The Squeeze is on and the bears are dead. I’m still looking for more upside here as we near a pretty little volume pocket. My man Option Addict has kept my eyes on this Volume pocket, which has the potential to suck us higher, killing a few more bears along the way.
Check it out:
My long watchlist is slowly growing with each passing day, and I’m looking forward to some great trading to finish off this insane year. We still have earnings to deal with, and I still would like to see some sideways action, but I think things are setting up pretty well for the bulls.
However, should we get into the vacuum, and immediately fill the pocket, I will be less enthusiastic about finding longs.
My current strategy has been working out perfectly, long a bunch of cheap names (ie. GOOG sub 500), while hedging longs against the indices.
Note: I don’t discriminate, I’m always on the look out for a great short setup. We killed $FMCN short in the chat room today, covering near the lows, and think it is important to stay relatively balanced.
At the moment, my book is still weighted to the long side, and I’m still looking to add longs. Here are a few names on my radar: PBR, BIIB, CIEN, DNKN, EGHT, GDOT, MWW, TQNT, TZOO, ULTA, VHC, WNR, ANAD, GOL, CAAS, DVR
Don’t forget to stop by our chat room, 12631, click here for details.
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Maybe a little GMCR for year end?
Have you seen Fly’s new PPT post?
What exactly is that a depiction of?
Watchlist: http://t.co/Rn8vRGo
What is a “volume packet?”
If you enlarge the plot, the light blue graph on the right is a depiction of the total transaction volume at each SPY price. Look at the mid-August plunge through roughly 127 to 122. Because the SPY were falling so fast, there were hardly any transactions at these prices, which creates a “pocket” of low volume compared to higher or lower SPY prices. The presumption is that as we get into this price range, where there were few transactions, and the bears had an easy time of it since it was basically straight down, we should see additional volume, filling the pocket as it were, and doing damage to the bears that they avoided in early August.
Hope this is correct, RC.
Yes you are correct.. This chart is displaying a volume profile showing transactions happening at discrete price points. When we dropped through the pocket there was no price at which demand met supply . Price stabilized when equilibrium was reached between the two. The market will want to fill in any volume pockets by ‘exploring’ price again to see if the auction process can resume at those prices.
Yes, CAAS, BORN watching as well….”>
Thanks for the love, homie.
How do you read this thing?