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

The Endless Sea of Opportunity

The inefficiencies of the market place are working their way to the surface this week, or so it seems to my eyes.  I want fresh cash ready to deploy into the market so I used this morning’s strength to toss out some old names and make way for new.

I closed out my TPX long near $40.  I thought it best to avoid staring at this gift horse for too long.  I lost 9 percent on the trade.  Not too shabby.  I like when I get excited about a loss, it means big wins are near.

I closed my EXK runner out too.  The USA dollar was ripping overnight and I’m not trying to get fancy.  The runner was still 4 percent in the profit so I cashed it out.

I cut AMBA, I’m not liking what the tea leaves are showing:

AMBAsentimentcycle

I planned on selling GTAT and OCZ this morning too, but after hesitating a brief moment they’re both back in the slop trough with other opportunities.

These sales brought my cash up to 50 percent.  I may miss a big blow off move on the Fed this afternoon, but should we see a downdraft I’ll be more prepared to pounce.

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Month End Index Levels

We printed a very balanced, very symmetrical profile overnight as it appears the broad market is on pause awaiting the GDP and Fed data.  We had a rotation higher overnight the stalled before the 1688 level I mentioned earlier as the bull target.  Sustaining trade above this price could bring in the buy flow at an accelerated rate.  I’ll be looking for price to run up to 1694 in this instance.

We auctioned back through Monday’s inside day yesterday and found buyers in the process.  The auction was healthy and produced a quality excess low we can monitor if any weakness presents itself today.

Should we trade lower, our expectations would be for buyers to show the same reactive nature at 1678, if they don’t show up, I’ll be on guard for liquidation lower, retesting Friday’s low at 1670.50.

I’ve noted these observations of the following market profile chart:

ES_MarketProfile_07312013

 

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That Was Fast

And just like that I’m managing a -10% position.  It’s 2/3 size too, dragging my book down nearly a full percentage.  I’m talking about none other than action camera extraordinaire Ambarella, Inc.

“It just happened so fast.” – Famous last words.

Seriously though, this is what happens when you’re caught in a momentum downdraft.  There were too many weak hands in this name apparently.  Perhaps the weak hands still exist, flailing around, in need of correction.

I’ll have you know I’ve been corrected my entire life.  My 4th grade teacher would slap my hands with a yard stick for disrupting Bible studies.  Even with carbon dating, I could never convince her dinosaurs existed.

“God put dinosaur bones in the ground to test our faith in Jesus.”  Right…may I have another slice of Jesus body?  I’m starving.

With AMBA, we’re in an IPO environment and the company creates camera components.  It’s not some social concept that curious minds gather around and debate where the money comes from.  IT COMES FROM SELLING PRODUCT.  There ought to be some buyers down here, perhaps at my final buying tranche.

I’ve clearly built into the name too soon, enticed by the virgin blood.  I’m in bed with the name now, prepared to deploy more capital between $15.50 – $14.25.

TPX went on a rally today, still my largest position, and perhaps I should just cut my losses at this point, down a mere 10 percent.  Perhaps, but the chart resembles bracketed trade, ranging from 35 – 50 so the greater risk at this very moment is to the downside.  That is, if my bracket theory is correct.

FaceBook is really bringing some heat to the market.  It’s exciting to see.

I had quite the run on GTAT today, but I’ve already sold most of it, booking a cool 6 percent in profits.  I’ll always grab that bread when it’s offered.  I still hold a runner that wants more, more, more.

I’ve held AIXG for so long, since June, and it has done NOTHING.  HOWEVER, it has done nothing.  All the while Europe is sucking, including Aixtron’s brethren from another reverend Deutsche Bank whiffing on earnings.  So perhaps any updraft will lift this name with great vengeance and furious anger?  I’ll stick around a bit longer.  This is my German LED play, BTW.

I have several other small positions, 25% cash, and a 10% FXY position as we ride into a very headline heavy day tomorrow.  I suppose I’m feeling lucky.

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Book Talk

I’m having an interesting morning as the Chinese say, with much to keep my attention and interest.  I closed out FIVE for a 2% loss after the broad market lost its momentum.

Early on I had eyes on both GTAT and RBCN, suspecting one of the sapphire names to run.  I went with GTAT and the position is up 2 percent so I should be happy right?  Wrong!  RBCN was the choice to make, up as much as 10 percent on the day.

TPX is working off some of the post-earnings selloff and the only news I see is they’re supplying the Chicago Bears with beds during training camp.  Please dispose of said beds in the proper biohazard receptacle afterwards.

FB lead by heartthrob Mark Zuckerberg is gliding along like a boat on the Spanish Riviera, all the while Marc whispering sweet nothings into my ear.

AMBA is going full Jeb Corliss for the time being.  I like it because it lets me know the name has a pulse.  Remember, momentum cuts both ways.

One long in the S&P futures, took a 1.5 handle loss. The trade had an 85 % plan compliance.

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Buyers Hold The Upper Hand Early On

The overnight market was relatively quiet and balanced and has begun showing early signs of upward momentum.  Pair this with the fact that we printed an inside day on the market profile and it suggests a reversal higher may be at hand after a mild drift lower.

To be sure, we’ll need to see price recapture and hold above 1688.75.  We’re currently only an earshot away as we approach 8am.  Given the small gap present from yesterday’s close however, we may see sellers coming into the market early and attempting to press us back down into the large value area from 07/26.

With a long bias, I want to see the market reject lower prices at the 1682.75 area.  Secondary support exists at the VPOC 1680 then the VAL 1678.50.

I’ve presented these thoughts visually via the following market profile chart:

ES_MarketProfile_07302013

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The Momentum Plan

I’m testing out a new run-and-gun strategy with about 50% of my swing portfolio.  Like any approach I take to the market, I start by writing out a plan.  I usually keep these private because they’re very dear to me, but iBankCoin is for the people.  I have written close to 50 of these plans.  Any good plan should be amorphous to survive in the markets.  Therefore I start with something basic and add or remove rules as I become more familiar with the approach.  Enjoy.

Raul

 

I will trade stocks from the popular intraday momentum screen within The PPT  (Link: PPT Members Click Here!)

I will trade long only

I will enter trades either when the S&P 500 as represented by the eMini S&P future contract “/ES” is at a support level I suspect could mark the low of the session or when the index shows upward momentum.

I will choose whichever stock in the list presents the best daily chart setup

I will drill down intraday and enter the first buyable dip

I will risk about 0.50% of my portfolio on each position

The above plan is already in action with the following trades:

Current positions undertaken according to this plan are OCZ, SCTY, & FIVE.

SCTY was entered too early according to my third rule.  Therefore the entry was only 80% within compliance with the plan.

FIVE conversely was entered in the afternoon, when the overall market showed signs of upward momentum.  The first buyable dip was entered upon, and the position size was correct. 100 percent.

I entered the SCTY trade very soon after taking my third scale in OCZ.  I’ve been scaling OCZ off in quarters because it was a huge position.  I was frustrated when I took my morning scale at 1.89 only minutes before it rallied to 1.99.  I immediately utilized The Stop Method© but I did so in slight haste, pouncing a bit aggressively on the SCTY long.  It offered a lower risk entry soon after.

Prices I’ll be targeting on the aforementioned three trades:

OCZ – n/a I’m down to a runner that must trade below 1.70 on a closing basis to stop me out.  I want to let my winner run free like a wild horse.

SCTY, Targeting 43.25 then 44.50 then runner.  Risk below 39.95 on a closing basis

FIVE, Targeting 42 for a 2/3 scale then runner.  Risk below 38.80 on a closing basis.

Rinse repeat, rinse repeat.

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FLASH: $FB Nearing IPO Price

THE RETAIL INVESTOR IS SAVED!  And I’m up over 40% on the name.  Everyone wins!  Thus, I’m officially married to this position.  A match made in heaven.

zuckerbergmarry

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Excellent

Excellent

The markets are soft this morning and they’ve afforded me the opportunity to buy more shares of AMBA.  This trade is playing out exactly how I hoped it would, allowing me to back the truck up.  With a bit of luck you’ll trade it down to $15.50 so I can buy more, yes.

I’m aggressive dip buyer in this name until further notice.

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Month End: Step Your Game Up

The globex market opened up Sunday evening without much fanfare and has drifted sideways-to-lower overnight in a balanced manner.  As of this writing, the futures are off about 3 points from Friday’s close.

We’re entering a week of moderate headline risk with the S&P 500 hanging around all-time highs.  The buyers may attempt to carry their Friday momentum into today’s session and their first matter of business is sustaining trade above 1688.50 where the liquidation break began last Wednesday.  If they’re able to accomplish this target, I’ll be on the lookout for a swift trade to 1690 then 1694.50.

Looking at the 24-hour profile, it suggests we’re accepting the large value area from early Friday morning and may work back through it to ensure the marked has sopped up all the buyers below.  Bulls will want to see the market significantly slow down in the heavy volume range from 1679.25 – 1678.  If we blast right through that range it would suggest a shift in sentiment and a possible retest of Friday’s ‘buy the dip’ lows.

I’ve highlighted the levels mentioned in the above scenarios in the following market profile charts:

ES_MarketProfile_07292013

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Trader Mind Games

I use the weekends to review all my trades.  I’m sure many of you do the same.  There’s beauty to data, it uncovers patterns and habits.  Trading on a discretionary basis, no matter the instrument, is a mental process.  This is the case more so if you’re a retail trader isolated from the trading community.  That’s why it is vital to understand yourself as much as you do the markets.

I won’t get too deep into a cheap psychology lesson here because I’m no expert on these matters.  I’m just a humble trader on the rise.  I’ve noticed a pattern in my trades.  After getting stopped out on a well planned trade I’ll take an unplanned trade.  These unplanned trades have a 31% win rate mostly because there’s no confidence behind the position.  I need to stop.  A few twitter traders recommended The Power of Habit: Why We Do What We Do in Life and Business.  It contains some interesting case studies and one of the book’s cornerstones in The Habit Loop map.

Losing trades are part of the business, and I’ve accepted and even embraced my losses.  But I need to eliminate the unplanned losses as they’re cutting into my bottom line.  I built the following habit loop to give structure to a new method I’m adding to my trading repertoire this week.  I call it The STOP Method©.  (just kidding with the ©, you can use it).

Let me know if you love it.  Let me know if you hate it.  I want you to let me know if you’re a boss and don’t need any of these gimmicky tricks to become great.  I put a link to the book below if you’re interested.

STOP_LOOPSTOP_CUE STOP_METHODSTOP_Reward

 

LINK TO THE POWER OF HABIT: WHY WE DO WHAT WE DO IN LIFE AND BUSINESS

 

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