My Portfolio Became a Pile of Degeneracy Last Week – You Love a Good Degenerate

Late last week, I started seeing several charts setting up in a manner I prefer, and with the docile behavior of the S&P I began buying up shares in names like ZIP, F, ATML, FB, and DDD.  These stocks were added to my other wiry positions: VHC, PPC, and TSLA.  Having a portfolio of these types of names can be more fun than a barrel of monkeys. But anyone who’s ever kept a pet monkey will attest to the fact that at some point the monkey will challenge you.  You’ll come home, and that cuddly pet will have grown into a fucking gorilla, perched on your china cabinet with a fucked up look in its eyes.

Last week’s buys took my cash levels down to 25% and I intend to rebuild that cash level at the slightest sign of weakness.  Top of my list to sell include: DDD, TSLA, FB, and ZIP.  If their behavior demonstrates weakness they will be cut.

Should the ground the market stands on (profile) begin to look shaky, I want to be back to my core holdings (GS and AWK) with a much smaller portion of degeneracy.  However, should said degenerate stocks continue to hold their respective nine day exponential moving averages I’ll ride.

Looking back at the profile from last Friday, we can see the early NFP numbers had us opening above all respective value areas for the week.  Again the sellers stepped in and smacked the penis lower, recapturing much of Thursday’s value area before we found buyers and spent the rest of the day methodically auctioning higher; a slow grind if you will.  The resulting auction succeeded in pushing value higher for a third day, but failed to place value above the important 1415.50 level (142.15 SPY).

We’re set to open right on this key level again this morning.  Bulls want to see 1414 hold, otherwise 1412.75 value area low.

Upside targets include Friday’s high, 1420, then last Monday’s above 1422.

The weakness today from shares of Verizon (VZ) and AT&T (T) today is pronounced and showing signs of acceleration, especially AT&T. Both companies had strong performance over the last three years, and the iPhone no doubt contributed to their strength. While I am by no means calling for a top in either name, it’s worth noting their weakness recently.

Be cautious of a flush lower in both names over the next few weeks.

When the daily price bars start to tighten up on the SPY ETF, I like to take out my magnifying glass and take a closer look at the auction activity. Looking at a chart of the cash trading hours (9:30am-4:00pm EST) shown in market profile accomplishes this task.

We started the month this Monday with a euphoric gap higher and price was quickly knocked down and with enough steam to blast price below the value established at the end of last week. Price gapped too high, and the sellers reacted by smacking the penis or whatever it is Rhino likes to do.

Tuesday formed a very balanced, Gaussian curve of activity. Look at the shape of the profile, a very uniform bell curve. Balance was reestablished after the bears controlled price Monday. The buyers were back. Then yesterday morning (Wednesday) the bears showed some aggression and tested lower. Shortly after a vicious short squeeze ensued, giving us the familiar “P” shaped profile.

A short squeeze profile during a downtrend usually indicates a temporary market imbalance, and a continuation in the trend lower is likely to resume. However, during this indecision, after a V-shaped recovery, it can be the spark to get a rally started. Today’s action was tight and contained mostly within Wednesday’s value area. It sat put, while the euro dollar went off a cliff.

I glean bullishness from this closer examination. What firms my stance? Key levels above need to be captured ASAP by the bulls:

Wednesday’s high: 142.16 SPY
Monday’s VPOC: 1415.50 ES_F (right near Wed. high)

Sustaining trade above these levels gets the bears on their heels.
Watch for a flush if we spend too much time below today’s value area 1408-1405.

Tesla Motors was recently awarded the coveted Motor Trend Car of The Year for the Tesla Model S. It was a landmark move by the magazine and has received more than a fair share of criticism on the internet. However, it may have served as a catalyst for stock price, which has been on a tear.

It’s one of my current longs, and is butting its head against a significant resistance level. I’ve taken a small scale in the name because my rules dictate taking profits at logical price levels (levels that when long present significant resistance). But I only scaled ¼ of the position, where I normally take a larger third. It’s hard to defend a level multiple times. It gets harder every time. My thought is always to assume a resistance will hold the first time, make it prove itself every time after that.

As you can see on the weekly chart, the battle line is clear, unlike the opaque future of electric cars:

I read this site for over three years before mustering the nerve to comment.  It wasn’t fear of criticism or banishment, but rather respect for what I had found.  I was fresh out of college, had taken two jobs in the financial service industry, found each to be equally vile, and was desperately seeking someone to teach me something.  Academia won’t get you far in this game.  The sage words of battle-hardened traders will.  So I read backward to the inception, and have gone forward daily since.  Fly axioms began to stick.  Words from his wise elders like, “If it sounds too good to be true, it’s a fucking god damned lie.”  Still, I insisted on learning many lessons on my own.  In regard to trading stocks, most of the recent journey has been chronicled within the blogger network where I’m Raul3.  However, I wear many hats.

I won’t bore you with a lengthy autobiography, but will instead tell you who I currently am.  I am 27 years old and without children.  By day I am an accountant in a corporate setting.  Much of what was once tasked to this position I have fully automated.  Instead of touting my accomplishments to upper management, getting some bullshit raise and saddled with more meaningless work, I chose to continue appearing as if I do manual work to keep me busy.  This opens up my eyes to watch the markets.  They love me.  

Outside of my day job I own a business.  It’s more lucrative than my accountant gig and is almost fully automated.  My current and most ambitious project is the development of a portfolio of algorithms that automatically trade future contracts around the clock.  When you’re at home being a good father, I’m tinkering with these bots while listening to flamenco.  They are not HFTs of the dark pool variety, but rather order-flow scalpers using small position sizes of 1-4 contracts to take advantage of statistical arbitrage. 

I own many books, most of which I’ve read.  From the latest hot writers like Nate Silver and Tim Ferris to philosophic Greek scrolls heralded during Rome’s fall, I glean market knowledge from it all.  I’ll read a book on gardening and it will state something like, “A good tool holds its edge…” and I’ll think of my faithful EMAs.  My mind rarely deviates from the markets.

It all boils down to business acumen.  I won’t emulate The Fly like I did in my early blogging.  I will simply offer my views on the market, stocks I’m watching, and the reasons why.  I will toss in some Gaussian analysis of market profile, specifically in the /ES and /6e.  I will keep the opining to a minimum, and focus my efforts on objectivity as much as humanly possible.  Also, this will be my last campaigning post. Enough time has been spent!

Going forward, with our without a paycheck from iBankCoin, I’m going back to writing about what I love. 

Finally, an endorsement from any of the current iBC members would be a supreme honor.  If I’ve added value to your trading life, let it be known to your fellow readers.

Believe me, I’m a people person and jokes, oh I love jokes. The funny thing like telling a joke about a clown like Young Gun whose intent is to abandon her third-tier blog and shower us with long paragraphs and sappy R&B is the irony. Capital Overlook is running on a platform that says iBankCoin needs “fresh and new life.” Am I the only faithful reader who thinks iBankCoin is as fresh every visit as the blood spilled today by the fat-fucked investors in Darden Restaurants (DRI)?

Young Gun, I hope I haven’t lost your vote by calling out your subtle words of treason. When the polls open up on Thursday, be sure to cast your vote for a blogger true to the brand, true to the reader, Raul3.

When I’m riding a winner, I’ll mostly taunt the opposition.  For me, the taunts are a way of saying, “I still like this position, in case you’re wondering.”  When I’m in a loser you’ll know where I’m wrong way beforehand, so you’re not left holding the bag.  Case in point, by most recent beast win: PPC.

Pilgrim Pride was highlighted by Fly near the end of the summer.  The media had sold you the story that corn was fucked because news blogs saw how many clicks their corn famine stories received.  Then they did slide shows expanding the sites view count exponentially.  IT WAS A HOT STORY.  And corn prices shot higher and have mostly held the gains.  It was all enough for their stories to hold water, unlike the exhausted soils of corn huskers in Nebraska.

Pilgrim Pride was taken to the woodshed because they had a few tough quarters and with one of their input costs skyrocketing, it seemed a layup to short them into oblivion.  Short interest was high going into earnings.  I had a small position.  I play multi-quarter positions very small (2-3%) until they start to work.  What happened next?  They crushed expectations and the stock gapped up huge.  The shorts were all.fucking.trapped.  It was time to mock said shorts, and build a massive position.  The mocking has continued for weeks, and we may have finally seen the last squeeze today.  Yet I will retain a small, novelty position in the name to remember the de-cocking I partook in.  ARISE!

Some excerpts from Twitter:

A chicken in every pot, a loaf of bread on every table, and a pumpkin on every porch. #americanfall

— Raul (@IndexModel) October 26, 2012

$PPC will squeeze all thanksgiving

— Raul (@IndexModel) October 31, 2012

$PPC above Friday's high for the sqeeze. pic.twitter.com/yIdw2mXE

— Raul (@IndexModel) November 6, 2012

Shhhhhh….the chicken is still coming. $PPC pic.twitter.com/arzt2f1f

— Raul (@IndexModel) November 7, 2012

$PPC has been doing the turkey trod for weeks, opting for the die slow short squeeze.

— Raul (@IndexModel) November 19, 2012

$PPC just.wont.quit. SHORTS: now you's can't leave ARISE pic.twitter.com/JGZLkV0o

— Raul (@IndexModel) November 21, 2012

Scales 1/3 $PPC pic.twitter.com/OgblJY0N

— Raul (@IndexModel) November 23, 2012

Oh my chicken, shorts getting their SPINES BUSTED SLOWLY in $PPC ARISE! pic.twitter.com/BCY4UWhZ

— Raul (@IndexModel) November 26, 2012

I am 1/3 left in $PPC, what a rip.

— Raul (@IndexModel) November 27, 2012

It can be challenging to hold winners. Pressing a large position is one of the keys to earning money in the markets. Sometimes a sick sense of humor fits the bill for staying power. Sense of humor and a nine day EMA BEHOLD:

The coin was banked as is to be expected, and was done in the style of our founders: with honor and dignity for the fellow reader while crushing the spines of the opposition.

“I eat more chicken than any man ever seen, yeah” – Jim Morrison, Back Door Man

iBankCoin is a beacon of truth in an otherwise thick canopy of click-whore campaigning by media monsters like @seekingalpha. It’s harmless to call out their blatant hack journalism because they add no value to our republic. However, one must take a softer approach to criticisms of equally ad hungry sites like Business Insider. Their staff is connected and adds occasional value to our site. Hence we may scoff their click hungry headlines, but respect the game. To even broach the question of iBankCoin’s loyalty to readers is grounds for immediate banishment, treason in the highest degree. Fly makes a point to kindly tell advertisers who attempt to “correct” his colorful commentary to kindly take their dollars elsewhere and fuck off. Show me a site matching such brilliance, I insist!

If you’ve resided in the mahogany lined walls of iBankCoin long enough, you know insolence toward the members will earn you a short trip to BANNED. This is by design. Through these actions Fly serves us all in building a place where ladies and gentlemen are held to their own merit; a Galt’s gulch of the interwebs but without the ad nauseum lectures on virtue. Instead we bump Mabach music.

Please consider this my formal request for inclusion in the tab battle.

Earlier this week I tweeted something that, like most everything said on twitter, should have been consumed, and since not immediately actionable, forgotten like a good ADD-riddled twitter user:

Invest @ least 20% of your assets in $GS, once you do I'll tell you why.

— Raul (@IndexModel) November 28, 2012

I have 15% exposure to Goldman and will ratchet exposure up to 20% if they show strength early next week. My reasoning behind the position is three fold.

Reason 1: First and foremost Goldman “fuck off and pay me a bonus” Sachs rules the world. Yea yea, they do. Don’t succumb to the vanity of politicians or religious leaders. They’re puppets put in place by the blobby bastards at Goldman, whose slacks bear blood and shit stains from years of rape and pillage. Who doesn’t want these corporate hit men on their team?

Reason 2: A simple portfolio allocation decision, I want some finance exposure. Financial institutions are the dog of the public eye, and their share prices were on the receiving end of a bludgeoning in the market for years. It’s an important piece of the allocation pie, in my opinion.

Reason 3: The weekly chart. To my eye, there is potential for a huge cup-and-handle formation. It could be too obvious, but should we see the $125.00 neckline revisited, bears will have to prove valiance big time to avoid a huge breakout. Note: This is my most important reason, I was jerking your tail calling reason one chief. BEHOLD:

And may we have many more full moons of excellent trading action, have a great weekend