iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,514 Blog Posts

Bulls Get Shanked into the Bell

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:

solars

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.

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Don’t Get Attached To Winners (or Losers)

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.

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This is What Makes a Market

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:

KORS_02282013

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Busting Loose

Here we are, at the end of a short month and what a ride it has been these last few days of business.  Things certainly have busted loose in the indices, where we’re seeing the largest ranges of the year.  This type of volatility makes for a higher risk/reward environment.  With that in mind, it’s important we have levels in mind as guideposts to the overall context and stance of market participants.

Clearly the most important level to keep in mind today is 1516.  This price level is the confluence of the selloffs VPOC, yesterday’s rally VPOC, and where we closed out the session.  Both forces have made themselves known near this range, and who wins out the battle going forward gives us insight into who is best dictating the direction of this tape, the buyers or the sellers.

I have a close target to the upside at 1522 because I’m giving sellers the benefit of the doubt since they’ve managed to string together a lower high, lower low.  If you can hammer lower high lower low and vice versa into your mind, you’re a long way to understanding momentum trading.  Back to the tape, sellers managed to accomplish this, but should buyers disrupt the pattern today by capturing 1522 it could put us back into a sideways chop.  Chop isn’t ideal, but it allows individual longs to work.

This morning I’m looking for sellers to try and reassert themselves.  I’ll be on the lookout for reactive buyers at 1515 (globex low) then 1511.  Should they not show up, I expect sellers to hammer us back down to 1504.  I’m looking for range compression.  They key is where the compressed range builds value.

ESMP_02282013

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Drinking The Kool-Aid

Ladies and gentlemen I’ve done it again.  The session is wrapped up, the best day of the year for the Dow-as a matter of fact-and looking at my portfolio’s gains you would think I was levered long.  I gained 2.4% today even though I started the day with 50% cash.  Bananas, I know.  I had a couple monsters in my port though.  They did horrible things to the shorts today.

I was in a rather gregarious mood from the moment I woke up today, mostly stemming from the fact that I recaptured my raw tick data on the S&P March future contract.  When it was taken from me last night, it felt like the time my Spanish teacher took my magical deck of cards away.

He caught me shuffling one handed while we watched Salina and snatched the cards cold out of my hand.  I met him after class and kindly asked for the cards back since they were a gift from my parents.  I explained how they traveled to the mystical lands of Las Vegas for the cards, and how it was quite the journey.  I did not get my cards back, but was instead shown the trash bin, where he proudly displayed his work: he had cut each and every card in half.  I learned that day to never trust a Spaniard.

Anyway, with my data in tote and a fresh coat of snow on the ground, I smooth cruised (No Triumph) into the office.  As the day progressed, I started hearing the pump whispers.  It was time to throw out a few #trampstamps:

I was in a gregarious mood then, it carried throughout the session and before I knew it my 50% cash became 30% and I had many more shares of CMG, ZNGA, ANGI, and CREE.  Hell I bought some KORS too, hoping to get elizamae back hooked on that crack.  Now I have a bit of a shameover © because a few of the names lost crucial ground at the bells.  But like a proper bad influence I have BIG Ben handing me a fresh cup of kool-aid, telling me, “ga’head, speculate on the GOOD stuff.”

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Put Some Winners in Your Book

The morning has been all buyers, contrary to my original thesis.  The dip buyers are out and about, dressed like knights and swinging their rubber swords like drunken barbarians from northern Europe.  I have a couple of big wins occurring today, and thus I must pen a bullish post to stop this reflexive jerk higher in its tracks.

The rally has found sellers at the second important level I highlighted this morning.  A thin void in volume was left behind during the big selloff and thus far we’ve seen a rejection of the level by sellers.  The main question we need to be asking ourselves is what type of momentum environment are we in?  Buy the dip has been the script since the year started, but now we may be on the other side of the mountain. 

The main thing I’m on the lookout for today and the remainder of this week is range compression.  If we see the market stalling out and balancing into a tight range, we may be experiencing only a counter trend reflex rally.  Given the overall context of our market this year, and where we are in the trend, this is a less likely scenario, but it’s worth giving consideration. 

Yesterday and today (already) have featured wide range, snap-back, action.  If we see a tight day before the weekend, I think that’s your cue to take any hard earned profits on the long side and consider trimming exposure, adding some hedges, or shorting broken charts.

In the meantime, keep ZNGA, ANGI, TPX, KORS, and CMG on your radar.  I’m long all of them, and they all look ready to pump.  VHC is also wanting a pump.  I don’t have Z yet but stalking.

Note: as of this post, I’m 50% cash and up 2% on the day.  Call it crack rock portfolio.

Stay nimble, be water.

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I Got My Data (Swagga) Back And Sellers Are Winning

I was thrilled to recapture the necessary data yesterday evening to get a proper readout from the selloff.  The first data point the jumps off the screen is the confluence of interesting data points surrounding the 1500 century mark.  It is likely investors and traders keep this level in their mind regardless of their method of observing the market, but given the context of market profile we can verify significant activity occurring at this price.

It just so happens the value area low from the selloff (although a trend day in many ways lacks a value area) aligns with the VAL and VPOC from 02/21.  The market worked its way back up to the level yesterday, but did not make it all the way for a proper test.

Yesterday featured reactive at the open when the market gapped higher overnight.  The sellers were quick to react to the gap, and pressed their orders in, effectively filling the gap and even taking out the lows from 02/25.  Then we say an aggressive reaction from the buyers which left behind a buying tail.  Should that tail be violated it would suggest buyers have lost their conviction.

The profile yesterday also tells us the bulls struggled to maintain control after the initial reaction.  The progress made on the bounce was ample, but they didn’t rage higher.  There’s certainly overhead supply to consider now.

Today I’m looking for selling early on again, I’ll be monitoring for buyers to step back in and balance price out around 1486 and then attempt a test of the 1500 level.  Should they push through, they will have to work over a value mountain spanning from 1502-1504 which could slow price.  After that, things get slippery meaning we could either see a swift rejection lower or a pump right through.

Note this scenario is only a hypothesis.  Should the day play out differently, that will provide me contextual clues to trade my stocks around.

ESMP_02272013

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Will $ZNGA Get ‘Sell The News’ Treatment?

This afternoon word came down that Governor Christie signed the online poker bill into law, effectively bringing the game and its betting back to the internet.  It’s long been speculated that Zynga would benefit immensely from the resurgence of online poker playing due to their existing community and platform.  Forget all that Farmville macaroni.  This is what the company is all about.

Leading into the event, players have been bidding the share price of ZNGA higher all year.  RaginCajun and I have banked a great sum of coin in the name already.  However, our coin pumping in ZNGA may have only been a first act.  If this stock gets moving, it has lots of open air above.

The issue with important news events that affect a company is whether or not the decision has been baked into the share price.  Often this is the case, and even when the outcome is favorable to what participants expect, the shares sell off.  Therefore it’s important to define your risk, regardless of the positive news flow.

I like ZNGA down to three, but that does not mean I have a hard stop in place at $2.99.  Instead I hone my attention into the stock as we near that price, look at how price behaves, and act accordingly.  I added shares this afternoon on the initial announcement, but I’m fully aware of my risk.  You have to ante up to see the flop, and I’m working with a big stack on this name.

ZNGA_FEB2013

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Find Your Next Investment Using You iPhone

Even with a realtor, I still love the information I can access on the go using the Zillow app.  Their strong mobile platform and disruption of the real estate industry has kept my attention on the company since the IPO.  After trading to an all-time high last week, the stock has seen aggressive selling.

Should we see buyers step in and buy this dip, I really like how Zillow is setting up on the daily chart.  I’ve played along partially with this name, riding the January rip and earning some nice coin along the way.  However, it pumped one day and I ran out of bullets, taking my final scale.

Since then, I have kept the name on my radar, hoping to see a buyable dip form.  Thus far, the dip we are seeing in price is violent.  However, gap fills of this variety tend to behave violently.  Looking back at how price behaved around $38, we can see it was a tough resistance.  I’m looking for that level to morph into support.  Should price stabilize and turn higher, it will threaten to break the steep trend lower.  The steeper the trend, the more violent the break:

Z_FEB2013

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Computer Blue Go

My home computer aka JET FUEL ONLY was so aghast by yesterday’s session that it could only stomach charting half the session.  And even though I calm it with restarts and data massages it refuses to provide me a full readout of the auction from yesterday.

The session yesterday was the widest range since 10/18/2011 and it was all selling after gapping higher on the open.  Headline risk drove the markets, which used the Italian elections as an excuse to selloff.  The stability of the Italian state came into question.  I can tell you as someone who has spent extensive time in Italy, they LOVE politics.  They love food, fast cars, and beautiful people.  And that’s it.  All of this gives them a dramatic flair.  They’re taking the election confusion in stride, it gives them something to live for.  The market has wanted to gut momentum traders for weeks.  This was as good a reason as any.

As for the rest of the week and how we should trade it, the key is taking it one day at a time.  There is a major low volume void at 1481.50.  If we begin rotating lower today, we could see this level behaving like a magnate.  Sometimes the market sharply rejects these low volume voids.  This is also where we put in the globex lows (which were yesterday late-afternoon). Below I show support at 1471.50.

Upside, let’s see how the market behaves from 1500-1504.  That can give us an excellent feel of sentiment. 

Here’s my chart output from yesterday:

 ESMP_02262013

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