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

LEDs Heating Up

The numbers do not quite catch the headlines like social media M&A, but don’t look now because the RVLT land grab continues.  They announced this morning the purchase of Value Lighting Inc. from Georgia.  Now they have a pipeline to the rapidly growing multifamily retrofit business.

Note: RVLT is my largest position and I am in no hurry to change that.

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Back in Balance

The buyers continue to flex their control of the long term timeframe in the NASDAQ composite.  When we observe the daily chart, we can see their control as a series of higher highs and lows on the daily and weekly chart.

The intermediate term jerked back into balance after three days of showing potential that we would break the gridlock.  The NASDAQ composite has been in intermediate term balance for 15 trading days dating back to February 13th.  Last week’s action added a cave feature to the intermediate term balance, and we watched closely for the moment when price would slash through this low volume zone.  Now the question becomes, do we take the time to auction this level and fill in the cave, or do sellers reject us away from it, leaving behind a shelf of supply, or “bag holders”.  Volume point of control never managed to shift to our upper distribution.  Whether value shifts higher or price reverts back to value will be telling.  Price and value always converge, it is only a matter of how.  We continue to trade in intermediate term balance and unless Buyers can hold Friday’s low, a trade back to the mean at 3674.75 is a distinct possibility.  Here is my view of the intermediate term:

 

NQ_VolumeProfile_intermediateTerm_0310
The short term auction balanced.  The sellers printed what is known as an outside day Friday, where price exceeds both the high and low of the prior day.  These can be reversal candles.  The key is follow through.  To me, follow through comes in the form of holding price below 3670.  The short term auction is otherwise in balance.  The following levels are how I envision early balance occurring:

 

NQ_MarketProfile_03102014

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Taking It In

I am down a touch today, but it has been a very fruitful week for the benevolent and persistent Raul (extra self aggrandizing via the third person).   As exciting as the runs have been this week, pinpoint sniper shots like BAC, GOGO, RGSE, and SINA to name a few, my greatest successes continue to be in the futures market.  Years of dedicated study to the ways of order flow are starting to produce the wonderful fruit of trader competence.

It is getting to the point where I sit through noise, gingerly, until my algorithms and I agree it is time to get involved.  I am fine tuning 4 different setups, capable of trading both long and short (symmetry, very important in order flow trading) and the results have been impressive.

Pair this with my morning contextual work, and I am well on my way to being one of the most proficient traders this world has ever seen.  If you think I only kid when I say I intend to be a major player in the markets, my friend you are in for a rude surprise.  What I do here for free is worth tens of thousands of dollars in college tuition.  The process is here for one reason, to extract organized-crime amounts of money from the electronic markets—all of them.

Progress is what keeps me going.  If you are hitting a roadblock in your trading game, try out a new strategy, especially a different timeframe.  Look at what BAC did this week or BBRY last….reverse engineer these order flow driven moves and make them your own.  Then do it on weekly charts, minute charts, range charts, renko charts, volume charts, etc studying the minute nuances that differentiate a winner from a loser.

Then do it all again with a new setup, or picture.  This is the process, and it makes money.

That’s my rant going into the weekend.  It looks like I pulled out a win in the second round of March madness by losing less then my competition.  This means next week I get to come in with a chart positioned to rip heads off.  I like my odds.

I am still long in the book, but I cashed up to about 15% during the week.  That is plenty of dry cabbage in desperate need of a new home.  Fortunate for me, I am surrounded by a team of diligent stock pickers.  I will be shopping over the weekend.  You should too.

Favorites from my current book include SINA, BBRY, GOGO, and OESX

Now I must depart, early from my new office, like a boss because well…I am the boss.

 

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Pre Employment Situation Analysis

We have some premarket data coming out which may materially affect the conditions of the marketplace.

Equity futures have been quiet overnight through some macro moves in currencies and metals.  It is likely the market is waiting to hear the 8:30am ET data before deciding on a direction for the morning.  The long term auction is controlled by buyers who can be seen grinding price higher along our upper ATR measurements (Bollinger Band, Keltner, etc.).

The intermediate term auction is still controlled by the buyer.  When the fast move occurred yesterday afternoon, I initially thought it threw intermediate term back into balance, but assessing the action in my calm morning state I can see we made a higher low.  Buyers still hold control unless they fail to make a new swing high.  I have highlighted some key areas on the following micro composite of intermediate term volume profile:

NQ_MarketProfile_03072014

The short term auction is balanced.  We can see value beginning to overlap prior days and no clear victor on the short term.  I have noted some interesting observations on the following market profile chart:

 

NQ_VolumeProfile_intermediateTerm_0307

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Race You To The Cliff!

We just had a fast move in the NASDAQ futures.

We are back inside Tuesday’s well established value area.  The move through value was rather swift.  Strong buyer response at the mouth of the intermediate term cave.

And I am done talking like a caveman, have a look:

NQ_MarketProfile_03062014_midday

 

 

NQ_VolumeProfile_intermediateTerm_0306_cavetest

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Slow Grind

Equity futures were quiet overnight, a feat in and of itself to hold this high watermark amidst a negative news cycle and more.  We operate on a playing field (the pitch, for you English blokes) of sorts based upon the average true range of the marketplace.  These type of measurements are interesting bits of context, but nothing is definitive in trading.  The same average true range which may have been seen as a swing high or low in the past can be rendered into a support line as price grinds along it.  This type of environment is where stock picking shines.

Tuesday was a pretty influential day on the market.  Using the 24 hour market profile chart, we can see three distinct distributions which formed during the rapid migration through intermediate term balance.  These distributions feature buying tails showing the aggressive response of buyers at prices they perceived to be discount.  The action slowed during regular trading hours Tuesday and the distribution took all of Tuesday evening and Wednesday to form.  This was the imbalance I highlighted yesterday morning.  We resolved it in a rather methodical manner.  We now have a wonderful and balanced distribution to gauge future market activity against.

The short term timeframe was in control yesterday and this could be seen as chopping action in the index with a slight edge to the buyers.  This slight edge may be the influence of departing intermediate term balance and the long term auction being in buyer control.

The key to sustaining control of the short term is continuing to migrate value higher and also keeping the overall velocity of the marketplace low.  Those same buying tails which represent strong responsive buying also have thin volume profiles which price can slash through.  This type of action may be a shocking lurch back into intermediate term balance.

I have marked up my NASDAQ market profile on the following chart:

NQ_MarketProfile_03062014

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Pressed

The stock pickers are running a full-court press in this sports analogy session.  Sellers are on their heels on 4th down and still have some plays up their sleeves, like the shovel pass over the ledge on the SPX.

I took scales in GOGO and BAC this morning, and put some risk into AAPL.

I have taken several meeting today from my new domicile and am currently laboring through many important tasks like building more algos and monitoring the quiet index markets.

We have hit all my upside targets for the day and I am done selling, so I suppose I should just sit here and manage this book I have.

Will the LED trade ever work?  In down markets, it is flat.  In up markets, it is pro flat.  The LED stocks are like CDs with your local credit union except they can gang up on you and steal your shoes at the drop of a hat.

Pressing ATHs with my book alongside the market.  Back to work…

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Envisioning a Selloff

Taking time to map out a scenario that would press into my long book allows me to stay calm in the heat of the action.  I prepare this every morning to envision what I will do in these situations.  Then, when the time comes to execute, all I do is click the mouse.  This morning, the market presents a unique set of circumstances that provide us clear visions on how the day may progress.

Equity futures were quiet overnight and held the gains attributed to an improvement to the situation with Russia.  Buyers will look to build on their progress today while sellers shoot at some well defined targets below.

Our long term auction in the NASDAQ is controlled by the buyer.  This can be seen as a series of higher highs and lows on the daily and weekly charts of the COMPQ.  The character of the auction has changed slightly, with increased velocity to vertical moves.  As we press the upper extremes of the Keltner channel I plot, we would be remiss to not question the age of the current thrust.  Bulls want to see tighter range grind trade, where we slowly progress higher.  Any excess range in either direction, and the sellers will look to press.

The intermediate term has been in balance since 02/13.  Yesterday we built a distribution outside of the intermediate balance for the first time.  This is bracket extreme, a position we were in last Friday.  The more times a resistance is tested, the more likely it is to break.  The same goes for support.  The buyers may take control of the intermediate term, especially if they can avoid the Panic at The Disco (PTD) reversion trade.

The short term auction is controlled by the buyer.  This can be seen as a series of value distributions drifting higher through time.  We also have printed several buying tails, suggesting strong buyer response to lower prices which are being perceived as discounted.

The current distribution we are developing this morning has a slight imbalance to the upside.  I envision us settling this early on via an upward move.  I have highlighted this scenario, as well as the PTD trade on the following market profile chart:

NQ_MarketProfile_03052014

 

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Vlad Takes A Headshot

shark

I love people who catch a great entry into a setup, the setup finally confirms, and they take profits. That is like driving to an amusement park and then staying in the parking lot to listen to AM radio. Sadly, this greed to snatch at table scraps is how most deals are blown. Go for the big deal—slowly if you must, but always with a strong sense of urgency.

I was out of cash at one point today, but decided to scale off some profits in LO. I have no idea whether the news is of the rumor variety or not, but word is someone wants to gobble up LO. And I can’t blame them, Lorillard separated from the herd charging the pot of gold at the end of the vaporizing rainbow with their Blu product offering. The fact that they sell delicious and powerful Newport’s in the meanwhile is moot—everyone knows that. The key is to parlay your cash cows into new evil ventures, like a doctor…evil inventions like disposable atomizers which allow humans to inhale nicotine and airplane deicer. It was an excellent allocation of resources and the execution was top notch. These are the types of management teams I want to be involved with.

So I have some cash now, and want to get it back into the game. I started getting into some ASCO stocks this morning, whetting my beak with shares of IMGN. I have another name on my radar, too.
I back to basis with my newest cannabis positions PHOT and GRNH. This is technically my “second entry” into this trend/pump, because I started by ripping a big win out of MJNA. This is the most absurd thing I have ever done, holding degenerate OTC paper on companies engaging in criminal enterprise. But, hell, people have earned fortunes doing worse things then speculating. I just want my piece.

“You dig?”

There is a big, dark cave crevasse just below where the market stands and everyone is jumping up and down like BassNectar just dropped the grimiest growl of bass in his repertoire. I suppose this has me keeping a clear eye on the LED lit Exit signs.
Want to see the cave? Here, ga’head:

NQ_VolumeProfile_intermediateTerm_03042014_CAVE

My hands are shaking, my hearts beating, but I am still moving, and I am still getting headshots.

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Fill The Cave

Equity futures are currently priced to gap up after printing over 40 handles in range on the NASDAQ.  As I write, prices are coming in a bit, and by the looks of both the intermediate term balance profile and the overnight profile, the action could be fast this morning.

Yesterday’s context report focused on the intermediate term balance, and whether price would stay in balance on the intermediate term or instead begin exploring lower.  Bracketed (or balanced) trade can be very frustrating noise for the trader if they are not aware it is occurring.  It can result in unnecessary capitulation and overconfidence at the extremes prior to getting faded.  The last two sessions in the NASDAQ have effectively set the floor and the ceiling for our balance zone.

If you have ever seen a live auction, you have seen this action.  Yesterday the market pressed lower in search of buyers.  They were found in the form of a sharp reaction.  Once a baseline bid is established, price can very rapidly move in the opposite direction to form the extremes of an auction.  Now market makers and specialists and hedge funds and retail participants meet and hash out the details of this balance to determine if the value is an accurate representation of the NASDAQ or not.

Long term auction is controlled by the buyer.  This can be seen as a series of higher highs and lows on a daily and weekly chart of the $COMPQ.  Yesterday we nearly brought the long term into a balance scenario, but we managed to print a higher low.  We need to monitor any retest of yesterday’s low very closely, and we need to consider reducing exposure should price be accepted below perhaps yesterday’s open at 4261.42 (on the $COMPQ).

The intermediate term auction is in balance.  This balance stretches back to 02/13 when we broke above the neckline of a V-shape recovery.  We are currently prices to open inside a cave inside the intermediate term auction.  Price will move fast in this low volume environment, at least initially, and often times we spend time filling these voids in prior to exploring elsewhere.  Intermediate term balance is aging, and a move away from it becomes more likely with every half hour that goes by.  I have highlighted this cave feature and some other observations on the following $NQ_F intermediate term volume profile:

NQ_VolumeProfile_intermediateTerm_03042014

We covered tons of ground, in the short term, but buyers are back in control.  This can be seen via the migration of value higher over the last few distributions.  However, the last two profiles suggest a slight downside imbalance exists.  It would not surprise me to see some backfill early on.  Given the overnight inventory is long, it would make sense to press into that inventory and test its conviction.  Conversely, should we see an opening drive, we can begin to consider the long term timeframe reentering the market, and we should join them.  I have highlighted the imbalances I expect to see resolved on the following market profile chart:

 NQ_MarketProfile_03042014

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