#MOARMODE

I am pressing though waves of exhaustion, much like the market is attempting to climb through the upper atmosphere of intermediate term balance.  If you cannot sleep, then you cannot sleep and you might as well work.

I scaled out of TSLA this morning and rolled right into YELP.  I could have pressed a bit more juice from the TSLA trade but with the options set to expire tomorrow and various “obligations” perking up intro the weekend, I thought it wise to roll into next week’s YELP if I want to continue riding the momentum train.

It turns out my knife catching idea in DDD was a winner, unfortunately I was not.  I planned this trade out almost perfectly and then fumbled at my own 15 yard line.  Had I executed properly I would be at the 75 yard line and in field goal range.  This milk, I spilt, much like pondering a YGE long 20% lower…you really do not need to waste much time on these would have, could have thoughts.  However, stick to your plans my friends.

CREE is working, and with the big lighting convention coming up in the first week of June, I think additional buzz and hype may allow me to reach my first target of 50 before my option expiration.  Will RVLT chase behind, the chart is coiled nicely, looking like the CREE of two days ago….thus it could.  No position for me in RVLT….yet.

Elsewhere I started looking for small bombs, I came up with FCEL.  You know, fuel cells, those hydrogen powered cells that power, stuff.  Come’on folks this is not high level research like The Fly generates, this is dumpster diving.

Speaking of which, I took a long in XON right off the rip this morning.  I love a good story stock, and I like what the IBB is doing here.  Have a look:

There is no one right answer to the momentum game.  You pick your few favorites, hopefully before they pop, and scale at logical price levels.  Like engineering, trading works best when you keep it simple.  I took a 1/3 scale on my QQQ long, long live the mighty PPT.  With a bit of luck, I can buy a pullback and trade the rest of the 10 day holdings period.  ALL HAIL The PPT.

We never know how far the market can go in any one direction.  We can however monitor the action and look for signs of continuation.

Nasdaq futures  are trading a touch higher after giving up some of the overnight gains when the 8:30am jobs report hit the tape.  We are currently trading just above the low of the job claims selling as the USA comes online.  The overnight session formed an odd ledge which is likely to resolve early on, especially given the proximity to the overnight gap.  See below, on the 24-hour profile:

The regular trading hours profile shows buyer control, however not the radical jolt higher radical control we have been managing to trade lately.  Instead we saw buyers respond to early pricing as if it was a discount, and later in the session more buyers came in and initiated fresh risk.  Toward the end of the session we saw another rally which printed a high volume node near the high of the session.  This is interesting and suggest the market was successful in facilitating trade at these higher prices.  Higher advertised prices brought more buyers into the market.  See below:

We need to remember however, that we are trading at the high extremes of intermediate term balance.  Gravity may kick in and pull us back to the mean, which is now very far from current prices.  Should this occur, we would first need to lose some important composite low volume nodes.  I have highlighted the levels below which sellers would have to bunker bust to cue the revision trade:

These markets are faster and more deceptive than ever.  For every good idea I have, there are three bad.  Unless I can capitalize on the good by diligent execution, the bad will quickly outnumber me.  I do not care how well you play Halo or Call of Duty from your favorite spot on the map, when you are outnumbered even a gaggle of pwns can take you down.  Straight pwnage brah.  This is who you are trading against:

I have three call positions:

CREE, TSLA, and ANGI

That’s enough call options in my life.

I have three common stock trades:

AIXG, SCTY, and QQQ

That’s enough swing trades in my life

The rest of my book is bracket committed (invested) into TWTR, LO, and GRNH because I am a quality guy.

I added a new tool to my futures trading repertoire this week and it has been a tremendous help.  Loyal iBankCoin comrade and fellow Pelican DVK1970 introduced me to it, and it really feels like the piece I was missing to achieve consistent profitability.

Trading is going well, the stats are solid and I am avoiding the traps I normally fall into.  We shall see what the summer brings, but I look forward to picking this game back up and going live again.  If you are feeling too old for the market, step back for a moment.  I spent most of the early afternoon building out new infrastructure for my grape vines.  It was very relaxing and creating something tangible was rewarding to my soul.  Also, increase your exercise and cut out the booze for a while.  These are a few actions working for me.

Now I am off to till the soil and sow the land.

The overnight auction is slightly higher in the Nasdaq index after an interesting neutral session yesterday.  As the week continues on, volumes are light and likely to decrease as we head into the holiday week.  Note: US markets will be closed Monday in observation of Memorial Day.  We have lots of Fed talk on the docket for today which may lend some volatility to the market. However, as the USA comes online we are priced to open inside yesterday’s value and range.

Yesterday was a neutral day, the type of market profile print where price range extends beyond both extremes of the initial balance.  These profiles suggest aggressive indecision on the behalf of the marketplace and tend to occur at or near inflection points.  The volume profile print that resulted from the action shows the heavy indecision with a wide distribution and several high volume nodes throughout the profile.  We settled near the mid, but there are some interesting characteristics and price levels from which we can glean some intraday insight as today progresses.  See below:

Since we can see the seller above, and we can also see the thin structure they desire to press price into, we can zoom out to the intermediate term and see why their presence is being felt.  See below:

And if we zoom in on the intermediate term action, we can see the microcomposite low volume node that is pivotal on this timeframe, 3599.75, which you just as easily could have conjured by watching the price action around the 3600 century mark.  But at least we know there is a why in the equation.  As adult learners we always want the what and the why.  See below:

Finally, going to the very long term weekly chart of the Nasdaq composite, we can keep our mind wrapped around the brackets we are trading in.  The market spends more time bracketing then trending, so you need tools to trade these conditions.  See below:

You may think everyone sold this afternoon on the Fed comments, but if you were watching the tape closely we began the heavy selling 27 minutes before that pasty face took the podium.  Did he speak from a podium?  I don’t actually have cable.

Anyhow, the real reason for selling, the pivotal moment which occurred at 11:47 and eleven seconds (timestamp), a mere 3 minutes before top tick in the daily Nasdaq session, was me buying June calls in the succubus, Angie’s List.  Everyone knows the game you play when you dabble in the dark arts of summoning the succubus.  All joking aside, I like the name, if only for a brief short squeeze into the greatest month of the year.

We printed a neutral day in the Nasdaq today and these tend to occur near inflection points.  The play is to grit your teeth and buy the second range extension on the day, which was the new low of the day this afternoon.  However, as is usually the case with market profile probabilities, one cannot simply place a buy order below the low of the day and pray, because the risk is insane.  Instead you need something to lean on.  You can also use the 1,2,3 reversal to keep yourself patient.  Here’s the neutral print, followed by the 1,2,3, reversal:

Bottom line: these neutral prints are a big piece of context.  We are trading in the mission critical danger zone, the upper cusp of balance.  Fast attempts to thrust the knife into your gut will be made.  Smaller position sizes are warranted until a clean trend emerges.  A short or two may not be a bad idea.

Stay dry out there folks. See you tomorrow.

Lately I have been studying the /NQ or Nasdaq electronic futures because I am building systems to trade it and find the auction activity to be more active and also more relevant to my tech-heavy holdings.  However it can be informative to look at other markets and see how they are behaving.  I have made a few observations about the /ES on the following market profile chart:

Nasdaq futures are trading a touch higher overnight in a mostly balanced session.  The key feature that stands out from the 24-hour profile (which includes our globex session) is the ledge that formed at 3607.25.  Markets have a tendency to spill over, or “flush through” these ledges.  The context of a ledge is interesting because we can glean insight from it.  If the market is instead unable to press below the ledge, then the profile piece is indicative of a strong bid in place.  I have highlighted this ledge below:

Taking our eyes to the intermediate term timeframe, we are at the top of our bracket range.  This zone is as challenging an environment as I know to trade within.  The forces of mean revision act like gravity on the tape and their powers are stronger until we exceed balance and begin exploring elsewhere.  This is week 7 inside this bracket range which is fairly old in market years.  The potential does exist to breach and explore higher, however you should be looking closely for signs of weakening propulsion.  There’s no need to get fancy in this regard, keep your eyes on 3600.  There is a very low volume node at 3599.75 which separates us from the main pull of mean revision.  See below:

Short term, we are buyer controlled with yesterday’s profile finishing out with a strong distribution atop a thin zipper.  This looks like an exaggerated short squeeze profile which often takes on a P-shape.  It suggests the progress made in the morning was sufficient for the day and did not entice enough new buyers to continue the trend.  That makes sense, given we have an entire week left.  Upside targets are the 05/13 high at 3624.25, then the naked VPOC from 04/03 at 3631.75.  Caution below the profile ledge at 3607.25:

I am having a mixed but mostly green day in the old trading portfolio.  The action is nothing like the flaming swords of earlier this year but much more palatable as I focus on some new strategies elsewhere.

My only move this morning was buying June calls in CREE.  I was chopped out of this name last week and decided to get back in and sit put.  My DDD is working as is the QQQ trade.  I am at a critical place with my AIXG trade which is down a quick 10%.  I can either add or cut or do nothing.  So far, I continue to look for buyers before acting.

We had a fast morning and we are grinding along, summer style.  Time favors the buyers on the intermediate term as it suggest these higher prices are gaining acceptance.  There was a battle down at the 3600 handle century mark.  Which side we of 3600 close these trading days will be my risk proxy this week.  Century marks matter and a flush below this level would swing the door open to blow through the bottom of consolidation.

I am keeping pace with this afternoon market, which is slow and steady.

Nasdaq futures are down a bit overnight but trading off the overnight lows as the US comes online to start the week.  The overnight session shows a balanced trade with a bulge of activity (volume) near the bottom of our profile.  Overall the globex session auctioned the price zone left behind by the fast afternoon move.  We are currently priced to open inside the thin and fast range which may lead to a choppy open.

On the short term, I am looking for support from 3564 – 3563.25 which marks the value area high of Friday’s primary distribution.  If buyers are not found at these levels we are likely to traverse the entire value region.  Up above our current prices I will be watching the high volume node which formed at 3585.25.  The burst of activity rushing into the market Friday was most transacted at this level.  If sellers are not active around this region then we are likely to continue rotating higher as there is little resistance above Friday’s high of the session 3589.50.  I have highlighted these short term observations on the following market profile:

On the intermediate term timeframe we can see what had me hesitant to buy Thursday’s close.  My authentic swing was setting up, the proverbial thrust-pullback-thrust.  However, buyers showed up right when they needed to and printed a double bottom right on the base of our tightening consolidation/balance region.  This level is important for the week, 3543, because below it we open the door to break balance on the downside.  Prior to last week we were consolidating along very orderly.  However the big gap up into last Monday made the picture a bit sloppier.  Overall the intermediate term continues to remain in balance, although the fast nature of the balancing would inherently favor the sellers.  There is a large overhang of supply left above 3600 after we flushed through the level last week.  I suspect we will struggle to press through this level as we attempt to work off that supply.  See below:

Zooming way out to the forest view, high above in a hot air balloon if you will, you can see the level of indecision in the marketplace.  This environment may seem volatile but in actuality we are balanced after a bout of selling.  The next move is yet to occur.  Until we see a definitive break away from this zone there are likely to be plenty of head fakes and stalled momentum attempts on swing trades:

Thinking a bit further about my strategy, I realized most of my morning trades should be complete by lunchtime. Therefore, this week I only viewed the opening swing and the action that took place into the lunch hour. There was a really clean opportunity to short the opening swing on Thursday which would have been an optimal entry for a very weak session. Check it out.

MONDAY:

TUESDAY:

WEDNESDAY:

THURSDAY:

FRIDAY: