#NoTaper

As per the usual modus operandi (extra redundancy) I navigated today’s trade without media outlets like the teevee and with very little twitter exposure.  Instead the news came through the filter of a well curated group of elite traders in the 12631 trading room.   “No taper” they said, the exploding /ES and /6E charts told me the rest—risk rush on.

Reacting is a dangerous beast unless your reactions are decisions contemplated hours and days in advance from the war room (home office).  I took SKF off first, as I rehearsed in my mind last night.  Then I took a wish list of stocks and picked two: CLF and Z.  Zillow was an obvious buy because I love the company and housing will quickly become the catch up play as we dash to Xmas. CLF was a pure chart buy that could play catch up. Then I dove back into the big wave riding competition in the green lit halls of globex.  Futures good friends, I held my own with the big kahunas.

I’ve had 2k days on sessions like this.  Today was much more modest, but much less stressful and a hell of a lot more precise.  When November rolls around and I’m trading the size I want to deploy my scaling system, these will be 2k days again.  I ran before walking, fell quite a bit, decided to start walking, and soon I will run again.

6 trades: 5 long – 1 short, 6 winners.

Seeing as RBCN was my largest position going into today’s tape, yes, I did have a good day…thank you.  What would have made it only better but without it I still high watermarked would have been holding onto EXK which I regretfully cut this morning.  Regrets, I’ve had a few as Sinatra says.  It ripped the tits off and looks ready to continue ripping the tits off this week.  Now I feel like I am missing the action, therefore I am.  I will revisit the miners this weekend.

Oddly yet amusingly enough, RVLT paired up with IMMR, smoked entirely too much MJNA and enrolled in Clown College. Due to their heavy course load, 7 credit hours, they will be too busy to participate in this ramp up. They will instead focus on balloon animals, banana cream pies, and terrifying children.

The question that should be at the front of each of your minds is, “Is this euphoria?”  Because, I can tell you I feel a bit euphoric.  I will be breaking down the days leading up to this moment, all the blogs, all the behind the scenes homework, and psychoanalyzing this win ship to find repeatable strengths.

The work load only increases when you are winning, you must love the process as much (if not more) than the outcome.

Get some rest and come back early tomorrow, for today is only Wednesday.

http://youtu.be/nhflmIbyHbg

My journal work these last two weeks brought attention the fact that I had been nailing my entries, but getting stuck in trades, losing interest, and then just managing to scratch them and lose a few bucks.  I think this behavior was a byproduct of our coiling markets ahead of the Fed.

What worked really well this morning was taking smaller profits.  Thus far I have taken three wins in the futures: two in the spooz and one in the 6E.  I would still be in two of these trades, contemplating scratching them for losses, had I not lowered my profit expectations by one to two ticks. 

This is adapting, this is surviving.  You must be one with the flow, one with your environment.  I strongly believe once the market gets some visibility (after the reaction to the Fed reaction) we will return to an environment where I can push my profit expectations back to their planned levels.

I cut EXK, no other portfolio adjustments.

Be amorphous, like water.  And stay calm if the market gets wiry around 2pm.  Perhaps listen to The Buena Vista Social Club:

The overnight session in the S&P was again quiet, setting a range only 3.75 handles wide.  The interesting observation is where the small range took place—at and above yesterday’s high.  The market is hanging high into the Fed today after poorly rotating lower during yesterday’s session.  This did two things—it made shorting very difficult and a losing venture, and left the dip buyers on the sidelines.

Therefore, my expectation is for early dips to be bought through the natural demand of underwater shorts being made whole (perhaps partially whole) and eager buyers putting fresh money to work. Given the implications of the Fed meeting today however, we must also be aware of a rug pull scenario where we slash through levels of support as the market attempts to digest the announcement.

I’ve highlighted a few scenarios for today which may be rendered ineffective if we begin trending, but still are context to keep in mind, and key price levels on the following market profile charts:

Pull up daily and 30 minute charts of EGLE, GMCR, ACTV, and END and you will see beautiful charts, tightly coiled and ready to make explosive moves.  I want you to note I bought none of them.

I did however buy CREE and MHR taking my long exposure up to 75 percent.  I have another 10 percent in SKF, leaving me 15 percent cash to navigate tomorrows FED day.  That’s essentially why I did not buy anything else today.  I like the stocks I mentioned in paragraph one.  Any one of those could produce a big gainer.

Interestingly enough, after today’s CREE buy and pooling in RBCN, 40 percent of my book is committed to LED technology.  RBCN has some action off the new iPhone home button too, but their sapphire is an important material in LED production.  This is my very concentrated bet.  Parts of it aren’t doing too well.  Take RVLT for instance—the chart looks hellish, yep…technical term.  And I’m -30% on the name.  Don’t care.  I mean, I care very much, but the stock is a long term speculative hold.  AIXG cannot and will not break out of its consolidation range.  My cost basis is the only thing keeping me in this play because if it wasn’t near the bottom of this range I would have a harder time stomaching these waves.

I took one trade in the /6E today.  After /6e pushed lower, it pulled back to a place I could enter.  The trade went in my favor, all the way to my target, but did not fill.  This happens often, and it used to cause a great deal of anguish and regret.  I would be like, “I put my target out too far, now I will be getting the fuck.”  Now I don’t sweat the action, but instead manage that which I can control at this point.  The /6E very well could have put in another thrust lower, and it still may, but it didn’t.  Instead it put my position below water and then just held it there.  Around noon I took a step back, had a stretch, and asked the following questions:

What has the /6E done?

What is the /6E trying to do?

How good of a job is the /6E doing on the try?

It’s helpful.  I pulled my chart out a bit, noticed the /6e has gone very quiet, something I noted this morning.  The market open introduced a strong thrust lower, but not to fresh swing lows.  We’re making lower highs, but also higher lows: it’s coiling!  That’s what it has done.

To my eye, the Euro is trying to do two things: the bulls are trying to work out of a range bound trade that lasted an entire year.  They are not doing a great job so far.  The bears are trying to reject range highs.  They’re doing a decent job, but have been smacked about quite a bit these last 8-10 trading days.  As a result, the /6E is marking time until an unknown factor causes order flow out of this consolidation.

It’s doing a pretty damn good job consolidating as the EMAs I track had gone completely flat on top of the VPOC.

So then, what’s it likely to do?  It was likely to chop the consolidation range, the short trade was dead.  Instead of just clicking the buy to cover and taking a 0.00012 loss, I was lucky to catch a bit of movement in my favor and only lose 0.0006.  I didn’t want to be in a coin toss situation any more.  I covered.  My entry was good so I really have no complaints with the trade.  It just as easily could have continued rotating lower.

And now you have read though my entire lunchtime /6E perspective and my subsequent introspective.  Have a great one!

Part of me thinks the high of the day was set already in the SPX, but I went ahead and added some long exposure.

I am trading around my core in CREE, I added more long exposure to this name looking for a move into the earning’s gap.  To be clear, I think we get rejection somewhere in the above gap initially, but I want to play a push into it, initially.

I bought MHR too.  I like this name, and I like how it is flagging on the daily chart.  That being said, it is still looking downward, so I have tight risk.

Everything else is in place from yesterday.

The overnight session was quiet, and the first thing to catch my eye is the way price kept bouncing off yesterday’s low at 1688.  There were four instances overnight where we saw buyers reject attempts to break this level.

As a result of all that time being spent near the lows, we have formed a very lopsided market profile overnight.  This gives us some interesting context clues as we trade today.

Many other markets are quiet too.  Take for instance, the Euro currency future via the /6e.  There has been strength but not enough to break yesterday’s highs.  Instead the Euro marking time with a gentle sine wave.  If however the Euro cannot strengthen this week, it could still be stuck in a bracketed range dating back to the beginning of 2013.

Returning to the /ESZ3 or $SPX December future, our key upside level of resistance is close at 1693.50.  When we broke down yesterday to commence gap fading we left a sharp low volume node at this price.  It can’t be seen as clearly on the below market profile charts as it is on a pure volume profile, but you will notice a split in the profile at this point and a value area low.  I’ve highlighted this level, other key areas of opportunity, and a few scenarios for today on the following market profile charts:

I couldn’t pull the trigger on anything today, not to sell existing shares, not to buy new shares, and I have SKF already which feel like a bit much in this tape.

I stalked CREE today, it is setting up perhaps.  I wanted to buy shares much lower, so if this setup does trigger I may just trade a piece and go back into my core size (3/4).

Current longs, by size: RBCN, SKF, RVLT, AIXG, CREE, FB, LO, EXK, F, IMMR, MJNA, and O.

Cash around 25 percent.

The O was very strong at the open.  That is a nasty little fade right there.

I lost some money in the futures today when I was shaken out of my short by the clown show in my brain.  I called the head and shoulders this AM to the tick.  But instead of capitalizing on it, I sat in traffic listening to Traffic.  The clown ring leader is Gary Busey.

I’m holding out for my favorite setups before I put any more cash to work.

Good Morning and welcome to another work week, we have quite a gap higher to manage this morning.  The +20 gap that occurred when the market opened last night is a perfect example of something not being priced into the market.  This is the risk we carry when we hold positions over the weekend.  The 20 point gap also doesn’t mean the news is priced in.  Instead it has thrown us out of balance, which provides opportunity, as we auction our way back into balance.

The overnight action is currently forming a head and shoulders pattern with a neckline at 1698 and left shoulder at 1701, head at 1703.75, and right shoulder at 1702 give or take a few ticks.  The downside target of the move is 1692.25 which is one tick above where we opened yesterday evening, and also showing other confluences of support.  This is a huge level to monitor today, and one that is likely to offer excellent trading opportunities.

We’re also coming into the market action from the first days of August which gives us a few handy reference points, a value area high and volume point of control a point apart at 1696.50 – 1695.50.  Keep these levels in mind, if the bulls make short work of establishing value above here, we may be in for a fast and furious move higher.

Otherwise, my expectation is for profit taking type selling to enter the market early on and back fill the single prints from last night a bit.  I’ve highlighted this scenario, important price levels, and more on the following market profile charts:

I came into the day completely unprepared for all the volume to roll into December contracts.  As a result, I spent the morning getting all of my charts built.  By the time I completed this task the only opportunities of the day had come and gone.  After watching the tape for a bit, I ordered an oversized lunch and stared out the window while eating it.

There just isn’t much for me to do today.

RBCN caught an upgrade but some the bounce if being faded off.  I get the sense this stock is setting up to offer long speculators another correction, but I’m struggling to justify selling my shares for any other reason. I will stick around for the flop Monday.

I can’t justify selling SKF either.  Aside from the Goldman Dow inauguration, financials have sucked wind all week while tech goes on a no holds cocaine bender.  Look at WFC, BRK/B, C, BAC, and the butt grabbers at AIG.  They all performed rather lame.

It helps me carry high beta through the weekend, too.

I will stick with EXK into the weekend.  It could either carve another 6-7% off me or rip tits higher.  I like that type of binary situation.

Enjoy the final throws of summer this weekend.

The overnight session has been very quiet and balanced with little to report in the way of new development.  Price action on the S&P is coiling up tight as we approach the Friday trading session.  Given the overall trend higher, even at this potential inflection point, my expectation is still to see some early strength.

To my eye when looking at this price consolidation on the bar chart and through the market profile lenses, 1684.25 looks to be the pivot point today.  That means I’ll be forming my intraday bias based upon how we trade relative to this level.

I’ve noted this level, a few possible scenarios, and other price levels of opportunity on the following market profile charts: