$NIKK Today vs. $SPX Post QE2 Announcement

The behavior of Japanese leadership sounds very similar to the game plan used only a few years back by our bearded leader and his manipulation crew.  The same behavior that in fact has driven party boy Scott Bleier to perma-disgust after years of watching the “can’t lose” #costanza market game is being implemented by Japan.

Sure it has its differences in rhetoric, but the end goal is the same, inflate.  Since they’re stealing a page from our playbook, and since I’m only a lowly chart trader, I thought we could glean some insight into the situation by templating today’s action in the $NIKK to the $SPX QE2 announcement.  Why QE2?  Well, the action is playing out in a similar fashion.

Check out the chart comparison click to enlarge:

This isn’t actionable information.  It’s more an exercise in interpreting a market’s reaction to a similar event.  After QE2 was announced, we had a modest pullback and then it was off to the races.  Maybe we didn’t understand the can’t lose implications at first.  Or remember how people insisted the Fed’s actions to be “firing blanks” and other hillbilly talk?  Should we see the Nikkei experience a mild down draft any time over the next 3-6 weeks, and buyers remerge, the play is to get long and see if they’ll rip like we did.

However, their market has been running much hotter than our own and could continue to do so, leaving us behind.  That would tell us the cycle is occurring faster than our own, and may continue to do so.  In this scenario, we try and grab hold to what we can, and hope to bail before things get too freaky.

Either way, the charts and agendas suggest we could see a big, sustained run.

Often times we find a company or product we love and as traders and investors our minds instantly gravitate toward the ticker symbol to see where the company trades.  Other times we do research into an industry and find our favorites.  Then, we pull up the chart and find the stock is running hot.  If you’ve ever taken a hot momentum stock long the day before it starts correcting you know the feeling of a hot knife being thrust into your stomach.  So you toss the name on a watch list and go your merry way.

Such has been the fate of GNRC for many months in my trading software.  It has sat on my ‘stalking’ list sashaying higher.  After seeing the east coast get pummeled again I really wanted to buy.  Today’s selloff came at a perfect time for me, I had cash on hand so I bought.

I typically don’t buy red candles.  It’s too….Keith.  I can’t really explain it any other way.  I’m not a heavy lifter.  My transactions won’t stop a falling tape.  I like to buy in the presence of other buyers.  When I bought GNRC today, or when I buy a name like CREE the day it gaps up huge, I put on a smaller position because the setup isn’t my hon3y hole.  For GNRC I used a half position.  Here’s why, I have a larger risk:

After scaling off a profit from my beast ANGI position today, I found myself in the precarious situation of having too much cash on hand.  The market is running very hot, yes.  My rally fever is perhaps matching the temperature of the market, sure.  These are the two caveats you must keep in mind while reading these musings.

Last week we talked about the nuclear trade.  iBankCoin noble Mr. Cain Thaler has been working the nuclear trade since Fukushima.  I really like MCT’s style.  He has incredible foresight when everyone else is running around with their heads on fire.  If you’re not reading everything he writes you’re doing yourself a great disservice.  He pounded the table on AWK two years back and I’m still holding this massive winner, collecting a nice coupon along the way.  See how I digress?

I love energy plays going in the State of the Union address tomorrow.  You know Obama is going to jawbone infrastructure and energy.  He likes nuclear and solar panels and all the other alternatives.  Position accordingly.  This is all subjective talk, mind you, by me.  I really just like charts.  You need to remember that.

In order to bring my cash back down below 10% I started new positions in GNRC and CCJ.  May the weather continue to be volatile and our energy infrastructure feeble.

I highlighted the levels that will make me rethink my stock exposure this morning.  The plan will continue to be amorphous like any good plan should be.  Grab some nuts from DMND and read along.

I’m impressed with the roster of musicians I saw at last night’s Grammy awards.  I often get stuck in the mentality that the best music has already been made, and for many listeners’ ears that’s true.  But there’s always more in store in this short life.

Well here we are, mid-February, making new highs in the S&P.  As I’ve continually expressed during this up move, and perhaps the advice I’m trying to hammer into my own mind, is to not over think the trend.  Keep your picks simple, you want stocks that participate in the strength of the market.  I sashayed out of Goldman last week, why?  No reason.  Look at its chart, side-by-side with S&P, they’ve been mirror images this year, except GS is like the levered version, check it out:

Instead we should focus on key price levels that would tell us overall sentiment has changed and sellers have grabbed the reigns.  Taking to the market profile, let’s pay close attention to Friday’s session since it will provide the most immediate feedback as we progress through today.

Friday formed a tight letter P.  The P-shaped profile has appeared often this year, and as we’ve discussed it suggests a temporary phenomenon has occurred known as a short squeeze.  It suggests the sellers were forced out of their positions, but once they were forced to buy out no new orders entered the market.  In a downward trending market, this can be a good opportunity to short.  In an up trending market, we take the action with a grain of salt and look at other contextual pieces.  What was going on Friday?

There was strength in the morning and then the east coast was freaking out over some snow.  Perhaps that explains the benign action of Friday after lunch.  They all left.  Regardless, we need to see buyers hold off the single prints starting at 1511, if that level is lost, batten down the hatches and prepare for a rotation to 1508 then 1504.  If trading back to those levels doesn’t bother you, hold tight and consider the real fight to occur down at 1498.  That level is everything.  It’s bigger than the 1500 century mark.

Otherwise, if we continue higher keep playing your pumpers if you’re a momo guy and playing your event trades if you’re an event guy.  If you’re a value guy, do your thing player.  Get on the good foot!

http://youtu.be/1N5jY00z_Sk?t=20s

Happy Chinese New Year ladies and gents, it has been a lovely weekend in Pure Michigan.  I’m certain Tim Allen would approve.  I hope you’re receiving me well in the Northeast, under thick blankets of snow.  That first day of sunshine after getting pummeled with snow, beautiful!  If you’re without energy, huddled over a barrel of burning trash, perhaps eating beans, and still receiving this message I’m impressed.  May I suggest procuring a generator from GNRC with your modest corporate bonus?

I don’t care to dig too far, but I’m fairly certain people from the Northeast hype up snow storms more than anyone in the world.  A news flash hit me Saturday while I passed a hotel television.  Apparently they’re naming winter storms now.  I haven’t watched a full news show in several years, and certainly don’t tune in to the weather channel.  I’m impressed many find the time to observe such television for hours, my how I’ve digressed.

It may be with good reason Nor’easters and Alberta Clippers strike terror into the hearts of these northern folk.  Your energy infrastructure is always getting beat to rags, likely because God hates your Facebook lifestyle.  If you intend to continue your immoral internet existance, you better take proactive and preventative measures to ensure your robot overlords remain powered up.

Obviously we need to benefit via stock market picks when people and governments step up their game to deal with the new era of volatile weather.  We discuss this play often, and I’m going to go back through the archives and find ways others have played or intend to play this weather phenomenon.

Note:  The crazy weather is really rather normal.  But we don’t care about that.  We want everyone to think it’s crazy and with the help of their administration find ways to overreact and buy stuff.  That way we can make money buying companies who stand to benefit the most.

Before I dig my way through the dim lit archives of iBC, let me toss my top two names in the hat:

CREE and GNCR

Anyone else who has a favorite play please chime in below.  Adieu

It was definitely a busy week in the market as we churned through our range.  The important matter is we finally auctioned the 1500 level in an orderly fashion.  That was the action I have been looking for all week.  I had a chart all marked up and pretty, ready for the interwebs to digest when my internet went down this morning.

Instead I provided you a picture of my PC screen taken with my iPhone via Twitter.  So haggard, but I did what I could for MY PEOPLE (OOMPH!).  So haggard:

http://twitter.com/TwoSmuth/status/299882387297419265/photo/1

Other notable happenings this week: ZNGA isn’t dead yet and plans to get your children addicted to gambling.  This is all very bullish as can be seen in the huge run up today.  Seriously folks, I attribute the strength in Zynga shares today to a decent quarterly performance (nothing extraordinary), the online gambling jawboning, and the MASSIVE LNKD move.  That final bit of sentiment could be what kept a bid in most the social names today.  We also had a nice breakout in the nazzy, that buoyed things I’m sure.

Zynga was my trade of the week, and I must solemnly tip my hat to iBankCoin legend and southern gentleman RaginCajun for trading side-by-side with me on this name.

I had to dump ANR today.  The stock has exceptional February seasonality statistics in The PPT, a high short float, and is part of an industry that was flagged by my seasonality trend work at the beginning of this month.  It can be frustrating to put a ton of research into a name, definitively have an edge, and still wind up on the losing end.  But believe me, it happens more than traders like to admit.  Knowing your risk going into the trade makes the decision to cut your well thought out trade when it doesn’t work simple.

Other times you just pull up a chart, it looks ace, you buy it, and it’s a ten-bagger.  So take the good with the bad.

I had a great week of trading here in the hallowed halls of iBankCoin.  My days as a tabber may be numbered, but I’m going to make sure and enjoy every minute I’m here.  You only live once and this is the best 15 minutes of fame Raul3 could ask for.

Have a great weekend.  I’ll be checking in with any internet foolishness or insights I have over the weekend.

http://youtu.be/GR8jOJZERhs

Traders are getting all bent out of shape by celebrity day trader Rachel Fox.  She’s a young girl who is really popular to begin with, then she took to trading stocks on her cellphone.  Hell, she’s crushing it this year, up over 60%.  I love these types of situations.  Traders, myself included, approach the market with a humble mindset.  Often this approach is refined through a couple of decimating losses.  Losses that make you puke in a garbage can then sit on the floor shaking.

Then Rachel Fox hits the scene, Hello Kitty iPhone in tote, and starts crushing.  Is she getting lucky?  Maybe a little bit.  But for traders who have spent years earning their place in this market, it’s frustrating.  I couldn’t care less if she gets famous in the trading scene.  Eventually she’s going to get whacked pretty well.  It’s inevitable.

What separates the fantastic Fox from many other aspiring traders is she’s already loaded.  And she’s super young.  She has tons of time to earn more money from her professional career.  This means trading does not feed her face, pay her rent, etc.  She’s probably approaching trading with the right mind state because she’s not emotionally attached to the financial outcome.  I’m pulling for this girl.  This type of participation is what will feed us traders for years to come.  New money baby!

Let me get you hip to a recurring theme in this market.  If a company beats analyst expectations and rips higher the next session, it will continue to run.  Look at PPC, GS, and CREE for example.  They gap and go.  This type of participation is a blaring signal of high demand for quality equities.  Risk is being put on in a big way.

We had a strong January, we had a funny little Super Bowl with a power outage, and now we have an EPIC SNOW STORM.  All of this happened amidst indices making new highs.

I come to iBankCoin late at night and dig into The PPT, building beautiful watchlists and highlighting industries that I like.  Then the session starts and all of those names lose my interest.  Then, by an invisible hooded force, I start buying social names.  I cannot explain this behavior.  All I imagine is mysterious hooded monks chanting in a dim-lit stone room to the stock gods, willing participants into the social stocks.  Crazy I know.

I’ve been a buyer all morning.  I bought more ANGI up here, I bought more ZNGA up here, and I bought more FB down around here.  I may have a nasty case of rally fever, be forewarned.

Other buys today: HES and RH

I’m eyeing a couple other stocks as we enter the afternoon.  Let’s see how they close’em.

I was welcomed this morning by a lovely coat of snow.  So lovely, in fact, it wiped out the internet in my home.  Losing the internet at my home means the whole show comes to a screeching halt.  I’m not unable to toggle the lighting and heat from my smart phone like I so enjoy.  My NFLX is out and that means there’s only antenna teevee.  And I most certainly can not pen lovely blog pieces full for media for my interweb people.

Thus I had to adventure drive into the office so I could trade these STAACKS.

If you are long, there is very little that should concern you.  The wind is at your back and prior discrepancies left behind in the tape have been settled by in an orderly auction by the mafia in Chicago.  If you’re short, a clown rather, I wish you high level risk management.  Please trade your positions well.

Today’s plan is to wind up exposure as high as possible into quality chart setups going into the weekend.

My assistant has fetched me a hot cut of DNKN coffee and it’s time to do work.  Good day.

TOP PICK: ANGI

MOVES MADE THUS FAR: Sold TZA and ANR, bought more FB

UPDATE: bought HES

UPDATE II: bought RH

UPDATE the Third: bought ZNGA