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

Month-End Roll Up

Index futures gapped higher Sunday evening and did little else for the remainder of the globex session as price chopped sideways and formed balance.  As we approach USA cash open, the NASDAQ is currently up about 0.50 percent.

The long term auction is still buyer controlled and we are near an area where I expect to see signs of buying.  Keep in mind however, this is only an expectation.  If instead I see heavy selling pressure throughout the week, then we may see buyer control on the long term come into question.

The intermediate term is seller controlled but showing an attempt to balance.  The selloff on Friday afternoon printed a neutral print which suggested slight indecision but an overall directional confidence from the sellers.  Now that price has reverted back to the mean overnight, it will be interesting to see if the NASDAQ futures can stabilize above Friday’s low and consolidate before moving elsewhere.  A consolidation would be a welcomed break for stock traders, perhaps even more so then a strong rally.  I have highlighted the intermediate term on the following volume profile chart:

NQ_VolumeProfile_intermediateTerm_03312014

Bear in mind today is month-end and statistically the first four days of the month favor longs which could skew the picture we see develop today and throughout the early week into a very interesting picture.

The short term auction is balanced.  After forming a large-balance distribution through Thursday’s trade, we printed a P-shaped short squeeze and a b-shaped liquidation profile.  We are now trading in the middle of these two profiles.  Let’s see which breaks and whether it sticks to see where the control is early on:

 

NQ__MarketProfile_03312014

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Opening Swing: Third Edition

Opening Swing is an ongoing series where we review the opening swing for each day of trade in the NASDAQ futures and the effect these price levels demonstrate on the subsequent price action.  We also look at tradable opportunities and discuss the risks involved with these trades.

The opening swing is the price range established right after the market opens.  There are orders called Market On Open (MOO) orders which execute when the market opens.  The opening swing is not timed, but rather the push in either direction from these orders.

I began writing this series at a very interesting time in the market.  Many of the traders I respect and follow foreshadowed 2014 to be a year of increased volatility and as soon as it hit in mid January I began formulating thoughts and testing strategies to capitalize on the wider ranges volatility offers.  I chose to focus on the NASDAQ because it offers a wider range to trade then the S&P and also by monitoring the index I have an indication of the pressures existing on most of the stocks I trade.

Most of my notes this week are embedded in the images, so click through them to see some very interesting market activity in and around the opening swing.  There were some fantastic tradable opportunities this week.  As always, do not hesitate to discuss these strategies and share any inputs you may have.

For additional insight into the overall context from each day you can review my morning context reports.

MONDAY:

NQ_OS_03242014

TUESDAY:

NQ_OS_03252014

WEDNESDAY:

NQ_OS_03262014

THURSDAY:

NQ_OS_03272014

FRIDAY:

NQ_OS_03282014

 

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Sellers Drive it Home in A Rented Chevy Coup

I am continuing to trade well, and I am continuing to lose money.  Sometimes this happens.  The market is simply not in the mood to give.  Tesla announced the Germans cleared their cars of any wrongdoing.  Normally this type of news can send shares of TSLA 5 even 10 percent higher.  Today it was instead faded alongside the broad market where momentum stocks are the divine enemies of the stock gods.

I have a few positions perching just upon their stop points, ever so gingerly, enticing me to sell.  I could not pull the stop trigger.  Instead I continue to wade in this festering pool of momentum—convinced a snap back will make me whole.

I liked what the NASDAQ was doing today, until I did not.  We printed the classic P-shape short squeeze profile.  In the recent past, these would form the basis upon which the market would decidedly continue to squeeze shorts.  With Mutual Fund Tuesday around the corner, it seemed it may be the catalyst.

However, the actual intention of the P-shape profile is to be temporary before we return to the overarching trend, which, on the intermediate term is down.  The market received this temporary phenomena of upward price movement, sellers responded, then they initiated more selling which resulted in us closing down near the lows.

You must understand, this profile print today has a strong smack of seller conviction.  They were convinced with a high degree of certainty that selling ahead of the weekend was the right thing to do.

Will they be proven correct Sunday night?  Will you be trading Sunday night?  Lord knows I won’t on the day of rest.  But come Monday, we have an important decision to make, ride or die, a new month is upon us, a very foolish one.

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Nearing a Potential Inflection Point

We began seeing sellers abate yesterday after they gave the marketplace a solid push at the opening bell.  Their activity early in the day was dynamic enough to print a very wide initial balance, but as the day progressed we saw their control give way to balanced, two-way trade.  This type of market profile print is referred to as a Normal day although the name is misleading as these types of sessions are more an exception to the rules.  A normal day lacks any real directional conviction and often shows up near inflection points.  We can see the short term coming into balance on the following market profile chart:

NQ__MarketProfile_03282014

The intermediate term auction is seller controlled however, which leads warrants caution until balance can be achieved at the least.  I covered my hedge early yesterday into what I deemed price becoming extended to the downside.  However markets can certainly continue to press their momentum both directions.  I have highlighted the key downside levels on the following volume profile chart:

NQ_VolumeProfile_intermediateTerm_03282014

The long term auction is still buyer controlled.  It is damaged.  The trend is not as clean cut as we have seen for many months, but the pattern of higher highs and higher lows is still in place.  And we are nearing one of my favorite reference points, see below:

COMPQ_03282014

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Can You Make A Series of Good Decisions?

I can sit here and lament about losing money, especially the instances where my own trading folly resulted in a loss.  But mainly I scrutinize my missteps and reflect upon the time these mistakes waste.  Time, my friends, is the most important currency of all.  The corporations will fool you into thinking otherwise but at life’s core is the 40 good years you have to perform the work you enjoy and the success it brings.

The schools only take you so far and corporate jobs often peak and suck away at your soul.  Journalism always seemed fantastic, but the grass is always greener elsewhere, yes?  I am drawn to two types of work—trading and process engineering.  At the heart of both is data analysis.  Business is a series of statistically favorable decisions piled one on top of another.  Thus the role of the robot overlord is born.

I am a robot overlord.  I am encased in enough processing power build weather models for the local teevee network.  I have been mining data on the market for months, honing my helper algorithm Elroi to aid me in navigating the peaks and valleys of volume profile.  Do you know why I am doing all of this?

Because it is only a matter of time before the market returns to this ultraviolent state we see now.  It comes and goes, like the influenza.  I can see it coming and I want tools for trading it.  I don’t want to sell my swing trades, trades like the god damned LEDs.

If I am smart enough to see this coming and formulate a plan of attack for it, then eventually I will get my timing right.  I could blame Multicharts for breaking the Zenfire API on January MOTHER LOVING 1st  this year, but in reality I could use the Mirus DOM to trade manually.  I have been building a plan, a process document if you will, which details every single trading picture, every single entry, every single exit tied to each type of entry, and then coding said rules and extensively back testing them for merit.  All they while I grow my contextual big picture understanding alongside the fine people of iBANKCOIN.

I am just as excited as ever to be a Velcro-shoed futures trader.  I like order flow.  Order flow is pure.  I can see what everyone is doing, even the enemy robots.  I don’t care if order flow is arbitrage or an algo or a fund or the devil himself.  They all either hit the bid or take the offer.  And I can see them.

This post is not achieving any actionable point.  Just know The Raul will continue to plug away at the futures trading process until it’s refined into a consistently profitable methodology.

In the meantime, I will trade my way out of this paper bag a few of these stocks have me in and back to proper glory.  Top picks: THE MOST ULTRAVIOLENT MOMENTUM STOCKS THE MARKET OFFERS.  They are our only store of value.

Tick tock tick tock…

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Terminated

I am trading well but ENPH is taking me out back and beating me senseless.  I am down 15% on this stock in two short days.  Unreal, yet very real simultaneously.

Here I am, once again, juggling 50 plates in the traveling circus show only this time one after another is smashing atop my bald clown head and cerebral fluid is dripping down my pasty cheeks.  I lopped another 1.5 percent off my book today.  I would have been two, but I had a TZA position which I sold within the first five minutes of trade.

My only other move was to buy calls in TSLA.  This is a 7 dollar bet essentially that states, “$300 before $200.”

I looked at buying other stocks today, names like DANG and GOGO, but I held off.  Clearly I have angered the market gods and they sent their fallen angel ENPH to sodomize me.  The stock never went up one penny since my ‘reentry’ nope, straight down the pipes.

I could like to be sick but I have 5 more hours of work.

ENPH may just be another ticker symbol in the market of stocks, but every time I have traded it I get the rolling pin to the face and ass.

Don’t worry I am still in so it can continue catering. I haven’t felt this noob in a few years.

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Settling Unfinished Business

Sellers gained quite a bit of confidence yesterday.  The day started with responsive selling into the overnight strength which morphed into initiating selling for the rest of the day.  The session ended up printing a new swing low and solidified the seller control on the intermediate term timeframe.

The long term timeframe is still buyer controlled in the NASDAQ composite even through this selling.  This can be seen as a series of higher highs and lows on the weekly chart.  We are watching the market follow through this week on an outside candle print two weeks back.  The outside candle print often occurs near inflection points.

The intermediate term is seller controlled.  I had to rebuild my volume profile back to November 25th to get all the data needed for a proper composite profile representation.  I have highlighted some key levels and observations on the following intermediate term volume profile chart:

NQ_VolumeProfile_intermediateTerm_03272014

The short term auction is seller controlled.  Value is being pushed lower and prices are testing lower into areas of unfinished business (naked VPOCs).  I have highlighted the key levels I will be watching today, as well as a few scenarios on the following market profile chart:

NQ__MarketProfile_03272014

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Just One Big Misunderstanding

First off, I do not have cable therefore I do not have access to the wonderful news flow everyone is so eager to consume.  Second, if I did have cable then I would only watch The Cartoon Network.  Bear with me for a moment. I have an important point to make.

What you read on the pages of the Raul is unadulterated commentary driven by market behavior and data.  Before every post, I envision myself in an all white baptism dress being dipped into a 74 degree pool of Fiji water by the big hands of Jesus.  I simply take to the pulpit and tell you what I see in the world around me.

King Solomon himself could not offer a more diplomatic approach to market commentary.  With all of that being said, I must reiterate one of the most important big picture thoughts to keep in your mind when making any and all market decisions—they want your shares.  Not only do they want your shares, they want to flip them back to you at higher prices.

I have committed one of the most bush league bullshit mistakes you can make in the trading game.  I bought a breakout, stopped out on the breakdown, then bought the SAME breakout again, which is now -10% on me.  I did this in ENPH, a stock which I have never traded well for reasons completely independent of the ticker itself or any bologna fate.  It’s bad business trading like this, but let us turn our attention to good business, yes?

Smoking, all kinds.  Pot stocks took a pass on today’s selloff and LO and MO downright appreciated.  It is one thing to shrug off two percent gains in a momo junket that can slit 20% off your person the next day.  It is another matter entirely to earn 2% on a stock paying a massive dividend.  For once, I do not feel like I need more.  Usually when I play old man I don’t sink my teeth in, like when Cain Thaler had us all buying AWK in 2010.

I watched this selling develop day by day which makes the actual happening much less sharp.  Interestingly enough, I did not play it very well and I am -7% YTD on my portfolio.  I do however have a TZA position that I have to baby sit and clean regularly.  This was my way of swing trading the volume pocket we traversed 3 times today (literally 1000s of dollars worth of futures trading to be had today).

BOTTOM LINE: Stay cool, you’re cool, right?  They want your shares.  It is almost time to buy ZNGA.  Are you man enough to be a KING?

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Sellers Abate as Balance Takes Shape

NASDAQ futures are higher overnight and we are currently priced to open inside of yesterday’s range but outside of value which presents an elevated potential for big intraday moves.  The overnight profile is also interesting because it shows no real consensus on value.  Instead we have a toothy profile with buyers pushing higher.

Price traversed through the volume cave which delineates where our upper-most intermediate term balance zone exists.  We are currently trading just above it which creates the potential opportunity for an overnight gap fill more possible and rapid due to the low volume structure beneath our current pricing.  The intermediate term is seller controlled but showing signs of balancing.  Yesterday morning sellers were unable to press to new lows verses Monday.  Instead we stabilized at a low volume node just above the Monday low and reversed higher.  Sellers need to prevent acceptance of trade above 3645.75 to sustain their control of the intermediate term. The long term auction is still buyer controlled as seen on a daily chart.  I have highlighted this key price level and the volume cave below on the following volume profile chart:

NQ_VolumeProfile_intermediateTerm_03262014

The short term auction is out of balance and buyer controlled.  This can be seen as value migrating higher.  Buyers need to make a new high above 3645.75 (overnight high) to firm up their control in the short term.  I have highlighted this level and a few potential scenarios on the following market profile chart:

NQ__MarketProfile_03262014

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Morning Rip Unraveling

That was a curious open.  It started as an opening drive, then it could not gain enterance into yesterday’s opening swing.  Now we are back down through the volume pocket.  This pocket will tell the story this week, I think.  Keep this price range in your mind as you navigate the risk environment:

NQ_VolumeProfile_intermediateTerm_03252014pocketselfie

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