Germans Do Architecture Well

Berlin is one of the most brilliant cities in the world.  The civil engineers were given the appropriated budgets and they produced magnificent methods of transportation.  Their parking garages are stunning pictures of modern design, their rails run on time, and their freeways, well everyone around the world envies the smooth autobahn.

And when you’ve engineered structural greatness you want lighting that’s equally breathtaking.  Lighting is the icing on the cake, it’s the makeup artist, and when using LEDs it’s an elegant leap into the future of visual stimuli.  Oh yeah, it uses 80 percent less energy than traditional HID lighting.  That too.

So when I see a strong Euro dollar, and a country like Germany that’s concerned with energy production and conservation I want a piece of the action.  What better way to get your piece of Germany than their premier LED company?  It’s traded here in the USA via AIXG.

Now it’s an ADR and trades lousy intraday, and yes, I’ve been in it forever and I’m hyping up my own book, but the move hasn’t happened yet, and I would be doing you a disservice to not bring this idea to your attention [again].

Here’s an updated chart and as I see it, it’s finally worked out of a consolidation formation, it’s resting on the 9ema, and ready to do work.

Full Disclosure:  I own many shares of AIXG.  If you buy AIXG because of this post, a panzer tank will come give you a lawn job, and you may lose money.

Buyers entered the market early Monday morning and lifted prices higher during the first half hour of trading.  It was at this point that the force exerted on the tape by the flow of sell orders became greater than the momentum of the buyers.  We spent the rest of Monday auctioning lower.  The action trickled into the globex session until the market finally found buyers at 1641 about the time European markets opened.

The Euro dollar firmed up overnight as well.

As the USA came online, we saw more buy flow entering the tape, pressing prices back toward the opening print from Monday near 1650.  This makes for an interesting junction to open the cash market.

I’ve looked at the 24 hour profile two different ways this morning, first exclusively separating the profiles into individual distributions, and second I looked at a merge of the nearby auctions to create a micro composite of the last several days’ activity.  From these two looks I’ve drawn out three possible scenarios that would not surprise me in today’s trade.

I’ve also highlighted some price levels of opportunity using the RTH profiles on the below charts:

The markets continue their summer trading routine, showing up late, leaving early, and sometimes behaving belligerently…as if the sun has cooked their brains.

The S&P session tried going higher, then it tried going lower, and as we speak it’s still trying to go lower.

Oil tried going higher and got smacked down, putting my promising END position back into the proverbial holding position.

Over the weekend, things got a little, how shall I say…weird at la casa de Raul.  Returning home after my bludgeoning, I ate several peaches off my tree like a giraffe.  I scoffed the squirrels for continuing to work my walnut trees bare, and then I cooked a large meal and ate an entire pie.  It goes without saying, but I drank a lovely blonde ale too which put me into a coma by 8pm waking only briefly to play iBC trivia at midnight.

So when I woke up Saturday morning at 3:30am, bright eyed and happy to be alive with the market’s closed, there was nothing to occupy myself with…except for the markets, SMH.  After plugging away at a few of my algorithms and pinning out the i7 quad core for an hour or so, something appeared, a cycle.  It nearly brought a tear to my eye, the beauty of it all: its simplicity.

I ran the data, and it is money.  Saturday morning as the sun crested over the horizon, BOSSRAM ALPHA was born.  The futures markets will never be the same.

It’s hard to describe exactly what BOSSRAM ALPHA is except to call it a cycle of sorts.  It’s a way of “working” a support or resistance level that allows the trader an 88% win rate.  It can be scaled to suit the operator’s financial needs, and it’s devilishly simple.  I’ll be beta testing it on live data all this week and next, and then cash shall be allocated exclusively to the cycle trade.

I would tell you more specifics, but then I’d have to kill you.

REGARDING STOCKS:

I have too many longs, I’m not afraid to admit that.  Everything’s sort of teetering on the brink of death and costing me a “g” every day.  It’s not very fun nor is it funny.  Yet, I can’t stomach the idea of selling most of my positions, for they have not wronged me in any way.  Is it the will of the market to trade only in one direction?  No sir, it is not.  Could I lose another 2-3% of my worth in the drawdown?  As my portfolio stands, yes.

My only action today was to buy more longs, as a matter of fact, gobbling up shares of everyone’s favorite retail data mine, AMZN.  You know: the guys who know what you want before you know what you want.  Genius robots that anticipate your spending patterns years in advance.   Them, I bought them, at the open when they were on sale.  I should have used weekly options, am I right?  I’m looking for a bit more upside to sell into, although the proper way to play AMZN is to swear allegiance to their algorithmic prowess and marry yourself to the name: getting your DCA on like a freak.

FB is having a decent day too, I missed adding shares, but I think it has a bit more churn in the tank which may produce another buyable dip.

I like seeing Z come in a bit.  I hope I’m not too slow to act on this name as it builds strength for the one hundred dollar roll.

OESX, the sleeper LED retrofit company, is having a strong day.  This is something worth monitoring.

These are my thoughts I’ve graced them upon you.  Go henceforth and spread the word.

After gapping higher in July and pressing to all time highs, the S&P grinded out a sideways consolidation before experiencing the corrective trading we experienced late last week.  The downward action is accomplishing the ever important task of filling a gap in the price action.  When we gapped higher on 07/10, the market left a large gap in its wake, spanning from 1661 to 1653.  The closing price on 07/10 was even lower, at 1644.75 which is where we need to trade to fulfill the gap.

It will be pertinent to monitor the profile levels from 07/10 early this week as we come into its range.  1647.75 marks the value area high.  Spending an hour or more trading below this level swings the door wide open for trade down to the gap-fill/VPOC at 1644.75 and the value area low at 1643.25.

The S&P is currently priced three handles below the Friday closing print and this gap is another (smaller) piece of context to be mindful of.  Trade back up to 1651 or perhaps to the overnight VPOC at 1651.50 seems a distinct possibility if the revision trade kicks in early.

Up above we have plenty of tradable opportunities at resistance which I’ve highlighted on the following profile chart:

I used some of that pesky cash on hand to reinitiate a position in END and start a new position in MHR.  I have to tell you, the news cycle is an interesting creature, feeding us what we demand.  Take Egypt for instance: they’ve been backwards freaks since the nose dropped off the Sphinx—troglodytes in sheep’s clothing.  Yet here we are, with oil pulling back ever so gingerly after thrusting higher, and the news is aligning with another thrust.

Talk about harmonic orchestration!

I’m not here to debate the toxicity of news.  I write to bring you the news, as filtered by my deranged microcosm.  Oh, and I’m here for one other reason—to extract money from the stock exchange.

I’m up over one and a quarter percent today which has helped return air to my lungs.  It was getting hard to breathe there for a minute.  I had nine-one dialed on my rotary phone, entirely prepared to round out the final one only a moment before fainting.

Now I’m going into the weekend with confidence, unjustified as it may be, restored. I need weekends, you see, to allow me to gather my thoughts so I can survive five days of market flow.

I bought back into a long time favorite company and short term favorite stock of mine, American Apparel.  They are the Cadillac of undershirts, which is great, I wear them almost every day.  But buying their stock was simply a matter of financing more tee shirt purchases based on a chart I like.  This thing has been dead money for-e-ver, and someone tossed in the towel these last two days, “fuck it” and I was there to claim their shares.  I’ll AT THE LEAST, ride these babies back up to the dead money zone.  At the most, we’ll finally get a pulse and I’ll ride a pumper.  There’s a lot of good investors who believe in this name.

Heading into the bell, I’d like to open my book to your criticism.  Here are my swing holdings, listed largest to smallest:

YGE, AIXG, RVLT, CREE, END, YELP, F, APP, MHR, LO, FB, IMMR, and O

I’ll be checking in this weekend with some data stuff I’ve been working on in the /ES.

The overnight session continued gyrating and trading decent volume after yesterday’s strong move.  The profile printed by the action shows a semblance of balance with the buyers working to regain a bit of control.  The key achievement of the buyers overnight was setting a higher low at 1656.75.  It will be interesting to see if they defend this level early on (if necessary).

Going into Friday trade, I’m interested to see if participants are as inactive as we’ve seen in other quiet Friday summer trading days, or if they’ve been lured back into the market by the dynamic action.  If we see a small range session with little range extension that would tell me we’re seeing mostly local trading.

I’ve highlighted a few larger scenarios that wouldn’t surprise me to see play out on the below 24 hour profile chart.  Either one of these distribution completions would firm up the auctions taking place.  However, both would require a push from larger market participants, so it will be interesting to see how today plays out.

I trade my worst when I feel chaotic.  I feel chaotic when I’m taking unplanned trades because I’m not trading with any structure.  I long ago accepted and embraced that much like an ocean, I cannot impose my will upon the market.  The market is the final arbiter.

There have been situations where unexpected news resulted in my losing money, like OCZ.  In that situation I felt an anxiety perhaps, more like a tension in my shoulders, and when I cut the loss I immediately felt a sense of relief.  Relief is a sensation, and sensations are one of the cornerstones of habits and habit formation.

Perhaps cutting CREE right here at this juncture would provide the same sensation of relief, but in this situation that would be a detriment to my long term goals.  Goals I’ve mapped and planned for prior to embracing this position.

Commenter AKwitdemBeamz commended my riding through a bludgeoning in CREE these last two days and likened me to Slim Pickens riding the nuke.  For those unfamiliar, he is referencing the most iconic scene from one of the most entertaining movies of all time, Dr. Strangelove.  As flattering as it is to be associated with such a feat of courageous greatness, my first thought was AKwitdemBeamz thinks I’m trading this position like a cowboy.

Shooting from the hip, if you will…

Everyone loves the big shootout scene in a western.  It’s usually the climax of a story and our hero cowboy, seemly outnumbered and certainly outgunned singlehandedly (or perhaps with the help of his faithful steed) dismantles the villains, restores order, and rides off into the sunset.  All this, mind you, happened against all odds.  That’s why we love it.  It’s seeing the low probability happen: the diving catch in the outfield, Jeb Corliss Grind The Crack, or the 65 yard field goal in overtime.  As breathtaking and impressive as it can be to watch these cowboys, you’re watching someone defy the laws of large numbers and probabilities.

I’m not a cowboy.  What I’m doing, right here right now with CREE is planned—god damned brooded upon while mopping floors.  Because when I have a plan, I don’t feel the chaos, and when I don’t feel chaos I trade my best.

I’m going to share my plan with you because I want this to go down as a nonevent, merely another blip in the trading timeline.  BEHOLD: The plan.  If it seems too simple then perhaps you’re too dense.  This is a weekly chart, this is an investment, but it’s always amorphous.  If conditions arise that suggest a retooling of the plan, such decisions will be made.  Typically the plan is reassessed when one of the following levels is traded:

“I ain’t no cowboy, gus”

Now this is what I call selling!  Sometimes you trap too many bears in a room and they collaborate and unleash their fury on you.  They attack fast and with downward swipes at your face and genitalia.  I spent the morning with a brave crowd of traders, beating them back where we could, but there forces proved too great for the most part, succeeding at pressing us into our fox holes.

Then I threw in the towel and started shorting.  When you can’t beat them my friend, it is best to join them even if only for a while.

My portfolio is getting tossed around like a rag doll and I really just want to survive until the weekend so I can gather my thoughts.  NOTE: When your core goal is survival, you’re no longer in a position to cease opportunities; you’re out of the race so cool your jets.

CREE is getting decimated and every rally in the name has been on opportunity to sell more, intraday.  Silver is appreciating non-stop and JakeGint is back on the scene (awesome, btw).  I don’t even know what Barack said but it sure didn’t help anything.

Everyone gets raging pissed at algorithms when the market liquidates, but do any of these people have pet robots?  I do and it made money today, TAKING LONGS.

So damn, get educated, not all robots are out to kill you.

I’m going to talk to some birds before perhaps making a decision or two into the bell.

Count me in on the dipper pool:

I’ve added to my CREE and YELP longs

The SPY isn’t out of the woods yet as the sellers are still pushing, but I see deals.

Heavy sell flow in the globex session, most notably just after US market close and in the early premarket hours of the US session, have seen the price of the /ES down as much as 10 handles since yesterday’s close.  Mounting tensions in Egypt, Cisco earnings,  and the overall benign action of August appear to have motivated sellers into the market.

If you zoom back and view the bigger picture via a daily chart, you’ll see the market formed a tight consolidation triangle, compressing price, before bursting lower.  This type of move can carry a lot of energy, but thus far has only taken us to the low end of an otherwise bracketed market.  See below:

When I look at my 24 hour profiles (second profile chart below) and start envisioning what trade may look like today, the first thing I notice is the thorough auctions that took place above.  They have formed nice, smooth bell curve distributions suggesting a solid auction of the price levels took place before the market decided to head lower.  Therefore, no unfinished business was left behind for the market to clean up before heading down.  It’s just a thought really, but adds credence to a possible deeper price correction.

The relevant levels of support coming in on our RTH chart date back to mid-July, 07/16 to be precise, which should give you an idea of the churn we’ve been experiencing.  I’ve highlighted these levels, as they will become shockingly relevant as today plays out, along with a few scenarios for today.

The best trades often fly in the face of recent market activity and if support holds, we could be in for an abrupt rally back to the top of the bracket next week because the overarching trend is still higher.