iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,358 Blog Posts

Post Super Bowl Commercial Roundup

The world’s best marketing is on display Super Bowl Sunday.  It’s hard for advertisers to get our ADD attention.  Yet once a year marketers are promised a massive audience who are actually excited to see commercials.

Going into tonight, my position bet was with Best Buy.  I thought they would deliver a solid advertising presence.  I found their commercial to be a non-event mostly because I was outside running a charcoal grill in the sub-arctic during its run.  No one mentioned it otherwise.

Samsung crushed the commercial scene.  They ran a funny Super Bowl ad campaign hard on the internet leading up to today and then a late game variation on the idea.  Then they splashed LeBron James in FTW.  Nice use of Saul Goodman too.

Chrysler delivered two solid ads, sticking with the serious tenor that the media machine receives well.  They played the military and the God card.  They want you to cry, they want you talk, then they want you to buy a pickup truck.

Through all the drama and Beyoncé emerged one very clear winner.  They didn’t have to spend a dollar on advertising, although they have plenty of cash on hand.  All they needed was a few thousand inefficient metal halide bulbs to overwhelm the electrical grid.  If only they had lit the stadium with the lights of the future, the LED lights of Cree, we would have had an uninterrupted Super Bowl.

Cree is already a beast this year, up nearly 30% in one short month.  The recent advancements in lighting grade LED technology are a boon for company as adoption rates accelerate.  Infrastructure rhetoric is sure to be on the tongues of our current administration.  How much of this is currently being baked into the stock price of Cree is unclear, but converting more of a city’s infrastructure away from outdated lighting is an insurance policy against fragile electrical grids.

Cree wins.  The babies from space had me for a minute, then it was Kia.

Bonus points to the Iron Man trailer, showing Air Force One blowing into pieces only seconds after the shocking power outage which my jaded mind instantly thought could be a terrorist attack.  Strange times we live in.

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Rule of Three

I went over my performance for the month of January this morning and I was rather impressed.  I’m sure people outperformed me, but I turned in a healthy 4.8% for the month.  It was a simple month to make money long, but that by no means makes it easy.

I started digging into the data for my future trading strategy too.  This project has been on the back burner for months as I completed a major overhaul of a business process but with the pesky business tasks and IRS requirements wrapping up it’s time to push my algo over the finish line and get her live.

Whether superstition or numerology or pure voodoo, I find much success in life when I use the number three.  Teams of three, three dips from the well, three sacrificial chickens, and well you get the point.  The environment I trade stocks in isn’t quite as structured as I plan to trade futures because I like to give stocks time to work and this can take days to months.  But with how I intend to trade futures, there will be multiple trades per day with the book going 100% cash at the end of each day.

Given the higher frequency of trades, a mistake is amplified and much quicker to damage my wealth.  Therefore I’m developing a very structured environment that will give me quicker feedback.  Part of that feedback is the rule of three.  These rules are put in place to prevent me from blowing up yet another futures account:

Three losing trades: paper trade the rest of the session and review plan and market context

Three losing days: paper trade the rest of the week and review plan and market context

Three losing weeks: rebuild the plan and algorithm

This will be my first attempt at automated trading.  My prior attempts at trading futures have been purely discretionary.  The key to being a successful (read consistently profitable) future trader is to TRADE ONLY.  That means no running a business and no having a day job.  I like to diversify my income sources and I have big plans outside of this market.  An algorithm solves this dilemma by only allowing me participation in the market when my edge is present.  I will get an alert when a trade is initiated and I can then turn my attention to managing the trade if I want.  Otherwise I can let the algorithm handle the exit too.  I like handling the exit so far in testing because I can’t program market profile context into my robot.

http://youtu.be/1mdgLn5BFRQ

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PEDAL TO THE METAL

I don’t think many people take me seriously.  The funny thing about a serious person is how funny you really are.  You’re living a joke of a life.  When I had a clear reading of the tea leaves this morning, I sent out the following tweet (edit: bad spelling and all):

I don’t know how many people realize this, but I always put my money where my mouth (pen/keyboard?) is. Always. If something is worth talking about, it’s worth putting your skin on the line. As for business endeavors, I firmly believe in giving 100% as anything less is lazy at best and whimsical at the absolute worst.

So I spent the remainder of the session ratcheting up my long exposure and taking my cash down to zero. Yes, I’m 100% long. I haven’t been all-in in over two years. My positions range from high quality to downright degeneracy. It is my hope that the Super Bowl stimulates obese spectators to jam their nacho covered hands into their tiny pockets to grab an inked pen and write a reminder on their arm to buy stocks on Monday.

Wow my thesis sounds really flimsy now that I write it down.

I have many positions, but I’ve placed my primary bets on TSL, SU, GS, SINA, ANGI, and VHC.

Trina, Susan, and Angie are my girls this weekend.

Trade’em well!

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Simple Working

Getting fancy with exotic stock picks has so far not been the best strategy for participating in today’s big move.  Your favorite senator’s bank, Goldman Sachs, and Notorious AIG are ripping in today’s tape.  A simple tech play like Google is crushing.  The non-farm and housing data out this morning was received well by the market and we’re seeing gap-and-go action from the S&P.  The NASDAQ is having a strong day too.

Meanwhile my specialty plays like solar and retail are trudging around, looking like they’re wearing their dad’s trousers.  Overall the morning session has been a progressive one for the bulls with strength in many key areas and a healthy start to February.

The profile today is long and thin suggesting buyers are initiating new trades at these levels.  The VPOC currently resides at 1506 which is a huge jump from yesterday’s at 1494.25.  The ball is in the buyers court going into the afternoon session.

If we see selling enter the tape, look for a fight at Wednesday’s value area high starting at 1504.  If buyers don’t present themselves at these levels we could rotate down through the value area and back below 1500.

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The Battle for 1500

http://youtu.be/zQDaGLe2qk4

Yesterday’s auction was successful in cleaning up the toothy lower ends of the prior two day’s profiles.  The price range from 1500-1495 has been very balanced and building pressure.  We’ve seen aggressive entry into the tape by both buyers and sellers at the extremes of this range which is healthy behavior for a balanced auction.

The sellers did manage to push value to its lowest level since entering this new range, down to 1494.75.  There were three shifts in the VPOC yesterday which is another sign of a balanced auction.  The VPOC was resting higher most of the session but as we entered the last fifteen minutes of trading a massive block of orders came through and lifted price higher.  Before the price was lifted the activity shifted value lower.

Honing in on yesterday’s value area, notice the entire value area is below the prior days.  This is a victory for the sellers as they have been able to slow value at best for most of this year.

Being the first of the month and a Friday, I’m expecting lots of trickery and traps.  I will again be placing most of my attention on the afternoon activity and the value placement.

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The February Seasonality Distribution

Seasonality data is still new to me, but given the volume of the data available it’s interesting to analyze the distribution to understand what is normal.  If we can define February performance that is normal we can hone in on stocks and industries whose behavior isn’t normal in the wonderful quest to extract money from our markets.

When you put all of the average monthly returns available in The PPT seasonality into a frequency histogram you see a normal distribution which forms the familiar bell-shaped curve.  Most readers of this site made their way through the school system by being massaged into the lower 1/3 of the bell curve.  Good for you.  I know a few of us were up in the 99th percentile, let us continue.

Once I have the data set I can make some observations which can direct my eye to potential opportunities.  My first observation is the slight upward bias of the distribution.  The highest frequency occurs above the zero line.  This could be attributed to the upward bias of the market during the month of February.  Next I use my eyes to single out where roughly 70% if the data is, much like the value area on a daily volume profile auction.  I’ve noted the range of normal February returns in orange on the following chart:

Much like the value areas from my profile charts, the opportunity lies at the edges of value.  This is where we can focus our attention and do business.  The extremes of the tails are interesting, but they could be erratic, event-driven performance.  If an industry’s stocks moderately outperform a massive dataset, there is a proclivity for repeat performance.

Thus I filtered the data down to stocks that reside in the fat tail of the upper distribution, with performance in the range of six-to-ten percent.  The data returns 187 (buck, buck, buck) stocks.  Finally I see which industry has the most stocks from this sample.  The winner is Industrial Metals & Minerals then gold:

Given Fly’s take on the data and mine [sic] I would say it’s going to be a shiny February.  It’s nice to see Senator Gint rejoining the ranks today.  You should read his post today and run through his entire archive and consider yourself lucky to have that knowledge free at your disposal.

http://youtu.be/oxpcZrQQM-4

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The Afternoon Is Paramount

The market has found buyers again today in what has been an interesting morning trade.  The battle lines have been drawn and I spent the entire morning practically sitting on my hands because I wanted to buy more stocks.  I sold out of HOV this morning when it lost a key level for me.  Now it seems the move lower may have been a shakeout and the shares are recovering nicely.  Go figure.  Selling the name for a loss is of no concern to me because it’s on to the next setup (and this market continues to offer plenty).

I really want to see how we close today before allocating capital.  Volume has started to come into a few names I’m stalking so I decided to pick up a ½ position in BBY in case people start pumping this market up while I travel several arctic miles to procure a sandwich.

I like how Fly’s generator pick GNRC is setting up today and it had a curious bit of buying intra-day that has me considering purchasing some shares.  The S&P is still coming to terms with 1500 and I’m hoping to see us stick within a +/- five handle range of this level.  This could allow individual stocks to perform well.  Overall, it has been a healthy auction today.

Facebook was a sale this morning.  Now it’s a matter of perception.  The volume on this methodical move today suggests strong accumulation.  I’m expecting big things from this stock in Q2 and getting my position size back up will be tricky.

Cree continues the comeback.  (Good) tech is working.  My goodness, look at MLNX.  I gave up on the name and now it’s finally catching a bid.  AMZN is run by communists.  ZNGA only dumped lower for two days instead of its usual five.  These are my brief talking points.

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MONTH END: TIME TO RIGHT YOUR WRONGS

As a trader, your job is not to impose your ideas on the market.  Your job is to research ideas and see if the market agrees.  Losses are part of the process. – FuturesTrader71

Often times we make assumptions in the market using the data at our disposal.  I personally feel that probabilities are the best tool available to a trader or investor.  I’ve built many probabilities into my trading style, and am fortunate to get a glimpse into The PPT which is a treasure chest of probabilities I can add to my stock picking.

Taking a loss does not mean you’re wrong if the process is right.

Taking to the profile we’re seeing some weakness carrying into the AM globex session.  The S&P futures have hit their head three times on 1496 and at 8:25 the level has been rejected in a rather stern manner by the sellers. Should we see trade continue to rotate lower today, I’m looking for buyers to step in at the naked VPOC from 01/24 at 1490.50.  I will be looking for buyers to stabilize price here.  Should they not show up to the party, I must consider cutting weak names from my portfolio to raise cash.

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Top Super Bowl Pick

Left for dead big box retailer Best Buy has shown signs of life this year.  They had a decent holiday season and their earnings announcement pumped the share price of BBY out of a nice base.  Since then price has drifted higher along with the rest of the market.

The advertising team at Best Buy is putting out a funny ad during the Super Bowl.  As simple as it sounds, it is an opportunity to reintroduce consumers to the brand.  You nacho chompers love funny commercials. Pair this with the curious business model of their online rival Amazon and we could begin to see money rotate into this name.  It’s beaten down and people love a comeback story.

The daily chart shows price behaving in a way I particularly like.  I would like to see shares of BBY continue to come in and enter the hon3y holeI’m always looking to find the first pullback after a stock changes directional trend.  It offers the highest probability and also has the greatest profitability potential.  Of course, the overall market needs to remain constructive for these setups to work, but keep Best Buy on your radar leading into this weekend’s game.

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In Bloom

For the sake of keeping things simple I’ve highlighted the two price zones that I consider significant in the short-term for the S&P future.  The scene of the breakout yesterday is interesting.  It’s the confluence of the prior two day’s value areas.  The subtle cue that the balance may break to the upside was the slight uptick in the value area.  Yesterday the breakout produced single prints.  Single prints signal aggressive activity that resulted in a violent movement in price.  How we treat this level for the remainder of the week can be very telling.

Above I’ve highlighted the level where I expect to see sellers enter the tape.  If they can’t show up and defend these levels, it’s pump time.

Today it’s all eyes on Facebook as expectations have been set high by wall street (why?) and they need to deliver. The GDP numbers are rattling the markets a bit, if the bulls actually hold on today they have serious sand.

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