iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
4,121 Blog Posts

A Different Way of Correcting

We hear the word correction often in the stock market, and as prices become elevated we here more participants expressing their reluctance to increase exposure before a correction occurs.  It is important to keep in mind however that corrections are not only price going down.

There are time corrections.  These are the juicy consolidation patterns we often hunt.  We see price basing out of several periods and we get an established zone to trade within.  We experienced a rare form of correction yesterday when the market profile printed a normal day.

Although the NASDAQ traded higher than last week’s closing prices, when you peer into the structure of the day session you can see the correction taking place.  We had a large gap higher to start the week, and when the RTH bell rang we saw a long initial balance form when reactive sellers began taking profits.  The first hour of trade was dynamic selling.  This was a form of correction.  We did not reenter yesterday’s value, though.  Instead, fresh initiating buys came in and back-and-forth auction ensued.

Overnight the back-and-forth continued and on the bar chart we can see the familiar consolidation pattern we know and love occurring since trade opened Sunday.  We are correcting, even though the prices on the teevee may suggest otherwise.  It is important to monitor the consolidation, and which party can successfully drive price away from it.  You can see the pattern here:

NQ_1126_consolidation

I have split open the RTH profile on the following chart to more easily display the normal day and I have also listed key price levels:

NQ_MarketProfile_11262013

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The Normal Day

It turns out the NASDAQ printed what is called a normal day in market profile theory and the fun thing about normal days is they are anything but.  In fact, they are rather rare.

And I must say I do not particularly like normal days, at least not up here at swing highs, because they tend to occur at or near inflection points.  A normal day is described as having a very wide initial balance (first hour of trade) which is not breached for the remainder of the session.  It suggests indecision, intraday, mostly signaling directional conviction is low.

That context makes sense if think about gapping higher, in a hot (too hot?) bull trend, into a short holiday week.  Short sellers do not want to get steamrolled in the thin trade, buyers are hesitant to initiate additional exposure at these elevated levels, and current longs are likely mulling taking profits.

Add to that the narrow pockets of market momentum and you have a solid recipe for indecision.

I have my book about 90% long at this indecisive juncture.  AMBA finally went to work, crushing the hopes and dreams of Morgan Stanley analysis hoping to make a name in the technology space.  I like to think this guy who downgraded AMBA will read the Raul blog, so I have a special message for him: this chipset powers the GoPro, it is on the X-mas list of every adventurer.  Short interest, albeit modest, will start to get icy hands as we approach December 5th earnings.  Then they will start making mistakes.

The chicken trade adhered to the November seasonality statistics, naturally, unlike the unnatural meat produced in PPCs new streamlined robot facilities.  December brings a tad bit more seasonality mojo, and we still have national eat 1-to-3-birds-at-once day Thursday.  I took an obligatory 1/3 scale today, but I like my prospects with the net.

I bought AAPL back right near the closing bell.  If you recall, I was in this trade a few weeks back and bailed with a little 2 percent gain.  It is an easy vehicle for me to lever long exposure up and down, as it consolidates along gently.

I now hold large positions in the following names, listed largest-to-smallest:

GOGO, RVLT, BALT, YELP, and CREE

These are all full size positions.  As you may imagine, this type of book requires attentiveness.  It has the capability of lopping 10% off my person rather effortlessly.

My ¾ size positions are as follows, listed again largest-to-smallest:

AMBA, AAPL, PPC, LO, and TSLA

Note: AMBA was by far my largest position prior to taking a scale near today’s high.  Tesla and their innovative CEO Elon Musk are in the house of pain.  Much like any successful individual, the media will frame Elon with a skeptical eye.  Innovators hunt profit and self-gain after all, which is inherently evil.  The issue most closely watched at TSLA is the battery technology.  If it is to usher in the era of zero emission commuting, it needs to hold up to rigorous scrutiny.  If Telsa intends to roll out a model for the middle class, they need sound battery technology established.  The chart is just basing out, below my favorite moving averages, suggesting acceptance of these lower prices.  What likely comes next is a new exploration lower by price.  This will scare most of you.  But I will be casually observing the action, minding the drawdown to my books, and meticulously selecting an opportunity to ratchet up exposure because I love me some sweet baby Elon.

I have dog and pony positions in the following stocks.  These positions are practically placeholders and some are relics from prior trades:

F, FXY, ONVO, TWTR, MJNA, and O

I thought I would turn a clever trick in MJNA.  Now I am -40% on this stupid, STUPID, holding.  It will enjoy a fake pump service or go to zero otherwise I will continue to hold this dumbness.

ONVO needs to die for a while.  It trades poorly.  I will keep my toe in the water to keep my eyes on the name.

TWTR is another name I will hold until zero.  I use twitter more than any other social media service in the world, why wouldn’t I own it?  One day I will have huge size, but right now there simply is not much to base my risk on.  Therefore I wait.

This post has gone on far too long.  These are my holdings and some reasoning behind them.  Let’s see how they perform this week.

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Beware The Polar Bear Hunters

This is your monthly reminder that institutions want your best Wall Street shares.  The stock market is like a massive game of Monopoly and some of the finest properties include social media stocks.

You bought their hype and they know it.  Now they are pressing their knee into your back while you lay face down on the cold concrete.  You have just been polar bear’ed by Morgan Stanley banksters.

I am merely an opportunist.  Their actions disgust me no doubt, but I simply ride the tidal currents.  After spending several days in Chicago using YELP to find many wonderful meals and mixology labs, I greet today’s blood bath with a warm embrace.  I am the hobo, pretending to pray on the street corner, in an earnest attempt to snatch your purse.

Morgan Stanley is the reckless teen, cold cocking you from behind.

Who is the villain here?

I bought a bunch of YELP this morning.

I bought some BALT too.

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Overnight Strength

Last week’s momentum carried over into last night’s globex session where we saw the indices continuing to rise.  The push higher occurred mostly during the first hour of trade Sunday evening, after which we balanced out and accepted the prices.

I find myself stating this bit of context often although it is by no means an effective timing tool but, index markets rarely print swing high outside of regular trading hours.  Thus we can assume the overnight high is vulnerable.

The question this morning is whether the sellers will make an attempt to fill the overnight gap or if we will instead “gap-and-go” which is a distinct possibility given the holiday week context.  Turning our attention to the NASDAQ composite, sellers need to first push through the overnight value area low zone from 3430.50 – 3429.50.  If sellers can breach this zone and press down to 3428.50 we are well on our way to filling the gap.

Should the sellers succeed, downside targets are 3422.50 (Friday high), 3420.75 (VPOC), and ultimately the low volume node at 3418.  This level is of particular interest because it represents the price moment when sentiment suddenly shifted optimistic Friday.  Sustaining trade below 3418 may suggest a shift in sentiment.

To the upside, we are working with measured moves.  I show a buyer target zone from 3437.50 – 3436.75.

I have highlighted the above levels on the following 24-hour Market Profile chart:

NQ_MarketProfile_11252013_24hr

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Converting The Sellers

For a good portion of the week, market participants slugged it out at the 3390 price level in NASDAQ futures.  We kept printing low volume nodes at the level which is indicative of fast market action.  Indeed we saw several swings away from the level good for 5-10 points at a time,

Then yesterday came, and this is something you will see often in market profile work, the market spent hours at 3390 and built a ton of volume.  So much volume in fact, 3390 became the volume point of control on yesterday’s profile.

After building the base, the market began migrating higher and held the progress overnight.  The sellers were in charge Monday through Wednesday but now buyers are attempting to dictate direction.

I will be watching 3413.25 above to measure buyers’ progress and 3395, 3390, and 3385 to track their defense.

The 24 hour profile suggests we may see some back-and-fill action occurring and we are set to open in a slippery zone so we may see some chop.  If instead we see an aggressive drive above or below the aforementioned levels, be cautious for trending action.

NQ_MarketProfile_11222013
NQ_MarketProfile_11222013_24hr

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A Motivational Post

I want to address you, fine people of the internet, very briefly and succinctly and without a drop of redundancy.

There is magic going down in the halls of iBankCoin. It “done gone” down for years. Only I was on the outside, shucking clams in the quest for pearls.

Maybe it was shitty conditions back then, maybe I was a fucking piker, but certainly I was on the wrong side of most trades.

I have been there, just like you.

There’s no magic bullet. There are tools, and there’s committing yourself to the game…running two three hundred charts through your brain each working day, talking shit to Keith McCool And his gay cronies, and adhering to the etiquette of iBankCoin.

You won’t find high level financial juggling elsewhere, trust.

I read the “finest” just like you. I won’t start naming people because you know who I’m stalking.

You won’t find better work, on a daily basis, anywhere else on the internet.

Yes we are crushing the GOGO trade. Yes we provide key index levels, and yes we provide confidence building exercises. We are here to learn alongside you. At least I am.

So read along. Criticize my errors, root for our winners, and bank the coin.

It’s your responsibility as an adult to earn that bread, own it.

I’ve never looked down my nose at anyone approaching this task. Learn with me. Tell your kids of our feats.

And be well.

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Where Are Buyers Wrong?

The indices caught a bid on the dip overnight and have us set to gap higher this morning.  The buyers may need a head start if they are to claim a victory on the day.  Thus far this week, the sellers have held solid control and are doing a confident job dictating market direction.

The sellers could even be seen shorting into weakness yesterday, an action that in recent history would result in vicious squeeze and capitulation type action.

I am still keying off of 3390 on the upside and 3360 below on the NASDAQ futures.  We breached this low print yesterday during RTH, it became our overnight low, and it market the level where we launched higher last Tuesday.  If buyers cannot sustain trade above this level it would suggest the sentiment that propelled the market to recent highs has changed, and is no longer impactful.

Do not have any graphics to present this morning.  Watch for sellers to enter at some point this morning to close the overnight gap.  If they no show, something may be afoot or they are waiting to see the auction behavior before stepping back in.  Rest assured they have gained a bit of confidence this week which in a big part is due to their solid defense at 3390.

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The Fiddler on The Roof

Pardon my fringe existence today, but trust that you would have loved the trading rig I managed to set up in the back of a Mega Bus.  I had to disassemble everything as we came into the closing bell so I could debus in the city of cheap drugs and crime.  No, not Detroit.  Raul has made his way to Chicago.  I am here on a mission of reconnaissance.  I will share the best  of my findings on a later date.

I was able to tether my laptop to my iPhone and then connect to the mother ship to keep an eye on the markets as we teeter only steps away from the abyss…that is prices from last Tuesday.

Perhaps with a more fluid connection I would have stopped out both AMBA and WLT, but from my blazing 1x wireless rig, I felt a bit more confident to see tomorrow.

I made only one move today, a powerful one, buying more shares of GOGO early, before the rip, which brings us around to the titling above.  Morgan, Stanley, and all of their accomplices will lose against Raul.  There is magic going on in GOGO with Raul.  I buy it, it levitates 5-6 percent.  While the redcoats use their horses and dogs to corral the rats, I am dancing a jig and playing my pipe down the road.  The British throw cake at my person, and I simply consume it without missing a note.

GOGO kept the port on team green today, not an easy feat with the rout going down in ONVO.

Yes, Tesla is still going lower.  So is CREE, which I now own a gentleman’s lot worth.  You’re going to have to do worse!  I will make the market commit heinous acts to take away my shares.

3390 is the demarcation line in NASDAQ futures.  We traded it four times, and four times we moved violently from it.  The sellers are 3-for-3 on the week.  Are they feeling lucky?  Can they sweep the week?

Stay tuned to find out.

PS I will be around early tomorrow but attending to matters of the highest order for most of the day, unable to field your inquiries.  If you need me, because I love feeling needed, twitter @twosmuth.

  

http://youtu.be/BLMV9wpPR8g

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NASDAQ In The Zone

Price in the NASDAQ futures is nearing the zone where we saw the large breakout last week.  Last Wednesday, just before ramping higher, the market printed a well-defined low volume cave surrounding 3360.  To my eye, if the market accepts price below this level (spends an hour or more below and builds volume-at-price) then the sentiment introduced to the market last week is gone, and we should adjust accordingly.

Keep in mind however, that a mere breach of this level is not your tell.  Instead price needs to sustain below for a reasonable duration.  A VPOC establishment below the reference point would support the case for lower prices even further.

Up above we have a wonderful confluence of low volume and value area high at 3390.  This is the sellers’ stronghold, a level they defended well yesterday after thrusting us lower.  Trade above these levels would represent a bull victory as the market attempts to regain balance.

Overnight we were fairly balanced with a bit of sell flow which was faded this morning.  In determining whether the bulls can sustain control of this aged trend, I want to see the velocity of the market slow.  If we can consolidate sideways a bit slower then yesterday’s violent indecision, then that slowing of the market in and of itself would be constructive.

I have highlighted the above price levels, as well as drawn out a few normal scenarios on the following market profile charts.  Remember, normal does not always mean right, and a different type of day development would be another clue:

NQ_MarketProfile_11202013

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