iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
4,121 Blog Posts

Dumpster Hopping

Sure I spend my nights pool hopping and participating in other poolside activities such as poolside conference calls, but in the mornings I forage behind buildings like a raccoon, hungry for my next can of tuna.  If the crowds I run with, pinky up socialites of the highest cloth, knew how I spent my days they would certainly not invite me to their next chip-and-dip mixer.

Which is why they are homos.

Moving on, abandoning FCEL ahead of earnings yesterday afternoon afforded me the opportunity to hunt a new dumpster pick, and I went with one I have been stalking for days, patiently, like a raccoon.  Unlike a raccoon my latest pick immediately took flight like it wants to naturally.  Naturally, because it is ticker symbol EGLE, like eagle.  I am only getting started with this one, and as we revisit the range we so falsely abandoned yesterday less than 24 hours later (pinch), my only contemplation is when to ADD MOAR.

The ever famous and intoxicatingly potent falsie fastie reversal pattern has a stench of aged gouda that cannot be mistaken for miles around, like the garbage incinerators of Hamtramck on a balmy summer night.

Now I must wash myself and comport my mind for an afternoon of potential trades.  Stay hungry baby babies.

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Lull into Complacency

Nasdaq futures are trading lower overnight after a busy European session.  Prices were sliding lower into a slew of Euro-Zone economic data which turned out to be inline-to-better than expected.  Prices reversed higher shortly after but again sold off on a sour ADP number early in the USA morning.  We have a busy economic calendar today.  At 9:45 there are some PMI stats coming out and at 10am we have a Bank of Canada rate decision and ISM Non-manufacturing composite.  We also have the Fed Beige Book at 2pm.

The steady selling overnight methodically auctioned the entire vale area of this large distribution forming on the 24-hour profile, have a look:

NQ_marketprofile_06042014_24-hour_1

When I see this type of action, wholly emerged within my well established profile, I compress it into my existing profile.  This does two things—it tells me the context has not yet changed and better defines the relevant price levels.  With all the economic information being created 24-hours a day in our global economy, it makes sense to keep these 24 hour profiles in mind as we go about our trading day.  Here is the merged profile, along with the profiles that exist behind it:

NQ_marketprofile_06042014_24-hour_2

Turning our attention to the RTH market profile, you can see the compression taking place as the short term comes into balance.  Yesterday we printed a SECOND normal day, with a close in the upper quadrant, which was also an INSIDE day.  That is some serious compression, and the eventual move away from this value zone will likely have some power.  I have marked up the profiles below:

NQ_marketprofile_06042014_RTH

Breaks from this type of serious compression can sometimes be FAKES…gut wrenching moves out of balance with equally gut wrenching reversals.  I could see this happening to shorts here, only because we have the “unfinished business” of a naked VPOC at 3703.75.  Should that level receive a hotplate reaction via responsive buying, then we very likely could launch back into our balance.

The selling is accelerating a bit as I complete my post.  We are now priced to open very much on the low end of intermediate term balance.  However, this balance is still in play until we see sustained trade below 3709.  Sustained is the key, because as mentioned before, we have unfinished business, a naked VPOC at 3703.75.  It should be an interesting session.  Here is the intermediate term picture:

NQ_IntermediateTerm_06042014

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Warm Headwinds

As the summer rolls in, I am focusing more on my futures trading.  I went live this week and my focus during active hours has to be 100% otherwise I will miss the subtle clues of the intraday auction.  Trading is going well this week, and I am managing to avoid many of the pitfalls I used to incur while attempting to “trade” while being an accountant.  Now I simply trade without the, “you hurry up and buy” of returning to spreadsheet chimp work.

I made a few changes to my swing portfolio today.  I stopped on in SINA before it went on an afternoon rally.  I also closed out BIS, a levered biotech short ETF, when I suspected a rally may be afoot.  The rally never quite materialized even after the picture set up.  This is like the dog that doesn’t bark at the thief in the night.  Something may be afoot, and buyers may be in a risky position.  This is all speculation, of course.

I took a WDAY long.  The PPT likes it, I think OA still likes it, and at times RC likes it.  I can’t say I hate it, but this is a slightly unfamiliar chart picture on the daily chart so I took a small position.  We shall see.

I closed out FCEL ahead of this afternoon’s earnings announcement.  This is not something I feel to participate in.  Instead I will find another tradable stock in the waste dump.  Speaking of which, my Wm sold off a bit today, but is of the old man variety which pleases me.  I will seek out more slow stocks to swing slow on while I focus my efforts on the nickel-picker-upper machine.

It is very hot outside and I must be on my way.  I have many meetings this afternoon.  Be well my friends.

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Beautiful Context Heading into Tuesday Trade

Futures are sliding lower into the opening bell here in the USA.  The selling waves began shortly after the Euro-Zone announced their CPI data and unemployment rate.  CPI was worse than expected and they had a slight downtick in unemployment and the markets sold off.  We have factory orders at 10 am but an otherwise quiet docket for our session.

The overnight profile is toothy and printing value down near the low of the globex session.  However, what I find most interesting is the large profiles we have built over the last 5-6 days.  When observing the 24-hour profiles, which encompass all tradable hours of the contract, we can redistribute the market action not based on time, but instead on relevance to each distribution.  By chopping up the price action into the relevant distributions we obtain a transparent view of the current auction.  See below:

NQ_marketprofile_06032014_24-hour

Some similar observations, as well as the relevant value zones can be seen on the regular trading hours market profiles.  Interesting context to note, the poor high still exists on the regular trading hours chart.  It was eliminated on the globex profiles.  A poor high is where two or more TPOs print at the swing high.  This is uncommon and often settled before abandoning a swing high.  As is always the case with market profile context, it is not a timing tool, but only a contextual caveat as you go about your trading.  See below:

NQ_marketprofile_06032014

Taking our attention to a higher level, we can see the market coming into balance on the intermediate timeframe after yesterday’s price action.  The balance spans nearly 5 days and the action has a near-perfect symmetry.  The VPOC is about 1.75 points below the midpoint at 3723.875.  There is a well defined LVN at 3727.25, just below yesterday’s close.  The two price levels just above yesterday’s close are of huge importance.  Essentially, if the Nasdaq goes red-to-green today, pay very close attention to the price action at these levels as the volume/market profile context is big:

NQ_IntermediateTerm_06032014

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DON’T GET ANGIED

As energetic as the bounces have been in some of the most beaten down momentum studs, you should always have one foot facing the exit and an itchy trigger finger.  Case in point: the trading action in ANGI.  I was able to book a small win on my options position today before it really went south.  It may go higher from here, or lower, but one matter is certain, the context changed from dead cat bounce to violent horror show for both teams…and the sellers seem to have speed on their side.

You have been reminded of these contextual conditions repeatedly by the sage (no Impala) cast members of the iBankCoin hegemony.  I had stops in place for SINA today as well, but it behaved well enough to earn a pass to Tuesday’s trade.  My only other trade was buying BIS near the open.  I am underwater slightly on the name but take solstice in having the position in these precarious times.  It helps me hold onto XOM which, goodness, we nailed some kind of entry on.  I am up nearly 30% on the name.  Of course, I started this position half sized, uneasy with the knife catch but impressed by the story.  I am waiting for a pullback of sorts, something that grinds both sides up, so I can add more size.  I may not see it until much higher.

I am pressing FCEL right up into the earnings grill, which is tomorrow after market close, if POS, ehm, TOS has the information correct.  Finviz also states after market close, but you never truly know with these back ally stocks.

We printed a normal profile today on the NASDAQ.  The normal day is classified as having an initial balance which is so wide, so dynamic, the rest of the days’ trade is unable to breach the extremes.  The name is deceiving, and I am not sure why Dalton named it as such, because the days are anything but normal.  They are actually very rare and an undisrupted initial balance occurs less than 20% of the time.  They typically occur when a news driven open makes such a large move we are unable to disrupt it for the remainder of the session.  The volume profile is fat and has three different distributions.  The actions marks indecision and will certainly give participants something to chew on this week.

We had an open-test-drive where sellers one ticked higher and immediately drove price lower.  This suggested strong directional conviction by the shorts.  However, we found a strong responsive buyer just below last Wednesday’s low.  The two sides duked it out and it looks like the bulls used their intermediate term control to press a ever-so-slight victory on the day.  See for yourself, and interpret the profile as you may, this is how we learn:

NQ_marketprofile_06022014_afterhours

I was trading /NQ live today, and was actually making money on the long side during the drive lower.  There were some healthy counter rotations going on inside the liquidation which was a slight hint we may find a strong responsive buyer.  This type of trading takes 100% dedicated focus as I truly was picking up nickels in front of a steamroller.  But have you ever seen those little birds who run along the shore break and snipe clams?  Nature has a place for the nickel-picker-upper, so don’t hate the player babe.

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Starting The Month With Buyers in Control

We are coming into the month with a slight gap higher.  We are currently priced to open inside of range and balance from our previous trading day (Friday) which suggests we are in a lower risk/reward environment.  We have some manufacturing data coming out at 10am and a few treasury bill auctions at 11am.

The long term timeframe left the balance bracket behind as buyers took the reins of control last week.  The question now is the impact we will see from the above supply we are pricing into.  See below:
NQ_Weekly_06022014

Turning our attention to the June contract, our front month contract for the next few weeks of futures trading, we are trading just a touch below all time contract high.  Buyers sustained control of the intermediate timeframe into the close of last week.  It will be interesting to see if they continue controlling the tape or whether we come into balance.  See below:

NQ_IntermediateTerm_06022014

The short term auction has some interesting market profile context.  You can see a ledge formed overnight and the potential for us to trade lower and rotate through Friday’s balance.  Whether this ledge gives way or not early on will be a key component of early trade.  We also have a “poor high” from last week, where two TPOs printed at the high, this lines up with the overnight high of 3740.50 and overall looks vulnerable.  See below:
NQ_marketprofile_06012014

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Opening Swing: Thin Volumes and Dicey Action

With summer warming up in the northeast the trading week had a feeling of emptiness.  The fine weather may beckon otherwise retail participants to instead explore outside activities, leaving only the most hardened and skilled participants around to do battle in the electronic futures performance arena.

Drone strikes can be particularly effective in this environment, and we saw a few midweek.  Overall, my algos were quiet, only triggering once into the bell and late into Friday’s trade.  With the market thin, it paid to be patient and really allow the market to come into the thick midpoint of trade before attempting entry.  You will see all of this, and more, on the following opening swing charts.

Note: Monday trade is not included as it was an USA holiday.

TUESDAY:
05027014_os

WEDNESDAY:

05028014_os

THURSDAY:

05029014_os

FRIDAY:

05030014_os

 

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You Have To Expect an Element of Uncertainty

Today has been another day of doing very little.  I bought a small starter in FEYE and stopped out on some weekly FSLR calls and stopped out my WB calls.  I simply did not have patience to stick with WB when it broke consolidation lower.  The throwback was the real tell that the trade was mush for me.

The Nasdaq June electronic miniature futures contract hit all-time contract high today.  There was a sharp selloff, but it put us into another neutral print.  The trend is still favoring longs, and I will see the rest of my positions into the new month, June, the finest month of the year.

So embrace uncertainty, know you risk, and execute like you always wanted to.  Now if you will excuse me, I have a poolside conference call at 3:15.

Stop by over the weekend for some auction theory.

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Anatomy of a Swing Trade

If you are trading stocks, then it is mandatory that you know how to take a swing trade because sometimes there simply is not enough volatility to merit day trading.  In the low volatility environments, we also see cheap option pricing.  The pricing of options is something I actually know very little about because I am most concerned with timing my swing and knowing two key price levels:

MY FIRST TARGET AND WHERE I AM WRONG (Stop loss)

My typical swing trade lasts from 2-12 days with my most recent successes being in shorter duration swings.  Since my holding period is this long, I like to use a 9 period exponential moving average for reference.  This tells me what the average price was over the last 9 days while skewing slightly to the most recent data.  I feel like old news is exactly that, which is why the exponential moving average which weighs more recent price action (or news)  heavier is more effective.  I also use the 33 ema because through extensive testing on multiple timeframes and instruments it proves time and time again to be the center of the universe.  This gives me an idea of the longer term swing.

Finally, I like two run two CCI channels to gauge momentum.   A longer duration CCI tells me the direction of longer term momentum and the turbo CCI helps identify pullbacks.  Most of the time I look to buy pullbacks in the direction of the trend, but lately I have been looking for bases in beaten up momentum plays because they offer a simple consolidation to base risk upon.  Take my recent ANGI long:

ANGI_JUNE2014

Remember, these types of trades work best when the broad market is trading in your favor, especially the Nasdaq.  When we had large ranges, big chop, and violent down days, swing longs were dismantled one by one.  You have to know when to change gears and go back to day trading.  It is much like riding a roller coaster.  The slow, anxiety ridden ride up is great for swings, the fast plunge down is day trade mecca, as is harsh chop.  Stay cool out there.

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Contract High in Sight

Nasdaq futures are down a touch after a balanced overnight session.  The 8:30am Canadian GPD numbers as well as the Consumer data out of the USA was initially met with a selling response.  We jave more economic data out at 9:45 and perhaps some Fed speak.

Yesterday the price action was tight after we opened inside Wednesday’s neutral print.  The opening type was an open auction inside range which eventually broke higher.  The Nasdaq rallied late in the session and into the 15 minute settlement period after cash close.  As a result, I had to split off the late auction from the rest of the well-defined profile.  This yields a clear picture of the balance and levels of opportunity below current prices.  See the following market profile chart:

NQ_marketprofile_05302014
The intermediate term swing is buyer controlled.  For a moment yesterday morning it looks as if we may be coming into balance.  However we never made a lower low after printing a lower high.  Instead the swing continued pressing higher and by the close of trade we were only 2.25 points away from contract highs.  I do not draw too many lines on my intermediate term chart when possible because I want to see the volume profile structure.  I have noted three key intermediate term levels however: the contract high, a nice low volume node just above yesterday’s congestion, and another nice low volume node inside the volume pocket buyers rejected us out of.  See below:

NQ_IntermediateTerm_05302014

After a strong week and into month end, the context is challenging.  Waiting for a clear picture to emerge will save your emotional capital, even if it turns out to be a losing trade.

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