Preparing for a Beating

“Everyone has a plan until they get punched in the face.” – Mike Tyson

In many ways I feel like my accumulation of degenerate OTB names is a result of two events that occurred earlier this week.  First was my showcase of the alcohol sector with a spotlight on BF-B, CEDC, and BEAM.  I’ve been watching CEDC run like a Romanian goat higher unable to buy the name.  Second was Tuesday morning.  I saw all the signs of accumulation and a big run higher coming, so I put over 10% of my portfolio into SKS and SHLD only to watch them sit the massive pump out, opting instead to trade sideways then down.  Thus concludes my recap of time wasted. Mostly I want to remember to stick to the plan so I thought an iteration would serve me well.

What matters now and tomorrow is how we’re going to pirate coin from the market.

We shall see how she looks in the morning.  I see little reason to turn to the profile at this hour because there’s plenty of overnight action ahead.  Let it play out and we’ll take a look bright and early.  I have a feeling I’ll be cutting a few names in the AM, but I will certainly exude patience and let the morning develop.

One important caveat to this unexpected action is receiving no accolades after making a near-perfect top call.  Our good friend The PPT flagged hybrid overbought on the close Tuesday.  Chalk up another win for the algos.

See you in the morning.

I continue to see a high level of caution among traders on twitter.  The wall of worry is lined with the carcasses of shorts and the volume is low.  Going into Friday, I want you to keep the weekly SPY chart in mind, and everyone’s favorite home intruder, Jolly Saint Nick.  Does this look like a chart you want to short? 

I have 14 longs, zero shorts, and 25% cash.  I want more exposure in fewer names.  Should the markets continue to rise, I will address that matter next week.  Have a holly jolly evening.

The market continues the holiday levitation today with steady strength in the financials giving bulls confidence.  Bulls have recaptured the important 1434-1436 price area highlighted this morning and have sustained trade above.  Should they hold price into the bell,  I strongly consider adding to winners.

My favorite pick going into Christmas is online shopping giant AMZN which is fast approaching 52-week highs.  Other lotto plays I’m currently long include AN, PQ, BGMD, and GLUU.

How we close today will let us know if this rally has teeth.

Tuesday’s trend day higher left some interesting price levels behind as we moon shot higher.  Often times, when a price level is not thoroughly auctioned, the market will return to those levels.  It’s quite possible that is how we will spend today’s trading session.

Although yesterday was an inside day, where price consolidated within the range of Tuesday, we did see price fall lower toward the closing bell, pushing price down below both yesterday’s and Tuesday’s value area.  As of 8am the globex session seems to have bumped its head on the value area low zone I’ve highlighted below:

Trading today in the non-auctioned price zone I’ve highlighted would be constructive and we can expect high quality charts to still provide high probability trades.  Globex lows coincide with the low of the orange box above.  Should we sustain trade below 1428 that’s our cue to cut laggards and consider scaling profits in winners.

Above 1434-1436 we can consider getting more aggressive into the close of the week.

I started writing a post reviewing my new laptop purchase and Windows 8 and was almost done when I got so bored I damned the whole endeavor and went to my nearest grocery to procure a chicken and Toblerone dinner.  What a fucking country where one casually travels a well infrastructured mile (thank you elizamae) to get their protein pilgrim pride pump.

“I’d also like a 12-inch bar of your finest Swiss chocolate.”  I informed the clerk.  “Be swift good sir I have to address the fine people of the Internet.”

For four dollars, I can buy and eat a fully cooked chicken.  Two miles down the road I can get one that lived a better life for ten.  Amen.

I’m so tired of people comparing us to other homo nations and their stupid billy club bobbies.  I haven’t gone SHABL on this bitch yet but I’ve left our country enough to know it’s the best.  Stop.

Just come here, grind so hard your shoes rip then grind some more because you can have whatever you like.

I like PPC, FB, GS, AMZN, BF-B, AN, VHC, RVBD, ATML, GLUU, AWK, and why the fuck not Ford.

Soak it up friends, this month is when Amerika SHINES.  Celebrate what we can, for those who can’t.

There’s never much discussion or analysis of a winning position on the interwebs.  Mostly we just get the end zone dancing, which is about the only thing I enjoy in football.  That and Mike Vick like five years ago or Barry Sanders in the early nineties. 

Trading psychology books often state as fact (What’s really a fact in psychology?  I mean come’on, I eat brains) that the sting of a loser stays with a trader much longer than a win of equal proportion.  Perhaps that’s why we pour over a loser, or hold memes like “There’s always a lesson in a loser” so tight.  I certainly learn from every trade, all kinds.

With that in mind, let’s take a look at a ten bagger I traded this week, Riverbed Tech — ticker symbol RVBD:

I’ve marked points where I’ve scaled, and I’m still holding a 1/3 position. Going back to psychology, I need to lock in gains along the way. It feeds my craving for instant gratification. Therefore, I always scale out at logical price levels. I figure I can always reenter the trade. HOWEVER, once I get down to my runner, it becomes a matter of conviction in the name and the picture the chart is presenting.

As I noted, the $20.00 level is the next logical scale point and I may sell there. But I may also stick around the name and ride a pullback, eventually reloading my position. If you pull up the weekly chart, you will see a significant amount of price confluence at $20.00. It’s a very logical scale point, perhaps too logical. Therefore, given the magnitude of the pump and the bleeding logic surrounding the “big round” $20.00, I may go for a fill of the above gap.

Study your winners just as much as your losers.  Don’t beat yourself up either way.  Remember, the holidays are about forgiveness.

Yesterday the market trended higher and did so riding on top of a pile of flaming hot hundred dollar bills and five hundred euro bills (I love that denomination, don’t you?).  What I mean to say is, just like any levitation in the market, it’s susceptible to the fickle hot money bailing.

What we want to see today to stay constructive on the market is not what we needed to see Monday or yesterday.  Today, we’re lowering our expectations.  If we can see a healthy consolidation of the impressive progress bulls made this week, it could allow healthy underlying charts to continue their advance.

Since we’ve cleared all nearby profile resistance in the S&P, we can gleam most insight from simply observing yesterday’s range and profile, and how we trade in relation to it.

As of 8:15 futures are priced three handles above yesterdays’ close, but within our value area spanning from 1443 to 1435.  If we can hold the value area low (VAL) at 1434.75, I’ll consider our consolidation very constructive.  Considering the speed and heat of the advance, I’m willing to remain constructive down to 1434 where the single prints begin, a level slippery and susceptible to a flush lower.  I’ll cut my less desirable, most degenerate, and most overheated names should we trade below 1434.

I grew tired of the “business man in chair silhouette” avatar I used on iBankCoin, so I grabbed something more true to my trading style, enjoy:

Today your favorite senator’s bank, Goldman Sachs, made a clean break through the neck (cup?) line I recently highlighted and suggested you give buying GS shares a strong consideration.  Going forward the $125.00 level should be considered a VERY significant price level for not only GS shares but the entire market.  Massive investment banks have massive institutional shareholders and are an important piece of sentiment for the overall market.  I scaled off half my position as it had grown to nearly 20% of my portfolio but the breakout merits continued bullishness.

Keep this important level in mind as a puzzle piece when forming your bias:

There has been a noticeable outperformance by online only retailers since the week leading into Thanksgiving.  Doing some old school channel check homework at my largest shopping centers has turned up lighter volumes.  Have people cut back on spending this holiday season, or are more people opting to shop from home/work using their smart phones and PCs?

I initiated longs in SHLD and SKS this morning in anticipation of them playing a bit of catch-up, however, I don’t trust their brick-and-mortar business models nearly as much as their online ONLY competitors.  Heat, well dresses sales associates, rent, and taxes are expensive.  I’ll dump SHLD and SKS on any signs of weakness.

Update:  I sold both SHLD and SKS when neither name participated in the 10 handle S&P rip.

Note the respective performance of AMZN, EBAY, SHLD, and SKS since the Monday leading into Thanksgiving: