Sellers Still Driving

The overnight markets were relatively solid for most of the session, but as USA comes online we are seeing selling pressure on the tape.  The sell flow started at 7:30am and swiftly brought prices to new overnight lows and back to the bottom end of yesterday’s value area on both the S&P 500 and NASDAQ indices.

As I write, the markets are becoming oversold on a very short term horizon although given the velocity of this selling we may see follow though lower.  The economic calendar is busy today including ADP employment data and International Trade numbers.

Putting all of that aside, we are coming into Wednesday and the sellers continue to retain control of the short-term auction.  They gained control on Monday, showed follow though and initiative action Tuesday, and overnight they are again in control.  This is all taking place in an aged long term auction controlled by buyers.

Focusing on the NASDAQ futures via /NQ, it will be interesting to see if the buyers can come in early on and work though this overnight gap.  Buyers will be targeting a gap fill to 3475.25 and perhaps yesterdays VPOC at 3480.  If buyers can turn momentum around, we have upside targets of 3484.25 (VAH) and 3489.25 (upper most distributions NVPOC).

If sellers continue to build on their momentum, they will look to trade through last Wednesday’s range and target the value area low at 3462.  Not too far below this price is a string of single prints which indicates a strong buyer was present at the levels.  Should that same buyer not present herself on a retest, it would suggest a shift in sentiment and downside action could accelerate.

I have highlighted these levels on the following market profile chart:

I see you there, looking at my stocks, chomping at the bit because you never pulled the proverbial trigger.  I always know winship is around the corner when my morning analyses are devilishly accurate yet undeservedly ignored.

GOGO whoops

TSLA blastoff

I just so happen to be holding two of the most vile momentum beasts while they are violently ripping higher.  You want to see violent?  Cue up the above two charts, vi-o-lent.  That is the joy of momentum trading.  If you haven’t been on the ride yet, keep working on your plan of attack.  Fine tune it.  A good plan is amorphous like water.  You are the surfer right?  Do you want some manager surfing for you?

How is that fun?

Winning is fun do not let anyone tell you otherwise.

I am holding some dogs.  I would not hide that from you.  I have a sizeable RVLT position.  It could die tomorrow.  I hate this company something solemn.  Imagine the most wonderful beach in the world, inhabited by only the naked bodies of Greek mythology.  Now imagine every time you step a toe in the water to cool off you are attacked by a fleet of kamikaze black flies, hell bent on consuming your flesh.  The management team at RVLT is that pack of flies.  I proposed early on that a chimp could succeed if given the reigns at RVLT because they have the tools in place to mine the prospect of a lifetime.  But perhaps these jackasses truly can muff things.  One thing is for sure, their investor relations are nonexistent.  My friends, that is not good business.

Let us move away from that sore spot, put my explosive wins aside, and focus on what matters most—what is my next trick?

It is twofold really, a move for the brazen and certainly not the meek: SOLARS AND SOCIALS.

I finally added to my TWTR long today, after riding a 10% drawdown from IPO.  I like how it didn’t follow the indices lower today.  It pairs well with my large YELP holdings.

I started new longs in FSLR and YGE today too, in that order.  Although the sun does not show its face in the murder mitten, these charts say solar is ready to win.  It all starts on December 5^th with the SOL beat.  Place your bets.

Of course, the meek shall inherit the earth.  Thus to you I provide the following selection: KR and PPC #cantlose.  That KR is the look right there, with a daily chart consolidating so tightly, and a catalyst in place.  Big grocery just lobbied to victory in Washington over GMO labeling on food. You will need to look this up on your own as I am very busy. They will not be informing you of the toxins you consume any time soon.  This is a win for KR and their new product—THE MASSIVE CHICKEN.  Have you seen this thing yet?  It’s twice the size of your normal, mildly hormone injected chicken.  That means it can feed your ever expanding illegitimate family and their ever expanding waste lines. 

I think you already know your catalyst for PPC, hehehe.

Finally, all hail The PPT, bestowing an oversold statistic at these unruly highs.  This machine has become an invaluable arrow in my quiver.

The index futures are lower overnight, with the marquee S&P 500 weaker than the NASDAQ composite.  Early on the momentum favors the short side, especially given the gap below in the NASDAQ.  My expectation is for an early probe lower by sellers into the gap.  I will look for buyers about half way into the gap from 3475 to 3473.75.  Should they not present themselves, I expect trade down to 3472.25 (11/25 high) then 3469.25 (11/25 VAH).

At some point the gap trade higher may come into play, perhaps fueled by shorts in the hole.  The overnight gap higher target is 3483.50.  If the algorithms decide to run stops on any newly minted shorts, my algo upside target is 3489.50.

Long term auction is still in the control of the buyers but is aged.  Yesterday was controlled by the sellers, and overnight the sellers retained control.

I have highlighted the day how I envisioned it above on the following market profile chart:

On the day timeframe, we saw action that suggests the sellers gained control of the tape.  It started with the open where sellers printed a wick on the top end of our NASDAQ profile.  Looking at the bar chart the print has a smack of euphoria.  From there came several subtle warnings as the tape went mostly flat.  It began to feel like sellers would fail [again] to roll the tape over.  Every time inventory became too short in the futures, a rapid squeeze would develop.  However, they never made new swing highs.  Then after 3pm the sell flow came back in and closed us out near the lows.

It important to keep in mind we are still in an uptrend and tomorrow has a hearty POMO on tap.  However, should that liquidity be absorbed and price continue lower, we may have a swing high in place.

Early on I sold out of AAPL, Z, and BZH.  I did not like how the puzzle pieces representing housing looked during my weekend analysis so I cut.  AAPL had just made its biggest four day move in the last six months and I wanted more cash.  I scaled off a small piece of my GOGO, sub thirty, regretfully, as 30 was my target on the day.  I sold NUGT for obvious reasons (it was getting pulverized) and I sold an old holding in O, because it looked weak.

My only buy today was of WBMD.  I chased a bit, thus I left room to add if need be.

The net of my actions raised cash to 21% after being 100% long into the weekend.  Call it what you will, I want more cash on hand into what may be a challenging month.

CREE started printing an inverse head-and-shoulders reversal pattern while its small cap counterpart RVLT struggled.  OESX took a minor beating too but may begin consolidating which would entice me to finally get long the name.  LEDS looks to have printed a bearish engulfing candle on the daily chart.  Overall, the LED industry is still a mixed /weak basket of securities.

TSLA is getting a little dangerous looking and needs to find some buy flow soon.  It looks to my eye to be setting up for another leg lower.  Elon has a missile launch scheduled for tomorrow.  Perhaps his motor stock will launch also.  TM is promising to bring fuel cell tech to Japan by 2015 and Europe and USA by 2016.  That means Elon has 2 full years to continue disrupting old auto.  Tick tock Elon, keep making moves.

Shippers, you know them, you love them, and you hate them.  This trade has been setting up so slow.  It wants to lull you into a trance so you bail out of boredom then SPLASH, swing highs.  It is still tough to get excited when I view my big shipped position.

Social media continues looking weak and there were reports of heavy put volume in crowd favorite FB.  Overall sentiment continues to be bullish and that never bodes well for higher asset prices.  For now, YELP continues to find buyers at the 99ema.  If TRIP confirms lower tomorrow it sprung a nasty bull trap on speculators.

I would like to see some panic tomorrow, for olde time’s sake.  Wouldn’t it be nice to get our one or two mandatory days of terror out of the way early?  That way we can focus on gluttonous buying for the remainder of the year.

The chicken trade does not appear complete.  I may need to reenter for the great ARISE.

The sellers have won the day.  Two weeks back they won Monday-Wednesday only to get BTC’ed Thursday and Friday.  Take todays win by the sellers in context.

The NASDAQ continued displaying relative strength verses the S&P 500 overnight, albeit mildly.  The composite index was able to make new swing highs during the overnight session where sellers were quick to greet the move.

As we work into the early hours of USA time, prices have balanced out and are slightly higher than last week’s close.

During today’s session, I am interested to see whether or not the lagging S&P breaks recent lows or instead continues consolidating/grinding higher.  Put quite simply, I will be monitoring the 1800 price level.  Should we sustain trade below 1800 for a prolonged period of time, I may reduce select long exposure.

I do not want to see the NASDAQ (as represented by the /NQ contract) below 3488 for a prolonged period either.

I have highlighted the levels I will be observing on the S&P today on the following market profile chart:

Today is the kind of day where I simply do not have much nice to say, so I opt to communicate very little.  The cordiality and couth I stockpiled for months was most entirely used up on distant relatives and my derelict friend set.  I applied many of The Fly’s etiquette tips to my festivities and things went swimmingly.

I spoke with an old and salty GM engineer for quite some time about the prospects of a certain Elon Musk and his stunning Model S.  He dismissed the brand repeatedly stating they will never go beyond niche manufacturer and that their cars are only a toy for the jet class.

He had his points.  He loves the Volt but could not justify the lofty insurance premium it carried.  The same goes for the Model S, except the niche factor ratches premiums up further.  One can service their combustion powered vehicle at 20 places inside a five mile radius.  The Tesla lacks 100 years of servicing infrastructure (mechanics).  He pointed to the $60,000 Corvette Stingray and boldly claimed it had more technology in place than the Model S.  Finally, he is convinced Toyota and their fuel cell technology will be rolled out, en masse, thus completely cementing the geniuses who mass produce automobies leaving TSLA to only service the upper scraps, the golden giblets if you will, forever.

This dilemma rings right through to LED, where an old industry is being disrupted by new technology and young leaders firing sniper bullets at strategic targets from their bird nests.  How I see it, eating an elephant is a large task, but if you focus on taking one bite at a time you get it done.  A strange man named Michel Lotito once ate an entire airplane.  I suppose I side with the strange and against all odds crowd.  I am sure Steve Job’s silly iPod was destined to fail too.  1000 songs in your pocket does not stand a chance against the brilliant minds at Sony, right?

Will the masters of industry in lighting and auto making be disrupted by TSLA and CREE?  Or will TM mass produce a car you fill up with gasoline which it uses to power a fuel cell that powers your transportation and your home filled with PHG bulbs?

I supposed that’s the thought I will be pondering over the weekend.  I would love to hear your thoughts.

There was a strong appetite for risk over the holiday trade, which saw prices of the NASDAQ outpacing the performance of the S&P.  The action slowed a bit over these last 8-10 hours and the resulting profile print has a very familiar, uncompleted, shelf footprint.

By vision for today is a completing of the profile via some back-and-fill trade.  However, we are set to gap much higher, which signals the market is well out of balance.  If we fail to hold around the high volume node at 3476 it may signal a rejection of the holiday move by the market.  If this is the case, we may see a swift gap fill back down to 3469.

Conversely, the shelf at 3476 may not breach in which case price will continue to probe higher in search for sellers.

The shelf is an interesting bit of context to bring into today’s trade.  Even the casual observer, hunting black Friday deals can use the price action around the 3481 shelf zone to measure sentiment.

I have highlighted this activity on the following market profile charts:

The markets are starting to crawl and I must begin making preparations for tomorrow’s festivities. The turkey gods have been selective in their benevolence, but have bestowed us with market gains nonetheless.

We seem to have timed our Apple entry well, yes?  It is always nice when you do not have to wait for trades to materialize.  But the best moves often take time.  Take the LED industry.  I made a killing in these names this year, yet here I am, large into this dip, sitting on my hands.

Sometimes I cue CREE and RVLT onto my 3-minute charts and watch them, why?  They are stuck in mud for the time being.  There will be brighter days for the space.  Every flat day it becomes more a question of when and not if.

Tesla caught a bid today and started moving, and it quickly perked the attention of the astute trader set.  It will be interesting to see if the lack of seller follow through can result in some buy flow.

I do not have much else to report on.  I am all in, 100% long, and there are other names I want.  I may make some lateral moves on Friday.

Have a wonderful holiday.  I am grateful to trade and discuss trading with my internet people.  You are the finest people I have never met.

Here is another reason to be grateful.  BEHOLD A GODESS, Khatia Buniatishvili:

http://youtu.be/Sp2eRmsCxkI

There was a bit of chatter afterhours about the spike lower on the indices shortly before the closing bell.  As we drift into a holiday, many will likely dismiss the action and continue preparing a warm home for their families.  However, the spike is a useful bit of context, and we can use it to frame some expectations for the day.

The spike lacked time.  The selling began so late in the day there was no time for us to gauge the momentum of the sellers.  Coming into RTH, we are set to open within the range of the spike on both the S&P and the NASDAQ and our analysis will focus on the Nazzy.

An opening within the spike indicates the market is balancing.  The other two scenarios are an open outside the range of the spike either lower or higher.  An open above the spike range indicates a complete rejection of the move and invalidates it entirely.  An opening below the spike indicates the market accepted the move and is still out of balance and we are likely to continue exploring lower until we reach balance.

Returning to our situation, opening within the spike, our expectation is for two-way trade to ensue as the market balances out.  We can use the range of the spike to estimate today’s daily range.  This will be incredibly important on a light holiday session where less is certainly more.  If we get a solid idea that one range extreme will hold, we have a target in mind for the auction.

I have used the spike to envision a scenario on the following market profile chart.  Remember not to lose sight of the big picture, where bulls have rallied strong all year long and we are heading into the weekend already, ahead of mutual fund Monday.

We’ve had good fun poking the stupidity of Morgan Stanley in their downgrade of AMBA this month. We banked some nice coin along the way.  The recent leg up in our aging index rally has been mostly to the benefit of old men and their mega cap stocks.  The snoozers, if you will.  We participated where appropriate, riding LO and PPC, but to be honest I could have held less crack rock and more bourbon and cigars, the preferred vice of old men.

But today we saw the speculative juices begin to sizzle.  Today we had WUBA pulling out the tits, Emily Ratajkowski style.  Today was for the brazen and the bold, with social media saying, “not.just.yet my friend.”  So my portfolio finally caught a decent boost.

I think there is more in store and I implore iBankCoin readers to get in line at the feeders: names like GRPN, Z, FB, TWTR, and TRIP.  Pay special attention to TRIP as it appears poised to rip.

I am 95% long and low on cash.  I had to sell PPC today to buy Zillow.  I have so much money tied up in LEDs right now and they are not doing a thing, except for bleeding me modestly.  This industry is ice cold, yet I love it.  What is an intermediate term speculator to do?

We caught the Apple breakout yesterday via 12631 service.

Top picks into the turkey: GOGO, YELP, and Z.

I have huge positions in CREE and BALT, yet I do not mention them as top picks.  Hmm…they need to DO SOMETHING.

PS I pretty much spoon fed this NASDAQ rally to you this morning