Stock Picking Is Paramount

The year is off to a bang over here in the club cadet casa de Raul, where I just so happen to be exhibiting the Midas touch in real time on these internets. Year-to-date, I am up a sultry 4.99% melting all surrounding snow as I walk, barefoot, down the arctic streets of Detroit.

4.99% has come so easy and may not seem too elegant, but consider too the fact that FSLR is one of the largest positions in my book and all the sudden WOW it is special. Typically, in the short history of Raul, a move like FSLR had today after being downgraded by Goldman would throw three weeks of performance in the back alley where five villain algorithms would slice them into thousandths and split their booty. Today instead I just watched FSLR meltdown, not adding, not puking, but instead with good sportsmanship. Three day rule is in effect on this position meaning, if selling abates these next three days I may add to my loser. If selling accelerates I will cut loss, and if buyers overreact I may sell into the bounce and take my interests elsewhere.

I took boss scales in YELP and C, and when paired with my Chinese lotto numbers LITB it was a pretty fluffy day.

I want TSLA. I was out of pocket this morning when my entry was on a silver platter. Now things become much greyer if you know what I mean. I still hold my longs from 10/31 and 11/08 with a cost basis at $144.10. Remember, my thought process on this trade has been we see $200 before $100. I am looking to take out my laser pen and add some juice to the name via call options because that’s how we roll in the future. We’re getting juiced, carefully, yah!

Finally, my wounded algos have been without food or water for days. My market profiles cut out every day yet Mirus futures refuses to admit the quantity of red gravy they have spilled on their servers. I am starting up an IQ feed tonight to get the algos back to firing signals, although they will not be auto executing until Mirus and Multicharts kiss and make up.
In the meantime, I like buying my favorite stock chart when I get a good market profile/order flow setup on the index boards. Correlations are through the floorboards and you get tons of bang for the buck with individual names. Option addict got me hip to this environment. I am working diligently to not get spoiled.

It will assuredly get harder this year to bank coin, but right now the market is in give mode. Trade accordingly.

Sincerest Regards,

Raul

USA indices are up slightly during the globex session, despite notable weakness in the Asian markets. The NASDAQ continues to lag the S&P, The Dow, and the Russell index.

The sell flow which entered the market last week was strongest in the NASDAQ where sellers can clearly be seen reacting to perceived premiums. Their actions in the market were dynamic enough to leave selling wicks on the market profiles and also effective in driving value lower. The 24-hour profile shows this action mostly clearly, with selling wicks clear. I have highlighted these wicks, as well as two scenarios I envision for today’s trade in the /NQ_F, our futures contract for tracking the NASDAQ:

It is important, especially if you are participating in the financials trade, to keep an eye on the intermediate-term balance in the S&P 500. I have highlighted this balance on the following /ES_F chart, our futures contract for tracking the S&P 500. We can monitor the price action near these balance extremes to gauge if other time frame (long time frame) participants are increasing activity in our market. Note: they “should” be more active, as the holiday trading season comes to an end:

Christians must have done a fine job celebrating the birth of the almighty one up here in the Great North, for their Lord is blessing them with heavy blankets of the white and fluffy. Dashing through the snow are disgruntled motorists who swarm on their nearest grocer like locust.

Costco was totally wiped out with checkout lines rounding the apparel section making me a captive audience to the Vitamix presentation. Frustrating it was, because I am a proud Bledtec owner. Similar mania was enjoyed in Kroger and oddly enough Dick’s Sporting Goods?

Nothing says, “go out and consume, my children” like 24-hours of snowfall. The economy is ripping on all cylinders with biblical backing.

What’s on your radar this week?

I like my LEDS. If Friday’s pop in low brow RVLT and LEDS does not get the standardized fade treatment, we are at the early stages of something beautiful. RVLT is the best positioned company publicly traded company, with OESX second in command. OESX ran into year end and I feel like a chaser but I love the story, love the company and I see huge demand for their products and their publicly traded stock.

Remember folks, I have existing and rather larger positions in CREE and RVLT. We keep disclosure full only over here. But I am a stubborn futurist who sees LED lighting as one of society’s first major infrastructure advancements. The numbers on retrofits make far too much sense for businesses to ignore any longer. These savings only improve every six-to-nine months through the intense research by our friends at CREE, Gods work if you will.
I like plenty other stocks based on charts alone.

Watch FB closely this week, it has been flagging, bear variety, just below its daily 9 period EMA. If it breaks down, then I am keen on how my YELP, Z, TWTR, and ANGI perform. If they brush it off, great. Otherwise, I may reduce exposure. If the bear flag fails to break lower, then we must turn all this thinking on its head.

It sure would be nice if FB tanked, putting all the stupid fund managers who positioned in the behemoth in the hole. I just don’t want it to drag down my holdings, naturally.

Let it snow my friends!

I started the year with a bang, up over two percent.  One percent per day would annualize nicely I am sure.  Driving these gains is a push into alternative energy and energy savings components.  Solar panels, fuel cells, and wind turbines for generating power to ignite the energy sipping diodes inside LEDs.  LED lighting is a technology that can be proven mathematically to pay for itself in short order and then last longer than most of you shall live.

You’re seeing more of them around you, aren’t you?

I get excited about very little in this world and LEDs are one of them.  They are going to get smaller and brighter every six to nine months, as proven by Haitz’s Law.  Thus you can expect the price to continue to drop, like the components in your obsolete computer, and the aesthetics to increase dramatically.  As the light source shrinks in size it will become increasingly ubiquitous in architecture.  Smaller and smaller it goes, where it stops, nobody knows.

I envision a pin-sized diode blasting the wrath of the sun upon one hundred square feet of autonomous robot laborers.  The future is bright indeed!

Today I sold out of BLDR and SSYS and part of the C position I started yesterday for gains.  Then I went large in CREE right at low of the session it was beautiful.

10% cash into the weekend.  Here’s to a warm inflow of mutual fund money once the New Year really kicks off, saluti!

December 20th was a big day on the S&P 500 (aka $SPX aka /ES_F) where price extended upon the large trend day only two days prior. The events of December 20th set the stage for a holiday drift of benevolent proportions.

Then yesterday came and we erased the entire drift in one foul swoop. Or did we?
The balancing process is an interesting natural phenomenon driven by the collective actions of all market participants. Yesterday the sellers were in control but intermediate term we are working through a balance.

This balancing event is occurring at very elevated prices which should bring the trader a bit of caution for continued liquidation. I compressed the balancing action into one profile this morning on the S&P 500 because the resulting picture is rather interesting and gives us a solid bit of context to frame our minds around. Put simply, we’re stuck between two humps…until we aren’t:

Overnight our range was larger than recent past where the action has been benign. Sellers could be seen early in the evening beating price lower at 1829 and producing a wonderful rotation down to 1820.50. This is where we can see the intermediate term balance/auction come into control—buyers defended the price zone and their demand was strong enough to propel price a tick above yesterday’s RTH range.

The bad news for bulls is we typically do not set swing high/low during the overnight session. Thus the downside is vulnerable. The good news is we are seeing healthy market activity and participation by both parties.

I have highlighted a few levels I will be keying off of in the NASDAQ today on the following market profile charts:

The year started with a bang as my zombie solar positions, relics of 2013, came back to life and began their 2014 campaign to eat the brains of short sellers.  I rode deep into “the shit” with YGE, stomaching nearly a 20% drawdown on the position.  I suppose said stock could have gone to zero and taken away all my money. Yet I am young and brazen and have 40 or so years of hard work ahead of me. You see time, my friends, is on my side.  FSLR caught a little love too.  I scaled a bit of YGE off but still hold a hefty lode.

My other zombie position “The Mangina” MJNA, is ripping rather recklessly because the people of Colorado are exulting their newfound freedoms. Prices of cannabis are soaring, as are the degenerate OTC penny junks that trade on these interwebs. Go figure.

My Z weekly lotto ticket started showing genuine promise this morning before succumbing to the pressure of sell flow which knocked price back into this holding pattern.  I still have common stock, but I may be out of time on these tickets.

The (unrealized) profits in Z weekly lottery tickets may or may not have been the culprit behind procuring CMG weekly lottery snacks, which quickly turned against me and will most surely expire worthless.  Ah the lottery, one can hope yes?

Social media, all of it except bizarre-o Twitter, looks weak today.  Fortunately, I am only long TWTR, YELP, ANGI, SINA, and Z.  There was pain.

I bought SFM and it was faded.

I bought C and it went beast into the bell.  They like the financials and C, last year’s SOTY, has been grinding for months and arguably resting and wanting higher.

I was up 1.5% today.  These type of gains can sometimes take all month.  Something tells me easy come…I need to stay nimble.

I have a big book of longs and we are teetering at the highs.  Is it different this time?  Or will I take a huge loss to start the year and spend the entire 1^st quarter playing catch up?  Developing…

We are starting the year off with an interesting bit of context in place.  The long term control of the bull was reasserted last week, fueled by strong buying demand that entered the market when The Fed removed uncertainty over their taper itinerary. 

Intermediate term, looking at the last few sessions, we have begun the process of balancing out up at annual highs.  We were yet to see any sharp rejection.  Instead price has drifted with a slight bullish bias through the holiday season.  Within this low volume drift environment, individual equities have performed well.

Tuesday, year end, was a day controlled by the buyers, and showed signs of control both from the long timeframe and the day timeframe where local traders appear to have actively participated at value area low, a logical level to see their participation.

Overnight we gapped lower and initially the action is being met with buying.  The move was dynamic enough to print nearly 10 handles lower on the S&P futures (/ES) and nearly 20 handles on the NASDAQ futures (/NQ).  This is pro gap territory where attempting to fade the sell flow and press the gap shut becomes a more risky endeavor.

However, we are still trading within Tuesday’s range, just a few points below the value area.  If price can creep above 3577.50 before the opening bell, it would indicate we are back into Tuesday’s balance, and the move has been accepted.  Should we open below this level, we need to be keen to the open type and who may be asserting control.

Should the sellers reject any attempts back into Tuesday’s value, we may begin liquidating early on.  I will look for buyers to react at 3563 and then at the support zone highlighted below.

Overall I anticipate balanced trade may ensue, but should my support zones void I am prepared for a liquidation tape, especially given the extended nature of the market.

I want to get sappy very quickly to express my gratitude to you, kind people of the internet, and wish you wealth and happiness in the year to come.  It truly is a pleasure interacting with each and every one of you.

My market profiles are back up and running after my instruments went down Friday afternoon.  I write about market profile every morning because it is important to understand as a trader.  Many know it and they hide in the corner selling their ‘secrets’ in back alleys.  If you truly cared to learn this stuff it’s all out there.  There’s one good book on it and a full year of the logic applied live in the hallowed halls of iBankCoin. 

I’m going to teach the old people something very quickly—do you see the section on the right edge of our website that says Categories?  Bloggers use those to aggregate posts of a similar nature.

Click market profile and go nuts…tell you kids too.

It is of no threat to me to share my ideas freely because market profile follows the laws of nature.  Laws like force, resistance, vacuum, velocity and more that we as earthlings are bound to.  And as long as you do not bother me too often, I’ll talk it out with you because discussing it breeds insight and learning, you see?  We are learning together this is good.

Happy New Year!

RIP Madison Montana, may a short squeeze propel you into the heavens like they always have

The premarket is seeing buy flow entering the market, albeit thin, as the USA comes online. The action was enough to push us outside of value and nearly above yesterday’s range. This creates an elevated risk/reward environment where intraday positions have a better opportunity to flourish.

Given the proximity of the overnight gap, we may see sellers attempting to fill it by trading us back down to 3566.75. If this is to occur, I think the time of day is critical. An early push from the sellers which gets rejected by buying would set the stage for a strong session.

If instead we see a mixed opening trade, predominately driven by buyers, we have to be on watch for an afternoon fade.

I have highlighted both these scenarios on the following 24-hour market profile chart. Below the 24-hour chart is the RTH chart which I have left blank but you can see the relevant value areas on high volume nodes, especially if you click and enlarge the image:

Today was interesting.  Like most interesting days it was loaded with technology issues—the robots of my life are failing me.  Computers, all kinds, are only as effective as their last update.  Something has gone awry on this machine I am currently clacking away on.  It freezes intermittingly at will.

Back on the mother ship, all my helper robots have been rendered useless by an API update.  After much fuss, the truth came out, and the geniuses will not have me back up and running until February.  Awesome, January is of no importance.

As of end-of-day, I have managed to reconnect my market profile charting.  It is considered code yellow, as the stability of the system is entirely contingent on third party execution.  Oh how I love leaving things in others’ hands.  I need to pony up and get a new data feed to get Elroi and the gang back up and running, and I must, because they put a modest amount of food on my family’s table.  Now I am doing the rigmarole to get deals.

Onto stocks, I have so many buys I desire, but I opted to instead watch.  If there’s one thing I know well, it is to sideline myself when systems are haywire.  The last thing I need is an overwhelming blow to my accounts and trader confidence with only the basic necessities of websites and iPhone apps to guide my decision process.

Here is my book:

Cash: 14%

Stocks: CREE, OWW, FSLR, YGE, CLNT, TSLA, GOGO, RVLT, SINA, LO, BALT, Z, BLDR, TWTR, MJNA, and SSYS

I don’t know how it came to this.  I need to focus down to my core…perhaps tomorrow into the New Year.  Here’s to better days ahead, although these tech issues will likely become worse before they become better…just like Michigan weather.