The Long Road Ahead for $RVLT

We discuss the sentiment cycle from time-to-time since Option Addict graced the idea upon us and I find value in envisioning where we are in the cycle.  It gives some perspective into how my comrades and competitors may be feeling at any given moment.

Unfortunately for RVLT longs, it appears we’re working through the rough side of the sentiment cycle.  If you love a business model, you sometimes have to ride through some crummy conditions while the business proves itself.

Therefore, I won’t candy coat what I think RVLT could do in the intermediate term, instead I’ve mapped out exactly how I envision it aka brutal, but eventually victorious.  Trade accordingly:

Buyers push.  Sellers pull.

1654 a battleground

From it, our bias formed

The first level catching my eye this morning is 1654.  Back in July, we rallied up to this point, found quite a bit of selling force before eventually the force of buy flow became too great and sent us spiraling higher to all-time highs.  The price level wouldn’t be visited again until late last week, where buyers worked adamantly to convert the prior resistance into support.

Since losing the level, we’ve tested it several times, and it’s been an environment where sellers are absorbing buy flow and reacting aggressively.  Overnight, we’ve churned around this level, but oddly enough, the price level marks a low volume node on the profile.  Price continues to behave like two magnates with the same polarity at 1654, flinging price away.  Something is afoot at 1654.

Into Friday’s tape, I’ll be keen on my observance of 1654 to see who establishes trade relative to the level.  As we approach the 7am hour, we’re pricing just below the level and the buyer’s momentum has stalled out a bit.  It wouldn’t surprise me to see sellers making the first move today.  However, control of the afternoon will be paramount going into the weekend, and they know that, which may keep sellers quiet early on.

The overnight profile marked a poor high at 1658, a point shy of my upside target for the latest move.  Any trade above 1660 would mark quality progress for the bulls.  Sellers will want to pin us deep into Wednesday’s value area, pressing south of 1644, the opening print yesterday.

I’ve highlighted these levels of interest and also mapped out a few scenarios on the following market profile charts:

What a wretched day to trade stocks, bonds, and futures.  Once the NASDAQ halted, and trading came to a snail’s crawl, I had to blow off some steam.  Normally I would do some cubicle dips or punch boxes as part of my corporate workout regimen, but today I felt particularly aloof so I went to the arcade and played some zombie murder shoot’em up game.  Ironically enough, I began talking with an interesting gent who was also killing zombies. He wore a curious duster jacket and small round sunglasses down on the tip of his nose, like Carl Levin.  I told him the NASDAQ was broken to which he said, “Stupid fucking humans, fucking with computers.”

I was shocked he knew the NASDAQ was an electronic market and amused by his excessive use of profanity.  I withdrew from the video game shortly after when my coins expired, leaving him to continue his campaign solo.  The exchange was odd, to say the least.

Upon returning, I saw nothing about my life had changed.  My assistants were still working on their whiteboard compositions, the NASDAQ was still iced up, and my stocks were where I left them.

As we pressed past three thirty I noticed shares of END rising back up…clearly to the chagrin of short sellers.  They’ve been aggressively fading every upward move in END lately, but failing to press lower.  MHR had been strong all day, but began getting stronger.  I queued up oil via /CL aka light sweet crude futures, it too was firming up.  Then I made my only swing adjustment on the day.  BOT USO.

I tried to make some sense of it all, but I can see it makes no sense at all…why oil is going higher.  However I only care that it is, in fact, going higher, IMHO.  That’s how you make the money.

My robot took two trades in the /ES today and made $175.00 using 1 contract.  #BOSSRAM went 1-for-1 in beta testing earning $75.00.  These robots are my ticket to the champagne lifestyle, watch.

I feel exhausted.  Funny how a day of less can take more out of a person than a day of more, yes?  It could also be the massive carb lunch I consumed at the arcade (5 slices of pizza).

The S&P isn’t relenting as we settle into the lunch hour, however my satchel of straight crack rock aka my swing portfolio has been faded back into its place: the fag box.

On the day, I was up nearly two percent before I finished my coffee.  Now I’m up a sultry one percent and that may dry up too.  It wouldn’t surprise me, the way many of these stocks are trading.

Stock pickers talk about the risk cycle and how it resets and where you want to be is contingent upon where we are in the cycle.  It’s not my jazz to make such analysis, I simply go where the momentum traders frolic, and I frolic along with them, much like Pepe Le Pew.  By that I mean I move slowly, letting my prey exhaust itself.  Then I slowly walk up and spray a loaded gland of stink on the market.

I like trading like this, because if a giant boulder falls on the other homo momo Joes, I can sashay around the crater and reach the promised land.

That being said, I’d like to see some liftoff soon, as my patience grows weary on a few of my names.

Here’s my investment basket of LED technology, representing about 25% of my swing money, largest to smallest:

RVLT, AIXG, and CREE

Another 40 % of my book is spread across the following long trades, largest to smallest:

YGE, YELP, END, F, MHR, and IMMR

And another 10% is ‘invested’ in the following positions:

LO, FB, and O

That leaves me 25% cash that needs a home, and soon, because cash is a waste of time.

Large waters overnight in the S&P 500, where the globex session printed a 14 handle range.  Wednesday’s late afternoon selloff continued into the evening before stabilizing around 9pm at 1631.50, which is right at the lows of 07/08, the Monday after Independence Day.  As of this writing, the market stalled out 1645.25 which marks yesterday’s volume point of control (VPOC) and also the tip of the lower breast we observed yesterday afternoon.

The upward rotation overnight picked up steam around the European open, and put the squeeze on from 1637.75 – 1643.75.  What I mean to say is the market made no pause or rotation lower throughout the entire move upward, giving overnight shorts little room to cover.

Since then the market has stalled a bit, but is aligned in such a manner that welcomes bulls back into the tape.  Whether or not they will oblige early on is debatable.

I’ve split the overnight profile into two parts to emphasize the short squeeze P-shape that developed and highlighted a few scenarios for today’s trade.  I’ve also marked the RTH profiles with levels of intraday opportunity on the following profile charts:

It was another frustrating day of RVLT sucking wind only today it was accompanied by APP.  I’m a huge fan of the APP brand, so their ticker is a permanent fixture on my Always Stalking watch list.  When it fell out of the tight/multi-month consolidation I took it to be the head fake, the shakeout, before the actual move.  Well wouldn’t you know it, I was -10% on the name in a flash reminding me how important entries are on these low priced stocks.  I simply don’t have a ton of conviction here, so I cut my loss and moved on.

You know my thoughts on RVLT.

YGE was interesting today, being one of my largest positions and all.  I want better prices before parting ways with any of my shares.  They’re Chinese and solar, I mean, what’s better?

Yelp had a decent day and some clown ‘angel investor’ put on his big boy pants and bet five stacks Yelp will be out of business by 2015.  Oh, you bad.  He made his bet via FB, BTW.  Have you heard of the stock market, you coward?

Nothing else really materialized in my swing portfolio.

Meanwhile, you hear traders calling days like today a day trader’s dreams or a day trader’s environment and I’m pleased to report #BOSSRAM concurs.  On the session, Bossram Alpha took 12 trades covering three different cycles and went 12-for-12 to earn a staggering 13.75 handles.

Based on a one contract position size Bossram yielded $687.50 before commissions.  Considering the position size can increase by one contract for every $1800 earned, you can see the scalability.  All trades taken must have seen price to go through the entry and exit by a tick in order to validate the walk forward and provide conservative numbers.  I think it’s safe to say BOSSRAM does well in choppy environments.  Aka, this is the perfect fix for a momentum trader stuck with summertime sadness.

I’ve been overly excited for algorithms I’ve built in the past, so believe me, I’m still a skeptic.  But today’s performance was dead on with what I’ve seen occurring in my seven month back test.  ROBUSTO!

I look forward to taking the cycle live alongside my current /ES trading repertoire.

Be on the lookout for odd moves overnight, it seems like that kind of night…especially with the rare moon.

As energetic as today’s trade has been, with the strong buyer reaction, we’re settling out back in between the humps or bumps we observed this morning. I suspect we will see resolution soon, and the next move away from this area will be a meaningful one.

Knowing our market, it could be an overnight move…just saying. That’s our recent history.

Oh, umm..see below:

Clearly we’re just beginning to see the panic set in with shareholders of RVLT.  Something about a stock being up 600 percent in a year’s time has folks a bit…oh I don’t know, spooked?

Meanwhile, a company I hold near-and-dear, OESX, a company I bought for $2.60 then sold for $2.30 in March is running circles around the old men with their stupid CREE and RVLT.  And I liked OESX MONDAY, for the love of bologna.

It’s all simply too much to bear, for a coward.  However, I don’t care about the severance pay RVLT dished out, it’s peanuts.  I don’t care about how RVLT’s stock price slashes through one support level after another.  All these jackasses need to do, and please excuse my retarted penmanship, is retrofit.  RETROFIT.RETROFIT.RETROFIT.  That’s why the purchase of Relume and Seesmart got me excited.

They now have the technology on hand to measure the savings their clients receive from retrofitting their bulbs.  This allows them to structure financing deals based on the savings they produce—eliminating the capital outlay a business may be hesitant to forego.  And they have a line of stupid LED bulbs to peddle: total vertical integration.

CREE’s bulbs are no better than anyone else’s.  It takes China like 72 hours to bootleg anything American companies do. Hence, RVLT’s bulbs are in fact stupid, but no stupider [sic] then Cree’s.

So as long as RVLT hones in on retrofits, focusing on the low hanging fruit, they have the tools in place to go Johnny Appleseed on the USA.  We’re in the management’s hands now.  Are they closers or not?  That’s all the matters.

Forget everything else.

A simple price check of the S&P futures via your favorite electronic device may give you the impression the market has weakened overnight.  However, when you frame the overnight auction in the context of our recent profile developments, you’ll see the market is still stuck between two large value humps and working at filling in the cave.

Market profiles are quirky characters that insist on adhering to the familiar bell-shaped distribution.  It’s nature, really.  For the most part, we can play along with these formations to build context into our trading.

The momentum ball is still in the seller’s court but the bulls did a decent job of stalling their progress yesterday.  My initial expectation is to stay stuck in between the two value humps highlighted below until we get some Fed talk to move the market.

I’ve highlighted a few scenarios in the following profile charts, as well as marked up the relevant price levels on the RTH chart:

My book recaptured over 1.5 percent of the most recent losses today if you don’t count RVLT.  Unfortunately for the Raul, RVLT very much indeed counts, and today’s respite was much less.

BLAST.

A stock down big during an all-up tape is like a cold dagger to the back.  The blade is chilled even further, perhaps dipped in liquid nitrogen, when a stock gets crushed on no news…simply more sellers than buyers.  But since said blade has been dipped in liquid cold nitrogen with the intent of delivering a shrilling cold death blow it is brittle.  Pathetically brittle in fact, to the point where my Greek bones, formed atop Mount Olympus, shatter the dagger into a million tiny fragments at the point of contact.

Such is the eventual fate of those who bet against me in RVLT.  Of that you can rest assured. I added to my position today.

Other interesting thoughts toddling through my mind: I started getting the itch to size my O long back up yesterday.  I didn’t actively listen, and the thought continued in my mind all day, like a catchy merry-go-round jingle.  I like O down here, but I know so little about REITS and RATES and ROUTS which made me a bit abash to sounds the horns.  Consider this: O is unch on YTD and pays a 5.5% coupon.  If you didn’t get a piece of the capital appreciation, you’re still making bank.  Relax, and wade into this space before it is again en vogue.

YGE was my largest position coming into the day.  I’ve been in this name for quite a while, wondering if I’d one day wakeup to a Chinese air raid, a Red Dawn of sorts.  It hasn’t happened yet.  The Chinese have been very kind to me because I’m a diplomatic gent.  Respect is important in all cultures.  That being said I consider this week’s action is YGE to be of the do-or-die ­variety because we’ve reached a critical juncture on the chart that can explode in either direction.  Odds favor the long side still, so I’m expecting the gods to shine on these solar panels.

The tape as dictated by the /ES got a bit ahead of itself today.  This became evident when the market didn’t rotate off the value hump at 1652.25.  Given the weight of tomorrow’s Fed talk and the confluence of value around these levels, to disregard them and print higher seemed either surprisingly bullish or getting a bit ahead of ourselves.  The market, our favorite arbiter, answered that question by swiftly correcting the tape into the bell.  It was nothing more than a ruler slap to the bull’s knuckles IMHO.

Being about 85% long, I clearly am free of bias.

But seriously, I work hard to remain objective in my profile analysis.

Until tomorrow,

Raul