The market now appears fixated upon roasting longs ahead of Apple earnings this afternoon and an FOMC rate decision tomorrow.
Transports are on a nose dive. Oil stocks are back in the furnace. The NASDAQ is flat and entirely hinged on Apple. The Russell is probing the low end of its range. Breadth is in the toilet.
My book is completely lit aflame and I am reminded why I should not pick stocks but instead GARP on dips by pressing one stupid button like a drunken chimp.
The largest holdings in my book are doing okay but one will report tonight and could effortlessly castrate me three ways to Sunday. The bird, a company ran by vultures. Meanwhile diversified plays like GEM and CNCR are holding up. I may just rotate into these hip new ETFs and focus entirely on picking off NASDAQ levels for less handles and more size.
It never feels like too many moving parts until they are turn against you. With unknown forces just beyond the horizon I am raising some cash to deploy elsewhere. Before doing anything, I think I will enjoy a hot beverage and some crisp autumn air.
Over the weekend I discussed some of the biggest hurdles in trading with a few of the conference attendees, and I paid particularly close attention to emotional (irrational) decision making.
Having a trading plan is great but sticking to it will make the difference between making the turn to consistent profitability verses conceding your fate to the latest indicator or guru.
It is extremely unlikely you have the resources to influence the market you are trading. There is no way you can control the collective behavior of other participants. That is why it makes no sense to worry about the why behind market behavior. Your energy can be better expended cultivating your own mind.
They are learning so much about the brain these days and tons of research and books are written on the topic. Here are a few books I have found valuable so far. These are links to Amazon and if you buy a book directly from these blue hyperlinks I will make like fifty cents:
Ubiquity: Why Catastrophes Happen – More about the omnipotent presence of extreme outlying events. Great for preventing being stubborn, especially when an indicator or signal keeps being wrong.
bird by bird – I bought this one to improve my writing but along the way my mind was expanded. Check it out.
Meditations – Random applications of stoic and Aristotelian philosophy by Marcus Aurelius aka the last great emperor or Rome. This translation is considered the cleanest and most actionable. These ancient writings are older than the Bible.
The Art of Learning – This is written by the boy genius chess player who went on to become a world champion in fucking jujitsu. Really solid stuff.
The Chimp Paradox – Get to know your inner cave man; the idiot who wants to smash computers with his fist, and how he may not be very useful in modern society. In Switch (above) they call it the elephant. Great pair of books to read together.
Bhagavad Gita – Another set of writings predating the holy Bible. This one pairs well with a small dose of LSD (I do not advocate breaking laws).
The Legend of Bagger Vance – I linked to the movie. Save time, just watch the movie it does a pretty good job as long as you can stomach a Matt Damon performance.
Gita on The Green – This is something. After you realize Bhagavad Gita is super confusing and you have watched Bagger Vance, this book ties to the two together in an epic way. Great for you golfing types.
The Psychedelic Explorers Guide – If you even remotely took my LSD recommendation serious, read this book first (and do not break any laws).
Sophies World – If philosophy is not your thing, read this lovely fiction instead. This is one of the best selling books ever and translated into 100s of languages.
The Power of Habit – Another book with lots of great case studies and research. Definitely top 3 in usefulness and application to trading. I love the part about scripting critical moments.
The Obstacle Is The Way – Ryan Holiday is probably younger then you and has accomplished incredible things. He is also a modern day stoic. This one is tough loving and more effective then coffee for waking you ass up.
Those are all the books I have worked through so far. Some I read halfway then shelved for now. Others (like Meditations) I read over-and-over. Has a book improved your trading or outlook on life? Please, share it below. I need more!
Even today, after a long week of nudging higher, the system managed an impressive afternoon rally. These ‘events’ have been happening with increased frequency. Seven out of the last eight sessions have seen an afternoon buying spree at the NASDAQ barter and exchange.
Amateurs trade the open, pros the close. This is another useless trading axiom. However, a strong close does wonders for improving the mood–especially heading into the weekend.
I’m headed into the weekend with a chest full of bravado, a pocket full of pesos, and a penchant for risk. What could go wrong?
September was a great month for selling the market short. Even for my intraday gaming—the speed left lots of room for me to be in-and-out, capturing 6-10 NASDAQS at a time, in a matter of minutes.
The general uneasiness that speed creates also gave me conviction to press a position short in BIS. I barely got the position on since it never pulled into my wheelhouse. I do a few things well. One is always treating news driven moves the same. The biotech move lower was triggered by a Hillary tweet.
Pop Quiz: What is our expectation on news driven moves?
A. Expect price to return to the ‘scene of the crime’
B. Kiss the level goodbye
Once tape speed left and my morning report forecasted chop, I lost my conviction in the BIS trade. Then I had Exodus flagging oversold, constructive conversations with the 12631 crew on the bull case, and lots of buy programs hitting the NASDAQ. I objectively cut my starter BIS position.
Finally, I wanted to make a note about the extreme NYSE tick reading we had today at 1:12pm. This tick classifies as a ‘party pooper’ signal meaning, per my observations, they happen at or near the end of a move. The market is behaving much differently than I have seen over the last few quarters, so I am skeptical of calling a top here.
That, and after going on a wicked winning streak, Rose Colored sunglasses has take two hits. Such is the nature of an 87% win rate. Even a win rate that high has a statistical draw down period. There’s no sense it trashing the model because of this. But, it may be whispering about a change in character developing in the market.
Sometimes a signal not working tells us something too.
I know this post is a hodge-podge of thoughts. I am weary, but this is all important, thanks for sticking around. The answer to the pop quiz is A.
I was all over the NASDAQ this morning. Equipped with a primary hypothesis and a wavering short bias, I trounced the morning high ticks like a caveman chock-full of pre workout. When I was done bashing the brains of early buyers in, my decisiveness was gone.
For the rest of the day I was a leaf blowing in the wind. Even the most rudimentary task, like ordering lunch, would flicker in-and-out of my brain like the ass of a lightning bug. Everything is taking exponentially longer than normal.
So I fully turned my attention to civic duties. I am responsible with dolling out free samples of Exodus to the plebian reader class. Fine, it is a noble undertaking, to grant unfettered access to our market intelligence platform (email [email protected] if you want a trial). Yet even during this repetitive task my brain would wander away, like a stubborn donkey.
You cannot whip a stubborn donkey into compliance. And you certainly can’t trade without a cooperative donkey. Actually, you can trade, but in 3 minute intervals your account will be chipped away, failure, failure, failure—done. I used to do that all the time. Now, and budda willing it sticks, I can see when my mind goes AWOL and just pack up my robots and do something else.
This also meant putting words together to make a blog was harder than taking the SAT. Do you see what is happening here? Did you make it this far. I’m sorry if you did. I have nothing to offer. I’m just grateful I made money before the affliction hit.
Just take two free trials of Exodus and call me in the morning.
I don’t fuss around with the futures too much on Friday. I have reams of stats that show me plundering away my own gains on Friday afternoons. It takes some color out of the weekend, and who likes that?
Heading into today, my primary expectation is for a slow tape. Look for sellers to work into the overnight inventory and close the gap down to 4345. Look for buyers to defend north of 4330 then make a move to target overnight high 4357.75. This sets up the gap fill up to 4366.25. Stretch target is 4370.
I can’t really envision any better than that.
I will take my stipend and focus my energy elsewhere. What’s on your radar heading into next week? Should I buy some small bombs because the Russell is a beast? Or should I buy the new Goldman Sachs emerging market ETF and chill?
Either way, I’ll be listening to this album cover-to-cover:
Thu Jun 11, 2015 6:43pm ESTComments Off on With Costolo Stepping Down, Investors Will Go Back To Debating This 1 Simple Question
I never understood the contempt for Dick Costolo. He always seems super friendly, which is surprising because he receives a quarterly tirade from my friend. It takes him like 6 tweets because of the asinine 140 character limit Twitter imposes. I find the character limit drives me to truncate my thoughts and separate the chaff. My friend on the other hand just tweet bombs like a madman.
Nevertheless Costolo is out and investors must now attempt to value the vessel and not the captain.
Never discount the value of an interaction. Each one carries an opportunity, which we as humans naturally attempt to evaluate.
What is the value of an interaction?
I’m afraid it’s a too big a question for me. Such a question demands a scientific process with the least amount of assumptions possible. Presented with the right data I am certain any one of you would choose the right answer.
Bear in mind, even the most formidable vessel will wander the seas aimlessly if driven without vision. It’s a shame Twitter can’t be more like iBankCoin, where investors unite the golden coin—stock market excellence.
The growing ranks of Exodus members have made profound strides in operating the new system and are empowering not only themselves but others with their insightful commentary. It’s quite the sight to behold.
If you haven’t taken a look inside the walls of Exodus, do it now. I’ll be your personal guide—just send me an email [email protected]. Better yet, HMU on Twitter @twosmuth, they need you to tweet more, dammit.
Sun Jun 8, 2014 12:52pm ESTComments Off on How Mutual Fund Monday Looks When Money Flows into RISK
The Nasdaq 100 index houses the absolute finest in growth and risk stocks. It includes the largest domestic and international non-financial securities listen on The Nasdaq Stock Market based on market capitalization. Some of the big dogs are AAPL, FB, AMZN, BIDU, CSCO, MSFT, CMCSA, GILD, GMCR, QCOM, INTC, and YHOO. For the full list of symbols involved, check out the link below:
This index has some shades of value stocks in it, but for the most part these are massive, promising, growth companies. When money flows into the index it suggests our market participants has a taste for popular, big timer, growth. We could expect the lazy mutual fund managers to put down their cheese platters and stop schmoozing for a few minutes to enter their fresh AUM (assets under management) into the market at the start of the month, and as traders we sit around eagerly searching for these gluttonous flows of money. The last few months they have been sort of weak, perhaps because people are either pulling some money away from the markets or not contributing their average allotment.
However, Thursday morning a huge unknown was removed from the market. Everyone worries about the Euro-Zone and usually we make a big story about their odd economy. However, they are taking the path of the United States, the path of free money and it has become very normal, almost an expectation of participants. These actions are what EVERYONE is watching, and MOST OF THE TIME they lead to higher equity prices. The employment data on Friday was a cherry on top, by no means a necessary to persuading the money into the market.
Anyhow, that is my view of the current investment conditions. This is speculation based upon what I hear people who I consider wise to the game focusing most intently upon. I like to focus intently on the auction. And without further adieu, I want to show you what a strong auction with fresh buyers coming into the marketplace looks like. See below:
Thu May 22, 2014 3:32pm ESTComments Off on #MOARMODE
I am pressing though waves of exhaustion, much like the market is attempting to climb through the upper atmosphere of intermediate term balance. If you cannot sleep, then you cannot sleep and you might as well work.
I scaled out of TSLA this morning and rolled right into YELP. I could have pressed a bit more juice from the TSLA trade but with the options set to expire tomorrow and various “obligations” perking up intro the weekend, I thought it wise to roll into next week’s YELP if I want to continue riding the momentum train.
It turns out my knife catching idea in DDD was a winner, unfortunately I was not. I planned this trade out almost perfectly and then fumbled at my own 15 yard line. Had I executed properly I would be at the 75 yard line and in field goal range. This milk, I spilt, much like pondering a YGE long 20% lower…you really do not need to waste much time on these would have, could have thoughts. However, stick to your plans my friends.
CREE is working, and with the big lighting convention coming up in the first week of June, I think additional buzz and hype may allow me to reach my first target of 50 before my option expiration. Will RVLT chase behind, the chart is coiled nicely, looking like the CREE of two days ago….thus it could. No position for me in RVLT….yet.
Elsewhere I started looking for small bombs, I came up with FCEL. You know, fuel cells, those hydrogen powered cells that power, stuff. Come’on folks this is not high level research like The Fly generates, this is dumpster diving.
Speaking of which, I took a long in XON right off the rip this morning. I love a good story stock, and I like what the IBB is doing here. Have a look:
There is no one right answer to the momentum game. You pick your few favorites, hopefully before they pop, and scale at logical price levels. Like engineering, trading works best when you keep it simple. I took a 1/3 scale on my QQQ long, long live the mighty PPT. With a bit of luck, I can buy a pullback and trade the rest of the 10 day holdings period. ALL HAIL The PPT.
You may think everyone sold this afternoon on the Fed comments, but if you were watching the tape closely we began the heavy selling 27 minutes before that pasty face took the podium. Did he speak from a podium? I don’t actually have cable.
Anyhow, the real reason for selling, the pivotal moment which occurred at 11:47 and eleven seconds (timestamp), a mere 3 minutes before top tick in the daily Nasdaq session, was me buying June calls in the succubus, Angie’s List. Everyone knows the game you play when you dabble in the dark arts of summoning the succubus. All joking aside, I like the name, if only for a brief short squeeze into the greatest month of the year.
We printed a neutral day in the Nasdaq today and these tend to occur near inflection points. The play is to grit your teeth and buy the second range extension on the day, which was the new low of the day this afternoon. However, as is usually the case with market profile probabilities, one cannot simply place a buy order below the low of the day and pray, because the risk is insane. Instead you need something to lean on. You can also use the 1,2,3 reversal to keep yourself patient. Here’s the neutral print, followed by the 1,2,3, reversal:
Bottom line: these neutral prints are a big piece of context. We are trading in the mission critical danger zone, the upper cusp of balance. Fast attempts to thrust the knife into your gut will be made. Smaller position sizes are warranted until a clean trend emerges. A short or two may not be a bad idea.
