your confidence when it takes a 12 percent move to deem you “wrong”.  At least it messes with mine.  I compensate with smaller position sizes, but then I have 15 small positions clown raping me simultaneously and shit gets out of whack.  Pardon all my swearing, I’ve lost mucho dinero (no Robert).

It’s been one stop out after another, if you read me on the twitter network you’ve seen them peppered out over my timeline.  Brutal.

But now is not the time to sit in an inflatable pool of pity.  As a matter of fact, it’s never time for pity friend.  It’s time to pick yourself back up and be more powerful, more dangerous, MORE STUPENDOUS THEN EVER.

I started already by absolutely annihilating the liquidation break.  Red arrows are my short entries, blue my covers.  Look at this:

entry

That’s the best god damned string of trades I’ve ever taken.  I should only trade during this madness because the rest of the time you’re cold sweating and grinding out 300 bucks. It’s disheartening to say the least.  To say the most it’s questioning every decision in your life that’s led you to trade futures.

The above string of trades is why I trade.  I crushed.  It felt amazing.  That’s my planned trade.  It cleared my mind, like making sweet love.  I made sweet love to the tape all over the place.   Anyhow…

If we’re entering range trading like I suggested last night, then we should be at or near the bracket lows.  Thus a mean revision should go down, taking us back into the 33 and 9 EMA.  That trade should earn some coin.  That’s why I bought ZION into the bell.  Banks make money with higher interest rates and ZION had some fantastic proprietary PPT stats going on.  So I took the trade.  Look at this entry, too.  It’s low risk, down to about 26.75 and relative strength to boot, not bad.

Tomorrow brings anything, being a quad witching and all, but we have the technology, the money can be rebuilt.

You would likely perfer the NSFW version of the following video, go find it:

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Grade USA Bunker Busting Power

The sellers brought the force yesterday and overnight.

S&P futures continued lower after the cash close yesterday rotating as low as 1612.75 before stabilizing.  Around 4am the sell orders began flowing into the markets again pressing the globex session to new lows at 1605.50.  Since then we’ve stabilized again as we approach RTH.

The current size of the gap (over 10 handles) is often referred to as a pro gap, and often goes unfilled.  However, given the overall choppy conditions of the market, I suspect a slightly higher probability exists than the typical low 40 percent odds.

Most important today however, is defining levels of potential support.  I won’t be performing any knife catching feats in the futures today, but it’s important to keep these reference points in mind while gauging the sentiment of the market.

I expect some attempt early on by the buyers to press higher.  Here’s the levels I’ll be keying off of in today’s trade:

ES_MarketProfile_06202013

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Market Indecision Will Fleece You of Your Coin

Whether you trade weekly, daily, tic, range, or minute charts you MUST recognize a lack of trend and behave accordingly.  To trade momentum there must be momentum.  I know V.King would enjoy that sentence.  Once you recognize conditions where momentum is gone, you must adjust to fading extremes or sideline yourself.  That’s it.

I like to use EMAs to give a trend some visual clarity.  When EMAs of different speeds (i.e. the 9 and 33 period) converge and then flatten out, that’s a strong indication the market is on pause.  Such was the case all morning.  Today it was easy for me to avoid because we were working inside a tight market profile and we had the Fed in the afternoon which I knew would give the market a pause.  More times than I would like to admit, I haven’t been so astute.  And every time I fail to recognize these conditions the alogs pick me to pieces.

I’ve been a doubter of any such trendless action most of June, but as the month drags on it’s becoming a distinct possibility that we’re entering a flat consolidation phase.  My 9 and 33 are flattening out and going sideways.  It would make sense too given that my momentum plays are all fizzling out.  Take a look:

 

SPY

I’ve spent the last few weeks churning my portfolio with small wins and medium losses.  All-in-all I’ve given back hard fought gains.  Anyone who tells you the gains came easy is wrong and unwashed.

Today I cut most of my China junket.  I sold off BIDU, YY, and MY.  I sold WETF along with the Fly and I took some profits in CREE, keeping the position about ½ size.

You may notice a much less manic tone in my writing.

I’m up over 50 percent cash now and lost around 1 percent today.  Current longs listed largest to smallest are as follows:

YGE, HMIN, IMMR, RVBD, CREE, SCTY, RGLD, TPX, and FB

I want to keep my speculative swing positions down.  I’m getting confused, tracking so many positions.  Plus liquidation becomes more taxing by my broker.

I’ll ride most of these through the trendless chop of the index.  But I swear little allegiance to any and will cut to make room for others.

I don’t love the idea of shorting up here, but both T and JBLU look like great swing shorts to my eye.

Bottom Line: It’s summer now.  We may still push higher but we’re showing signs of stalling momentum.  This is the third major pullback too, it has a much lower win rate then the first two.  HOWEVER, we’re on the proper side of the 33 EMA, my primary demarcation.

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Sitting Through a Draw Down

As we mosey into the Fed event, my arm is slowly being eaten by a small Chinese crustacean.  I don’t hate the name yet, but why oh why?

I don’t even know what they do.

The problem here is I still like the chart.  What Uncle Ben says should have no real implications to the basic goings on of YY, but YY as an equity could see some action on the Fed.  So it’s on ICU watch, and I’m fully prepared to pull the plug if it takes a turn for the worse-er.

Same goes for fairy dust wind energy name MY.

Awesome, carry on.

UPDATE: Both of these positions stopped out post our holy Ben speaking. 

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Key $ES_F Levels and Review of the Overnight Session

The overnight session featured a seven and a half handle chop which already sets the tone that the market is building energy.  Up above, yesterday’s high of 1648.75 was tested twice and both times rejected.  It now resembles a triple top.  Any sustained trade above this level gets us moving fast.  If we see price accepted above these levels only to fail, that would be a nasty bull trap.

Below the overnight chop is 1641 which aligns with yesterday’s value area low.  Sustained trade below this level will quickly take us to yesterday’s low (and open) at 1634.  If the lows don’t hold, the sellers will likely target 1627.25 then the sold foundations from 1622.75 – 1620.25 – 1618.25 – 1617.  This cluster of support is vital to the long case in the short/intermediate term.  Below there, price gets slippery down to a 1614 LVN then 1610.25 06/13 VPOC.

I’ve noted the above levels in the following chart:

ES_MarketProfile_06192013

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