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

15 Longs, 0 Shorts, 15 Percent Cash

I shuffled the deck up a bit today, closing out MHR after a fantastic run and scaling off some bread in USO, AMBA, and YELP.  Then I bought some TRLA even though deep down I wanted to chase Zillow.  I think the concept behind both companies is ostensibly the same although a realtor who has worked with both firms may possess differentiating information.

I used both when home hunting and found their services to be indispensable, even with the help of a realtor.  I could find listings and say, “Hey, guy, why didn’t this gem populate my daily emails?”  I liked keeping him on his toes but mostly I wanted to find the right house which was painful in my price range.

I lightened up on the whole oil shebang because of how many false breakouts I’ve seen across the markets these past few months.  The crude oil breakout looks so picture perfect, I don’t like it.  Then everybody started getting soft about playing missile vollyball and everything started to unwind.  Note: my profit taking occurred before the unwind.

Let me take a brief tangent at this moment and discuss bragging and the swag that goes along with it.  First off, I’m a very humble person in real life.  I don’t drive flashy cars or wear over-the-top fashion because I don’t like the attention it brings.  Last time I dressed too nice, my gym locker was broken into and picked clean.  I never dressed nice again.

When losing trades roll through, sometimes four of five at a time, I analyze them, painstakingly, live to the people of the internet.  As honest as this all seems, I do it for myself and to learn from my ways.  I read posts in the days leading up to the losses and peer into my mentality.  It’s a useful tool, a journal, for finding behavioral patterns.

So if I’m going to self-deprecate all over the internet and loath losers because I hate them oh so much, excuse you, I’m going to take a victory laps too.  You should try it.  It is fun.

Now let me ‘splaine’ something to you.  I nailed the oil trade and I will continue to do so.  This weekend I’ll be eating a meal fit for a king because, if there’s one area in life I never cheap out on, it’s eating.  Then I’m going to bring no less than two fast women along in my subcompact auto to sample the finest offerings our local scene provides.  Trust me, we all gone eat honey.  When they ask what we’re celebrating I’ll simply point upward and say, “Mother Russia” in a thick accent and then slam my fist onto the nearest table to summon the serving wench.  Then it’s ‘eyeball Paul’ time.

“Babe, I had to nail the oil trade to finance the drubbing I’m taking in this RVLT investment.”

Investing, my friends, is hard when your first investment vehicle is a three dollar stock that was a penny stock in January.  But I can tell you this, if their management team executes by collecting ALL THE LOW HANGING FRUIT spread across our country, a bumper crop if you will, they will make hundreds of millions of dollars.  The hardest part of this investment isn’t going to be holding through a drawdown, it’s going to be sitting on my hands when it goes green.  That’s where the money is made.

Or the whole shit house goes up in flames.  Hey, it happens.

If you’re young, time is on your hands.  We have many more years to earn any lost money back.  Why not invest into a high spec stock?  What else will you do with your money?  Lease the same BMW as your douche bag friends?

Finally, I didn’t even fire up my futures platform until 3pm today.  ELROI was dormant today and BOSSRAM took one winning trade in beta testing.  I have 600+ unread emails, five overbearing fruit trees, and one broken database to tend to aka why I abhor vacations.  I likely won’t be trading futures live until next Tuesday.

I missed you guys and I’m glad to be back in the saddle.

Until tomorrow or perhaps this evening,

Raul

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Scaled and Closed a Few Longs

I took some profits where I had them early on, scaling off some YELP and USO, and booking the final piece of my MHR long.

Cash up a smidge over 15 percent now.

UPDATE: Scaled 1/3 $AMBA long too, now a 2/3 position

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Defining Equilibrium

The overnight market in the S&P was unable to breach either the high or low from yesterday’s RTH session which tells me there were no new developments overnight and the market is balancing out.

Part of the balancing process is forming a range or bracketed trade.  It’s important to envision where this bracket may exist so we can fade the extremes back to the mean.  The first level above that I could see behaving as resistance early on is the range from 1640.75 – 1642.  Taking out yesterday’s high could trigger some buy stops on shorts which could lead to a temporary squeeze to these levels.  These levels would then make an excellent short entry.  They also coincide with the value area high of 08/27’s volume distribution.

Bracket lows could be between 1627.75 – 1625.75.  We could take out the overnight lows which could trigger stop orders to temporarily press us lower, allowing for a quality long entry.

That puts our mean, or midpoint, right at about 1634.  Therefore we could target this level during our mean revision trades.

This is only an idea based upon the context of balance.  Should the market receive news that gyrates us out of balance, we could see more directional volatility.  I’ve mapped out a few scenarios on the below 24 hour profile and opportunistic price levels on the following RTH profile:

ES_MarketProfile_08292013

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ELROI The Algo

ELROY

I began talking about the drone strike algorithm ElRoi during my vacation not because I ever intend to share my coding with the good people of the internet, but instead to get your collective gears spinning about an exciting way of approaching the market.

Imagine earning an average return on your money without the uncertainty of overnight positions.  Take that thought and also consider what could be done with your newly minted free time.  You could learn an instrument, or travel, or stop being an absentee parent.  I, on the other hand, will use said time to trade more markets simultaneously.  Eventually my goal is to trade three unique markets with complete automation, and trade the /ES on a discretionary basis.  All the while collecting my favorite stocks, like baseball cards, to pass down to my kin.

I’ve been trading the ELROI signals since April to enter into the market, but I’ve been managing the exits manually based upon inputs like market profile that aren’t coded into the algo.  Prior to vacation, the system went through a drawdown, then a long (in Elroi terms) quiet period.  That’s when I made the decision to turn Elroi to full automation and hit the road.

It’s almost as if I had to unplug myself to keep from fiddling with the knobs.

The rest as they say is history as Elroi went on a four trade winning streak before taking its first losing trade late into today’s session.  Elroi only traded one contract per trade while I was away, but if someone possessed the capital to meet larger margin requirements, this system could trade much larger size in the /ES as it’s the most liquid financial instrument in the world.

This statistical arbitrage stuff gets me very excited, and promises to be a fun income stream that fits my fringe lifestyle.

I figured the Woodshedder crowd may enjoy a presentation of the following equity curve and data.  Here you go, Woodshedder crowd:

 

ESROI_EQUITYCURVE_AUGUST2013 ESROI_PERFORMANCERPT_AUGUST2013 ESROI_TRADEANALYSIS_AUGUST2013

Stay tuned for the two week performance results of my new cycle hypothesis, #BOSSRAM ALPHA.

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Positioned for a Rally

Taking yourself out of the proverbial shark tank that is the stock market for a few days leads to some interesting observations.  Once outside the tank, you’re better able to observe the water you’ve been swimming around in.  It’s a higher sense of self understanding, if you will.

After buying AMBA Tuesday morning, I’ve been inactive.  This is in part because the purchase took my cash down under six percent.  What little cash I have left must be used to average into CREE and RVLT should the opportunities arise.

Speaking of RVLT, I’m now minus thirty percent on my basis.  Investing, it seems, is a tricky endeavor.  On one hand, I know they have to potential to make hundreds of millions of dollars retrofitting businesses with LEDS.  I also love the vertical model they’ve built with their recent acquisitions.  On the other hand, I’m in an ugly chart in a company that was up over 600 percent in one year’s time.  Yeah…

But I’m keeping my investor hat on and entrenching into the LED industry.  CREE, AIXG, and RVLT are multi quarter holdings.

Just before heading out last week, I increased my oil exposure.  Nice timing, yes?  I still have positions in END, MHR, and USO.  Until the Libyans find out they didn’t in fact kill Doc Brown because Mike Fox used the time machine to warn him to wear a vest, I’m sticking with these positions.  I may trim a bit of exposure into further strength.

I passed through no less than four po-dung towns on my travels, and in every case I depended on YELP to find my palatable food with a reasonable atmosphere.  I did the same in Traverse City, a much finer and top hatted community.  Why not use Google?  Because the YELP interface is BETTER, you jack asses.

ENPH and YGE are both lit sticks of dynamite.  I intend to stick said dynamite in the tail pipes of the shortmobile.

LO will succeed in addicting teenagers to Blu Eciggarets and I will collect a lovely coupon, much higher than any government or corporate paper, at little or no risk to my person.  Same goes for O, except for the teenager part.

IMMR, F, and FB round out my book of long positions.

I’ll be back this evening with an update on Bossram Alpha and El Roi, my drone strike robots.

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$ES_F Midday Update

It has been an interesting session thus far in the S&P futures, where we’ve seen strong volume overnight and near the open but since then it has dropped off significantly.  However, the market has found accumulating buyers after a reactive-type rejection at 1624.75, which is only one handle above the initial breakout point from the post 4th of July rally.

As of this update, the momentum has made a slight turn in the favor of the bulls intraday, and we’re working through the wide value area established yesterday.  A full rotation of the value area would take price to 1639.25 which also marks the VPOC of the last 36 hours of activity.  It’s a logical bull target.

Downside risk increases if we lose today’s lows, and especially if we see the market accepting trade below 1623.75.

I’ve highlighted a few possible scenarios on the following 24 hour market profile chart and noted potential areas of opportunity on the RTH profiles:

ES_MarketProfile_08282013

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Sellers Escalate The Situation

The S&P futures are lower by nearly 13 handles giving back most of the progress the bulls slowly accomplished since last Wednesday. There’s been an above average amount of volume done and the velocity on this follow through move is higher than normal.

As I write, the bulls are attempting to stabilize price near 1642. This level marks the value area low of the lowest distribution from our recent 8/21 – 8/22 swing low. Failure to establish support here (trade sustained below this level) opens the doors for a retest of the swing low at 1631.50 which is a reasonable seller’s target if we see a liquidation trade occur.

Should there be a full fledged panic liquidation lower, beyond the swing low, I will be looking for signs of buyers at 1623.75, the starting point of the 4th of July rally.

It’s been a while since we’ve seen this fast of a move overnight, so I’m interested to see how it’s received during the open. In terms of momentum, although rapid, we’re already into the third dip. Bar complete liquidation conditions, this downward move is already long in tooth. The dynamic action also left plenty of unfinished business (incomplete profiles) in its wake.

A healthy, rational market could rotate higher and auction levels like 1650.75, the scene of the overnight breakdown and eventually and the low volume node at 1653.75. Eventually, it would come as no surprise to see a more thorough auction of the entire range from 1659.50 (very key level, lots of supply trapped above) to the 1653.75 level.

I don’t have the technology to draw out these scenarios today, so you’ll have to visualize them. But we can still give a reasonable expectation to seeing the market stabilize and properly auction the above levels if buyers are able to perceive today’s pricing as a discount.

A gap and go situation although uncommon is possible today so use caution and predefined stops with any attempt to fade the market.

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Maritime Log: A Question of Credibly

After narrowly escaping a swarm of viscous flies keen on eating my flesh, I’m happy to be reporting to you from the deepest waters of Lake Michigan. Verizon has been kind enough to supply the lake with an acceptable data feed sufficient to update my internet people.

When soliciting the advice of strangers on the internet, there comes a time when one must ask themselves, “Why, in fact, should I listen to this man?”

Many things happen to a person who submerges himself into the news flow. It makes us feel smart and ‘in the know’. We read blogs; first hand accounts from the trenches of industry or sports or fashion. Depending on the trustworthiness of the information, we act and often times we overreact.

I used to hate overreaction.

Which brings us back to the important matter of Raul, floating in the lake, mind swirling from the crafts of brewers and wine makers, having the gall to provide financial commentary on a tier one website.

Tier one, mind you.

I came into the morning very long volatile names, names like $RVLT, $ENPH, and $END. I put faith in my finest futures trading robot to trade at full automation today. More on that in a moment. Sensing maturity in the bounce, I scaled off shares of YGE and MHR at respectable levels from a rain soaked campsite. But #bossram alpha was enjoying the long side of the tape, so I went about my day, exploring sand dunes, beaches, tearing down backcountry roads on a speed board, and letting my longs ride.

When I checked in just now and found the market much lower, I nearly choked on my pipe smoke. How could it be? Things were going so well. The first thing I noticed was ‘El Roi’ my favorite algo, extracted $175 dollars on the way down, in ten minutes. Well done El Roi, which is Sapnish for, ‘the return on investment’.

Next I saw AMBA. Oh the laugh I had when I saw AMBA! At my fellow traders, long of the shares? Goodness no. I’m in deep correction in RVLT and wouldn’t wish that upon my comrades. However, what a comedy of overreaction. This is now an unacceptably oversold situation, one in which I intend to extract income.

Pray for weakness early tomorrow, so I may buy the shares with great pomp and vigor to make a quick 10-15 percent.

You see? I have hardly heard news of any war out at sea. It passed by only, like a cool breeze on my face.

I still want more shares. I want your jetsam…the jetsam you tossed overboard as your mispositioned ship took on water.

Then I must suit up to race on one of the greatest road tracks in America. Because, my friends, you only live once.

Trade’em well

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Our First Visit To The Gap Gets Faded

The S&P futures printed nearly a 10 handle range overnight, printing a fragmented profile in its wake. The lack of any symmetrical shape clues us to the lack of balance in this price range.

As we approached midnight a a rally ensued but was entirely given back. We didn’t quite make it into the gap above 8/15 before supply came into the market. Going forward this week, it will be interesting to monitor any further strength in the market and whether or not price takes out today’s globex high at 1667 since swing high/lows most often occur during regular trading hours.

By this I mean we’re likely to see a more active test of the gap soon, where we can more actively assess the condition of the supply overhead.

Capturing 1559.50 was the accomplishment of the week for the bull camp. We’re trading right around this level early on. Whether buyer or sellers make the initial push from this level will be our early look into the market sentiment.

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Closing Strong

The S&P squeezed above the bull target we observed this morning.  Capturing and sustaining trade at these levels was a worthy accomplishment by the bull camp and instills a bit of confidence going into the weekend.  The flip side of the coin is the complacent manner of the tape, where bulls are being led back into high energy momentum stocks and the market yawned off a complete NASDAQ freeze.

Regardless, I’ve made no changes to my book, nor do I intend to ahead of the weekend.  Instead I’m day dreaming about hitting the magnificent road and leaving this filthy city behind.  I’m heading for the pure air of Pure Michigan.

My only move today was buying ENPH, and old nemesis, near the open.  I’m 90 percent long heading into the weekend, carrying a broad array of stocks and ETFs.

Could I get slaughtered come Monday?  Sure.

But I’m confident I can trade my way out of it with my thick quiver of arrows.  I look forward to doing so, live on the interwebs, like a boss.

Top Picks: MHR, ENPH

Have a great weekend!

http://youtu.be/bkZZo0XSm5s

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