Where Is Santa?

The selling continues this afternoon, with sellers continuing their blitzkrieg campaign with a 2pm algorithmic shock wave.  A block trade like the one we just experienced at 2pm is a way of starting a siphon—the algo sucks on the tube with the intent of motivating atmospheric pressure to move liquid(ity).  Once it starts the flow, a force of equal or greater value must arrive to stop the force.

There’s nothing wrong with sell algos, they just receive more criticism then buy algos.  They are both attempting the same feat.

Keep the context of our market in mind.  It is mid-December, we have had a huge run, correlations are low, the long term trend is higher, risky assets continue seeing cash inflow, and sellers just controlled their first week since mid-summer.

With that in mind, and despite my extensive coverage of the indices, I think it is important to keep your focus on individual setups and how they are behaving.

My book is going out 95% long after purchasing OWW today at the top tick.  I have other names of interest, including LEDS basing just below one dollar.

My AMZN YOLO lottery ticket was a loser.  I risked the entire premium because it was a lottery ticket.  It had a moment of hope early on, but could not breach recent overhead supply.  The trade needed more time than one day.  I realized this soon after taking the trade, and was discussing how TSLA would have been a more prudent YOLO…if there is such a thing.

I never grabbed ENPH yesterday.  Instead I just watched it and commented on it.  Now I cannot buy it and it can likely go much higher.  I simply lack to conviction to assume nearly 20% more risk.

My book of stocks spun donuts in the mud this week even though I have winners among my ranks.  Here’s the book, largest-to-smallest:

BALT, OWW, FSLR, GRPN, TSLA, YELP, RVLT, YGE, Z, LO, WBMD, GOGO, CREE, F, and my bane MJNA.

Final word of on the market – this looks like discouragement phase, where the market makes an earnest attempt to steal away your favorite shares.  Review your risk plans, make adjustments where necessary, and stick to them.  Do not assume gains are guaranteed.

We continued working through a correction yesterday in the NASDAQ where sellers continued to their control.  Their success in controlling yesterday’s auction can be seen in yesterday’s RTH market profile print.  Assessing their control boils down to the following points:

Range extension lower

Value overlap/lower

VPOC migration lower

Lower high and lower low

The positive news for longs is price has begun the pinball process of discouragement, where price is chopping around and taking no prisoners on either side.  If my read on sentiment is correct, I will be looking for a higher low to setup soon on the NASDAQ.  This may occur as soon as today.

The S&P has a very similar sentimental context.

Buyers came in overnight and bid the markets up a bit, but we are still trading inside of yesterday’s value, thus it has been accepted.  Early on, I will be looking for sellers to reemerge and press price lower.  I will be gauging their sentiment between 3465.50 – 3462.50.  Should their pressure abate in this range, I will be looking for long exposure.  Should their selling campaign continue, I will look for sellers to push into our 12/04 low at 3453.25.

On the upside, I will look for any signs of trade sustaining above 3476.50 our value area high from yesterday and also a low volume node left behind during Wednesday’s liquidation.

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

I hear a faint jingle and smell peppermint schnapps.  If I’m not mistaken, Uncle Santa the giver is near.  The markets are behaving Santaesque, if only intraday.  During the opening and closing bell the Coca Cola bears, juiced up on sugar and caffeine, take wide swipes at the market—pawing bits of flesh into their mouths as if it’s warm honey.

Much like the children, I have some Christmas wishes.  The first is blood.  I want more blood.  I sat on my hands diligently today, keeping my fingers off the buy buttons.  I put on an AMZN YOLO trade, buying tomorrow’s 390s.  That was it.

Under the surface, I was brooding like Ryan Gosling, circling my prey like a vulture while waiting for the highway traffic to clear.  I had an opportunity intraday, but I held off.  I am being very selective with my 10% working liquidity.

Should I see one more day of selling, if only for the morning, I will be drawing my battle lines and buying FCEL, ZNGA, more GOGO, more RVLT, or any other ticker that tickles my risk appetite.

One more day

All I want for Christmas is one more day of selling, Friday the 13^th.

I may have to pay up, because today offers the discounted prices of uncertainty.  More information costs more money.  You’ll learn this as you trade more.  It’s fun.

One more day

Good night,

If you have been sidelined in cash with risk capital you otherwise desire to be committing to equities, you may be coming into today with a shopping list of stocks.

Perhaps however, you should not simply buy at the open.  If instead you have the option to watch the day develop, I have two downside targets in mind for adding exposure.  The following prices are in reference to the

The first is 3460 and the second is 3453.50. These price levels represent targets algorithms will have in mind when they attempt to liquidate any holdouts to the long side.  The market went up for quite some time, lacked follow-through conviction, and is now testing lower to gauge buyers’ appetite.  A step taken by the market place to do this is pressing into existing longs to see if they liquidate.

The overnight market was on the move and slightly lower.  The short term momentum favors seller control.  Therefore we can measure their conviction verse the above to support levels.  Should sellers abate early on, they may be waiting to see the auction first.  In this event, look for their presence at 3476.25, the low volume node just above our overnight high, then 3483 which is yesterday’s VPOC.

Should strength rip through the market, my upside target is 3490.

I have highlighted these prices on the following Market profile chart:

I love how the temperature of the internet changes during our 1-2 days of sheer terror.  It is like the days of terror are new!  Friends, tell me, have we completely forgotten how to take heat?

Typically it gets worse before it gets better, like influenza.

I have some names deep in the red on my books—FSLR and YGE.  I have some WBMD too, my family doctor of choice, off nearly 8 percent since my purchase.

These trades may be wrong and I may be crazy, but it just may take a lunatic to manage a book of high velocity momentum stocks.

We went risk off today.  There were warnings if you put your ear to the rails.  The only problem is the weather is cold, and if you aren’t careful your ear will freeze to the tracks and then you are toasted because train.

I lost 1.24% today but could have lost very much more.  Social media stocks proved a store of value in these rough waters.  The only weak spots were Z and YELP.  I was fortunate to scale a piece of YELP yesterday if only for my psychological wellbeing.  The problem is it goes much higher, eventually, so I am now tasked with getting my size back on.

I sold all of my ONVO yesterday which brought a warm feeling to my emotional capital.  The action you are seeing in this stock is caused by a weak investor base, lacking the necessary discipline of institutional money.  You will continue to see erratic behavior from this name.  Let it get bloodied and beaten, like ENPH, and then we shall reconvene to purchase zeroed out Zecco accounts.

I tried a long in the NASDAQ futures today, just before noon.  It was a low risk trade with decent probabilities.  It took me out for a small loss, but had I remained stubborn it would have destroyed me.  These are the victories of discipline and they do wonders for your confidence.

I scaled off some CREE shares I knife caught in November.  It pays to work your cost basis down when you are working on the wrong side of the chart in a momentum name.

I had some pretty extreme order flow readings into the bell, panic liquidation if you will.  My hope is that it continues overnight and into early trade tomorrow.  It is then that I will be stalking my prey:

ZNGA the dog

FCEL the future

TSLA the inventor

Finally, it is with great pleasure I ride in The Fly’s BALT boat.  I have seen too many Fly trades in my internet years to muff this one.  I started buying on October 31^st like a sage of sorts.  I have been a buyer since, several times, riding the diligent work of my elders who are much wiser.  There is no need to reinvent the wheel out here.  It is all about building upon the previous generation.  That’s the American dream.

Now the $AMZN drones just seem childish:

My book is down a touch over 1.5 percent as I write, as risk gets sold across the board.  Today looks like a trend day down.  We saw cracks developing yesterday which is why I raised some cash but coming into the session this morning I was bullish when buyers showed reactive strength overnight.

We opening inside of yesterday’ value on the NASDAQ which typically suggests we are in a low risk environment.  The opening swing was mixed but soon a strong drive ensued with sellers behind the wheel.  This driving action by the sellers deserves additional merit for originating within yesterday’s value.  It shows strong conviction on the part of sellers.

I tried taking a long just before noon and I was looking for a quick reaction from the buyers.  It never happened and what initially looked like a normal variation type day now appears to be of the trend variety.

I am battening down the hatches for now.  I have 10% cash which I am now very grateful for as I manage my way through some sell flow.  My next move will develop slowly.

Tickers of no immediate interest, but interesting nonetheless include TWTR, FSLR, ZNGA, SINA, and RVLT.

The NASDAQ session was weak overnight prior to the early morning, when a rally ensued after buyers rejected an attempt to move price below yesterday’s RTH low.

Although we saw indecision in yesterday’s tape, there was no clear victory by the sellers.  In fact, several footprints were left in yesterday’s profile which suggest buyers still hold control.

Yesterday’s profile has three bullish characteristics:

A buying tail

Range extension higher

A poor high

I have highlighted these features on the following market profile chart:

I have been very busy this week, making exhaustive preparations for what will unquestionably be the greatest holiday seen in la casa de Raul.  Garland, mistletoe, lights, and cookies—hundreds of cookies prepared to feed my diabetic friends and family.

Let me tell you, Martha Stewart is a dangerous woman.  She is the godfather of mass cookie production while looking fine for a white girl with a prison rap sheet.

I had a strong feel for the market today, based upon my perception of our placement in the sentiment cycle and some hound sleuth market profile work.

Anyhow, I sold AMBA but I will revisit.  I used these monies to promptly start a new long in GRPN.

I sold some YELP.  I took a 10 percent gain on 1/3 of a full sized position.  This is scaling and makes the psychology of swing trading much easier for me.

I sold shares of RVLT which I bought in September.  I am managing my way out of the ugliest chart I own.  This chart is so ugly, I am losing faith.  There I said it.

I sold ONVO.  Something about knowing the fickle retail base present had me looking for the exits.  I closed my runner our, +71 percent.  I quite liked seeing these types of returns, which has me weighing the thought of running an option book…this is still a seed thought.

The net result of above was taking my book from 100% long to a paltry 90% long.  I had a really difficult time selling anything, but I forced myself.

Solar caught a bid, with the Chinese burritos of the solar world catching a particular bit of strength intraday.  It will be interesting to see if follow through occurs.

Should I feel the need to get longer tomorrow, ZNGA is high on my to buy list along with SINA and perhaps I can catch a nip on one of the fuel cell beasts.  ZNGA daily chart is simply perfect.  Otherwise I will look to add to my existing longs, many of which I want more shares.

I must now return to the stove.  Good day market wizards.

Sellers pushed into the marketplace early this morning and continue pressing into the NASDAQ.  Although a news bite may be the culprit, let us instead focus on the price action.

As I write we are making new overnight lows and they are carrying a bit of velocity.  Should the algorithms sense buyer blood we may see trade down to 3511 – 3509.75 range, pressing any long initiated yesterday during RTH underwater.

It would make sense to test the sentiment of the buyers early on after they lacked any real follow through on their rally yesterday.  Should buyers not show up at the above range our next levels of support are the LNV at 3505.50 then the value area low at mezzo-century mark 3500.

Below the mezzo century we open the door to a 12/5 retracement, when an open gap still exists down to 3478.25.

However, I am still calling for a rally off these highs.  Overhead I will look for signs of selling around 3519 (VPOC and gap fill) and yesterday’s high of 3525.

These levels can be seen on the following MP chart: