iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,748 Blog Posts

The Highlands

We saw an interesting session yesterday.  After gapping out of a multiday range and opening higher we immediately saw selling on the open.   The sellers drove price lower for the first half hour of trade and we had ourselves a weak morning gap being faded.  The buyers seemed to watch the morning activity play out and after letting the sellers bring price in they went back to work bidding up price.  They stayed active throughout the rest of the session.  It would only be ten handles higher when sellers were able to react and overpower the upward momentum.  We closed the session higher than the open and above the day’s midpoint.  Bulls won.

At this point the sellers have much work to do before regaining any semblance of control.  Given the progress higher, there is much room below for buyers to put in a higher low and remain in control.

For today’s session, I’m sticking with the bull and will be hesitant to cut names unless we lose yesterday’s value area low at 1474.  Keep in mind only my weakest would be cut below here.  Any new long trades would be trades only and mostly of the short squeeze variety.  I don’t intend to initiate any intermediate-term swings at these levels.

Top two picks going into today: PPC & DNKN (chicken & donuts)

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Big Index Gain: Stocks Stay the Same

More often than I would like to admit, I make a solid call on the direction but my stocks hardly participate.  Today was one of these days.  My stocks are up modestly.  The portfolio is green which is always good.  But considering I’m 75% long I would expect a bit more juice.  Every time this happens I’m reminded I need to finalize my alogs.  They’ve been on the backburner for months, simmering, thinking, waiting to wage war on the world’s futures markets.

For now we must continue to bank our coin trading these stocks.  With the markets levitating higher like this, I’ve been quick to take profits on extended names and toss the money at fresh ideas.  The rotation is great and keeps the portfolio humming along like a well oiled Ponzi scheme but eventually I want to settle into a few companies as investments, not just trading vehicles.  I like the Japan thesis Fly built.  It was odd when my good friend who does big business in Japan but never invests asked me if I knew anything about EWJ and if it held good companies.  He wants to get it.  Apparently they’re loving Abe over there.

Whether or not this is a peak I’m not certain but we are getting to a level where I like to lighten up.  The trough is where I like to do my business.  We had a nice trough the second week of 2013 and we did work here at the Raul3 blog.

I may lighten up my long exposure tomorrow.

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#MOARMODE

The gap higher this morning is yet to be faded and many stocks are playing along in the rising tide.  Given these conditions, I’m very hesitant to fight this tape by any means of hedging, raising cash, or shorting.

My style is to never fight the tape.  Quality volume or profile shape aside, if price is moving higher that is the final arbiter.  Price pays, nothing else.  I would not consider fading today or cutting small losses unless we see trade move back into yesterday’s value.  On the S&P you would look for trade below 1468 as your sign.

Until then, enjoy the levitation and consider buying some strength, Texas hedge style.

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We Can Work This Out

http://youtu.be/deghL8o0qHM

The buyers continue to show conviction, and with the powerful numbers out of Goldman, and Jamie Dimon taking a pay cut to save face for having degenerate traders in his ranks I can understand their conviction.  The financials are getting their act together.  And the semiconductors are seeing buyers rotation.

The characteristics of yesterday’s profile suggest shorts were put into a squeeze.  You can see the “P” shaped profile suggesting the rally higher yesterday was drive by old business like shorts buying to cover their position.  This also suggests that the rally struggled to encourage new participants to enter into the market.  Should that theme carry into today, we could expect the market to auction lower, filling in the lower half of yesterday’s profile.

The other scenario is a break higher.  As over extended as we are this is still a real possibility.  No need to get fancy trying to spot the rally, just look for price to take out yesterday’s value area high and how we behave as we approach the high of the day at 1469.

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EVERYTHING GOES HIGHER

What we are experiencing in the markets this year is extraordinary.  No amount of bad news can slow this market.  We’re about to make fresh highs.

Dump your weak and buy some STRENGTH.  Buy stocks that make people work harder (until at least noon) like DNKN.  You really don’t want to overthink a big move higher.  Simply find stocks you can define your risk in (using prior interesting levels or voodoo) and buy.  Then sit back and let the rising tide lift your boat.

There’s confidence in the banks.  That’s the cornerstone of capitalism.  It’s something we haven’t had for a few years.  Oh how well time can heal.

I highlighted the pump line this morning.  As I’ve done since the blogger network days, I put my money where my mouth (pen? keyboard?) is and took the bets.  Should we lose the pump line, many bets will come off and I will return to a more defensive position.

Actually even if we close strong I may dump some weak.  Why on earth are any of my stocks trading down?  Ridiculous!

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Major Action to Monitor Today

It’s all eyes on our banking overlords this morning as JP Morgan and Goldman Sachs report all the esoteric ways they fleeced us of coin last quarter.  They both crushed but the futures haven’t reacted.  I don’t know valuations or earnings metrics, but the technical picture on both names are running hot.  They’re running hot but they’re still pointing higher.  Go figure.  I suppose we will get the proverbial hand tip from both companies today.

An automated business is fantastic.  That is until something goes wrong and an inordinate amount of time must be spent “retooling” a situation.  Such was the case yesterday evening and as I result I’ve come into the morning having not done my evening research into trades for today.

When time is of the sweetest essence, I prepare most of my picks by poaching them from the generous folks here at iBankCoin.  You should too.

I like SD from RC’s 4 Wednesday Trade Ideas post.  It would pair well with my SU like a robust Bordeaux paired with ostrich.

I also like GPI from Redman59 over in the blogger network.

There was some talk yesterday in 12631 about ANR, I like it on strength.

UPDATE: DNKN looks good too

Digging further into apparel and retail given the strong consumer data yesterday (albeit normal given seasonality h/t Scott Bleier) I like that chart of PVH.  It’s near 52 week highs but is wanting higher.

Other thoughts:

I think people may still be afraid of FB today and perhaps the rest of the week.  Eventually, I’m going to add back to the name.  That is of course if an orderly pullback presents itself.

I’m hoping to not be sidelined on the banks too long but I have the feeling I won’t be jumping right back into GS until the earnings reaction plays out.

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Tight Bias Lines

It seems like the market was trying for lower yesterday but the pesky buyers were not having it.  The market gapped lower and a fresh batch of buyers stepped in and auctioned price higher all day.  Morning buyers had it easy.  They spent the morning targeting a gap fill and the afternoon featured a little dip after the FaceBook noise where eager side liners could grab the wave.  They were rewarded too as the index pushed to new highs before eventually settling near the value area high from Monday.

The profiles are overlapping, building potential energy.

That behavior into the close does signal resistance however.  Looking closely at the auction above 1466 yesterday we can glean insight.  Late day chasers, perhaps swing traders positioning for an overnight play were punished for their lack of discipline. Or it was a little short squeeze.  Either way, it created excess above and we closed within yesterday’s range.  That is why yesterday’s closing print at 1465.50 is our key resistance next time we go for a new pump.

The globex session has mostly glided lower, but Goldman just crushed estimates.  As of 8am 1460 has been support.  This level also is in confluence with the single TPO prints yesterday.  If this level can’t hold the market will begin exploring lower.

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The Sane Push Higher

After a gap lower today the market was mostly occupied with buying which kept the S&P on a tight grind higher throughout the entire session.  It’s had a slight algorithmic feel the entire session.  Despite the steady strength of the bulls, I spent most of my session lightening up current longs.  The only exception was my AM purchase of $MLNX, a longtime favorite stock of mine, that continues its dog like ways.

Tomorrow we get to hear earnings from JP Morgan and Goldman, two of the high velocity rockets that have been vital in lifting these markets higher.  They are both trading well into earnings with their stocks still showing positive momentum and even offering what could be considered an entry point today.  They’re almost trading too good to remain constructive on the names into earnings.

Now I could be wrong, and as Fly pointed out this morning traders don’t belong in the earnings forecasting game, but both Goldman and JP Morgue could announce stellar earnings and profits and still sell off.  Should this occur it would be a soggy blanket on the entire rally.  The way the benchmark S&P has been trading in conjunction with a weak Apple and flat banks is impressive.  But I’m embracing the uncertainty of tomorrow’s news.

My cash levels are near 50% after selling out of GS.  Obviously now I welcome any pullback.  I feel a little underinvested, so I will be digging into the charts this evening to flush out some potential longs I can grab should we continue pumping.

I still like meats.  I still like Textile and Apparel.  I had no idea my “Amalgamation” pick (SU) would trade so slowly but I still like it.  Everything else is subject to whimsical liquidation.

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Tracing The Strong Hand

One of the first things I looked at this morning was a zoomed back chart of all the 2013 daily auctions.  I then traced the progression of the high volume nodes to shine light onto the intermediate term auction.

The trip thus far has been a very orderly auction, with the first pullback tagging the high volume node (not leaving it naked) and the pump following the pullback achieving new highs.  When trading momentum this is exactly the type of behavior you want to see.

The last three days have seen the progression of value slowing and beginning to tightly overlap, with our prior two sessions actually sharing a point of control at 1464.25.  The behavior around these levels the next time they trade will be a key piece to the overall picture.

As of this writing the globex session is making fresh lows and we could be starting our second pullback.  However I’m hesitant to call direction with the several macro events occurring today.  Instead my plan is to give more weight to the afternoon session and simply manage my existing positions.

Should we trade lower we will look for signs of buyers at the 01/09 VPOC at 1455.75 then the same day’s value area low at 1454.  If those levels can’t hold the sellers will target the 01/08 value area.

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The Chicken Cometh

As you sit in your chair with your eyes fluttering, day dreaming of your bed as you digest your carb-heavy lunch, preparations are being made to resurrect the chicken.  Two tribesmen are burning thickets of sage to ward off the evil spirits as we call to the land of the dead.  We call for the chicken, we call for the chicken to ARISE!

Seriously, the smoke from these sage leaves is burning my nostrils and staining the crowned molding.  These guys mean business I’m sure of it.

I put the #meattrade on your radar this weekend over at chartpin.com were you paying attention?  Is anybody paying attention?  Or should I start talking about football and man-whoring?  Please do realize my derriere is on the line and my site statistics are teeny-weeny.  Fly’s going to toss me off a cliff like a deformed Spartan baby unless you start telling your financially driven friends how much coin we’re making over here.

Don’t worry, our edge won’t vanish.  It’s based on the laws of nature.

PS If you were REALLY paying attention back in the blogger network days, we grabbed 60% upside in $PPC last quarter.  Indeud.

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