Whether you trade weekly, daily, tic, range, or minute charts you MUST recognize a lack of trend and behave accordingly.  To trade momentum there must be momentum.  I know V.King would enjoy that sentence.  Once you recognize conditions where momentum is gone, you must adjust to fading extremes or sideline yourself.  That’s it.

I like to use EMAs to give a trend some visual clarity.  When EMAs of different speeds (i.e. the 9 and 33 period) converge and then flatten out, that’s a strong indication the market is on pause.  Such was the case all morning.  Today it was easy for me to avoid because we were working inside a tight market profile and we had the Fed in the afternoon which I knew would give the market a pause.  More times than I would like to admit, I haven’t been so astute.  And every time I fail to recognize these conditions the alogs pick me to pieces.

I’ve been a doubter of any such trendless action most of June, but as the month drags on it’s becoming a distinct possibility that we’re entering a flat consolidation phase.  My 9 and 33 are flattening out and going sideways.  It would make sense too given that my momentum plays are all fizzling out.  Take a look:

 

I’ve spent the last few weeks churning my portfolio with small wins and medium losses.  All-in-all I’ve given back hard fought gains.  Anyone who tells you the gains came easy is wrong and unwashed.

Today I cut most of my China junket.  I sold off BIDU, YY, and MY.  I sold WETF along with the Fly and I took some profits in CREE, keeping the position about ½ size.

You may notice a much less manic tone in my writing.

I’m up over 50 percent cash now and lost around 1 percent today.  Current longs listed largest to smallest are as follows:

YGE, HMIN, IMMR, RVBD, CREE, SCTY, RGLD, TPX, and FB

I want to keep my speculative swing positions down.  I’m getting confused, tracking so many positions.  Plus liquidation becomes more taxing by my broker.

I’ll ride most of these through the trendless chop of the index.  But I swear little allegiance to any and will cut to make room for others.

I don’t love the idea of shorting up here, but both T and JBLU look like great swing shorts to my eye.

Bottom Line: It’s summer now.  We may still push higher but we’re showing signs of stalling momentum.  This is the third major pullback too, it has a much lower win rate then the first two.  HOWEVER, we’re on the proper side of the 33 EMA, my primary demarcation.

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I’m sticking to the China theme mainly because the charts aren’t over extended. I can get decent risk based entries in names that could produce huge returns. That’s the humble reasoning.

The subjective reasoning is the Chinese are coming. They’re coming for the US markets riding solar powered Godzilla monsters and they mean business. My list of China longs is, well, long:

YGE, HMIN, YY, RENN, HSOL, and MY (listed by position size, largest to smallest)

All together, the basket represents about 35 percent of my portfolio. May they all go total Godzilla on a town near you.

UPDATE: I’ve pinned all the charts up to detail what I see

http://youtu.be/9T8vlrPTkYA?t=41s

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I’m feeling a little in the zone today so you must pardon my absence.  I’ve been crushing this S&P tape since 11pm last night.  Shorting, longing, more longing, and now I’m finally flat and in awe.

I made good monies today.

As I turn a more focused eye to these stocks the first thing striking me as odd is the lack of tenacious demand for solars.  It’s like the god damned secondary over at FSLR put a wet blanket on the whole industry.  Everyone’s still tending to their sunburns with coconut and aloe.  But I must let you know, Raul never burns, I only get darker.  And when I get really dark, things get weird.  By that I mean YGE needs to get moving NOW!

HMIN will cut dicks once it finally crushes this stupid 30 level.

DDD is still blowing minds around the world, building shit out of polymers and what have you.  Believe it or not, this company is still special even if Japan unwinds their monetary policy.

China isn’t getting awesome yet.  They will be.  Never sleep on the Chinese.

TPX is behaving excellent.  I think you have to keep the weekly chart in mind if we see follow through tomorrow.  That would carry some major implications.  Watch me crush this trade.

YY is going red to green but will always have a red soul and desire to kill shorts.

IMMR yes they have the haptics.

I bought more ODP because something about office supply stores gets me excited.

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I was caught out of position today in FSLR and as a result was stopped out for a single day 6 percent loss.  Listen closely, it happens.  The way I chase momentum, about 1 in 10 trades does this to me.

If you recall, I bought two solar names yesterday, YGE being the other name.  Interestingly enough, this position is sized the same as FSLR.  But pull up the two charts and you might be able to see why one stopped out and the other didn’t.   I’m not saying YGE is a sure winner here, the trade is still in question, but it is/was a better bet than FSLR yesterday at 3 pm.

CREE burned me too when it melted its heat sinks and lit the ceilings on fire here in la casa de Raul.  I will go to hell and back with this name though, extra devil.

Every other part of my book sucked less, which is good.  YY is at an important junction.  This junket may have already reached its destination as they say, but I would be remiss if I cut it after one day of selling.

My largest position performed admirably.  Well done HMIN, may your holding out for better days be met with strong accumulation.  I’m talking to stocks again…I need to bring this up next time I see my therapist.

I closed out the day with cash elevated back to 35 percent.

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No, not my gain/loss, but my swing portfolio.  You see, I like these Chinese Burritos right now.  They’ve had strong years, yet they shrugged off this entire week’s weak weakness.  The stocks of my brothers from the Far East are poised to pump with great pomp and vigor.  They sport pristine balance sheets, approved by the general secretaries and chairmen of China.  The board of board of directors will not lose (sic).

I also took down WETF today because, there’s nothing like a millennia-old rivalry to get the energy going.  WETF is my Japan exposure, YY and HMIN represent China.  You know what? Let’s throw LEDS in with China too, no one knows what the hell they actually do, like China.

This is a game of Risk gentleman, position yourself correctly and you may find yourself chairman one day too.

Into the weekend, I’m holding the line, dressed in Red regalia, saluting you and yours.

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I wasn’t able to trade the futures this morning as I was never able to give the market my full attention.  In hindsight, we had a gap-and-go open, sometimes referred to as a pro gap.  Traders shy away from fading this type of open due to their strong directional conviction.  Therefore, if we close near the low of the day, that’s unexpected, and reason for concern.

New longs were initiated today in WETF alongside The Fly and LEDS alongside RaginCajun.  It’s not that I don’t have any quality ideas, but sometimes a ticker gets brought up that I’ve been stalking for a long time, I revisit the chart and see a clear level of risk and I take the position.  The key is to own the trade and take full responsibility for managing it.  It’s astonishing to see someone follow a trader only to cross their fingers and get high on hopium.  It seems to be occurring quite a bit lately…

You can hire brilliant analysts with the best tools in the industry but you can’t win if your decision making and execution are weak.

Enough of that, TOP PICK:

Right here right now HMIN – this stock gets legs over 30

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The first time I went on a sea voyage was aboard a CCL vomit comet.  I remember a storm tossing the boat about and enjoying running down the long hallways, maniacally, whist others hugged a wall and resisted the urge to purge.

I’m not quite to that level of confidence yet in the futures, but I was happy to hold my own today and earn a meager bit of coin.  Keep in mind, this could have been a very swell day, but I shorted into the hole and it took 4 handles to find out.  Big seas.

I traded a lot, 27 round turns, 16 winners and a sore neck.  I closed the day a slight hue of green both in the face and in the books.

I would imagine most people seeing all this work return so little and throwing in the towel.  However, I continue to make mistakes, and they continue to cost me money.  Once I iron out a few small issues this entire process becomes another income stream.

The market rejected the SPX gap aggressively, impressing upon many the feeling that we may be gearing for a bounce higher.  Several of the more studied traders resisted the urge to participate this afternoon, opting instead to save their cabbage until after we see the data tomorrow.

My swing portfolio was up today, lead forward by HMIN, IMMR, and CREE.

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It has been a very interesting week in the markets thus far, and the bounce we saw off the lower gap gives us a sense of the demand present for equities.  I don’t like many charts out going into Friday, but a few stand out.

I bought shares of TSLA – I want to see the stock rise soon as we’re dealing with a momentum situation.  Without momentum this name gets dangerous fast.

I like China stocks of the burrito variety.  They shrugged this correction off well as a whole.  My favorite is HMIN and I bought more.

I’m still about 50 percent cash, but I want to get involved in case the market decides it wants to test the all-time high again.  Hey, I’ve seen crazier.

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On losing days, my old routine used to be calling up some buddies and having a few beers, chalking it up as another hard lesson from the market.  I can always have this mentality because the money, I don’t depend on it.  I’ve always been told consistent profitability in the markets requires a low stress money situation.  I agree.  I absolutely can’t imagine being in a financial pinch and trading.  As for the jumpers, they’re simply cowards who can’t swing the poor life, thrift shopping and such.

Today really wasn’t as bad as I’m making it out to be, but frustrations were quickly compounded and before I knew it I was going ‘Full Gibson’ beating people over the head with rocks and such.  I played back the tape of my futures trading just now and the mistakes didn’t start until I made it about me.

I made it about me.  Not the markets, because some crazy shit went down that rattled me.  Let me explain:

I took planned trades, trades with statistical advantages.  The first two win.  Good start.

The second trade takes off as soon as I get it in, looking great, gets to my exit, prints my target a few times, I don’t get filled and it slams down and takes me out break even.

At this point things are looking REALLY choppy and moving REALLY fast.  For the next 30 minutes all hell breaks loose, Raul taking funky ass unplanned trades.  Good God, it looks like I fired a machine gun at the screen.

Funny thing is, my last trade, a long…something was still firing in the old noggin…my exit looks like the most beautiful short entry you’ve ever seen.  The floor fell out seconds later for five handles, then many many more.

This all happens very fast you see.  I lost sight of the market.  I started having a very real and very strong feeling that the algorithms knew exactly where my stops and targets were, and they were fucking me. That’s paranoia…fear based nonetheless. Me, me, me, that’s what my internal dialogue sounded like.

Recognizing this, I cut almost all my risk out and pressed my cash to 65 percent.

Some names I just couldn’t let go of.  Here they are, presented by size (biggest-to-smallest):

AAPL, CREE, IMMR, RGLD, HMIN, DANG, and FB

I also hold some cheap lotto tickets in HPQ weekly calls and NFLX.

My fate as a trader lies entirely on backing off when conditions don’t favor my style of trading.  It’s something everyone has wrestled with I’m sure.  It’s never hit me this hard in my life, even though I’ve taken much larger financial blows.  I was furious.

It’s a learning experience as always, but this one left a lasting impression.

BOTTOM LINE: ALWAYS LIVE TO FIGHT ANOTHER DAY

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Do you like the transient manner in which I avoided today’s AWK dump off?  After over two years of being invested in the name, benefitting both from the large coupon AND the capital appreciation, I simply cut it loose.  This type of thing happens all the time over here.

Is it luck?

I’ve always considered myself lucky.  I walked away from a pretty gnarly Cessna crash a few years back.

But it’s not luck.  It is marrying the knowledge that matters and hanging out with it every night.  It’s foraging through The PPT, aimlessly, for hours on end.  Reading everyone’s commentary here sure helps.  Pay attention.

Moving on to this landslide close, there’s your sell in MAY!  That was 30 handles from the high of the day.  I got stopped out of my NANO trade amidst the selloff, but my impunity in ES_F continued.  I just had to try the mean revision, and actually made a point and a half going LONG mid death spiral.

I’m telling you, I should buy some lottery tickets for real today, I have the Midas touch.

After seeing the selling pick up tenacity I covered and bought some TZA.  Who am I not to join gentleman RaginCajun on TZA?  On this birthday!?!  I had to.  Plus it’s like my Ambien for the weekend.  Quickly: Raul trusts no pharmaceuticals, hence his distrust for resident drug dealer @halfbloodpope. I’m really not sure why I’m talking in the third person, via my pen name.

Some of my stocks held up well considering the carnage.  New long ACHN didn’t chit the bed, which is sometimes expected of newborns.  DDD was ugly, but damn, I’ve seen worse.  I’ll probably see worse come Monday.

I have the China PMI to look forward to this weekend with HMIN and DANG.  And I have SNE.  I even have a dash of NBG.  I like taking my chips to another country and gambling elsewhere while the USA gets sold in May.

My cash rose to 30 percent.

It seems like June is going to whip about something awesome.  I hope so.  Enjoy your weekend, eat a good meal, make love to your wife, for we battle come Monday.

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