I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
4,043 Blog Posts

New Buy: $CREE

I started a new position in CREE. If you buy CREE because of this post, if you buy 20% pops in stock prices, you enjoy pain and may lose money.

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Welcome To The Highlands

I’ve marked up the profile chart to get a picture of what I’m seeing.  There are several interesting reference points on the auction charts.  I merged the “unorthodox pump” potion of the Friday session into yesterday’s session because it better fit into the auction that occurred yesterday and gave a clearer picture of the distribution of trades.

The resulting profile shows value at new highs, but still within the range of last week.  Just above the normal distribution is a low volume node then the trending action from yesterday.  Halfway through the session I commented the auction was very methodical.  I was referencing the fact that buyers sat back and watched the open, allowed price to tag our bias line (prior day VPOC) exactly as we highlighted then stepped in with their buy orders.

It still would not be a major blow to the bulls to see some retracement, and more and more traders want this to occur.  Therefore I’ve highlighted below levels that you may want to consider cutting weak longs or adding on hedges.

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Book Talk: Notorious AIG

AIG is one of my current longs and I like the way it is setting up today.  I was impressed by the strength in the name last Wednesday and started my position.  Since then it has been flat/down.  However if it can hold today’s strength into the close the setup looks even better to my eye.

I like the alignment of the EMAs and the strong thrust through the 9ema.  It is showing promise for making a new swing high.  I may add to my position.

The chart has me hypnotized.  The company not so much, this is just a trade. Notice the prior behavior of price @ $35.50. Should we be unable to sustain trade above this level, I will cut the trade.

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The Double Decker

This one takes the chrome off a bumper (abrasive):

Friday price action was almost entirely contained within the range from Thursday.  The buyers managed to pierce the prior day highs with an unorthodox short squeeze into the close.  The very fact buyers were able to pull off such an aggressive feat suggests the sellers were fatigued going into the close last week after watching a stretched and gapped tape continue to defy gravity.  As impressive as the move was, the auction on Friday did manage to set value lower, moving value almost four handles lower to 1473.50.

I’ve highlighted my bias zone intraday in a lovely shade of blue.  This level is the confluence of the Thursday VPOC and Friday value area high.  It was also the scene of a swift V-shaped reaction this morning during the globex session.  It’s signaled its importance several times.  How the market treats this price level this week will be telling of the overall tenor of market participants.

Sellers will look to push us back below the Friday value area low which could lead to a swift back-and-fill of the gap left behind by Thursday’s gap higher.  The primary target for sellers is the VPOC from Wednesday with its high placement within the value area.  I expect to see buyers reacting at those levels.  Bulls have been eager this year to sweep up perceived bargains this year.  I remain constructive on my longs down to this level.  Below I will reconsider my intermediate-term stance.

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What Is Your Edge?

“Good tools stay sharp, hold an edge.” –Bob Flowerdew, The No Work Garden

After a very long day of toiling with my people, working on another lucrative project for the house of Raul3, I sat down to my Minority Report touchscreen laptop and immediately directed it to iBankCoin, naturally.  I love reviewing the new Best of iBankCoin weekly series.  Seeing my name listed beside people who for years I’ve held in the highest regard gives me a satisfaction beyond earning coin.  I read this site in silence for two years terrified to comment and look like a piker or worse yet receive banishment.

There is so much talent within these halls and when I see my top two posts providing very specific and actionable trades I feel like I’ve done my job.  But what is my job as a blogging trader?  I know my job as a trader.  As a trader my job is to buy and sell stocks, ETFs, futures, or options when I have an edge backed by probabilities.  It’s important for me to trade high win-rate situations because it keeps me confident.  A low win rate setup can be profitable if the winner outsizes the losses to a large enough degree, but I don’t know if I’ll be around for the winner.  And worse yet, the setup’s edge may have broken and it will be expensive for this to become clear.  I like high win rates and I’ve digressed.  What I need to understand is where my edge lies in blogging as a trader.

As I do with any situation, I first attempt to apply logic and dig into the data.  What gets read the most?  When do the most interactions (comments/retweets/etc.) occur?  I can say without a doubt my morning review of the S&P 500 market profile is a flop.  You guys are either too tired, too confused, or bored beyond words after reading those posts because you say NOTHING.   But I won’t give those up; they’re part of my trading edge.

What does work?

Talking about America –  TALKIN BOUT MERCA, shyit.  Talking about America positively or negatively gets people talking.  People love talking about America.  It’s like gossip hour at jezebel.com (puke) here at iBC.

Citing specific stocks in the blog title – Your time is precious, so is mine.  When you want actionable ideas you like to judge a headline by its title.  I can respect that.

That’s about all that works for me.  So I hone my skills in The PPT, putting Fly’s robot brain to work for me to dig up very specific stocks ready to make very specific amounts of money.  And I write about them.  Check out my two entries in this week’s Best of iBank Coin post.  They’re very specific.

Therefore my only edge in this blog game is being right on my trades.  I can’t seem to charm you with literary wit or commentary couth.  So I’ll continue to be right early and often.  Don’t hesitate to read along and tell your friends.

I’ll reiterate: I deal in high probability trades.  These are the tools my good friend Mr. Flowerdew referred to.

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New Do(ugh)nut Trend

I’ve sat idle today, watching my portfolio oscillate through 50 shades of green.  It’s currently settling into a modest forest green as MLNX wet blankets the advancement in chicken and donut stocks.  I’m stalking a few names into the close, but I’m not certain if I’ll pull the trigger.

Interesting trend of late in the foodie world is the donut connoisseur.  For them the doughnut (spelled in traditional long-form) is like a blank canvas.  It’s a vehicle for introducing tasty sensations from around the world to your palate.  Around here they crowd into bakeries Sunday morning clamoring over the newest delicatessens.  Then (and this part just drives me nuts) they eat the doughnuts with a fork and knife.  They fork and knife the whole thing like it’s a steak.  You can see them through the bakery windows, sitting at small round tables, sharing doughnut photos on Instagram then cutting the doughnut into fork sized pieces.  They eat maybe one and a half doughnuts.

It’s my opinion that all of this bodes well for DNKN as they ignore said trend and stick to banging out mass amounts of donuts and coffee for the working man.  The working man is serious and consumes no less than nine donuts whist guzzling down a canteen of coffee.  This is the crack that keeps our job sites humming.  They work hard until eleven in the morning.  Then they crash and feel guilt.  This feeling can only be cured with more donuts, more coffee.  DNKN keeps winning, forever and ever, amen.

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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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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


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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