The 20 year Treasury bond ETF has put in three significant swing points since its late July peak, and I’m positioning for what I expect to be significant point four (second lower-high) and the potential for significant point FIVE (lower-low, momo hoes).
Have a look:
I bought TBT this afternoon in anticipation of the above scenario. You will notice it’s a near mirror image of the TLT chart. I will look to take my first 1/3 scale if price trades into reference point “(3)” to lock in some gains. Not rocket science, just a bit of risk management wrapped into a momentum mentality.
Beyond that, I’m planning some grandiose events for this upcoming weekend to welcome the gentle seasonal change.
Wed Sep 5, 2012 12:19pm ESTComments Off on Goldman Sachs Strong Post Selloff Warning
In treu #costanza form, Goldman Sachs (GS) is ripping today after their bro bro (full Keith “sweat” McCullough) Kaiser comes out with a selloff decree. I’ve been long “your favorite senator’s bank” since August 20th here in the blogger network halls with an intermediate/long term hold intention. It’s my finance exposure, ya dig?
I plan to leg into the name quarterly, because frankly, they raul the world.
I don’t really have much more to say about that. Carry on.
Mon Sep 3, 2012 11:13pm ESTComments Off on Euro Bullish Again this Evening
So far this evening the Euro has bounced back into the highs of last Friday. Midway into Friday, around 11am EST, sellers reacted to the new swing highs and faded price lower. Therefore it will be interesting to see if the Euro bulls can hold onto and press the gains they’ve earned while Americans were grilling oversized cuts of beef on the grill. For now, the tail is wagging the dog.
What is most constructive about the push higher in the Euro is the health of the price auction taking place. If we look at the most recent profile, we see a well shaped distribution, suggesting a healthy auction occurred and resulted in higher prices. The opposite would be a volume profile that looks jagged with deep peaks and valleys.
Going into tomorrow, I’m looking for the Euro dollar bulls to advance their gains at best or build value higher at the least. Either way, I have a bullish bias in the contract unless we see aggressive selling dictating price back into the long consolidation.
Potential areas of resistance for the bulls are:
1.2640 immediate term. The price bars printed since late Thursday resemble a head and shoulders pattern with the head topping out in this area.
1.2670 comes from the June micro composite and would be a constructive accomplishment from the bulls.
Potential support levels:
1.2595 also from the June micro composite- volume point of control
1.2585 composite HVN
Buyers are strong this evening, but how price behaves when our markets come online could dictate what we can expect this week.
Fri Aug 31, 2012 4:09pm ESTComments Off on Major Tom’s Bearish Stance on YELP
Sometimes a long month-end Friday amidst a market riddled with tomfoolery leads the mind to dark, murderous thoughts. I thought it fun to share my most recent thoughts with you, the curious-internet-view-count statistic perusing the iBC blogger network, on populace control and decedent executions.
Executions are already expensive, what with all the laws and justice, sure. But let’s consider a method with dashing style and a spirited display of retro technology. My friends, are you familiar with Jacques Cousteau’s faithful Calypso ship and its underwater sea lab? It was really something, and often times his esteemed colleagues would spend weeks underwater researching turtles and shit. Have a look:
Even after a normal dive, it’s imperative one does not hop in an airplane as the nitrogen built up in the blood stream will not escape and a bad case of the bends will occur. This risk is magnified significantly after a week in an underwater habitat.
On to execution:
Many a market wizard wise enough to short YELP into lockup received the market’s form of my newest and most brash concoction. You mount an underwater launch vessel to Jacques Cousteau’s sea lab, capable of launching prisoners into low earth orbit. BENDS 2.0 bitches! No space helmet will be provided, of course. That way, if the BENDS doesn’t burst their organs, they’ll be freeze dried in space.
Regarding civil control:
ALL THIS, will be live streamed in NYC’s Time Square, to teach obedience. Financing for this project will come from Senior Tropicana, one of the world’s largest private space financiers.
It has been a long day, with many hours of robot over lording to go. I bid you farewell, unless you’re on my fucking death row.
Thu Aug 30, 2012 8:59pm ESTComments Off on Looks Like a Long Liquidation in the Euro
Just as technicians define recurring chart patterns on their price charts, so too profilers attempt to gain insight by spotting a picture. However, they’re not as clever it seems, opting to name the following setup to define exactly what they interpret the activity to mean. Behold, the long liquidation:
A long liquidation resembles a lowercase “b”. Where the setup occurs in the context of prior profiles gives additional meaning. Observing the current market on a pulled back chart we see the Euro has been trending higher since working through a long consolidation of annual lows July-August. We put in a higher low on 08/27 but are yet to make new highs which would add significant conviction to the long trade:
The idea behind the long liquidation is the same as a short squeeze; they’re a short term phenomena/reaction. The long liquidation can happen when the market gets “too long” and needs to rebalance the inventory. Once complete, one could expect price to continue in the direction of the trend.
A little bullying if you will, but without the beef to back it up. Get’em bulls. You could play a break of the bracket high and set your stop below the volume point of control on the long liquidation profile.
UPDATE: The move did indeed go higher. However, placing a stop below the VPOC of the LL profile would have resulted in a stop out prior to the move:
Last night I suggested bulls stepping up and defending 1.2475 as constructive price action. Well the price area indeed turned off the selling spigot and ushered in a rally back up to recent swing highs:
If buyers are able to build value near these highs, the constructive price behavior suggests we could see the swing high taken out. As much as I would like tomorrow (today) to be Friday, we can carefully watch where the next value is established and if positioning into this week’s news events is supported by the volume footprint being established:
Overhead resistance bulls need to clear: 1.2572 and things could really get moving above of 1.2585.
Mon Aug 27, 2012 9:40pm ESTComments Off on Sellers Active in EUR/USD Futures
This evening the Euro dollar is exploring last Tuesday’s large distribution. The price range was left in the dust as accumulation pushed price higher. By the end of the week the buying pressure receded and gave way to sellers. Since Thursday afternoon we have seen sellers controlling this tape. They were able to push price near the initial breakout and then put in a lower high.
Now this evening the selling pressure has ratcheted up and the breakout has been negated. If buyer don’t show up soon they may lose much of their hard fought gains.
1.2475 would be a healthy level for bulls to defend, however this evening the bears have smashed into that level with a head of steam. 1.2460 would be the next target (08/21 value are low) and ultimately the interesting confluence of price and volume at 1.2425.
It looks like selling pressure if you look at the delta starting after lunch on Friday:
Market profile is an enjoyable way of assessing price and volume activity on a futures contract. When interpreting market profile, it’s interesting to look at the shape of the profiles.
Looking at a bar chart of the EUR/USD will show you price has come a long way in a short period of time. Viewing the action through the lens of market profile I see a bit more.
Pull your eyes in a bit closer on the most recent profile activity:
1.26 was a significant price level for many reasons. It’s a big round number, it was a “high volume node” on the volume composite of the prior range, and price slowed in the area in the past. After coming within seven ticks of touching the price level, we see sellers entering the market, and responding to the higher prices and resistance with selling. To put it blunt, buyers were slapped the fuck down, back into their prior range, or value area.
What we now want to see, should we be speculating on further downside, is our volume delta (see last night’s post) show a steady red, indicating sellers hitting the bid. This pressure should also show sellers dictating price (driving price lower).
Should we see the selling be absorbed by the market while a more time-based correction occurs, it could signal patient buyers in the market confidently absorbing the sell flow.
Starting around noon of yesterday’s session, we can see the sell flow entering the market.
Up unto this point however, price has been relatively stable. The bears appear to have slightly gained the initiative and now need to dictate more direction into the tape or else get run over again by the breakout market.
The pullback occurring on the major indices over the last three sessions occurred in a very smooth manner. Compare it to the pullbacks occurring during the early summer months leading up to our most recent advance. The character of this pullback is defined by steady rotations, overlapping price bars, shorter “candle wicks”, and tighter daily ranges.
Tomorrow and Monday will be critical to the pullback we are experiencing with Monday having a higher possibility of producing a gap. If we continue to see this type of less violent price consolidation, it could stage for a healthy leg higher. “The Fly” is cautioning us about a September surprise, and investor sentiment is cautious at the least.
Should we see price stabilize and attempt another leg higher, I will put more cash to work. At today’s close I bought back my Expedia position. I think the EXPE chart exemplifies the price action I want to see prior to a thrust higher. Should the market rise it could be entirely reasonable for EXPE to do likewise.
Stupid trade of the day: buying the highs in WFM. I may close this position out tomorrow should this bearish momentum continue.
One of the interesting characteristics tracked in futures contracts is volume breakdown. Very quickly it’s calculated as follows:
Delta = Buy Volume – Sell Volume Buy Volume (Ask Volume) = volume that traded at or above the ask price. Sell Volume (Bid Volume) = volume that traded at or below the bid price.
The above volume analysis can be applied to any timeframe or range to get a feel for the type of trading activity occurring. Buy delta (buying the offer) can be interpreted as more aggressive, accumulative type buying. It could also be shorts getting squeezed and hitting the big red “panic” sell button. I believe the former (accumulation) has been occurring in the $6e (EUR/USD).
Tracking along the bottom of the following chart is a moving average dating back to 8/15, when the contract was trading near the midrange its recent consolidation after making new annual lows in July:
Ignore the rest of the hubris on this zoomed back chart and focus on the bottom line. It’s a nine period moving average of the volume breakdown. It appears smooth calm-handed accumulation has occurred throughout the entire breakout, with most red delta only resulting in mild price consolidations. This aggressive buying continued throughout today’s (yesterday’s?) day session.
The move has already covered much ground but unless we see sellers aggressively entering the tape, I see more upside in the currency. Another puzzle piece to the risk appetite of the market.