Making Jungle Preparations

Smooth trend higher has given way to choppy, indecisive action.  The resulting daily candles for the S&P are long bodied.  By looking at the profile, we peer inside the candle and see the footprint left behind by the buyers and sellers.

The globex session spent Sunday and early today slowing gliding lower until recently when a six handle spike effectively erased all of the losses from the prior action.  As we approach the 8 o’clock hour, price is bumping up against the 1516.50 level which is also the VPOC from Friday.

The first observation that jumps off the charts is the P-shaped profile that formed on Friday.  The structure of the auction suggests early action caused shorts to cover their positions which fueled the rally higher.  However, once they were done being squeezed, no new business entered the market and initiated new longs.  Often times we can interpret this type of action as a temporary phenomenon, which once completed results in price continuing lower.  However, given the context of Friday, going into the weekend, and the uncertainty surrounding the sequester it makes sense that buyers were not aggressive in initiating new longs into the weekend.

I’m respecting the notion that we may trade lower, and with that in mind, I’ve tightened up my bias line below.  Should we see price trade below these levels, especially toward the end of the session, I will look to reduce exposure to equities across the board.

I’ve also traced out the progression of value over the last several sessions.  It highlights the progress sellers have made and how we recently stalled out. Value placement today can either negate the recent progress of the sellers or confirm it.  I don’t see room for much else but I suppose we could see a tight value placement again today.

Devote readers, you may have a difficult time locating the Raul blog temporarily.  I have been cast into the Twilight Zone by The Fly.  This is likely due to my insolence and reaction to getting fired while making boss market calls.  As traders we always need to temper our emotions, especially those of the reactionary nature.

Futures are down a bit, but absolutely nothing to get your panties in a bind. I’m looking for a Buffet bounce early Monday. I’ll have specific values and observations manana.

An observer was able to capture this video of me, floating through the internet:

I went back to the seasonality analysis I performed at the beginning of February to reexamine how wrong of a conclusion I was able to draw from it.  I knew it was going to be ugly because my top pick from the data dig was ANR.  Have a look at ANR’s February performance:

I actually lost some money on that play, taking my third and final attempt at buying ANR as it tried to negate the head and shoulders pattern.  I sold around February 8^th aka the trough before their earnings announcement spike, then subsequent melt lower.

The wrongness of my analysis extended further when I predicted it would be a “very shiny February” because my seasonality interpretation supported the idea that miners would be strong in February.  BIG TIME WRONG, check out how awesomely wrong I was on this call:

Fortunately, I never committed any money to this call, I simply observed the play.  Every single chart in the space looked weak which made it easy to avoid.  ANR at least had a semblance of hope setting up in the price.  If you have a dog’s brain worth of technical analysis understanding and aren’t a long term investor, you would have stayed out of the miners this month.  You downright love losing money if you parked your stupid money in EXK for the month.  F-

Please accept my apologies if my seasonality data put a bug in your ear that was whispering false promises about the miners.  If you read along you would have stayed clear, but I understand how people can make rash financial decisions based on other people’s internet decisions.  Don’t do it.

With all of that in mind and because my access to The PPT has been revoked, there will be no March seasonality data dig.  This is likely better for everyone.  I don’t like to waste my time or yours by not adding value to your trading day.

I can’t tell you what will happen tomorrow, and I most certainly can’t predict what will happen over the course of a month.  I work in probabilities.  My probabilities are most reliable in the intraday to 3-12 day swing environment.

I posted all my thoughts on the #socials and their charts if you want some value added.  If you’re over 47.5 and don’t see that the word #socials is a hyperlink, let me be the first to tell you that if you click it you will be taken to a spectacle of charts.  Get excited you fossil.

Finally, I am not a huge fan of knife catching, but the rubber band is stretched out more than my nephew’s tee shirt after a trampoline wrestling match on a few of the miner charts.  I may dabble in the circus arts this week.  Similar setup on both of the following charts (click the charts to HUGE size them)

YOU WANT PICKS, GO SOMWHERE ELSE AND DECIFER THE DRIVEL.

TOP PICK IS/WAS ZILLOW

We’re seeing constructive action across the board in social stocks these last few days.  Encouraging the stocks to advance higher is the early stabilization in share of Facebook, which last week looked like it had made its way to the other side of the momentum mountain.

Eagar shorts (read: haters of the future) are now confronted with the fact that these companies are real and there is demand for their shares.

My two favorite plays in this budding space are ANGI and Z because they incorporate the housing resurgence into their mobile/social awesomeness.  But that doesn’t mean I don’t have a soft spot for the other players, in fact I own a few.

I’m also seeing the LED play work magic.  There was a huge move in RVLT today, and CREE continues to defy gravity.  I don’t own RVLT, and these spikes can be rather precarious conditions to initiate new longs into, but I think the company has an excellent opportunity to grow as LED adoption accelerates.  I still own shares of OESX.

The S&P is having a hard time reentering yesterday’s value which has me slightly cautious.  I took off my KORS and BX longs.  But overall, it’s been a constructive session.  I bought my RH back because homeowners who want some swagger shop here.

The sellers went to work into the close yesterday and continued their onslaught overnight driving price to new lows as I write.  I’ve also been axed from the iBankCoin roster.  And this morning, when letting my hounds loose to bark at the schoolchildren one doggy caught her ear and spilled blood, literally, everywhere.  I’m off to the vet after this.

The way we’re all overreacting you would think something bad actually happened yesterday.  Yes we gave back some gains, but nothing is lost.  We may be entering a bracketed trade for now.

Here are some important levels to keep in mind as you sashay through your gay day:

Sometimes we work hard at something because it’s our passion.  Other times we bury ourselves in the mundane, perhaps something easily delegated or put off, because it takes our mind off other parts of life.  I like both of these.  It’s hard for me to call trading work.  The research doesn’t bother me either.  All the data gets fed into my mind, and then I apply it to my whole life.  As hard as life can be in America, if you diligently make good decisions there’s no better culture to thrive in.  Studying successful businessmen and their companies gives me confidence to walk into any boardroom, mobbing my boots rugged, and throw down.  My life is improving rapidly, and 2013 is my busting out year.

This is about the point where my handsome face gets shoved in a blendtec.

My readership reached record lows this week and now I’m getting fired. My blog isn’t something people want to read and share with their friends.  I act weird on the internet.  I’m the first to admit that.  It’s fun and ads color to my otherwise grayscale day.  I really don’t think that should matter.  You should see some of the characters I do business with in real life.  I wouldn’t take them to a baseball game with my corporate coworkers but I trust them in their profession.  I rely on people to be good at what they do, so I can be great at what I do. Contrary to what commenter “Fly Fraud” would have you think, I trade well.

The hits are rolling over here.  I really thought being right more times than wrong would build readership.  I’m not going to lie, I pumped the election boxes a bit.  Do you really think I had a shot at being top three?  Obviously you weren’t hanging around the blogger network where I rarely ranked top ten.  I figured grab the stage, crush some trades real time, and sit back and watch my viewership explode. Boooooom, didn’t happen.

With all of that in mind, I’m lightening up most of my positions these next few sessions, and strategizing March.  Being right—doesn’t matter.  Juggling hand grenades—not impressive.  Funky You Tube grabs—yawn.  I’m going to get increasingly selective with my positions even if it means delaying gains.  To keep your interest I’m taking this show on the road, and heading back to the dark dungeons of the Blogger Network.  Stay tuned.

If you wanted month end fireworks you had plenty to be excited about today.  The market was full of action everywhere.  These wide range days are a momentum traders dream because they give positions room to work.  The sell off into the bell took the cascading algorithm shape, where orders get jammed into the exchange severs at warp speed. 

Today was feeling like a tight, boring day in the futures, where the range was compressed down to ONLY ten handles.  Then there was a curious afternoon pop which stalled out no sooner than RaginCajun strapped on a festive TVIX bowtie.  

Underneath the surface there were big moves.  Solar stocks got dismantled following a weak day yesterday.  A few names survived the carnage, but overall a drubbing was had.  Here’s the data, courtesy of The PPT:

Zillow ripped while the rest of the mobile social space consolidated yesterday’s gains in a rather mild manner.

I missed reentry into $RH today.  The stock closed strong, and the name should be on your radar going into the weekend.  I’ll be looking to raise cash levels tomorrow, and I’m hoping I’m greeted by market conditions that allow such transactions.  Into this first week of March, I want high cash levels so I can stay objective and hone in on the bigger rotations taking place as investors position into the close of Q1.

One of the most damaging mistakes trader can make is becoming too attached to a position.  Maybe they’re fan boys, maybe they hate the person on the other end of the trade, or perhaps their research is so awesome they can’t accept the fact that it was noise.  Whatever the case may be, I think it’s paramount you take on a trading flexible trading style for supporting your thesis.  For me, flexibility comes from scaling out of positions.

Let’s take today’s winner for example.  I put a position on this morning in Zillow.  I wrote a piece a few days back explaining my thoughts on trading this name to the long side.  When the market confirmed my plan with buy flow this morning, I put my position on.  I’ve learned the best trades are hard to grab ahold of.  That was the case today.  I was stalking, and as soon as I saw what I liked I had to jam the order in fast.  The position worked right off the rip, and before lunchtime we are already at my first target.

At this point your mind starts messing with you.

I was expecting this move to take a bit longer than two hours to reach my target, obviously there is a strong demand for shares of $Z, so my mind says, “Aye, take your target and shove it in your cannoli hole.”  My internal dialogue is always in an Italian-Brooklyn tone.  This is me getting attached to a position.  You know what comes next?  A shameover © when the peak forms.

But I’ll be the first to tell you missing additional upside because you’re trigger happy can feel worse than a losing position.  That’s why for me, the best methodology is to scale profits along the way.  Everyone is different, but now I’ve already put bread on my table.  If I want to stick with the position, my cost basis is now lower. Plus when this stock screams higher, I’ll keep getting paid.

I think most successful traders scale, but you don’t hear many of them preaching it.  Define your levels, use the charts, and build and scale your position accordingly.  This will remove any attachment to a single price level, and will keep your mind clearer to make better decisions.

There are busloads of chartists and technicians being dropped off daily at the exchanges and they all have their favorite setups they trade.  What’s interesting is how two people can look at the same chart, two people with the same background in technicals, and see a different setup emerge.

It is a constructive exercise to consider what your opposition is thinking, and that is what I’m highlighting in this post about one of my current longs, KORS.  Where I see a buyable dip, another could certainly see this bear flag forming and could be either stalking a short on the break or positioning for such an event.  This is what makes a market, place your bets: