RAUL BUY: $RVLT

I bought much more RVLT today, making it my second largest position behind CREE.  Let the LED Empire commence its march to glory.

IF you buy RVLT because of this post you may lose your pesos like Raul

The market has been one-directional overnight, with a steady bid elevating prices.  Immediately turning our attention to the NASDAQ, the weakest market of late, we are trading inside of yesterday’s range but outside of value meaning the environment is risk elevated but not as elevated as yesterday.

Bear in mind however, that we have an NFP announcement premarket, which may materially impact price and where we trade when the opening bell rings.

I have framed our current price action in the context of everyone’s favorite sentiment chart, and I have taken to the vision that we are trading inside of aversion, the uncertain state occurring prior to a new thrust higher.  If I am right, then we should not see much of these overnight gains given back early on.  Instead we should see price press up to 3577 and churn about before ultimately pressing higher.

However, I do not want to be caught flat footed so I will run though the layers of control in the marketplace:

Long term price action is firmly controlled by buyers (BTD)

Intermediate term, we are seeing balanced, 2-timeframe control with extremes being faded and a slight bullish imbalance

Yesterday, sellers dictated direction of the tape but ultimately printed a “b” shaped profile after showing no follow-through in the afternoon

Overnight, buyers are in control

When the market opens at 9:30, watch the opening swing closely.  If we see a one directional drive higher the long timeframe is asserting itself.  If we see two way action, we are still in the intermediate term and we need to be keen on the intermediate term’s balance structure.

I have highlighted the key zones of the intermediate term balance on the following volume profile chart:

I took some heat today, naturally.  If you think you can play this game and never experience the warm embrace of heat then I suggest you get an undergraduate degree in accounting and join the blue collar ranks.  You will be cozy, earn a modest salary, fund your 401-k, easily qualify for a mortgage, marry and reproduce, and then find joy in modest your modest home furnishings.

And that’s okay.

But getting more requires getting more.  This is like a V.King wisdom.  In order to be big you have to be big, you see?

I realize I am fortunate, being on the receiving end of the market only today where others have been beaten around all week.  I see big hands in the marketplace, sashaying their orderflow onto the tape, getting my algorithms twisted up.  And I recommend sticking with one side to avoid the chop.   Right now I am on team long.

Thus I had to sit through most of the day.  I closed out my final YELP piece, that was a huge win.  It’s less fun to crush a YELP trade when The Fly is not involved, though.  But that’s just me trying to get too social instead of focusing on the most pressing matter, banking coin.  Huge win.

I started a new long in VJET before I realized it was trend day down environment.  Then I became risk averse.  Then I realized I was risk averse, in a risk averse moment, and decided to buy the weakness in X.

I have some cash, I have some January expiration call options, and I have a butt-load of longs.  I erased yesterday’s gains but I am still well up on the week.  Let’s see how they close them out tomorrow.  Apparently the NFP report tomorrow is the biggest one this year…go figure.

I still like my Chinese lotto plays LITB and CLNT.

I still like my light emitting diodes LEDS CREE and RVLT

I still like my inverse HnS on SFM.

Elroi needs some gear grease.  He’s unfamiliar with the higher octane petroleum I now feed him.

Always more work to do.

For your consideration:

http://youtu.be/Qm2Bh2QtkRk?t=3m37s

Market activity picked up overnight.  We are certainly seeing signs in this marketplace that the big hands have come back to work, and their actions are jerking price about.  The market has been in a rather benign drift for many weeks, but business is clearly becoming more pressing as the year ramps up.

Yesterday, we saw an aggressive seller enter the NASDAQ in the afternoon.  Their action was dynamic and fast.  The sell flow was quickly reacted upon by eager dip buy orders, and if I have a clear read on sentiment here, I can see the case for dip buying.

We are currently trading outside of yesterday’s range meaning we are coming into an elevated risk/reward environment.  Your losers will press harder into your pocket, as will your winners.  Tight stops will be obliterated, and exuding a gentleman’s patience will be paramount today. 

Pick your spots and let the market come to you because there will be an added velocity to price today which may carry the market well through your desired entry point. 

Long term the buyers are firmly in control, intermediate term there is balance, yesterday was dominated early on by buyers and again late in the day with their aggressive reaction to lower prices.  Overnight buyers were in control.

It will be important today to understand which timeframe is active.  My expectation is for the intermediate-term timeframe to be prominent because of the aggressive sell flow that began yesterday afternoon and also because they are reacting premarket to higher prices.

I will be looking for an overnight gap fill early on down to 3564.50.  Below this level is a thick layer of volume for the market to work through.  Should we see sellers pressing a second rotation, they will be seeking downside targets to 3551.75 then 3546.25.  Keep in mind however, trading as low as 3536 is possible today, and would fit the framework of “aversion” context.  That is to say, the intermediate term balancing process is a violent one and it is best to pick a side and stick with it, especially near extremes.

I have highlighted these levels on the following volume profile chart:

You can only keep a wolf caged up for so long. They build layers of fencing in place when you become an adult because they know how dangerous you can be if set free.

Every time I chew through a chain and whittle my exit hole larger they beat me like Charles Bronson. But every time I learn a little more, and I get a little closer to running wild along waterways, eating housecats.

You may find yourself commissioned to a small cube with carpet walls 50 hours per week. Maybe instead you live some kind of champagne lifestyle, jet setting and trading from your yacht. I am somewhere in the middle of these two, scarred up from these corporate shackles while my robot existence travels across the world extracting shekels.

My spirit is nearly free. And I assure you, once I break loose, the corporate machine will take orders from my helper robots.

Elroi is alive and well, today I fed him a few hundred thousand bits of tick data and the color quickly returned to his cheeks. I need to rewire some of his neuropaths to ensure he doesn’t do anything stupid, but he caught the move lower this afternoon effortlessly, cashing in before the entire fade was faded. Welcome back Elroi, you were missed.

My portfolio of stock lunacy started the day peak risk. I sold down some SINA. Early on I was up over three percent, I finished the day up over a percent. I have been running at a one percent plus return per day since ringing in the New Year. I want it to continue. Nothing satisfies, as my good comrade The Rhino would say. I want to beat up monks and take their trinkets so I can sell them on craigslist.

I need to finance my infinity pool and more. I am still very long. Stock picking is working well. I still like TSLA right here, and CMG is something I want to stalk for a snack.

Overnight we printed a balanced session of trade into 8:30am, where the markets appear to be catching a slight bid. Overall we are mostly unchanged across the board.

The opening action yesterday whispered of long timeframe activity, where aggressive buyers came in and disregarded day timeframe price zones. Thus although the Think or Swim volume-at-price is highly inaccurate, it proved sufficient for measuring intermediate term activity.

Sticking with the intermediate term, and by no means is it my choice, I again turn your attention to the Think or Swim platform, where the NASDAQ futures are working through a consolidation pattern with some interesting volume reference points to gauge market sentiment upon:

My first vision is for resolution of this consolidation. I would like to see sellers push off the open, perhaps down to the 3539 LVN, where I will look for signs of buyers. If they are not present, a second thrust lower to 3527.50 may be in order.

Ideally, this weakness is met with aggressive/reactive rejection from buyers which propels us up above the highlighted consolidation formation.
My second vision is a slow grind over the MCHVN at 3558 and over the top of this distribution to my upside target of 3576.

This is it, fine people of the interwebs, the moment where I typically blow myself into 1000 pieces via pure, unadulterated gluttony. Take last Thanksgiving for instance, where two dinners would have been sufficient, yet I pressed on and had a third while sitting Indian style on a linoleum floor. I felt like a grain fed cow afterward.

I have put all of my capital to work, in a variety of methods, to achieve a levered risk stance. On the surface, the risk seems immense. Curiously enough however, most of it was assumed at much lower prices. I have worked my eyeballs and fingers tirelessly to gain entry into my positions patiently, a little slowly, tenderly…and now we wait.

Some crazy-eyed speculator killed himself, but before he did he told everyone he made the most money by sitting.

I’m echoing the dead man. I have targets in mind higher. My book was propelled today by an influx into LED lighting. Tomorrow Elon Musk will see fit to throw Tesla investors a bone, enriching himself in the process. Thursday the Israelites will bid for shares of MLNX, and I will have my merchant cart out, selling bottles of water and neckties.

I am describing rotation, you see? I came into the game at the depths of market calamity and fumbled my way around the high correlation world. Stock picking, and the easy to define risk associated with it, just meant you had five positions stopping out all at once every time the market traded lower. ETFs and their traders were king, it was pretty lame.

Now we skip on landmines, gingerly, and one or two combust our portfolio higher every day.

Stay tuned as the market attempts to rain pianos on my person.

Top pick into tomorrow’s tape: TSLA

That’s all it took to power the 30,000 light emitting diodes affixed to this year’s ball drop in Times Square. Tell me this isn’t the year of the LED so I may white wash your face into submission.

By the time the clean glow of LEDS is illuminating your shoppes and neighborhoods I will have already banked a king’s ransom.

FD: Long CREE, RVLT, and I just bot some LEDS

http://youtu.be/5Sn6u5YPfZA

I want to apologize to my reading audience for building a set of tools reliant upon one third party.  Mirus futures updated their API and since then there data connection to NinjaTrader has been patchy at best and often down entirely.  They are failing, repeatedly, to stabilize their relationship. 

Due to inclement weather, the staff at IQ feed are very slowly working to get my data stream online.  Unfortunately, I will not be using this data to feed my market profile charts, but instead to feed my algorithms which no doubt will need to be almost entirely rebuilt based upon the new data.

In the meantime, we need some kind of vision for the day, some sort of lens to view price action through to ensure nothing is afoot.  You know the market, it wants to catch you sleeping so it can cut your ear off and feed it to its Van goats.

The equity markets have rotated higher overnight, with the NASDAQ composite flaring open a gap down to 3518.50.  The width of this gap is not quite of the “pro” variety meaning we should expect to see an attempt by sellers to fade the gap fill.  This piece of sentiment alone does not mean sell the opening print, but instead look for a logical price level where we may expect to see sellers. 

We have a volume void up above on the /NQ.  My expectation is for buyers to press into this void but find sellers, either around 3540 or 3545.  From there I will look for a rotation down to 3527.50.  If buyers are not present at these levels then a swift push down to the gap fill 3518.50 is in order.

I have highlighted these levels on the following 30 minute TOS chart.  Note: I have always questioned the integrity of future’s data presented on Think or Swim.  Thus these are very rough estimates, especially in regard to volume-at-price.