The selling continues this afternoon, with sellers continuing their blitzkrieg campaign with a 2pm algorithmic shock wave. A block trade like the one we just experienced at 2pm is a way of starting a siphon—the algo sucks on the tube with the intent of motivating atmospheric pressure to move liquid(ity). Once it starts the flow, a force of equal or greater value must arrive to stop the force.
There’s nothing wrong with sell algos, they just receive more criticism then buy algos. They are both attempting the same feat.
Keep the context of our market in mind. It is mid-December, we have had a huge run, correlations are low, the long term trend is higher, risky assets continue seeing cash inflow, and sellers just controlled their first week since mid-summer.
With that in mind, and despite my extensive coverage of the indices, I think it is important to keep your focus on individual setups and how they are behaving.
My book is going out 95% long after purchasing OWW today at the top tick. I have other names of interest, including LEDS basing just below one dollar.
My AMZN YOLO lottery ticket was a loser. I risked the entire premium because it was a lottery ticket. It had a moment of hope early on, but could not breach recent overhead supply. The trade needed more time than one day. I realized this soon after taking the trade, and was discussing how TSLA would have been a more prudent YOLO…if there is such a thing.
I never grabbed ENPH yesterday. Instead I just watched it and commented on it. Now I cannot buy it and it can likely go much higher. I simply lack to conviction to assume nearly 20% more risk.
My book of stocks spun donuts in the mud this week even though I have winners among my ranks. Here’s the book, largest-to-smallest:
BALT, OWW, FSLR, GRPN, TSLA, YELP, RVLT, YGE, Z, LO, WBMD, GOGO, CREE, F, and my bane MJNA.
Final word of on the market – this looks like discouragement phase, where the market makes an earnest attempt to steal away your favorite shares. Review your risk plans, make adjustments where necessary, and stick to them. Do not assume gains are guaranteed.
It turns out the NASDAQ printed what is called a normal day in market profile theory and the fun thing about normal days is they are anything but. In fact, they are rather rare.
And I must say I do not particularly like normal days, at least not up here at swing highs, because they tend to occur at or near inflection points. A normal day is described as having a very wide initial balance (first hour of trade) which is not breached for the remainder of the session. It suggests indecision, intraday, mostly signaling directional conviction is low.
That context makes sense if think about gapping higher, in a hot (too hot?) bull trend, into a short holiday week. Short sellers do not want to get steamrolled in the thin trade, buyers are hesitant to initiate additional exposure at these elevated levels, and current longs are likely mulling taking profits.
Add to that the narrow pockets of market momentum and you have a solid recipe for indecision.
I have my book about 90% long at this indecisive juncture. AMBA finally went to work, crushing the hopes and dreams of Morgan Stanley analysis hoping to make a name in the technology space. I like to think this guy who downgraded AMBA will read the Raul blog, so I have a special message for him: this chipset powers the GoPro, it is on the X-mas list of every adventurer. Short interest, albeit modest, will start to get icy hands as we approach December 5th earnings. Then they will start making mistakes.
The chicken trade adhered to the November seasonality statistics, naturally, unlike the unnatural meat produced in PPCs new streamlined robot facilities. December brings a tad bit more seasonality mojo, and we still have national eat 1-to-3-birds-at-once day Thursday. I took an obligatory 1/3 scale today, but I like my prospects with the net.
I bought AAPL back right near the closing bell. If you recall, I was in this trade a few weeks back and bailed with a little 2 percent gain. It is an easy vehicle for me to lever long exposure up and down, as it consolidates along gently.
I now hold large positions in the following names, listed largest-to-smallest:
GOGO, RVLT, BALT, YELP, and CREE
These are all full size positions. As you may imagine, this type of book requires attentiveness. It has the capability of lopping 10% off my person rather effortlessly.
My ¾ size positions are as follows, listed again largest-to-smallest:
AMBA, AAPL, PPC, LO, and TSLA
Note: AMBA was by far my largest position prior to taking a scale near today’s high. Tesla and their innovative CEO Elon Musk are in the house of pain. Much like any successful individual, the media will frame Elon with a skeptical eye. Innovators hunt profit and self-gain after all, which is inherently evil. The issue most closely watched at TSLA is the battery technology. If it is to usher in the era of zero emission commuting, it needs to hold up to rigorous scrutiny. If Telsa intends to roll out a model for the middle class, they need sound battery technology established. The chart is just basing out, below my favorite moving averages, suggesting acceptance of these lower prices. What likely comes next is a new exploration lower by price. This will scare most of you. But I will be casually observing the action, minding the drawdown to my books, and meticulously selecting an opportunity to ratchet up exposure because I love me some sweet baby Elon.
I have dog and pony positions in the following stocks. These positions are practically placeholders and some are relics from prior trades:
F, FXY, ONVO, TWTR, MJNA, and O
I thought I would turn a clever trick in MJNA. Now I am -40% on this stupid, STUPID, holding. It will enjoy a fake pump service or go to zero otherwise I will continue to hold this dumbness.
ONVO needs to die for a while. It trades poorly. I will keep my toe in the water to keep my eyes on the name.
TWTR is another name I will hold until zero. I use twitter more than any other social media service in the world, why wouldn’t I own it? One day I will have huge size, but right now there simply is not much to base my risk on. Therefore I wait.
This post has gone on far too long. These are my holdings and some reasoning behind them. Let’s see how they perform this week.
Today the old man woke up at a customary 4am, sans alarm clock, and slowly rose from his twin-size bed positioned appropriately across the room from his wife. He prepared his straight razor with smooth swipes across the grit of his sharpening belt. His thin lips held onto a cigarette as he removed any trace of facial hair with a generation of confidence. He swung the washroom door open and emerged from a thick cloud of smoke in a Tom Ford suit and said, “I want Cisco.”
And so went the day. Old men across the nation dialed their rotary phones and demanded their brokers buy shares of CSCO, in 1000 lot increments, until instructed to stop. The action firmed up the Dow Jones as well as the S&P 500.
We are only 10 points away from the 1800 market on the SPX and I am 95% long. There was a mix of winners on the day. The peddlers sold down GOGO today after an impressive gap which is to be expected from the degenerate class. Meanwhile ONVO ripped the hearts out of shorts and fed them to the pigs.
The chicken play in PPC is setting up finally, and if we close the week out strong prospects look solid for a rise into the gluttonous festivities of Thanksgiving.
Facebook wants needs to corner the sexting market. Without it, they are vulnerable to rapid extinction due to lack of attracting teenage use. On the contrary, teenagers are smoking LO’s Blu brand eCigarettes at a growing rate. LO is winning over the next generation of smoking class.
I am completely out of energy, here’s my book:
AMBA, PPC, AAPL, GOGO, RVLT, TSLA, LO, YGE, WLT, SFM, BALT, CREE, F, ONVO, FXY, TWTR, MJNA, and O
Many of those are partials. The main size is from AMBA-to-WALT
My Halloween was a rather non-event. A few children came to my door demanding tricks or treats and I drank one mug of cider and rum. It took a while to unwind yesterday’s action. I played it though my head a few times, remembering the subtle moments when the market gave me a little wink.
Then today came. I anticipated sell flow on the S&P which led me to offer three scenarios that emphasized sellers. But I never felt confident on the short side intraday. The moves were too unorthodox according to my practice, and I could tell I was out of my element (Extra Donny).
Come 11am I started selling down my long exposure a bit. I trimmed where I could selling parts of my LO, GOGO, and BALT. Something about the AMBA bounce did not sit well with me so I scratched this position entirely. I know flip-flopping can frustrate spectators, but some of these positions require confirmation for me to stick around. AMBA stalled and after I gave my book a hard look AMBA stood out. I still like the stock.
My two largest positions now are PPC and WLT. This is completely unacceptable. A young gent like me should not have size in stupid chicken and coal interests. That is plain vanilla dumb. I want my size in places like GOGO and Zillow and FaceBook. You know, new companies.
Fortunately I have these TSLA shares. I was so excited to finally own TSLA shares that I exclaimed the news to friends. I have no idea what has me so god damned excited to own TSLA shares. Of all the positions we go through on a weekly basis, I have never excitedly told friends about any. That being said, I should probably just sell the stock now because I am way to enthusiastic about it.
I boosted cash up to 25% into the weekend because I am sticking with the theme that a large seller is at work in the S&P futures market. Until that seller slips up and loses control, I am keeping some cash to buy up your margin liquidations. Individual stocks are still working though, much to my dip buying chagrin. October did not have a “day of terror” where everything goes on sale.
The market kicked into high gear this morning shortly after breaking down out of the consolidation we closely observed Sunday evening.
The idea was simple, and with it, I saved myself from the nauseating task of watching news which is centrally focused on politics. Instead I could watch price and determine how to manage my portfolio accordingly.
When everything started breaking down early on I sold off all my shares in WLT, FB, AMBA, and BALT. They were hard decisions to make because I didn’t want to sell any of them, but I knew there were major implications to that consolidation snap. Also The Fly has been preparing us for a correction rather extensively. After all of the selling my portfolio was bulked up with over 40% cash.
We are closing on the lows of the day after a high volume, large range selling candle. Something tells me there will be better opportunities to buy soon and I want plenty of cash on hand.
The seller I was observing Sunday evening seemed big by how the orders were carried about—absorbing buy flow at the offer for a full day. They just won big time and today’s tape is likely to embolden them. Do not discount the bears at this junction.
At the same time keep your eyes on stocks that are trading in a microcosm. Notice how financials aren’t as beaten down as tech. That’s because they were dogs all last quarter. We are nearing the time to consider another Goldman Sachs long.
Bottom line: stay cool and get out your shopping lists, but move slowly.
Top picks: CREE and RVLT, my two largest positions
Thu Oct 3, 2013 5:03pm ESTComments Off on I Am The Lizard King
I can do anything.
We sure do cover the /ES_F often over here on the Raul blog, discussing its…implications, if you will. Building the contextual cake helps me to identify abnormalities, flinches, and hand tips by the big money. The E-mini S&P is the most liquid financial instrument in the world. It makes sense to pay attention to it.
But trading it has become a slow and painful grind. It is like going years without a dish washer even though you love to cook. You get by, but your soul dies a little every day.
I needed some change (No Obama) so I traded the /NQ. I like the NQ…peep today’s stats:
Thoughts:
today had a large range
/NQ is thinner
smaller contract size suits my size a bit nicer
I trade lots of Nasdaq and Russell stocks so I may be concentrating my eggs
It offers more trading opportunities (at least lately)
/ES has been brain numbing, while I go ‘big pimpin’ on these wiry stocks. Speaking of which, my book was up a percent today. That is a result of stock prowess and hanging out with traders much more seasoned then me. Mainly my gains today were a result of being on the right end of a technology revolution. So while sour bastards get their kicks shorting Tesla, which is fine, I am embracing the future and finding opportunities to invest in it.
In short: CREE and RVLT what what?
I started buying ONVO too, right about at these levels. You can’t keep me out of this name. When my pickled organs give out I want robots around to print new ones. Seems like a no brainer at five fifty. I consider it an investment in myself.
I sold YGE. It felt like when I sold VIPS yesterday…too soon-ish. However, dwelling on these thoughts prohibits the mind from seeking opportunity elsewhere. I sold RBCN too, for a loss, because it sort of just fell out after mainlining hot money. I do not want to be around when the Apple WWDC crowd goes running for the doors, should they do so.
ADHD is a ticker which by design frustrates me, ripping higher like a freshman jacked up on Mountain Dew and Ripped Fuel. Ah high school…when ephedra was still legal. I have wanted a long on this one for a few weeks but my attention keeps darting away from it. Instead I want to Snapchat and play ping pong in the futures.
I do not really love the way we are setting up into the weekend. The market looks like the headless horseman. Sentiment sucks but the crowd isn’t always wrong. I have concentrated by book down to the following positions listed largest to smallest:
That jackass MJNA stock can burn up and go to zero for all I care. What a garbage stock. I am -20% on that field play. I thought about cutting O about 100 times, but I figure keep it and collect the yield. My basis is a tad below here.
Everything else I hold close to chest. As a matter of fact, I need more CREE and RVLT but I am exercising patience. Together the stocks represent almost 30% of my risk capital.
I will let Q4 play out a bit before getting more risk into those two names. In the mean time I can increase my LED exposure via VECO, RBCN, GTAT, OESX, and LYTS.
Through the thick Michigan overcast a blinding beacon of light hast parted the clouds and shined down upon la casa de Raul. The gods of the stock market saw fit to order their mortal servants (Goldman Sachs) to upgrade the LED sector, levitating my portfolio to unseen highs.
While the indices diddle more than a Sunday school preacher my book of stocks like VIPS, BALT, AMBA, and MHR are ripping the doors off this market. Counter trend shorts hiding throughout this market are feeling the cold hand of Raul on their necks just before I choke slam them into margin calls.
I did all of this choke slamming and raised my cash above 20 percent. I have 20 percent cash on hand ready and willing to deploy into hot charts and the blooming LED industry.
Not a share of CREE or RVLT has been sold. Instead I hold these bits and bites of numbers attached to letters close to chest, weary of any passer by admiring them. They’re mine! The precious…
So yeah, I’m on one.
10% in one day would tell the rational person their eggs are too concentrated. But I never set out to be rational. I am on a quest for vanishing edge pools and car stables. I want to stop eating bullshit meat. I want my meat to live a happy life…rolling in the grass and soaking up sunrays while raising a family. Then I want the farmer to give that sweet meat the best meal of its life. Then, like the mafia, quietly sneak up behind the beast and boom! Dome them, very clean. I need to make the monies so I can visit my meat and get to know its quirky lifestyle and name. My meat will not be imprisoned.
Then I’m going to eat that meat poolside, off a model’s ass, while she lies on the hood of my Tesla Model S.
What I am trying to say is I bought more RVLT. I had too much money after I scratched AIXG. NEIN! Nine times that god damn German ADR head faked higher. Pathetic.
Before I digress any further—good evening to you. Let’s do this again tomorrow.
My book was up over two percent today. The sheep were shepherded higher by the benevolent RVLT which rolled out the Power Point slides they will be using in their upcoming dog and pony show. The pocket of momentum present in solar fizzled into the bell but still provided impressive gains this week. I hardly see the run up in YGE being over, and given the ace entry earlier this week and the scaled piece, the best play seems to let my money work here instead of constantly fiddling with the knobs.
The afternoon was all about MHR. This is another stock I nailed my entry on. Patiently waiting for quality entries at well-researched levels, even when the battle is at its hottest, gives me a huge edge when it comes time to manage the position. I don’t get that pinch on my shoulder blades telling me I am losing my cool. Being up over 10 percent on the name in a scant three trading days and feeling the urge to scale, I decided to do the opposite and buy more. It brings my average up but still keeps my cost basis within the consolidation range. It was a good move according to risk.
October is fast approaching and I get the feeling the headless horseman is dusting off the cobwebs and making preparations to thrust his axe into my spine. Thus, even though I am 95% long, I have a clear sight on the exits. I feel like a squirrel foraging through a bountiful prairie while hiding from the hawks under a squirrel sized umbrella. Stocks like AMBA, BALT, MHR, and YGE are giving this small rodent the courage of a lion. I will eat the poachers faces and then go lay in some mud with the Rhinos.
For most of my tenure as a trader stocks have been treated like a singular asset class and thus tightly correlated to other macro instruments like bonds, the US dollar, gold, and oil. The binary nature drove me to studying futures because if all stocks were hell-bent on moving as one, I might as well trade them all simultaneously with an ass load of leverage.
I love the futures markets. They are pure order flow with no dependence on a company and their decisions. But seeing good companies and more importantly good charts succeed even while the market chops around is exciting.
It makes me want to concentrate more funds into stock trading.
I got caught on the wrong side (the long side) of the quick drop this morning. Even though I preach plan adherence, I deviated and had to take a ton of heat on my trade. The poor entry, paired with a non-market related event which shall not be mentioned but which has officially created a rule, caused me to shake out of my long—I shit you not—one tick off the morning swing low (about 11am). No less than five minutes later, what I had expected—a bit of a bounce to cut my loss into—occurred.
This was a huge setback to my futures trading, huge. I am so sick of setbacks incurred from plan deviation. They are huge drains on emotional capital.
I went and had some tacos with a friend. We talked about hunting mushrooms and it was quite the stimulating conversation and helped clear my mind to assess everything. Trading structure will be restored for tomorrow’s action and it is good to make these mistakes while trading small, believe me.
Focusing so much energy on work and trading futures allows me to think much more slowly about stocks. The more I learn from the excellent traders and stock pickers here at iBankCoin the better this approach feels. My book is up 2.5% today while the Big Board chops the UNCH.
RVLT is a big part of the green portfolio, but it is getting plenty of help from IMMR, MHR, YGE, BALT, and FB. My account is straight crack rock and ripping.
I see a huge consolidation occurring, as if we are waiting for news flow to get this party started. Bull or bear, a party is near—I can hear the bass rumbles in the distance. Until this decision is clearly made, I will hold the line, 90% long.
My slow money is in AIXG, LO, RVLT, MJNA, FB, O, F, and CREE
My fast money is in AMBA, IMMR, MHR, YGE, BALT, RBCN, and CLF
I still hold a sharp edge in the futures market and my win/loss ratio shows it. The p/l however does not yet because of setbacks. This isn’t over until I win which is simply a matter of time, not if. This week however, my stock gains are casting a bright glow on my futures losses.
Pro Tip: Like any business, be sure you are sufficiently capitalized. Better yet, have other revenue streams so this learning process doesn’t come with the added stress of keeping a roof over your head.
