The Reaction to The Reaction

The NASDAQ futures drifted higher over night on low volume ahead of the jobs report at 8:30am.  The initial reaction to the jobs report was a move higher.  The report itself was mediocre-to-decent news thus an initial positive reaction is good, but not of the strongest conviction.  The strongest conviction would be a positive reaction to a bad employment report.  The strength was quickly faded by a strong bit of sell flow.  It looks like the opening may be interesting today.

The long term time auction is buyer controlled.  This can be seen as a series of higher highs and lows on the a daily chart of the NASDAQ composite.  If sellers can succeed over the next few days at printing a lower high verses March, we will likely see the long term auction transition into a balanced state.

The intermediate term auction is in balance.  Overhead supply came into effect yesterday morning and the resulting trading day was a press lower.  The action probed prices back to the midpoint of this intermediate term balance where my expectation was to find buying.  I will be watching the price action around 3632.75 for an early directional bias on the day.  I have highlighted this level and a few other observations on the following volume profile chart:

The short term auction is very indecisive but I would call it a semblance of balance.  Value is roaming somewhat aimlessly.  We have a strong developed profile overhead which price rejected away from yesterday and since then we have been inching back upward toward the reference zone.  I have highlighted this key upside profile as well as a few other observations on the following market profile chart:

The market made an interesting move this morning after establishing initial balance.  We will take a closer look at the specific details later on today but its suffice to say a new trading picture is emerging from the opening swing.

I was down a hefty bit today, led down by the aggressive selling in YELP.  I had in mind a stop on this stock but in only a few moments of being away from the computer it blew right through that level.  Now I have no choice but to hold onto my nearly worthless option premium.

I still like my changes with LULU going into tomorrow.  The yoga pant is looking ready as ever to bust a move.  I managed to scale off some of my Z calls at the high of the day early on

Everything else is still in place.  Perhaps the market will motivate me to act further tomorrow?

Stock index futures were quiet overnight and traded inside of a narrow range without much volume.  As a result the overnight profile shows no definitive value or balance.  As the USA comes online, it appears some selling is working into the marketplace.

The short term auction is balanced.  The balance spans back to Tuesday afternoon when a strong upward move came into overhead supply and two-way auction ensued.  This was very interesting because my expectation was for overhead supply to be of a greater force and cause a more sudden rejection, especially with sellers at the time controlling the intermediate term.  Perhaps the market place is waiting to hear the jobs report on Friday.  Regardless, it appear the market is pausing until more information is presented.  I have highlighted the short term balance on the following market profile chart:

The intermediate term auction is balanced.  Price is pressed up into a glut of supply dating back to mid-February and it is slowing upward price movement.  The EMAs I keep on the intermediate term timeframe crossed back upward and now my expectation is to get back into the prices in and around these EMAs and see how the market behaves.  I have highlighted some key price levels on the following intermediate term volume composite:

The long term auction remains buyer controlled.  Buyers are currently tasked with setting a new swing high.  On the contrary, sellers want to roll this market over and put a lower high in place.  A turn lower could be the catalyst to displace the long standing buyer control on the long term.

There is no game in town better then momentum swing trading, in my very humble opinion.  It just has the potential for so much given the proper risk strategy.  The play is essentially to buy into the best looking charts in the most momentous stocks and try to hold on to the one or two positions that go beast mode while the rest do nothing/bleed you out.  Managing the bleeders is the bulk of the labor.

The other game is intraday scalps in the futures.  There were a few opportunities today before we went catatonic.  Overall, I was waiting for some aggressive selling but it never quite showed up.  Therefore, I put on weekly YOLOs in LULU.  The weather is breaking and with the change comes streets literally lined with women in yoga pants and skirts.  It feels festive to put a side bet on LULU into the weekly close, especially while we trade in the viscous gap region.

I took another scale in the weekly TSLA calls I bought last week.  This is the “one or two” positions I need to not muff to make this whole idea work.  I took a solid scale intraday at the first peak, it felt good.  The execution was solid and I didn’t sell the whole position—a folly which would have me level 3 frustrated because of how the stock ended the day.

Social media took a burn mostly today, led by YELP which was caught on the receiving end of an FTC document from a few weeks back getting passed around.  I am right about at my risk extreme for this position.  However, it did not breach.  Thus I will have to just tolerate the potential risk of a gap lower tomorrow.  This is one of the drawbacks of swing/momentum trading, but you diversify so one loser does not derail you.

I bought some KNDI today once it fell well off its high of the day.  I have little else to report.  The intermediate timeframe is getting a look I know and love, thus I am pressing my longs into overhead supply a bit more.

In business, not just trading, momentum is your best friend.  If you can get a little bit of it, keep it rolling or else you will have to break the static force of friction again.

http://youtu.be/Hw9CzSSk218

Yesterday was a strong day for the NASDAQ index, a day marked by aggressive other timeframe (long term) participation.  We really dial down in these morning context reports to wrap our mind around the context of the marketplace.  We focus on the NASDAQ because most of the high flying momentum stocks reside within it.  As important as the short term timeframes are to our daily decision process, we always have to keep sight of the big picture.  The long term auction is still buyer controlled.  This can be seen as a series of higher highs and lows on the daily COMPQ chart.  The long term buyer is now tasked with making a new swing high, otherwise the long term auction may come into balance.

The intermediate term timeframe is balanced.  The strong move yesterday was dynamic enough to push sellers out from their controlling position.  We are however nearing a price zone where I have some expectation of selling.  Price is pushing up into the bottom of our uppermost balance distribution which dates back to February 13^th, a day when Ben Bernanke gave the market a final push before leaving his post.  As participants are made whole, we may see supply coming into the market.  I have highlighted some key price levels on the following volume profile composite:

The short term auction is buyer controlled.  This can be seen as value progressing higher over the prior few profiles.  It can also be seen as a lack of overlapping value areas which tells us the buying force is dynamic enough to keep value on the move.  However, our current profile which includes part of yesterday afternoon’s rally and all of the globex session presents a slight imbalance.  From this imbalance, I envision some downside early on.  I have highlighted this scenario, as well as a few other observations on the following market profile chart:

There was nothing about the way the market closed yesterday which suggested we would gap-and-go higher today.  You have to take every indicator, every puzzle piece if you will, in context.  It is important to not base your decisions on any one single indicator or seasonality statistic or favorite blogger pick, but instead to build a comprehensive knowledge of the market and its stocks.

You can achieve this rounded understanding by keeping your browser dialed into iBankCoin.com where a band of pirate-like capitalists cultivate an environment of winship and tenacity.

I started intiating risk yesterday afternoon after noticing a subtle shift in the behavior of “the seller” in the NASDAQ futures.  Where she so often struck with great vigor and gumption, she instead gave a limp-wristed shove.  I was shocked.  I was sitting in my chair, watching dearest Elroi trip over himself to cover the robot short, the same afternoon short that was bread-and-butter for weeks.  That was the first bit of context.

Then today also happened to be the first of the month.  You need to hammer a few calendar dates into your brain: the first trading day of the month and the Thursday before option expiration.  These are shenanigan days and you need to- be ready for anything on them.

The buyers came in at the opening bell and prices drove higher, the action was abundantly clear to be of the long term participant variety.  Given the context of an off kilt seller yesterday, and the vigor of the long term buyer today, I made the executive decision to intiate an aggressive amount of risk.  What risk, exactly?  Well I’ll tell you:

YELP & Z calls and YGE stock

I swapped out most of my ENPH for the YGE so it was actually only a lateral move.  Here is the rest of my book, for better-or-worse:

Calls: TSLA (weekly), ZNGA and FB (April)

Stock: RVLT, LO, GOGO, TWTR, CREE, AMBA, OESX, IMGN, LEDS, HEMP, and GRNH

That makes 17 positions.  I will look to consolidate that sooner rather than later.  As soon as tomorrow, as a matter of fact.  Let’s see if I can make some pesos tomorrow.

I was up 2.6% on the day.

Cash is 6%

Pants are off in anticipation of oculus rift.  I have to step up my FaceBook game.

You just can’t keep me away from social media.  What with the prospects of virtual fornication with high school sweeties via FaceBook and their oculus rift to YELP with their addictive interface for the too-cool-for-school foodie, I like them all.  Goodness, I even have ZNGA.  Help, because I have Z too.

I have risk allocated to the delicatessens of momentum trading: TSLA, Z, YELP, and FB. I pair that with the outlaws: TWTR, ZNGA, and LED/solar.

Perhaps one of these stocks will have something of a rally over the coming days.  If not, I will again be self-lambasted for assuming too much risk.

Here we go again, social media exposure part deux.

NASDAQ futures drifted higher overnight and as of this blog are set to open inside of yesterday’s balance and range.  Opening inside of prior day range presents a lower risk/reward environment.

The composite index gapped higher Monday morning and was mostly able to sustain the gains.  We did see heavy selling into the bell which carried over into the post market settlement period.  However, this selling was not able to achieve even a half gap fill.  As we progress through this week, we must keep this gap context in mind and how the market ultimately handles it.  Do we leave this gap behind?  Does it half fill then find buyers?  Or do we close the entire gap and then ignite selling momentum again?

Standing between us and the above gap fill scenario is a volume cave on the intermediate term.  The cave spans roughly from 3590 – 3565.  We entered the cave yesterday but sellers ran out of time.  With the overnight inventory long, I suspect we may see sellers present themselves after the opening swing and attempt to stimulate liquidation through the cave.  Whether or not they succeed will be interesting because they still retain control on the intermediate term timeframe.  I have highlighted the intermediate term volume cave on the following volume profile chart:

However, this is the first of the month, the first day of a four day period where buyers have a slight edge in the SPX.  Whether this strength finds its way into the NASDAQ is to be determined.  The short term auction is balanced.  We are trading inside of a large distribution formed yesterday with clear signs of responsive buying and selling.  The break from here will give us guidance into whether either party is able to gain control in the short term.  I have highlighted your key levels to monitor for short term control on the following market profile chart:

The long term auction is still buyer controlled, it is the beginning of the month and quarter, and we are priced to open inside balance and inside range.  This seems like a great day to fade early price level extremes (extensions from the opening swing) and go with and buy flow trend intraday.

If you must play, decide on three things at the start: the rules of the game, the stakes, and the quitting time.

—Chinese Proverb

We put the first quarter to rest, and I managed to be down eight percent over the duration.  What may seem like a grotesque underperformance and waste of time to you has been one of the most enlightening periods in the market yet.

I overtraded momentum stocks, piling each successive win into two or three more ideas.  Then I mismanaged a few of the key puzzle pieces that would have kept the whole leaky dyke in place at unchanged on the year.

Literally mismanaging two winners put me at eight percent.  There isn’t a huge margin of error in this game folks.

Nor any game, for that matter, especially on the highest level.  If you think you can trade live and make correct decisions one-after-the-next without a plan you will slip in the heat of battle.  Most of you live outside the world of total market immersion too, so your daily work life may be even more complicated.

Have a plan.  Set hour(s) of operation, talk about what overrides said hours of operation, and just trade for that moment.  I am narrowing that timeframe tighter and tighter to the open.  At this point I can surmise the gist of a trading day by 11.

Today was looking like an odd normal day again until sellers took a massive battering ram to the NASDAQ into the bell.  It was something to see.   The support was there right up unto 4pm, for the tape paint I suppose, then it wooshed lower in that little 15 minute settlement period over in degenerate Chicago.

I was a buyer in the afternoon, just before the above rout occurred.  I was buying with the expectation of a similarly awesome powered rout, just in the opposite direction.  Such is life.

You must understand, a normal day occurs less then 30% of the time so if you can approach either initial balance extreme late in the day, you are talking about a 70% likelyhood of a breach.  DOESN’T THIS KIND OF STUFF EXCITE YOU GUYS?  Stats!?

I like’em.

Finally, I think everyone is out watching baseball and enjoying their children and such, not buying Facebook and Zynga Monday afternoon.  I don’t know, I felt unique.  Let’s see if it pays off to be unique, or if I am just the only jacked ass sitting inside my hipster office.

I am back on the facebook bandwagon.  They bought Oculus Rift, that’s just cool.  Plus, I like the look here verses the 99day EMA.  In the $62.50 April Calls.