Well it was a modest week of making money, until today.  In two quick swooshes the market took back my gains and more resulting in a losing week.  In my defense and in the defense of my cycles, this was a rough week to get started for the following reasons:

1. Holiday shortened week

2. Wednesday never once pulled back

3. Thursday (yesterday) was a freakishly quiet, like five in one hundred occurance

4. Today was a news driven monster truck rally

What’s interesting to note is this week’s losses did not damage my ego whatsoever, where I normally feel a bit aloof and edgy.  I think it’s because I’m sticking to my well laid plans.  The laws of large numbers will kick in next week, and I should recapture most, if not all of these losses.

All that being said, I lost money my first week live trading Bossram Alpha.  It only had one losing week backtesting from March 1 – present…go figure.

Before commissions, Bossram lost $675.00 and Elroi, the jackass helper robot lost $25.00 aka outperformed me this week by losing less money.

As a result, 10k has nearly become nine.

With more screen time, days like these will be some of the best of the year.  For now, they’re modestly priced classes in humility and market skill.

 

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We want to keep an eye on the migration of value, especially now when we’re trying to decipher whether the most recent strength will sputter out, offering a quality short entry, or whether the market is taking a short pause, a wall of worry moment if you will, before continuing higher.

Last night’s session was nearly as balanced as what we observed yesterday morning, although much less docile, printing nearly an eight handle range.  Initially the S&P was weak into the late evening, but a bid came in near the European open and we moved back into the upper quadrant of yesterday’s action.   We have some important data coming out in a bit from the NFP that could get us moving.  The key take away from the current profile is where we set value relative to yesterday’s session.  The value did move slightly lower, but still within the value area from yesterday, showing little has changed in terms of market perception, and the momentum is still in the bull’s court.  Again, this could either change or strengthen post NFP.

I’ve highlighted a few areas I’ll be looking for trades and the above observations on the following market profile charts:

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Yesterday’s action in the S&P was successful in closing last week’s gap lower, but we’re still trading lower then where we came into the market at the beginning of last week.  As a result we’re coming into some overhead resistance on the profiles where I expect to see active sellers (overhead supply).

Keep in mind however, if we’re seeing buy flow continue to drive the market, expectations may change.

The overnight session shows a near-perfect balance which leaves little in the way of clues to potential scenarios today.  We did take out the RTH high from yesterday overnight, but the action was met with selling.  Mostly the overnight session reflects a healthy overnight digestion of the move higher.

It’s going to be interesting to see if the buyers can hold these levels, particularly 1650, the swing low once the market finally rotated lower late yesterday afternoon. I’ve highlighted some levels I’ll be monitoring for trades on the following market profile charts:

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I have to chuckle at the Bossram Alpha cycle today.  It had me short at the open, and I didn’t like it one bit.  Yet BOSSRAM stayed true to its name, ramming out a 1.5 handle profit on a short.

It was the only /ES trade so far today.

ELROI is clearly smarter than I am because I wanted to put a short on at 1647.50 but since I’ve pigeonholed all discretionary trading to conform to the Bossram Alpha cycle I only looked for Elroi to engage.  It looked like the type of situation Elroi loves to engage, yet Elroi did not, in fact engage.  I have to go over the code and see what threshold kept Elroi out.  In the meantime, I’m proud of my little helper robot for laying off the tape and not taking the fade.

+1.5 on the session. That is all.

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The globex session pieced together a bit of a rally yesterday evening, following through on a wave of upward momentum that rolled into the market late into Tuesday afternoon’s cash session.  The move encompassed 6.25 handles of direction which pressed into the single print selling tail from early yesterday morning.

The selling tail yesterday morning was a result of aggressive selling and the action left behind a low volume pocket from 1643.75 – 1639.50.  After setting an overnight high at 1642.25 the market stalled out and failed to sustain trade within the low volume zone.  However, we’ve balanced out since then and I’ll be on watch for a rotation through the low volume zone early on today.

Less may perhaps be more in the /ES_F today as the market is currently flat lining since the evening rally.  The buyers could have made better use of the momentum they carried into the overnight session, which leads me to question their tenacity.

I’ve laid out three scenarios on the 24 hour profile below, none of which would surprise me.  1629.75 is key support should scenario three take hold.  We’ll want to see bulls defending this level, otherwise prudent measures like raising some cash or taking a hedge should be considered.

1648 is key to the upside if we see the stronger scenario 1.  Momentum and profile/auction theory slightly favor a rotation higher, which is why I’ll be closely monitoring if and how the market conforms to scenario 1 this morning.

I’ve also noted price levels of opportunity on the following RTH profile chart:

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I really like the feel I had trading the /ES_F today.  I’ve currently pigeonholed my discretionary trading to conform to the BOSSRAM ALPHA cycle.  This prevents me rushing.  It allows me to measure where we are in the cycle after some broad redundantly calls my phone so she can hear herself talk and position (or hand sit) accordingly.

You see, plates, I juggle so many.

One of my favorite trades in the market requires full attention because it can fly in your face quickly.  I didn’t want to stop trading the chart picture simply because my day job doesn’t afford me focus so I automated it.  This was the birth of ELROI.

Elroi doesn’t trade the picture as profitably as me.  But what he lacks in profitability Elroi makes up in consistency.  Elroi bagged 3.75 handles in profit today on trades that were too racy for me.  I on the other hand, wielding Bossram, made $25 or 0.50 handles.

But it was fun to watch Elroi go to work while I waited for the market to come into the Bossram wheelhouse.  This week I reset my account to $10k: five for me, five for Elroi, and I pulled the rest out to buy cat food.

You see, trading the /ES since April has been by and large a circle jerk and a dangerous one at that.  It came down to losing focus.  I’ve…courourrrected the problem and put several policies and procedures in place to ensure the new habits stick.  My future’s trading operation is looking more like a Fortune 500 company every week.  Goodness, companies like AMZN, GOOG, and SBUX aren’t on these lists by luck.

Learn from their cultures.

Now it’s exciting and I’m happy to fire up my futures every morning.  It’s me verses Elroi.  So far he’s winning.

ON TO STOCKS:

I sold AMBA entirely today.  I told you very clearly I was taking this cheap trick for 10 percent and then taking my business elsewhere.  AMBA fucked me once, I fucked AMBA once.  Perhaps after earnings we can make love, or something.  I earned about 8 percent on the trade.  It was a 12 percent position.

I took profits in Ford(s) because I was watching the /ES_F weaken.  It’s nothing personal.  I still have a 5% position.

My top performers were END and YGE.

RVLT continues to ‘suck goat’ instead of retrofitting Manhattan with LEDs.  Get to work you zoophiles.

I bumped my cash up above 25 percent and was up 1.75 percent on the day.  I needed it.  One thing is certain.  When RVLT stops going down…I’m forecasting champagne showers.

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The big gap higher over the long weekend is still mostly intact on the S&P 500 as we approach the cash open.  Early this morning a bit of selling entered the market and took us off the overnight highs by a few handles but the market has mostly digested the move, holding above the 08/29 VPOC at 1642.75.

Last Thursday (08/29) featured a poor high which can be seen on the RTH market profile as several TPOs stacked at the top without a single print TPO.  These types of highs are often resolved sooner rather than later and it was an excellent clue we may see some relief strength in the index.

The question today is which of the three scenarios drawn out below come into play today.  The important level to keep in mind for scenario 1 to occur is the aforementioned 1642.75 VPOC.  Should price sustain trade below this level for more than an hour it could signal acceptance of the lower value which often results in rotation back through the value.  That would print either a scenario 2 or 3.

I’ve noted some levels of resistance the market needs to clear in order to print scenario 1.  Most important however is recapturing the zone covering the overnight high at 1649 and 1648.25 which would put the market back into the 08/22 value zone from two weeks back.  The market accepting trade (sustaining trade for more than an hour) within this value area opens the door to a larger upward move, perhaps even triggering a short squeeze to 1674.50.  That would be the bulls crowning achievement if they’re able to accomplish it this week.

I’ve noted these price levels and the three scenarios on the following market profile charts:

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The overnight session printed large chop, nearly nine handles wide.  A wave of buy flow swept though the market around midnight EST pressing the market above yesterday’s high briefly before the move was faded back to the midpoint.  The overall action is indecisive but slightly favoring the bulls.

A key price level to keep in your mind as we approach the weekend is 1641.75.  The level behaved as support several times since 8/21 before giving way and becoming resistance.  On yesterday’s tape the level formed a low volume node which clues us in that the level is perceived in a unique manner by the market.  The sellers consider it a wholesale entry point aka it’s where the pros are at work.  If price can be sustained above this level during today’s session, it may force short covering into the weekend and change the overall perception of value in the marketplace.

At this point we could explore higher, searching for value in the large gap above.

Conversely, if price cannot sustain trade above 1641.75, we may rotate back through the last three day’s of value to make sure the buyers are confident enough to react to the discounted prices.

If not, a retest of the swing low is on the docket.

I’ve highlighted this price level and a few scenarios on the following market profile charts:

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The overnight market in the S&P was unable to breach either the high or low from yesterday’s RTH session which tells me there were no new developments overnight and the market is balancing out.

Part of the balancing process is forming a range or bracketed trade.  It’s important to envision where this bracket may exist so we can fade the extremes back to the mean.  The first level above that I could see behaving as resistance early on is the range from 1640.75 – 1642.  Taking out yesterday’s high could trigger some buy stops on shorts which could lead to a temporary squeeze to these levels.  These levels would then make an excellent short entry.  They also coincide with the value area high of 08/27’s volume distribution.

Bracket lows could be between 1627.75 – 1625.75.  We could take out the overnight lows which could trigger stop orders to temporarily press us lower, allowing for a quality long entry.

That puts our mean, or midpoint, right at about 1634.  Therefore we could target this level during our mean revision trades.

This is only an idea based upon the context of balance.  Should the market receive news that gyrates us out of balance, we could see more directional volatility.  I’ve mapped out a few scenarios on the below 24 hour profile and opportunistic price levels on the following RTH profile:

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It has been an interesting session thus far in the S&P futures, where we’ve seen strong volume overnight and near the open but since then it has dropped off significantly.  However, the market has found accumulating buyers after a reactive-type rejection at 1624.75, which is only one handle above the initial breakout point from the post 4^th of July rally.

As of this update, the momentum has made a slight turn in the favor of the bulls intraday, and we’re working through the wide value area established yesterday.  A full rotation of the value area would take price to 1639.25 which also marks the VPOC of the last 36 hours of activity.  It’s a logical bull target.

Downside risk increases if we lose today’s lows, and especially if we see the market accepting trade below 1623.75.

I’ve highlighted a few possible scenarios on the following 24 hour market profile chart and noted potential areas of opportunity on the RTH profiles:

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