There will be no exuberant, headline grabbing action from a name like Deere. However, there just aren’t many that can run like a Deere.
Therefore, I started a new position in DE, looking for the long overdue $100 roll.
Comments »The article below is from last week’s Weekly Strategy Session. We also caught a nice chunk of this move in Google live in the 12631 trading room:
Comments »Let’s revisit the 4 pillars of technology and add in some of the supporting cast members.
To recap, during the 01/19/15 Strategy Session we began looking at shares of Amazon as a “tell” to the durability of momentum stocks. It had a bearish technical setup to start the year and many short-term traders were leaning short. The stock started to “work” for shorts only to sharply reverse back into its consolidation pattern and then gap-and-go higher on earnings.
Then on 02/02 we looked at the potential “failed auction” in shares of Apple. In essence, this technical setup is the opposite of what was occurring in Amazon. On the surface, Apple was making new highs in an uptrend. But, it briefly took out the prior high and then had a fast move lower. Therefore, we hypothesized it may do the opposite of Amazon and punish short-term traders who took the obvious long. It did not. Instead it turned out a strong week for the bulls.
Last week our attention was on Facebook. It was up to bat for the bulls and managed to hit a proverbial double, gaining over 5% on the week.
Following this logic, Google is the next pillar to have on watch. If you recall, the four pillars of technology is a naming convention Google Chairman Eric Schmidt used during a 2012 Bloomberg interview.
From a year-to-date performance standpoint, Google is still slightly outperforming Facebook. But from a rotational point of view, Google is quite a bit behind some of the other marquee names. Check out the year to date performances of these hot money stocks:
Nasdaq 5130.52 aka the all-time high. Let’s see how we navigate the millennial mark but, we’re this close, why not poke above and see if anyone’s home?
Heading into the new month the Nasdaq is trading up a few points. The overnight auction has been on normal range and volume and shows sellers having the slight edge for most of the session. This is shown by rotation size and the weaker looking session low.
Heading into today, my primary expectation is for prices to close the overnight gap to 4448 and then test higher to the VPOC at 4457.75. Overnight high is also up there at 4458 if buyers can take out the ONH the look to continue and test swing high 4464.
Hypo 2 is sellers push down through Friday close 4448 and take out overnight low 4446.5. If buyers no show at 4440 mCVPOC then take out weak low at 4429.25 and target NVPOC 4418.
Levels:
Oil has been spending some time negotiating its micro-composite VPOC. There have been seven aggressive attempts lower from the level and each has been met with responsive buying. $48.60 and below has been the territory inhabited by responsive buyers.
If they lose their responsive aggression below here then we may see a leg lower. Otherwise, we continue holding this VPOC:
Levels:
A big chunk of my weekend was occupied bringing all of my Nasdaq statistical studies up to date. Traders inside the Pelican room see me rattling off this data throughout the day. It helps me think through the actions of the market to talk through the cold data occurrences real time.
Weekly Strategy Session members, I posted the results of these studies today. You can find this type of in-depth analysis as well as a broad contextual feel in this week’s report—truly a sweet deal if you’ve been feeling a bit out of sorts with the behavior of the market.
Anyhow, it is time for me to accomplish something a bit more tangible. It is universally unacceptable for one to center all their efforts on the intangible.
Comments »
Lately I have been waking a bit early on days when the market has some news out at 8:30am. I like the slow behavior leading up to the numbers and how you’re almost guaranteed some kind of order flow just ahead of, during, and after the announcement. I also enjoy going through my 10-20 morning rituals extra early, during the magical and transient moments of sunrise.
Today I was long coming into the opening bell, which seldom happens, but I traded two of my opening sequence trades from this position and did some disgusting things to the market. I held true to my morning goal, a simple goal: Walk in, Fuck shit up, Walk out.
Looking at the statistics behind several hundred trades, I can tell you Friday and Wednesday are my worst two days for scalping. Therefore, If I put up solid numbers early on either day I stop after any small loser.
You would think a slow up drift tape would be easy pickings for a trading but the slow action can be deceiving, especially if you have a twisted bias or cannot justify your actions via a hypothesis. The harder you work on the somewhat grey field of context, the better you’ll find your 5-6 trade pictures working.
The market went range extension up 4 out of the last 5 days. There’s a consensus some air needs to come out of this rally. And Monday is the first of the month. I like pushing risk through the start of the month.
So I will.
Comments »Yesterday afternoon oil looked to be diving off a cliff. However our location on the volume profile was thick with price history. Part of the reason I do not like taking entries at the VPOC [except perhaps on first touch] markets misbehave around them. It typically wants to test through the other side of value.
In doing so it is looking for buyers to assert themselves. If their reaction is stronger than the selling which pushed down through the VPOC, then mean revision often takes place. The close proximity of this magnet assists the process.
Here was the oil chart after mean revision happened yesterday and this morning:
Now let’s look at GoPro. Weird right? Totally different asset class, same form of analysis. In the case of GoPro there is no nearby price memory below. Instead the history took place in the weeks following the IPO. So these prices involve early public investors. In essence, if you came into the day long these are the people you’re leaning against. It may also be a price level with institutional implications. All of these people operate on a higher time frame then I typically trade. That is the nuance between GoPro and oil, the rest is the same.
We are testing through this Gaussian bell-curve distribution. We are looking for buyers. How good of a job is it doing?
That is your job, answer the question.
Range and volume are compressed on the globex session despite the GDP data at 8:30am. The data came in a bit stronger than expected which esoterically is a negative occurrence because it may be seen as evidence the economy is ready for Feds to raise rates. Price is flat on the news as we head into cash open with a small gap down.
We have Chicago Purchasing Manager at 9:45am, Pending Home sales and the Final U of M Confidence read at 10am.
The market traded sideways with a slight upward skew all week and today is the final day of trade in February. Early on my primary expectation is for buyers to close the gap up to 4462.50 and attempt a test above overnight high at 4464.75. Up here I will look for responsive selling back down to the mCVPOC at 4440.
Hypo 2 is we ush lower off the open and take out mCVPOC 4440 opening us up to break the weak low at 4429.25 and target the NVPOC at 4417.75.
Hypo 3 is we drive above overnight high and target measured move 4480.
Levels:
Oil bears made an earnest attempt to shake oil loose from this big composite VPOC yesterday afternoon only to be swiftly rejected. The power of mean revision is strong when price is so near the event horizon of a VPOC. This is why I called the area “muddy” earlier this week:
