Less Indeed Was More

We are treading water up in the market highlands and when the air is thin thoughts tend to mend together into a blur from lack of oxygen.

I made only one adjustment to my portfolio today, reducing my exposure in CREE to a more manageable ¾ size into earnings tomorrow.  I intend to carry ¾ through earnings and use up to a 1.5 position size to trade my way out of any corrections.  If they gap higher, I will simply buy more shares at a greater price.  However I won’t go full size into earnings because as much research as I have done on the opportunity in lighting, my edge is stronger as a technician.  After the sale, I have about 20% of my equity portfolio concentrated into the LED industry via CREE, RVLT, and LEDS.

I want AIXG again, but I may take a pass because it trades in a ghetto way.

PPC has me 10 percent in the hole on a full sized position after two quick trading sessions.  Sometimes all the fancy timing and indicators get smashed with the gravity hammer that is unknown risk.  How was anyone to know a salmonella outbreak would occur the next day?  The stock has undergone heavy selling pressure over the last two days and it is likely to continue tomorrow.  We are coming into an area I believe to be support.  Should it not behave as support, and buyers do not react to the prices as if they are a discount (a reaction like when you touch a hot plate) I will cut my 10% loss.  Being a 10% position, this trade potentially lopped 1% off my book.  It sucks, but I live to fight another day.

PPC still has to work through earnings on Halloween before it gets into its seasonal sweet spot so it appears I was at least one day early on this long.

My other menace stock is ADHD.  The little bastard stock lacks discipline and needs to be made stronger by correction and medication.  HEAVY MEDICATION.  That will teach this stock to misbehave…talking rubbish about ghosts and imaginary friends when it should be memorizing Bible passages.  No, I have not been watching too many scary movies.

CLNT is set up right to be the next winner in the Chinese lottery.  Shorts, I have one simple question, are you feeling lucky punks?  Well, are you!?

Everything else is just wiggling around, waiting for proper order flow to dictate direction.  The RVLT daily chart has the exact picture I hunt for daily, but I suppose I am partial to the name.  I still have a very large position after all.

I traded the /NQ like a jackass today.  I overtraded and clocked a 22% win rate.  I over traded after writing less is more in my morning analysis—that’s what gets my goat.  Futures trading is all about bringing you A-game and following your plan to the T.  There can be no deviation.

The S&P futures traded in a tight and balanced range overnight, holding the high water mark levels established Friday afternoon.  Last week’s action was so dynamic it left behind areas of poor auction.  The market wasted little time climbing to these highs and as a result we do not have a strong foundation of auctions below.

The weekend brought nothing deemed significant enough to re-price the markets, so we can interpret the early AM moves relative to our current reference point to gauge the early-week conviction of market participants.

To my eye it appears less will without question be more in today’s environment as price action looks choppy and quiet.

I have highlighted a few scenarios and levels of opportunity on the following market profile charts:

Hello Friends,

I have been busting my trading butt this week and the result is my best week ever.  I could not pull tricks like this without the hard work I put in and all the discussions I have with everyone.

The iBankCoin team is strong.  Make us your cornerstone and you will become a strong trader capable of defining your own edge and bringing it to the market every day.

I am 90% long some wiry stocks, some of the most violent movers in town.  And I am cutting out early because things are about to get plum weird in la casa de Raul.  This is gluttonous complacency.  ONVO was/is my largest position.

I added to my chicken for the chicken is soon to ARISE!

For some excerpts of the hedonism and debauchery tune in this weekend via instagram at my handle @twosmuth

http://youtu.be/LoQYw49saqc

What was interesting coming into trade yesterday morning was the largely impressive and vastly under the radar strength in the Euro dollar which we observed via the 6E contract.  The euro is sitting at multi-year resistance which many macro funds are leaning on and it went on a full out rout higher.

Then our markets did, too.

Regarding news flow, the strength in the indices marks a victory for Washington DC.  And precious metals ripped yesterday too, so everyone enjoyed some cake in a rather hedonistic manner.

Market strength continued overnight with one the bigger drivers being the strong earnings out of Google.  It makes sense to pay attention to the market’s reaction to the market’s reaction of this positive news.

As of this writing, the market is digesting near the highs, the /ES has a measured move target of 1734.50.

Yesterday’s profile has the toothy characteristics of a trend day, where volume (value) follows the price higher.  I have highlighted the volume zones I will be observing today as well as a few potential scenarios on the following market profile charts:

The market – Not quite

Raul – INDEUD

There is an air of discontent amongst the stock picker class today.  The trumped up bull certainly did not lift all ships.  Take my precious RVLT for instance.  It traded like a loser while loser stock LEDS went on an ape shit quest.

GOOD THING WE BOUGHT STUPID LEDS THIS WEEK, YES?

Pardon the all caps, but I blew out a few thousand shares of LEDS at $1.42 today.  Now I have a risk free position that can ‘do work’ while I focus my attention on extracting dollars from the futures markets.  Speaking of which…

Trading the /NQ continues to show progress.  Here’s the current statistics:

44 trades, 35 wins, 79.5% win rate

Goal:

50 trades, 75% win rate

As you can see, the plan is progressing rapidly thanks to the opportunistic nature of the indices.  The stock picker reigns supreme in this market yes, but adding a method for extracting money from the random walk of the index futures is a must in my humble opinion.  Once I hit 50 trades I will up my position sizing.

I went ahead and bought a full size PPC position.  Earnings are on the 31^st and chicken manufacturing inputs are cheap.  Bird meat is consumed by our rabid population every day, the chart has gone largely ignored after a successful campaign higher, seasonality says indeud, and I feel the voodoo spirits talking on this one.

ONVO started to tingle my kidneys this afternoon.  Either that or I have another stone forming

::drinks two gallons of water::

Portfolio sits at all-time highs folks.  I could be a normal piker, giving my money to the stock market or sidelining.  Instead I commit to the game, take any and all criticism as constructive, and keep my eye on the prize.

Google blew out earnings and is trading at all-time highs.  You should too.

The market continues to trend higher.  I miss my $AMBA shares, and everything is up.  That is all you need to know for now.  The indices are rolling higher and resistance is futile.  Here you can see shorts getting margin called:

Quiet markets overnight mostly.  The Euro dollar made a strong move overnight which is interesting because it has been resting at a multiyear bracket high.  It will be interesting to see if this currency’s strength has any correlative effects on US equities.

Overnight profiles in the /ES and /NQ suggest a relatively balanced trade suggesting any news flow overnight was either expected or non-material or never happened at all.  We are seeing a bit of selling creep onto the tape as the USA comes online, and it will be interesting to see if the sellers can gain any traction at these elevated index levels.

Yesterday we printed at poor high at 1717 which clues us in we may see higher prices in the near-term.  We also saw a huge flow of aggressive buying into the closing bell get absorbed with ease by a passive seller.  This suggests the power is starting the wean as this bull presses on.

I have highlighted a control zone today on the profile and I think whichever party best dictates price around this area and is able to press from this area will gain control today.  I also highlighted a few other key price levels and potential scenarios on the following market profile charts:

That title was my attempt at the driest headline ever.  The anti-click bait because I don’t want non-core readers peering too deep into my mind.

– Raul

My feel for index future trading is warming up this week as I continue to focus the bulk of my day trading activity to the /NQ.  I have been the beneficiary of these large ranges, capturing a good portion of the range with my trades.

What’s working?

• Staying on the right side of the market – it was much easier to take longs today
• Wide EMAs – when my exponential moving averages are wide I have a greater edge
• Modest price targets – getting a scale off at 1.5 points builds a ton of emotional capital, allowing me to manage the remainder of my position better.
• Taking cues from the /ES but trading the /NQ

What’s not working?

• Stacked EMAs – my edge deteriorates when my EMAs converge too tight (CHOP!)
• Afternoon trading – I took two meetings today.  Afterwards I could not focused and botched a trade

Midweek progress:

33 trades, 25 wins, 76% win rate

Goal:

50 trades, 75% win rate.  I can build size onto this.  50 trades is the minimum threshold to consider any set of data to be statistically significant.

I have to keep in mind that trading opportunities are much more bountiful in this wildly indecisive tape.  Large daily ranges certainly benefit day/scalp trading.

About half of my trades last less than one minute it is beautiful my friends, instant gratification that would satisfy the most impatient gambler.

I put out a quick note on the /ES this afternoon when a large divergence occurred between the cumulative volume delta and price.  That turned out to be a solid trade signal.  I have noted the occurrence several times now and it now merits a proper backtest.  Just add that to the ole ‘to do’ list.

My book is up 1.25 percent today led by LEDS which is back to my cost basis and GOGO which is just marinating ever so nicely.  Zillow traded nicely too, making a move which is still of the dead cat variety but I will take it.

The most troubling news today came inside the premium halls of iBankCoin, where an esteemed member of our secret society informed me ADHD in fact develops non-stimulant, non-amphetamine medicines for treating ADHD.  I share my thoughts for record keeping purposes and also to solicit feedback from people I know are much smarter and more informed then I am.  That blows my core thesis to bits and I am now trading a stupid price chart with no back story.  Damn those Israelites for having the best ticker symbol ever and lacking the amphetamines to back it up.

Every day I want to buy TSLA and SCTY because Elon Musk is the best CEO of my lifetime.  He sets the standard for corporate communication, scientific acumen, and risk tolerance.  Instead I go out and play the Chinese lotto and buy crap stocks like LEDS and ADHD.  In short, I want to focus down to my core and start buying TSLA and SCTY.

LONGS, sized largest-to-smallest:

CREE, ONVO, RVLT, USO, LO, Z, GOGO, ADHD, LEDS, CLNT, F, IMMR, MJNA, and O

Cash 10%

I’m reposting Eminem because he crushed all these little boy rappers:

We had some fun trading this stock last 4th quarter, it has hot seasonal stats PPT folks should check out, and the chart looks perf:

Don’t say I never gave you anything. This is as ideal a stock pick as you will find the the internet. Enjoy