The futures opened for trade Sunday evening mostly flat, and spent the overnight session basing sideways in a balanced manner. The /NQ, our futures contract for tracking the NASDAQ, is currently trading 2 point below Friday’s close of 3361.25.
The sharp rally on Friday was effective at moving price higher and closing near the height of the session, but value failed to migrate to the uppermost distribution on the day. Instead our VPOC printed at 1756.25, almost 10 handles below the closing print. Early on this week, it will be interesting to see how this relationship plays out and whether price migrates back to value or conversely value migrates higher.
A key level to monitor while determining whether price will revert back to value is the low volume node at 1757.75. Low volume nodes represent moments where prices moved rapidly and little volume was traded at a given price. It suggests strong conviction transactions occurring by a longer-term timeframe trader. If price were to cut through the low volume mode and then spend time trading below the level, it would suggest a sentiment shift.
Traders will be keenly observing the low price level on the S&P this week as we attempt to determine whether the market is in fact setting up for a performance chase into year end. If we cannot hold the lows, we may roll over into year end.
1750 is another key level of support to watch if the market begins heading lower and is one of the last defensive lines for the buyers.
I have highlighted the above price levels as well as two important resistance points on the following volume profile chart:
When the stock market starts acting up you really get to see the character of a person. It can be really lousy to lose 3% of your entire risk capital in seven hours. A big drawdown can cause actions, often reactions, where your decisions are framed around your own finances and your own state-of-mind. It is important to break this habit of thinking about yourself or any shortcoming you may have. When you catch yourself too caught up in your own person, just STOP everything. Take a walk. Talk to some birds. Help a friend with a tough situation—anything to change gears and normalize your thought patterns.
Most of you are intelligent otherwise you would not be reading iBankCoin. When presented with facts or bits of logic like price levels or candle stick charts you can make sound decisions. But when these exact same circumstances are presented in the heat of battle it can be difficult. I only speak from personal experience.
I read an interesting tweet yesterday while the market was playing whack-a-mole with my portfolio. According to @facthive, sarcasm is very effective in reducing stress and coping with tough situations. With a name like @facthive, it must be true right?
And with that thought, I will promptly step down from my soap box and discuss the market.
Listen, people of the internet, yesterday was a day sent from the bowels of hell with the explicit intent of striking terror into your rapidly beating hearts. If you were late to the long party, trumped up on some hot money stocks (TSLA, BALT, RVLT, take your pick) you were summoned to the town square for the tar and feather treatment. Raul of yesteryears would have solemnly capitulated into that move without second thought. It broke everything I was watching. Shit was broke.
But the precious, our beloved hybrid PPT score, came out and gave us the subtle wink. I have built some algos of my own which fire off 2-3 trades per day (bastard elRoi) in the futures. I learned one thing early on—trust your signals when things feel their worst. I knew, based upon the laws of large numbers, that bulls have entered an environment with a statistical advantage, short term.
Did I expect this bi-polar turnaround? No sir, and I don’t particularly like it.
Yesterday looked like hell, today looked like a Friday, and all of the sudden the weekly chart in Citi (my SOTY) looks picture perfect. Financials should be a hot topic next week and could be an important element in the next leg higher.
I have gotten overly verbose and our time is precious. Let me sum things up rapidly:
LIGHT EMITTING DIODES are the WAVE OF THE FUTURE—hop on. Retrofitting is where the gold is: OESX and RVLT
Tesla makes the hottest automobile on the planet and is run by Tony Stark. It is going to $200 before $100. My trading hand on this name is a force to be reckoned with. Elon whispers things to me.
AMBA looks hot, so does USD. Go figure.
If you BOT TWTR right when it opened (like Raul) it is already down 10% like a piece of flaming garbage. The market is wrong right away on this one.
I traded the /NQ with 95% plan compliance, earned an honest man’s wage, but did not capitalize on Thursday’s action because I was taken out of my zone.
Miley Cyrus is no worse than any other pop star, until she isn’t. Enjoy the icons manufactured by suits in boardrooms.
The turkey is still coming, whether marketers have their way or not. And with it comes the chicken. Do not question my voodoo powers.
The following morning view is presented prior to 8:30am employment information which may shift the outlook of the session. Check the comments below for added commentary.
The market has been trying to go higher during the entire month of November and also during the final days of October. Yet it hasn’t. Yesterday the S&P rose to a new high marginally after a somewhat unexpected rate cut by the European Central Bank. At that point we witnessed a failed auction where price was sharply rejected by sellers.
We spent the duration of the session pressing lower and even established value at the low of the session. It now seems the market is trying to go lower, and the concept of sell flow or a large sellers’ presence in the market seems more reasonable.
Overnight we saw a bounce in the futures until the early US hours. Since around 6am the sell flow has reemerged and we are well off the overnight highs. The sellers continue to exhibit control on the tape overnight, they are exhibiting control of the intermediate term auction, and the long term auction is still dominated by buyers. I use the following value migration chart to justify sellers controlling the intermediate term auction:
Paramount to the buyers regaining control would be for price to trade back above our overnight high at 1751. There is a low volume node in yesterday’s profile at this level and also at 1756. Climbing price back above these levels would suggest the elements that provided sellers with conviction have materially changed.
Below, I am keen on the support cluster from 1739 – 1737. Should sellers blast through this zone with little recourse, we could be in for much lower pricing.
I have envisioned a scenario for today’s session, as well as highlighted the aforementioned price levels on the following market profile charts:
The Twitter IPO was officially a success. People are taking to Twitter to congratulate @NYSEEuronext on their handling of the public offering and the investing community couldn’t be happier. There was one little hiccup however, anyone who bought shares at the actual opening price is either unchanged or underwater in their position.
And the market trended lower all day.
Determining whether the broad market weakness was a result of the TWTR IPO or whether the TWTR IPO was flat intraday because of the broad market weakness occupied my mind entirely too much today. What came first, the chicken or the egg?
One thing is for certain, it did not piss everyone off…yet.
I bought some shares today, a modest ¼ size position or 2.5% of my entire book. Twitter is my crack rock. Facebook is for nosy relatives unlike Twitter which is the greatest mechanism for taking the collective pulse of any situation anywhere in the world instantly. It’s fun, always. Are you a lonesome loser some nights? Don’t fret, pal, fire up your tailor made feeds and join the discussion. Jeff Macke would love reading that I bought TWTR today with long term intentions. I know this because I read Macke’s quip on Twitter! As I write, no less than 300 birds are swarming outside my window. No doubt a sign from the stock gods that this will be a major win for my purse. I intend to build into a 10% position, quarterly, or as I see fit.
Now allow me to address the 2.8% bloodshed I took today on the rest of my damn book. The LED industry was completely pulverized today alongside its relatives the solar stocks. The only thing confusing me is the fantastic earnings report out of OESX. They are growing a modern clip, retrofitting companies across the nation with energy-saving light emitting diodes. I always had a sweet spot for this company. Why I don’t own them, I couldn’t tell you. The entire announcement was solid and only strengthens my outlook on the pipeline for LED business. We have RVLT reporting tomorrow, should they meet their lofty forecasted growth, we could see these stocks stop going down. That’s the first step towards going up.
TSLA is getting the beat down. If this surprises you, then you have never been a hot money stud. Hot momentum cuts both ways. Keep your position sizes modest, know where your trade is wrong, and always look to scale profits. I am still waiting for the right kind of weakness to size up into.
I bought more AMBA today only moments before its final afternoon poop lower. That is the opposite of a pop higher. The company is solid. The technology is bringing high quality cameras to an excellent price point and the GoPro camera line is a massive success amongst my age group. Earnings are out of the way and if tech gets over this seasonal cold, I see AMBA as a primary beneficiary into year-end.
BALT traded like it was being pulled under my a massive squid. Thank goodness for my sniper entry. I’m riding this boat until the Capitan abandons ship.
No developments of interest from the rest of my book besides nibbling pieces of flesh off me like I was a walking buffet. I can’t complain, it kind of tickles.
Finally futures trading: I took one winning long scalp at the open and then I sidelined myself once the blood bath began. I am very talented at recognizing when I am out of my element. It’s an education I obtained by donating thousands of dollars to the markets. I am green on the day. I could have been emerald green with a pink top hat had my mind been focused, but I digress.
May the bloodshed continue into the weekend so I can obtain better pricing in TSLA, saluti
Stock futures were mostly quiet with a bit of seller’s bias overnight until a brief moment ago when the ECB cut their benchmark interest rate. The decision sent the /ES futures to new swing highs. This development is interesting because it is very uncommon for swing highs to be established during the globex session.
Judging by the structure of the past rotations and the cumulative volume delta that has accompanied them, this move has the potential to continue much higher, with a current measured move target from 1777.75 – 1780.50. Achieving these goals would represent a successful flush out of most short sellers over the last week.
It will be interesting early on to see if we get a fourth day of aggressive selling at the open, and if we do, it will be significant to see what the sellers are able to accomplish. Because this overnight news/movement certainly puts an already exhausted seller base on their heels and if they flinch here we could see a major squeeze develop.
I have noted support reference levels on the following market profile chart, and my measured move target is above:
If you do your web research and talk with locals, you can spot the elusive snow owl here in Michigan. The majestic creature is a treat to see with your own eyes, even if only from a distance.
Now deer on the other hand, hell I can get you ten deer this weekend whist drinking canned beer.
About a month ago, momentum trading was like deer hunting. Until these precarious, tight rope-esque conditions in the indices resolve we are hunting snow owls…which has to be illegal.
Using our holistic knowledge of the marketplace, the team at iBankCoin has put you in a position to capture the ever elusive momentum. Put much brasher, ONVO saved my ass today.
The rest of my book either did nothing in a very horrifying manner, or poked holes in my organs by trading aggressively lower. I cut my net WLT long today and booked the big winner. I wanted $20 yesterday. I sold it lower today but overall this trade was a great success.
I still have this garbage IMMR stock. I hate dead money and this has been the biggest waste of time ever. This turd needs to just die so I can cut my loss. Somebody put ole’ Raul out of his misery on this one. It’s a small position and I refuse to cut it until this senseless range concludes.
TSLA dropped 15% today and nobody panicked. It would be nice to see some panic. Perhaps Citron will shout fire in the auditorium and bless us with some panic top get the herd spooked. What a stock, I want it lower.
The /NQ traded out of my element a bit today, but I managed to extract a few wins and end in the green. Consistency is getting very nice in this department.
CREE dumped into the bell but I suppose such is the life of a stock/industry that is out of style. RVLT reports Friday and could rejuvenate the space.
Of all the stocks in the universe, I put my WLT money into NBG. I feel dumb even writing it. I bought more GOGO too, which also seems dumb given they report Monday BMO.
I need to work on being more patient during these ranges instead of constantly jostling my portfolio around. This is what the market has made me into though as momentum becomes increasingly rare.
Early last week we were hot on the trail of a suspected whale on the tape: a large seller who perhaps was much more privy to future knowledge then us, directing massive AUM, and quietly entering the market. It was a contextual concept that framed our decision making process.
Every morning I would delve a bit deeper into this idea by drilling into the market profiles and determining where this potential bear-whale could show her claws. She never really succeeded.
As more information becomes available, it now appears what we were observing was not a large individual, but instead a collective profit taking by global money managers. And coming into today’s gap higher, it appears the market absorbed the profit taking exceptionally. One of the components of this distribution, or rotation, which kept me constructive on my swing long positions was the structure of the market as we encountered heavy selling. Have a look:
The key to determining a successful entry into the year-end performance change in my view is establishing value above 1767. We would then be told that value is migrating to all-time highs and being accepted.
Down below, the bulls don’t want to lose yesterday’s value area low at 1756 in short order because that would represent a swift rejection by the sellers.
I have highlighted the above levels and a few interesting foot (tail) prints on the following market profile charts:
