Sellers To Push First

The index futures went for a rip yesterday evening, for a detailed rundown of “the why” check out @chessNwine’s coverage of the event.

Since then we have mostly faded lower, in a rather gentle manner as the stock market continues its complacency in the face of the dramatic events unfolding in Washington DC.  AS the early AM strolls on, the sellers are making an earnest attempt to get momentum back in their favor and with a decent push soon they could regain control.  I suspect sellers will push the gap fill trade down to 1692.25 before we see what is next for the market.

The overnight profile suggests balance and acceptance which is a solid sign of the longs given the velocity in which we returned to these elevated levels.  However, should we fall out of balance, the prices below look slippery and fast.

Yesterday’s RTH printed a “neutral day” with range extension on both sides of the initial balance.  It settled lower suggesting the sellers had more control of the auction.  These neutral prints tend to occur near inflection points so it is important to not overly discount the power of the sellers here.

I have highlighted key price levels and a few potential scenarios on the following market profile charts:

This volatility kicked up some wonderful waves in the index futures today and boy was I in touch with the auction.  Insane.  I look at this daily candle we printed, a little insignificant wiggle in the universe of price and think, damn, I just pwned that candle, both ways, like a well-endowed swinger.

The beauty of trading index futures is you escape the rigmarole of ‘digesting’ news and staring down the barrel of a losing stock position.  I let these stocks prove themselves wrong, or right, giving them room to make noise.  There is so much god damned noise in the world.  You need a way to tune it out.

I don’t use music.  I prefer the ambient hum of printers, keyboards clacking, and phones ringing.  These are sound of business being done and money being made.

Inside my undersized cube I pull levers and click buttons with the sole intent of extracting money from the economy and fueling my escape from mediocrity.

Since I paired back my big dickt RVLT long yesterday to a more modest 10% position, I was joyous when I saw it printing a lovely candle of death.  May it bring new lows along with it so I can accumulate this story at a more modest pricing.  You need to look around a bit more and realize there are little piles of money sitting around and these prospectors have the tools to mine them.  The management may as well be a team of wild chimps because this business would take epic mismanagement to fail.

That being said, I have seen epic mismanagement and I wouldn’t wish it upon any company.

I started buying ADHD as I mentioned earlier.  Your brain is already losing attention, I can tell.  You want to read another joke or watch porn.  Go get prescribed Adderall and demand Israeli sources.  Let’s talk about models.

I love them, they are the most often quoted and retweeted people represented by Raul via the @twosmuth twitter handle.  Their symmetry is beauty, much like the market profile.  The universe awards us with symmetry, pay attention.

GOGO is slowly bleeding me out. Enjoy my blood for I no longer need it.  I will generate newer fresher blood.  This action reeks of impending death (no geriatric center).

I have far too much energy for 6pm.  I am off to spoil myself with iron work.

My port was down 1.2% today.  Peanuts until they aren’t.

MORE DAYS LIKE TODAY

The indices have been all over the place this morning but their net action has done little to change the big picture.  We have a V-shaped rally in the footprint and the market is doing a decent job digesting the gains while our government continues playing political euchre.

I started buying $ADHD at about twenty bucks and I would have more at eighteen and change if it wasn’t for you meddling kids!  They did a secondary today so that risk is off the table. This stock trades awful on an intraday basis and you could drive a truck through the bid/offer spread, but the underling is wonderful.  What you are buying is a vested interest in the finest meth labs in the world.  This meth lab cranks out the most sought after drug on college campuses: “medical marching pills” or MMPs for short.  The naming is a throwback to WW2 era where the German Blitzkrieg was fueled by amphetamines.  Our soldiers are still readily dosed with MMPs to shake off jet lag and get to pitching tents and blowing things up and such.

The kicker of it is everyone covets this crap.  Raul, being the staunch proponent against all things pharmaceutical, refuses to take the juice.  I always see it as cheating and wonder, “what if I trade wonderfully on amphetamines and one day they run out?  Then I am toast.”  In short, anyone can get prescribed the drug because everyone has ADD.  In the darker circles of vice, brand name Adderall is the preferred stimulant over traditional cocaine because it is cleaner.

Trust me, I am just as disgusted as you by such abuse.  But I am not stupid.  Instead I am a buyer of dips in ADHD going forward.

It pairs with my LO stock to form my thesis that millennials party in a whole new way.  This is a big picture trade.

Now if I can just find a good molly stock I will have this thesis sewn up…

The overnight S&P market featured a bit of follow through strength early in the evening before balancing out near the highs of yesterday.  Yesterday was an interesting kind of trend day.  It earns the title of trend day since it never made a new low during any TPO period.  The trend day featured a bit more overlap than your standard trend day, and the day also started with a normal auction as opposed to a strong opening drive.  Overall this type of day suggests buyers gained conviction after watching the first hour and a half of trade and subsequently drove prices higher for the remainder of the session.

The balanced overnight market is currently exploring the low-end of current value which may lead to responsive buying early on.  An early test of the 1700 range (1700.50 – 1699) would provide an early puzzle piece to today’s auction.  There is a low volume pocket below these prices spanning all the way down to 1696.  A lack of responsive buying at the 1700 range could lead to a swift trade to the 1696 level.

Some digestion of the recent bull progress may be in store today, but overall control of momentum is back in the buyer’s hands.  The control comes into question below 1684.

I have highlighted these price levels and a few scenarios on the following market profile charts:

As I type, prices are at the crest of another delicious and powerful V-shaped bounce…nothing short of incredible.  You have to trust your robots during these crazy times because they have no souls.  Instead they only want to gobble up data and goat spit out high probabilities.

I tried something as stupid as fading the /ES_F today with a short.  I sat around too long because it started “working” for me right away.  After that, it closed in on me, squeezed me, never rotated lower at all, then squeezed me again.  I cried uncle at 1704 taking a whopping 8.75 handle loss.  What that trade essentially did was say, “take those 6 winning trades in the /NQ and shove’em up your ass.”  I had six winners, zero losers in the NQ.  It was boss, you should have seen it.

You knew I was huge RVLT into today so you know I am happy today is playing out like this.  RVLT V-shaped too, only it provided exponentially larger gains then the indices.  Huge win here, I had to scale it back down to a 10% position as we inch closer to earnings.  I will ride a position into earnings, but nothing too huge.  CREE played well today too, and I bought some LEDS to compliment my LED collection.

LO printed fresh 52 week highs today—we knew this day was near.  It goes higher, much higher.  The inusrty is chasing their vapors as they sprint ahead in the eCig industry.  You have to love the first-to-market advantage.

Everything else is noise until we see some real action.  Cash is still about 25% until we get through this stupid week of Washington nonsense.

Stay cool out there—we are in opportunity city so dust off the losers and keep moving.

The first characteristic I notice when reviewing the market profiles printed last week is the fragmented nature of the distributions.  Price is bouncing all over the place while it explores buyers and sellers in search of the perfect price.  As we dive into earnings during October with Washington DC dramatics occurring, the market is having a difficult time establishing value.

We gapped lower Sunday evening for the third week in a row.  The previous two occurrences saw follow though to the downside before buyers showed up to buy the dip and press us above the gap point.  Will the third gap lower yield a solid victory for the sellers?

Price formed a wedge overnight as it worked higher into the gap.  As the USA comes online, we are seeing an early attempt to break down from the wedge.  The market is still very choppy in terms of momentum control early on, with no clear victor during the overnight trade.

The profile suggests a relatively balanced overnight trade with an overhead shelf at 1688.  This is the price where we shot higher last Friday before balancing out over the weekend.

I have mapped out a few scenarios and price levels of opportunity on the following market profile charts:

Let me start by saying I am not thrilled with the action in the S&P 500.  I was discussing this with one of my most distinguished readers, gentleman UncleBuccs.  My chart brain sees lower prices in store before news highs are achieved.

So I did what any responsible person would do when confronted with these “facts” …I bought stocks.

I still have some cash on the books, about 25% which is about the highest my cash has been this year.  But I have a huge position in RVLT, a huge position in ONVO, and a huge position in CREE.  My next largest position is USO because I think oil is just going to surprise everyone and rip tits into year end, taxing the tight wad consumer before x-mas.

Everything else is ¾ size or smaller: LO, Z, GOGO

Then my slow money: F and O

Then a tiny IMMR I keep for sport and this stupid MJNA long—down 20% waiting for a pop to sell into.  It will come.  It is a matter of time not will.

I traded the futures less this week, especially after I got gang banged by algorithms Tuesday.  I took a conservative trade in the /ES yesterday that worked out well.  Today, that same conservative nature caused me to miss an idea I mapped out very well.  Oh well, there is always next week.  /NQ is looking promising as anything I have ever seen—both on a discretionary and algorithmic basis.

About this time every week I am overcome with a huge feeling of gratefulness.  Thank you for reading along.  I love this work and interacting with my internet people.  Have a great weekend.

BONUS: 12:28pm bid blast, through my very granular order flow screen:

The market rotated all over the place last night, trading about 13 handles lower from yesterday’s close before finding some buyers.  Since then and throughout the course of the evening the market rotated higher in a very orderly manner to regain the lost ground and managed to print a new swing high around midnight.

The overnight high at 1689 is interesting because we typically do not print the high water mark of a rotation during the overnight hours.  This is a bit of context that cues us we may see higher prices during an RTH session before heading lower.  However, there is no timing associated with this context.  It may happen today or next week and there is always the possibility it never gets breached at all, but it does exist.

The S&P coiled up over the early am hours and appears poised for a quick move early on.  After that occurs, my expectation is for a consolidation day.  Bulls would love a quiet market which resides primarily in the upper quadrant of yesterday’ large candle.  And that is my core expectation on the day.

However, emotions continue to run high and this is a choppy environment with asset correlations creeping up, so it is important to prepare for sudden moves.  I have highlighted a few price levels below on the RTH profile chart, and buyers do not want to see trade sustained below yesterday’s VPOC at 1672.25.  That would indicate value was unable to migrate higher with prices and that the true value of the market is not as high as price.

I have highlighted these prices and a few scenarios on the following market profile charts:

Of course the news flow had some merit.  After all there were serious talks occurring in Washington DC, the epicenter of insider trading.  But save me the wordy discussions, I can see their footprints in the walk of price.

Funny to see former Detroit Mayor Kilpatrick getting 28 years in the hole while the Federal government plays budgetary chicken.  I never considered Kwame’s actions worse than your average politician, they only seemed move obvious.  I promise you, the city of Detroit is a better off with Big Meech behind bars a solid 20-something years.

Enough, let’s discuss what happened here today.  We gapped up huge overnight and drove hard off the open.  At that point it was simply a matter of finding a way to grab on to the long side and hold on for one hell of a ride.

We had upside targets in mind and they were achieved before 11am.  These targets were far from the opening print and I thought it may take us all day, if not into the weekend to achieve the prices.

But there’s eager money out there, yearning for another hit.

What worked for me today?

• LED stocks crushed today—all of them.  The industry is on fire.
• Buying GOGO blood yesterday, veddy nice
• Vapor smokes via Newport cigarette maker LO – that is a quality company with a quality chart.  Don’t be blu [sic] if you missed today’s move because it is just getting started.  Nice dividend too.
• Measured move, market profile, and Fibonacci confluence – My most profitable day trade was a four handle short in the spooz.
• My /NQ algo.  It is starting to worry me, it is on a roll
• The mighty PPT

What didn’t work?

• ONVO was quiet…almost too quiet
• Z didn’t make much of a bounce
• Cash, lazy lazy cash

There was a bit of selling into the bell and the waters are still choppy, however cool minds prevailed and top calling continues to be a daunting task.  Tomorrow will be the challenging day after a trend day.  The location of today’s close also precludes chop in store for tomorrow.

Should we not chop, but instead drive higher or lower, it would be a surprise and a reason to adjust your stance.