Bracket Committed

When you define market conditions to be range bound, it’s good to establish price levels, often called goalposts, which define the range you’re envisioning.  The idea here isn’t to predict the future but to hone in your observation and interpretation of market behavior at these reference points to gauge sentiment and conviction (or lack thereof).

I opined what I thought were my range posts back on June 8^th  and I still am using the same vision while positioning myself.  We’re now reaching the upper bracket of the range in the SPY, but my favorite high spec mobile company, Pandora, is bouncing off bracket low.  Although we may see another downside rotation through our range on the indices, I used today’s big push as support to size into Pandora.

The daily chart of Pandora has chugged through a range since blasting off the $8.50 base during pre-FB-IPO days.  Since then it has churned $10-$12.  And in my view, market participants are accepting a higher value in the price of Pandora stock, and the next move will be price discovery to the upside.  Thus, when I saw price sitting on the bracket low yesterday, I put my tester piece back on.  If you’re going to play the bracket, you must commit.  This morning, it looked strong so boom, I ratchet up to a 12% position.

Unless it charges $12 like an angry bull, the plan is to take a 1/3 scale if we approach $12 from below.  Otherwise I will press, but look to scale a piece during that trading session.  The remaining position will be under close scrutiny for another round robin down. Below $10.00 we could see a cascade of bone crushing sell stops. I want to avoid that mess.

Trading brackets, SIMPLE, but never easy.  Commit baby.

This week most of the twitter stream is focused on the same names.  It’s apparently causing a crowded situation.  Everyone’s hitting on the same girl at the bar simulatneously, all getting in eacother’s way and rejected violently.  I was tempted by LNKD as it setup after lunchtime only to be on the receiving end of a nasty downdraft.  I like the look of the dailies and was considering letting the stock run its course, but I swapped it out late in the afternoon for Zillow instead.

Zillow I like both as a company and a chart of price activity.  LNKD not so much, I think it’s where tight slacked homos stroke eachothers ego. Now Zillow, It hasn’t done much since IPO, but for the time being $33.00 has been solid support.  My stop hovers slightly below there and I will lean against the number and add should we trade into the support zone.

Beyond that I scaled off some exposure today as detailed in my earlier post.  Scaling works for me.  Everyone’s strategy is different but I find the key to my long-term success is taking hard fought profits.  Especially in a directionless, no momo tape like the current.  I also find it key to let runners run.  I thought I would have a piece of Pandora running along freely like a wolf.  Instead I have no position left.  This climate is not conducive to swinging multi-month trades.

My EUO hedge was scaled back a bit this morning because tomorrow is likely to whip the currencies around.  I still like the price behavior however and retain 2/3 of the hedge.  This ETF slugs around mostly.  I currently have 10% of assets here.

Cash & AWK: 48%

Longs (by weight):  TRIP ADS YELP Z TPX VHC

TPX is being attacked by suits and ampersands, tread carefully on this sleepy name.

http://www.youtube.com/watch?v=Y1H7vZYBeHc&feature=youtube_gdata_player

Good Morning traders let me quickly update you on my morning moves:

I scaled off 1/3 of my EUO hedge ahead of the summit and as we test the low range of what I perceive to be a value area in the $6E_F

I scaled 1/3 VHC trade off as it popped $36.  This trade is so damn crowded with over caffeinated scalpers it’s bound to be short lived, for now.

I picked up a ½ position in TPX.  Mean reversion trade.  Plus my bed industry insiders say they’re rolling those mother fucking beds into showrooms at an alarming rate.

More later, for now stay chic.
http://www.youtube.com/watch?v=gMlhiK8BtRI&feature=youtube_gdata_player

Momo plays are taking a back seat for the time being, as money isn’t chasing price at the current market juncture.  This however is an excellent trading environment if you shorten your timeframe and focus your attention to mean reversion trades.  Seeing as we’re below the midpoint of our range, you want to consider beaten down names whose price has room for some upside reversion.

One of the names on my watch list is RAX.  It’s working on putting in a higher low today so you’re not catching a knife and the risk is easy to manage while still having some upside room.  If I take the position I’m targeting $47.00 for my first scale, likely a half scale.

I like to take ½ positions with mean reversion trades as the risk is a bit higher then trading a momo pullback.  That way you can get the second half on should it be necessary 5-10% lower, depending on your risk definition.  Good practice is to also scale off your double down at the initial entry, thus lowering your basis.  Or you can take the full position as is.  Your choice, your risk.

Trade’em well…

Position Update (More Cash)

Good afternoon pen pals, this market sucks balls.  You can’t be mad at the markets for being indecisive.  You have institutions forced to hold positions, a weary retail base, and bow tie wearing cooks calling for the end of days.  Put on top of that a throbbing red cherry bomb, European leaders, and you have a sundae best suited for blowing your teeth out the back of your head.

Then you have the chartists, the market profilists, the Elliot Wavests, and the technicians all looking at choppy charts going nowhere.  They’re in cash.  No mo momo.  Thus we have our summer trading range.  Hated on the way up, cheered on the way down…at least on twitter.  The key to navigating this market environment, or any market environment for that matter, is to never impose your expectations on the market.  Instead analyze and manage risk.  Know the potential ranges a stock or ETF may move in a given day, where your trade is “wrong” and define some targets (time or price).

I upped cash today.  I sold OPEN, P, and GSVC.  OPEN and P I could buy back as soon as tomorrow.  GSVC…..TBD.

Current holdings after the bell, by weight: EUO TRIP ADS YELP and VHC

CASH 55% — AWK 6%

As we enter the official beginning of summer, it’s hardly surprising to see us priced at the middle of what could be our range for the next six to twelve weeks.  Most of my positions discussed in the iBC forum are swings with the occasional multi-quarter hold.  Therefore the daily candle chart is my primary focus when trading.

Taking a look at the SPY daily, there are several reference points suggesting range bound sideways action:

The QQQ’s have the same look.  So if you share the sentiment that we’re range bound you have a few positioning choices:

1. Cash – spend your time building watch lists or perhaps ignoring the market entirely
2. One Direction (no homo band) – Enjoy gut wrenching doubt at opposite range extremes
3. Mixed bag – perhaps a slight directional bias, but hedged and with some cabbage on hand (my favorite)

The thing about a range is it eventually ends, and often in a violent manner.  It’s fun like most forms of violence.  I think the range eventually ends to the upside.  Therefore I am keeping a long bias via my favorite tech/mobile names TRIP, ADS, YELP, OPEN, P, and (sigh) GSVC.  Weighting is in order of listing.

I’m playing the downside (hedging) via short the Euro dollar using EUO.  As chess has been discussing, the Euro is considered a risk currency.  I could go long US dollars and have similar positioning, but I figure the butt fuckers in Europe give the hedge a bit more downside spice potential.

Finally I hold around 42% of my portfolio in cash and AWK.  I pool the two together, and this may be unwise, but I don’t expect much of anything from AWK except its coupon and I always add some more when the weekly chart gets oversold.  My current basis in the shares is $26.00

The plan is to ride out the summer, be ahead of the herd when we bust ahead, and bank a few percentages in the meantime.  Simple.

Care to share your positioning? I’d love to hear.

Also, it’s all about the summer chic pool party music on Songza:

I promise you radio is big business.  It’s a big business being invaded by Martians.  The push made by Pandora sent shockwaves.  They made streaming radio work.  People like it.  I think it’s safe to say they’re executing their business plan well, and profits are soon to follow.  This I don’t doubt one bit.  This is why Spotify and the gang are all clamoring to catch up, they smell opportunity.  And being little dogs , they make so much fucking noise every time they take a nip at Pandora’s heels.  But that’s all they’re doing.  Or so I thought, until I streamed in Songza to the old iPhone.  Quickly, see this:

The above is data point 2.0, yes? It’s our way of gauging the competition in an otherwise murky environment. If you’re someone who enjoys music, give Songza a try and thank me later.

“BUT WHAT DOES THIS ALL MEAN AND WHAT ARE ITS IMPLICATIONS ON PANDORA STOCK?  We WANT STOCKS THAT BANK US COIN. GNAM GNAM!”  – Internet Cretin

When I saw the 109% two day review jump I could have liked to been sick.  I was holding around 15% of my risk assets in Pandora.  Since then I’ve gotten light for three reasons: QE mania, summer range, and Songza.  After tomorrow however, I’ll look to start building my position back because I THINK PANDORA HAS A GOOD QUARTER GOING AND THEY WILL FUCKING SMASH SKULLS RHINO STYLE.

Regarding price:

Ideally the stock never visits $10.00 again but if it does we need to see buying demand.  A loss of this level could damage many a bull’s fragile eggshell ego.  A hold above 10.50 tomorrow would be very bullish as would price holding above $11.50.  $11.20 has seen tons of fast moves around it and is a key hold also.  And clearly we need to break the fuck higher than the $12.50 outlier earnings pop.  I bet you want a chart, instead you get this:

Lest I not leave you song less!  That would hardly be apropos.  Enjoy some trill straight out the dirty dirty uugh:

Summer trading ranges, god I love them.  Trading in the summer months truly is a feat of handling a double edged sword.  This is especially the case if you’re playing around with dynamite aka highly speculative spaces like mobile future stocks.  Today the market looks to have taken the penultimate step before leaping to the top of the range.

Explosive in nature, the penultimate step is used by competitive jumpers to fling the body to its final resting place, as far as possible.  The better the penultimate step, the longer the jump.  Today’s session was beautiful, but not perfect.  We closed off the highs and it may not propel us to the very top end.  Hence therefore hearto I’ve begun positioning for the top bracket and my expectation that it will prove resistant.

I started the day with Pandora being my largest position.  The trade was relatively easy to manage and was commentated all day over @twosmuth.  I took a ¼ scale at $11.37 but the position remains my largest holding.  Today also involved buying OPEN along with RaginCajun.  Healthy looking chart, hype to boot with iOS and Microsoft integration speculation, and a feeding ground for shorts.  Finally I initiated a position in EUO the ultrashort Euro ETF.  I liked the pull higher on the 6E after its beat down, and am using the position as a hedge against the rest of my portfolio.

In the past I’ve FM’d (failed miserably) attempting to hedge with UVXY, QID, and TZA.  Let’s hope my setup doesn’t go 0/4.  HOPA!

The following are my current holdings by weight: P, EUO, TRIP, ADS, YELP, OPEN, GSVC (lol), and NTAP.  40% cash and AWK.

Good day pen pals.  Let’s hit‘em again tomorrow,

Santa Maria, I had a pleasant morning.  After my usual “commute from hell cattle corral” I poured a small cup of coffee.  After adding my usual dash of cinnamon I raise the Styrofoam cancer cup to my lips for my first surprise of the day, ice coffee.  Puke the hot plate wasn’t on.  My second surprise came from fucking Richard Greenfield over at BTIG.  He’s going around touting SONGZA and its potential to cripple Pandora.

At first I think no big fuggin’ deal right?  Spotify and Yahoo Radio and I <3 and them all circle jerk and suck, so what’s another sucky radio stream right?  Eh…no so much; it’s pretty great.  As good as, if not better than Pandora.  POOF!  Your bullshit moat has dried up.  I’ve been listening to it all day, banging out this bullshit paper-pushing project, when I started thinking about how much I’ve discussed Pandora in this open forum.  Two-three-fifteen times or so.  You’re all smart and up with the newest apps.  I know someone knew about SONGZA.  SOMEBODY…YOU!  Hook a player up, please.  Throw any insight my way.  Let’s talk about it.

Aside from these digressions, stocks went up today.  They can go up for several days, or down.  We’re range bound, that’s how it works.  Use the goalposts I laid out earlier this week and position yourself.  Or be a cool cat and let this turbulence give way to direction.

AND TELL ME NEXT TIME ONE OF MY INVESTENTS GETS BESTED!

How I will treat Pandora going forward:  It’s forming a head and shoulders on the daily chart and I’m looking for it to head fake lower then reverse and obliterate.  I’ll tighten my scales lower as I pretty much want to lessen my exposure in the name.  I want to hold a small piece through earnings as they appear to be executing their business plan very well.

The rest of my portfolio ripped, but it was all muted down to mere basis points by my largest position getting SONGZA’d.

Regards,

I was having a relatively strong day until peaking and turning south about the end of #WWDC.  My technology portfolio held strong most of the day led by sleeper Pandora.  Their CEO is doing his best in DC to level the playing field for radio royalty costs.  Apparently his run at about 50% of revenue where satellite provider SIRI runs at around 7%.  Not much other big news out of the name but it displayed relative strength only to fade slightly into the close.

Beyond that we have exactly the type of gyrations one could come to expect from summer trading, what with its low volumes and young interns and news sensitivity.  My portfolio sits around 40% cash and AWK, with 60% allocated to the following names, by weight:

P, RAX, VHC, TRIP, ADS, YELP, GSVC, NTAP

The above theme is mobile-social interactions.  RAX was weaker than normal and I have a stop in place at $43.50 as I don’t intend on letting the name get away from me.  The bears remain at the reins on this one after a brief bounce last week.  It looks great on the weekly chart, but needs to recapture the $45.00 level which was the primary breakout at the beginning of this year.  Fly has the name on his avoid list until they produce better earnings and this, combined with its lack of bounce from support, has me keeping a tight leash on the name.

Everything was floating near unchanged during the session, even showing shades of green for a bit.  However most of the progress diminished into the close.

RAX is the only name nearing stop.  All others are behaving well, considering the misfits they are.  I was prison shanked into the close bleeding out for nearly 1%.