Taking a Beating and Liking It

Take your fancy words like masochist and stow them under your chair.  I don’t want to hear them.

YOU SHOULD SEE MY PERFORMANCE CHART OVER THE LAST 3 MONTHS, IT LOOKS LIKE THIS:

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That’s literally how it looks if only to see the chop a bit more pronounced.  MY WHEELS are spinning, you see?

LED stocks as a whole are retracing their 2013 gains after the tepid Q1 forecast from CREE.  To call the move in CREE a retracement however, may be an understatement.  This is panic and margin calls rolled into a giant blunt and smoked, like a clown, by yours truly.

Of course I bought some more CREE today, adding to my [still] green core.  I bought some into the closing bell for $58.85 #timestamp.  Even if only for a trade, I can’t stand by idle and watch my ‘ace boon coon’ CREE get bludgeoned by panicking idiots.  Oh and believe me, I have more bullets to fire at these bitches while they’re concentrated in this back ally trough.

I’m telling you now, send CREE lower, I want it lower.

Send RVLT down too, I’m patient.

I have zero edge trading earnings let’s make that clear as crystal, which it already should be.  I’m building investments here…they’ll make fine x-mas presents.

MOVING ON, AGAIN

I cut some small names off my books because the /ES was trading in a downdraft.  I cut PBF, KWK, and ONVO.  I made a killing in ONVO, BTW.  The other two, not so much…

Speaking of the /ES: There’s simply no way for me to broadcast my strategy out to the world.  Back testing and optimizing has created a medium frequency beast that even I can be overwhelmed by.  I took ten trades in the /ES today, 7 were winners and I made 160 bucks trading a 1 lot.  When this system is making 160-250 bucks per contract 4-5 days/week, which it will, it can be scaled to as many contracts are needed to sustain my lifestyle.  Cool, yes?  Then I can abandon this corporate hole and go work for Cree or something.

I’m down a percent and a half today.  My cash is nearly 40 percent partially because of a series of decockings and partially due to the aforementioned sales.  Why the silver trade is back on, I have no idea.  When I return to winship lane I will be wearing an undersized tunic so you can admire my cajonies.

I want you to take that thought and hold it close this evening.

http://youtu.be/G8rGNk6vkM4

The market drifted lower overnight, not accomplishing much, but setting a higher low: the third in a series of higher lows since the market sold off Sunday night.  The momentum to the upside isn’t nearly as enthusiastic as we’ve seen throughout the year.  Instead it’s a bit more lethargic with price making a higher-high by only two ticks on the last trough-to-peak move.

The moves are also violent and with a smack of indecision, offering large chop often 10 handles wide.

I don’t have much directional conviction currently, but I’ve highlighted some key levels that may give us insight as the day progresses in the following market profile chart.  Sustaining trade over yesterday’s VPOC at 1691.75 would mark good progress for the buyers.  Conversely, taking out yesterday’s value area low at 1684.75 sets us up for scenario 2 on the below 24-hour market profile:

Cree shares are in the toilet after reporting soft guidance after the bell.  I can only see this as a buying opportunity.  If it presses my RVLT shares lower, I’ll be looking to buy more of their shares too.  Listen to me very carefully: LEDs are coming in a big way.  There are hundreds of millions of light bulbs that will be updated to LED technology.

Cree was priced for perfection going into earnings, it worried me.  I could have lightened my shares, but then I risked having to buy them higher on a positive reaction.  I’ve been biding my time with CREE, letting it effervesce for months, hoping for an opportunity to add exposure into some blood.

It appears I have my opportunity.

Shares are down nearly 15 percent on the news.  My cost basis is much lower so the market will have to do worse to shake me. I’m a buyer down here, but I intend to do so with laser like precision.

The CREE chart has needed to reset since February.  This isn’t a trade.  It’s a multiyear thesis that will crush.  The numbers out of CREE look great to my eye.

MOVING ON…

There’s nothing you can do, sans having illegal insider information, to avoid the type of loss I was forced to take in OCZ today.  Sometimes you get unexpected news, especially when you’re digging through dumpsters looking for winners.  You have to cut the names as gracefully as possible and take precautionary measures to protect your emotional capital or avoid tilt as some say.  I should have probably sold on the first bounce, instead of nursing the position late into the afternoon.

I am experiencing winship in the AIXG today, I’ve waited quite some time for this name to get active, and it will be interesting to see if CREE is a negative contagion tomorrow.

My peanut gallery of stocks were mostly down today with the exception of ONVO and IMMR.

Tonight I’ll be formulating plans to accumulate the blood in LED and I will burn thickets of sage to cleanse these demonic losses out of my home.

I’ve been nursing a few position this morning, namely OCZ, which has me somewhat sidelined to the other opportunities our markets present.

In terms of momentum trading, this is where you buy YELP, down here in the trough, if it shows any signs of strength.

Several of my other stocks are in the red.  I wish some were more in the red than others so I could buy more, but the day is young.

Our morning idea in the $ES_F was to see some digestion of the overnight move because it took the markets into overbought territory.  The sellers had more than a mere digestion in mind and put us firmly into scenario 2 from the morning report which called for backfilling yesterday’s short squeeze.  That task has been completed and the buyers are right back on the scene, keeping us in the churn.

The buyers could turn this thing around by holding above 1686.75, and we would target an upside move to test the daily high at 1690.50.

There was a sense of pressure building on the offer as we closed out regular trading hours yesterday.   Pair that with the poor high set on the market profile, which built context going into the globex session that we would take out the high.

The market has actually gotten a bit ahead of itself overnight, and it wouldn’t surprise me if we saw a bit of churn this morning while the market decides if it wants to accept the overnight progress. I’ve highlighted a few scenarios about how today may play out, and highlighted levels I perceive to be opportunities on the following market profile charts:

As quiet as today seemed, I was able to advance my portfolio by over 1 percent today.  Leading the way were my LED players, RVLT, CREE, and AIXG.  This basket of securities currently represents 23 percent of my portfolio and I intend to make it much larger, perhaps even as large as 50 percent of my book.

That’s how much conviction I have in lighting grade LEDs.

I intend to make a very concentrated bet and advance my family to the next level of society, top hats.  If anyone can present one iota of evidence contrary to the eventual 100% adoption rate of LEDs in the United States, please do so now.  And don’t feed me that plasma light bullshit, I’ve tested these things and I’m wholeheartedly unimpressed by both the performance and the economics.

I’m slowing my swing portfolio down a bit, instead focusing on building into names I believe add value to society, which is why I started buying cigarette marker LO into the bell.  I’m essentially parking money in the Newport Cigarette maker, planning to earn the very handsome coupon while they add value to the smoking community.  How?  The Blu eCigarette.  When LO took over Blu and rolled it out to every convenience station from here to California, they earned the early mover seat in this space.  I like to imagine they have teams of behavioral physiologists and scientists working around the clock to sell more of these disposable vaporizers.  My game plan on LO is to buy weakness, time and time again, and allow the eventual growth from eCigs to buoy the share price enough for the coupon to make me profit.  Fun stuff, I know.  I’m sleeping on some Ford(s) shares the same way.

I have a heterogeneous mixture of other stocks kicking around in the old portfolio, mostly names where I’ve taken the lion share of profits and left a runner on for sport.  Stocks like O, BPZ, ONVO, and IMMR.  I really only see reason to sell BPZ but the others I keep, like collecting baseball cards.

I still have a decent hunk of FB, about 35% of what I consider full size.

I bought more OCZ today.  This is my aggressive pumper.  I’m having a hard time accepting a double top at two bucks.  I’ve questioned this proposition by increasing my size in the name in search of a short term pump.  I’m playing PBF in a similar manner although it has different chart logic.

My other aggressive trade is YGE, which is still huge.

That makes 14 longs, 0 shorts, and 25% cash.  Just writing that out makes me want to sell something and concentrate my eggs…

RVLT today announced they acquired Relume Lighting Technologies, a fine company in my neck of the woods.  I’m loving how they structured this deal, paying only $5 million and offering the remaining ten large in common stock.  They’re aligning goals by getting everyone vested in the share price.  And by acquiring Seesmart and Relume they’ve become a formidable competitor in the lighting grade LED space.

Shares are up modestly on the news, but I wish they were down.  I want a huge position in this name.  I have a current cost basis of $4.35 and about 8 percent of my portfolio invested.  I want to be 20 percent invested…a concentration of sorts only a madman would consider.  And I want to hold it for years, or until I feel the management is not executing.

Right now I love these guys.

Consider this my hype piece on RVLT.  I’m not going to pump this name, but I will be swinging it intermediate to long term.

The challenge here will be sitting on all the profits, watch.

No charts needed here.  I have GTC orders at $3.20 and $2.15.  Hook it up.

The globex session in the /ES has been dominated by the sellers thus far who have pressed us as low as 10 handles off our Friday closing print at 1686.25.  Price seems to have made a run at the first lot of stop orders placed by longs last week, and has since stabilized a bit, although sellers have the momentum currently.  The markets were weak during the Asian session, but another burst lower occurred around 4am EST, around the open of the European markets.

I’ve highlighted a few scenarios for today’s action and highlighted the price levels I perceive as opportunities on the following market profile charts:

Cumulative delta is often mentioned when discussing the trading of futures likely because the information is more available in the futures than it is on stocks.  For any given timeframe on a chart (ie 2500 contract, 3 tick, 5 minute) the cumulative delta for each bar is calculated as follows:

Trades executed at offer – trade executed at bid = cumulative delta

Thus a positive delta means more trades are being executed at the offering price, where a negative reading would mean the opposite.

The data lets us peer into the order flow and see which party is more active or aggressive when entering (or covering) their trades—perhaps using market orders or “hitting the bid” when selling or “taking the offer” when buying.

Zooming way back on the cumulative delta and applying a moving average filter to it, we can see that the /ES_F (the future contract traded on the S&P 500) has been steady accumulated since around 8:30am on July 25th:

The ramp in cumulative delta started at about 1670. Price action since 1670 has been working through an anxious return of confidence phase where we wall of worry higher before getting an actual move.  It’s another reason why I’ve been buying dips all week.   Seeing that level taken out would put two weeks’ worth of accumulation under water.  Bulls don’t want to see that.

That’s my big idea for the weekend.  I’d love to hear your take on it.  Have a good one,

Much like the pile of Mexican food I consumed late last night, the USU shares I chased yesterday are providing small explosions in my person.  Position sizing is key and although discussed often, perhaps not often enough.  I only took a 1/3 size long in this name with no intention of making it larger.  That way, WHEN it comes back on my like this, I can at least maintain my composure and die with dignity.  This trade is likely a loser.  Moving on…

RVLT is a much larger position of mine and is down AS MUCH AND OFTEN TIMES MORE than USU.  But still, I don’t flinch.  I henceforth and hereafter am one with RVLT.  We’re a team, RVLT and me, consider me an RVLT employee, got it?  As long as they continue to focus their energies on Seesmart, I have zero complaints with the name.  I think it was a good deal between RVLT and Seesmart and we’re going to see real value from this company going forward.  I will go as far as putting 20 percent of my book into this name, if need be, allocating slowly during any meltdowns.  After buying more today, the position represents about 8 percent of my book.

I have CREE too, the leader.

I may have additional thoughts to offer you later on, but the market is very dynamic today and I’d like to return my attention to it.  Adieu good fellows of the interwebs.