If you have been around these parts a few years, then you know Zillow was one of my favorite stocks to go long. It was a momentum darling. The company is a social beacon of top-notch mobile phone capabilities. As a bonus kicker, their hands are in the real estate cookie jar, a jar being nursed back to health by record low interest rates.
I used it extensively while I hunted down my first home. I would sit in the third stall of my corporate bathroom and thumb through listings. If I found something my agent overlooked I would pace the hallways of my mouse maze accosting his oversight. Zillow was showing me more than the agent. So cool!
Today is different. Today Trulia is public too. Today Zillow is stuck at $100/share after being a dog for half of 2014. Today they have a looming lawsuit over their “frat house” culture and a delayed merger with, um, Truila.
Anyhow, it has a few catalysts and I present the short-selling case first from a longer-term then from a short term trade management chart. Like any idea, it could be wrong, and we want to have some risk in place for when it is.
That way, if it flips back to totally awesome frat dude with “bros and hoes” tattooed on its back then I can calmly walk up to their beer keg and fill my cup.
Other shorts of interest are MANU vs $16.15, AMZN vs. $313, BBBY vs swing high, GILD vs $97, and WFM back below $50 vs $52
Let’s look at how simple trading can be if we remove the noise. Below is a weekly chart of Zillow. You do not need any indicators except price bars. Even price bars have their limitations. All we attempt to glean from a chart is the behavior of supply and demand. This is a very physical force in nature that drives movement.
The physiological $100 print was the scene of sellers for quite some time. They sat there, on the offer, absorbing the demand of buyers. Their staying power was enough to cause a correction nearly 30% lower. This was not just longs taking profits. The short float is reported to be over 30% in this stock. There are short sellers who live at $100, and they took $60 dollars worth of heat in 2014. Some of them might have some lingering traumatic stress from the event and seeing price return to this level allows them to scratch their idea.
Others, who sold their $40 shares at $100 only to see price rocket to $160 now can jump back on where they left off.
These are just hypothetical characters to envision when wrapping your mind around how prior resistance is converted into support. Markets are the net of all interacting humans’ behaviors. Nothing more.
I have no Z position, but I love it right here, especially if we see another dip that lets me in next week:
Tue Jan 28, 2014 4:48pm ESTComments Off on The Social Experiment Continues
I have been trading these social media stocks, the fire, names like FB, TWTR, Z, YELP, TRLA, ANGI, and GRPN since I started blogging here back in the cussing days. I would cuss and trade these stocks, like an internet villain of sorts, for my profit and your entertainment.
I was trying to get people excited about my little blog, over here.
I bought weekly calls in YELP and TWTR this afternoon, which prompted distinguished 12631 trader @ckelly44 to question what I was seeing, and also to explain a bit more about the trade. First, what I was seeing is this:
Second, we have Facebook earnings out tomorrow, and I have no idea what they are going to report. However, many social media stocks are in alignment into the earnings. Therefore, I expect a very binary response from the names once Facebook reports. I had a hard time choosing between TWTR and YELP, therefore I picked both—like a good American.
Here’s the YELP:
While we’re looking at charts, here’s FB:
This same look can be seen in Zillow too. ANGI is trading a bit radical, but nice too. Here’s the kicker, I have exposure to all of the above names like some kind of crack head. Should the names bounce, I will have exposure to said names, all of them, until Friday.
Here’s the exposure catalogue:
Z – Feb $95 calls and common stock
GRPN – Feb $12 calls
FB – Feb $57.50 calls
TRLA – Feb $40 calls
TWTR – weekly $65 calls and common
YELP – $80 weekly $80 calls
ANGI – Feb $17.50 calls
Via the above pot of positions, I have a ton of exposure to social media. More exposure then I have ever had in my life, as a matter of fact. The crazy part is, only one of those call positions needs to cooperate and I will profit. Options, when bought with halfway decent timing and proper sizing, offer a much more modest risk profile then I previously understood. Should they all lose after a big FB upset, my book will sink about 3.3% from here. That is losing ALL of the premium. I know, bananas.
I have a short term expectation for movement higher, you see?
MOVING ON…I had some AAPL call exposure left that scalped me today, yet I am still up 1.6% on the day. Leading the way was LEDS. The stock went #BEASTMODE into the bell on heavy volume. Someone wants some LED exposure. I still hold 25% of my risk in the LED industry. I have not sold anything yet. Today it became clear they are making another attempt to take my shares from me. They will fail, again.
I am most bullish on the LED industry. Next is social media, and third is natural gas. It is so freakishly cold here in Michigan, colder then I can remember. Also, they are limiting the propane deliveries to the hilled billy folk, telling them to, “get with the times and hook up to a natural gas pipe.” I was going to get something exotic, like UGAZ, but I opted to follow The Fly into AREX.
I did not sell anything yet, therefore my cash is down below 10 percent. I think we still trade lower from here, but it is also my expectation that individual stocks will be allowed to behave on their own merit. This could be seen today in volatility, which was crushed.
Here’s my plan, we stuck to it today, albeit slightly weaker than expected. Let’s see what tomorrow may bring:
Stocks went bananas today, and our latest big shot short seller has been made to either run for his life or dig his heels in. Nothing says welcome to the New Year like having your lolli snatched from your pudgy hand, yes my friend? I profiled a massive seller Monday morning. The market sat, literally for hours, while the bid in NASDAQ futures was PUMMELED with aggressive sell orders. The market gave way and promptly sliced to the bottom of intermediate term balance. I screwed up a bit, selling calls in TSLA that would have launched me into the stratosphere. Instead, I only rode 90% of my book long for a much more modest ascent.
I sold some positions down today. I scaled exposure down in CREE, TSLA, and YGE. I closed C outright ahead of earnings which I later regretted but perhaps tomorrow will exude as genius timing, right? Honestly, I think they rip post earnings and I wish I had a runner still. I sold OWW finally too. This was a December seasonality statistic trade that morphed into a swing trade before finally morphing into a waste of time. I scratched it as I have no patience for stocks exuding insolence to a broad market on the move. That is, unless they are sitting out a broad correction.
Today the strength in LITB caused it to swell to my largest portfolio holding. LITB has taken the proper gaunt stance to propel itself deep into the anus of short sellers. Something like this:
Later in the day, I scaled 1/3 of my MLNX long and parlayed it into MCP. These are trades RaginCajun and I are navigating with our distinct SHANK and BANK strategy. Here we are celebrating:
Lastly, I opened up some February $60 calls in FSLR. TAN worries me, the solar ETF, but aside from that little detail, I love this FSLR chart. Plus, if I win I get to talk smack about the old men at Goldman Satchel purse. Making money comes first, but roasting Old Wall comes in at a close second. I know, armature. I don’t care. Most of you guys are way too serious.
I have 6% cash, the market is fueled by degenerate stocks, and I am up 6% YTD. I should just close my book and call it a year, but instead I will press on, hopefully amusing my readers in the process.
I have a bunch of selfies of myself doing birkram yoga in LULUs that I will slowly release as my LULU trade starts to work.
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.
We’ve had good fun poking the stupidity of Morgan Stanley in their downgrade of AMBA this month. We banked some nice coin along the way. The recent leg up in our aging index rally has been mostly to the benefit of old men and their mega cap stocks. The snoozers, if you will. We participated where appropriate, riding LO and PPC, but to be honest I could have held less crack rock and more bourbon and cigars, the preferred vice of old men.
But today we saw the speculative juices begin to sizzle. Today we had WUBA pulling out the tits, Emily Ratajkowski style. Today was for the brazen and the bold, with social media saying, “not.just.yet my friend.” So my portfolio finally caught a decent boost.
I think there is more in store and I implore iBankCoin readers to get in line at the feeders: names like GRPN, Z, FB, TWTR, and TRIP. Pay special attention to TRIP as it appears poised to rip.
I am 95% long and low on cash. I had to sell PPC today to buy Zillow. I have so much money tied up in LEDs right now and they are not doing a thing, except for bleeding me modestly. This industry is ice cold, yet I love it. What is an intermediate term speculator to do?
We caught the Apple breakout yesterday via 12631 service.
Top picks into the turkey: GOGO, YELP, and Z.
I have huge positions in CREE and BALT, yet I do not mention them as top picks. Hmm…they need to DO SOMETHING.
Let me start by saying I am not thrilled with the action in the S&P 500. I was discussing this with one of my most distinguished readers, gentleman UncleBuccs. My chart brain sees lower prices in store before news highs are achieved.
So I did what any responsible person would do when confronted with these “facts” …I bought stocks.
I still have some cash on the books, about 25% which is about the highest my cash has been this year. But I have a huge position in RVLT, a huge position in ONVO, and a huge position in CREE. My next largest position is USO because I think oil is just going to surprise everyone and rip tits into year end, taxing the tight wad consumer before x-mas.
Everything else is ¾ size or smaller: LO, Z, GOGO
Then my slow money: F and O
Then a tiny IMMR I keep for sport and this stupid MJNA long—down 20% waiting for a pop to sell into. It will come. It is a matter of time not will.
I traded the futures less this week, especially after I got gang banged by algorithms Tuesday. I took a conservative trade in the /ES yesterday that worked out well. Today, that same conservative nature caused me to miss an idea I mapped out very well. Oh well, there is always next week. /NQ is looking promising as anything I have ever seen—both on a discretionary and algorithmic basis.
About this time every week I am overcome with a huge feeling of gratefulness. Thank you for reading along. I love this work and interacting with my internet people. Have a great weekend.
Of course the news flow had some merit. After all there were serious talks occurring in Washington DC, the epicenter of insider trading. But save me the wordy discussions, I can see their footprints in the walk of price.
Funny to see former Detroit Mayor Kilpatrick getting 28 years in the hole while the Federal government plays budgetary chicken. I never considered Kwame’s actions worse than your average politician, they only seemed move obvious. I promise you, the city of Detroit is a better off with Big Meech behind bars a solid 20-something years.
Enough, let’s discuss what happened here today. We gapped up huge overnight and drove hard off the open. At that point it was simply a matter of finding a way to grab on to the long side and hold on for one hell of a ride.
We had upside targets in mind and they were achieved before 11am. These targets were far from the opening print and I thought it may take us all day, if not into the weekend to achieve the prices.
But there’s eager money out there, yearning for another hit.
What worked for me today?
LED stocks crushed today—all of them. The industry is on fire.
Buying GOGO blood yesterday, veddy nice
Vapor smokes via Newport cigarette maker LO – that is a quality company with a quality chart. Don’t be blu [sic] if you missed today’s move because it is just getting started. Nice dividend too.
Measured move, market profile, and Fibonacci confluence – My most profitable day trade was a four handle short in the spooz.
My /NQ algo. It is starting to worry me, it is on a roll
The mighty PPT
What didn’t work?
ONVO was quiet…almost too quiet
Z didn’t make much of a bounce
Cash, lazy lazy cash
There was a bit of selling into the bell and the waters are still choppy, however cool minds prevailed and top calling continues to be a daunting task. Tomorrow will be the challenging day after a trend day. The location of today’s close also precludes chop in store for tomorrow.
Should we not chop, but instead drive higher or lower, it would be a surprise and a reason to adjust your stance.
“An organ printer, an iPhone with airborne internet access, a real estate app, haptics, and LED light bulbs”
NOTHING! Not quite.
They are all technologies that will make the coming years exponentially more kickass than 2013. I hold stock in all of them via ONVO, GOGO, Z, IMMR, RVLT, and CREE respectively. These are real companies adding value to society. On the contrary, we have the god damned politicians and their media outlet mouth pieces. There is no value being created by politics.
And I have no alternative to offer because I never follow politics. Hell, I have antenna teevee and really only watch Jeopardy. Therefore I don’t talk politics. There, I said it. I know it is ignorant and I cannot care. I have too much business to tend to.
I was a buyer of stocks today. I am siding with the robots. I cut my twitter exposure down to the bear [sic] minimum. It is too noisy. My squiggly lines say buy for a quick hit of crack rock and then GTFO, therefore I am doing exactly that.
My slow money is still in place via F, O, LO, and USO