Still on The Give

My portfolio continues to eroded with each wave of selling.  The upward progress made in the NASDAQ was not reflected in my portfolio, a basket of high spec technology.  Instead today’s theme was energy and hourly reminders that Dick Costello has no plans to sell any Twitter shares.

I sold some RVLT today, thinking earnings were on deck.  It appears however that was not the case.

A few pieces of the market caught my attention today.  First is ONVO which was absolutely crushed today.  They are liquidating any 3D printing company as if each was a flaming bag of garbage.  As far as sentiment goes, these stocks are incredibly unpopular to the point of excess.  Does society no longer stand to benefit from the prospects of 3D printing?  I still sense there is something of a breakthrough near for this industry.  Second was the neutral print on both the NASDAQ and the S&P.  We saw legitimate buying interest today.  Perhaps it was the fair weather of the weekend creating a sense of optimism or the illustrious glow of the blood moon.  Regardless, we are seeing signs of buyers down here at a potential bracket low for a very large range. Range trade would be a welcomed change for me to unleash my algorithm.

I spent most of the day working out the kinks in my algorithm.  I am nearly ready to unleash him back into the marketplace.  Futures trading can be stressful if you let it.  Often times this is due to position sizes that are too large and stops that are too tight.  Testing, lots of testing, can reveal where your stops should be.  Then once the conditions merit a given algo, turn it on and let the entry automatically happen.  At this point I can adjust targets and stops to logical price levels and mainly stay out of the way.

In summary, we may be entering a trading range here, but that may just be the thoughts of a hopeful optimist.

We have some early strength in the NASDAQ index futures.  The question on everyone’s mind this morning is whether we will see the early weakness get faded by strong sell flow or whether the higher advertised prices encourage buyers to enter the marketplace.  The former has been more prevalent for the last two to three weeks.

For today’s presentation of the intermediate timeframe, I chose to build out the volume profile based upon the 72 trading sessions completed thus far this year.  From the volume profile emerges some unique clues into whether the intermediate term is balanced or readying to explore lower for value.  The pattern of lower highs and lows gives sellers a clear momentum edge on the intermediate timeframe, but what is volume suggesting about value?  We do show some consensus of value around 3550 which you will notice is below the midpoint of our annual profile.  This suggests value has built lower and adds support to the idea of a continued migration lower.  However we do show a semblance of the bell curve too which makes the mean revision trade still a viable thought, although one which needs to engage sooner than later.  Also, any bounce which materializes much be carefully observed verses the very low volume node at 3580.  If price cannot gain acceptance above this level we would further expect price to continue lower.  I have highlighted these observations and a few others on the following annual volume profile distribution:

The short term auction suggests buyers have an edge this morning.  We had a rather thorough auction during our globex session which built an excess low which can be seen as a thin tail below the profile.  This suggests responsive buying and sellers drying up.  As the USA comes online we are seeing the large value area from Friday gain acceptance via volume building higher on our current profile.  This creates the expectation for trade through Friday’s value.  I have highlighted Friday’s value area and the key levels inside of it on the following market profile chart:

Taking our attention out to the long term we can see the buyers no longer clearly in control of the long term auction according to the daily chart.  We are trading below our moving averages which are flat at best and some moving lower.  We are still above February lows and we may see a balanced, bracketed trading range form.  Overall the long term auction is in balance until we take out the February lows.

I started live trading the first range extension after the opening swing is printed.  I was using a DOM for trade entry and I immediately remembered why I dislike the DOM so much.  It is a very distracting tool, in my opinion.  The market is noisy enough as it is.  When you add the flickering of this device into the mix trading becomes even more obscure.

I will continue testing the strategy next week and I am setting chart trading up over the weekend.

One of my observations from trading this setup live is how incredibly fast it happens.  I can sit here in retrospect and circle the idea, but the live environment gives you seconds to get your entry in.  Also, the trade can take immense heat in seconds.  Without a rock solid plan and execution, this high probability scalp trade is destined for failure.  It appears the best approach is a limit order set in place beyond the opening swing on the chart.  Then as price exceeds either extreme your entry is hit and filled.

I thought the overlapping of opening swings on Tuesday/Wednesday was an effective piece of context.  I was a buyer of swing longs against it.  However, the prices did not hold off sellers who cut through them with a slow grind lower.  I am so familiar with being on the right side of the slow grind.  Usually sell flow is much more knife-like.  Anyhow I found it odd and powerful to be on the receiving end of a grinder (Thursday afternoon).

The infamous Elroi can be seen on my charts today.  He has been getting chopped up pretty good during the opens.  I have always found his signals to be more potent later into the session but I like to see the signals because they give me insight into how other algorithms are performing.

Here are this week’s opening swings in the NASDAQ.  Feel free to share your thoughts and observations:

MONDAY

TUESDAY

WEDNESDAY

THURSDAY

FRIDAY

The NASDAQ cannot find a solid bid as the month of April progresses.  Interestingly enough, many people live a grand life outside of the market, sashaying about the globe without much worry about the financial markets.  To them, this has just been another month of doing whatever their preferred vocation is.  Yet here we are, some of us flexing on the short side and others fighting the tape.  I am fighting the tape, the latter party to this fiasco.  The one who is being clunked on the head 5-6 times per working day.

I have not put together a winning position once this week.  As of the closing bell I was all in.  I have a slight shade of old man with one position, LO.  The rest is pure momentum crack.  I am certain this book would cause a stroke in most:

CALLS: FB 62.50s (-70%) KNDI 17.5 (-95.69% they’re dead) WUBA 50 (-52%) YELP 82.50 (-98% dead) GOGO (-84% still alive)

STOCK: AMBA (-7%) CREE (-9% on my LIFOs) DDD (-8%) ENPH (-13%)  IMGN (-25%) OESX (-11%) RVLT (-12% on my LIFO) SINA (-4.5%) TSLA (52.15%) TWTR (-21%) and YGE (-11.7%)

Rest assured, most of these stocks will snap back with great vengeance and vigor.  Sadly, all of them will not.  But, these are questions for Sunday strategy and decisions for next week.  Have a great weekend, rest, get outside, eat a good sampling from Costco, for Monday we must navigate our down dogged market.

-16% YTD

http://youtu.be/yuR1rVVf358

When you need something, that’s an adult responsibility:

Equity futures gapped lower overnight displaying strong follow through on yesterday’s trend day.  As the USA comes online the S&P is down nearly 10 points and the NASDAQ about 20.  We have an hour until the cash session begins to recapture some of this downward progress but this is otherwise known as a pro gap.  Essentially that means the risk is elevated beyond a level most retail traders can handle in the event they attempt to fade the move and close the overnight gap.

I am of the opinion that with the right tools we can formulate a sound method of participating in this gap, and the most important tool today is market profile.  On Wednesday morning, I highlighted two key price zones which tell the story on the NASDAQ.  One was a low volume price zone above.  We traded ALMOST the entire range of that upper zone before stalling and being rejected out.  Auction logic would suggest a move to the lower end of this bracket to see if buyers possess the same conviction they had down here.  This takes us to February 4^th, a rather interesting day.  Have a look:

I won’t get too deep into observation of the above except to say this type of well defined profile structure is VERY useful for leaning on.  I will look to buy as close to the value area low at 3431.50 as possible.  Here’s the current market profile picture:

The intermediate timeframe auction is in clear seller control.  They have this timeframe locked into a pattern of lower highs and lower lows.  I have highlighted a few very interesting low volume nodes we are coming into this morning on my volume composite:

Finally, the long term auction.  On the daily I show balance with sellers still pressing.  But on the weekly, there is something keeping me on the buy side, a squiggly line.  We may overshoot this reference point, given the markets current velocity, but I am leaning on this level nonetheless until we make a clean break:

The fast and corrective markets of late are a welcomed climate.  I open my arms wide and high, advancing to embrace the cold corpse of volatility.  I was forged in these conditions coming into the game fresh faced back in 2008.  The markets feel more normal and accurate now than the last two years.

What was that even?  A slow drift higher guided by a gentle summer breeze price action?  That was no place for me, a disheveled secret agent of sorts, affixed on extracting the knowledge of unaware old men before they perish.  NOTE: the strictest adherence to the 47.5 and up policy applies.  If I suspect one meets this threshold, then I begin my process of stealing their lifeblood.

Odd, I agree, but how else does one become wise to industry?

Let’s change gears and talk about how I am an ignorant buffoon who moves far too slowly.  My autonomous trading algorithms are still in testing as I wrap up the ‘odds and ends’ of robo trading.  Algorithms I have spent months building, years thinking of, and weeks testing for THESE VERY CONDITIONS, are still in the laboratory.  Have a look at what Elroi was doing today:

There is a very simple plan for deploying elroi into the market-early range extension.  Anyone who wants to inch closer to my classified potion now has another piece.  Early range extension and I fire up the algo and go eat iced cream whilst driving a go cart and listening to 47.5 and up rock musics.

On the flipside, this is what I was doing today:

Chasing waterfalls with by groin brain…

I front ran both of my secondary entries because a bounce felt suddenly imminent about 4 times today.  We closed below both.  This isn’t to say I no longer desire to hold these positions because quite the opposite is true.

I have convinced myself (and others) that what we are seeing, RHRN, is a dirty trick.  With April options running rich, it was time to secure some premium, just as we must every month before option expiration.  In the hood they call it the overplay for the underlay.  I do too.

So I fret not, really, even while the world around me degrades into a disheveled mess.  If I want to see real death and decay then I can just drive down to Mound and Caniff to see the most destitute shitholes this nation has to offer.  Crumble around me bro market seriously, I shine in the rough.

Color me complacent.  Here’s the SINA plan: http://ibankcoin.com/raul3/2014/04/08/doubling-down-doing-the-dirty/

Because plan: http://ibankcoin.com/raul3/2014/04/09/swing-trade-plan-for-ddd/