The Shakedown 12-22-24

by Shake P

Let me take you back to Christmas 2014.

I was trading at T3 Trading in NYC alongside Bennett, I had been a professional trader for 13 months and had not yet achieved consistent 'profitability.' We were on the most elementary desk in the office and were not yet taken seriously by any senior traders. I was grinding it out trying to figure out how to make it as a trader every single day. There was no 'time off,' or well deserved 'vacations,' because frankly, I wasn't taking much money out of the market. 

It's December 29th, we're doing trade review at 5:30pm after another day I had gotten smoked. There was very little volume in the market as always this time of year, and I was taking bad trade after bad trade, but I needed every share of experience I could get at this point.

One of the big senior traders who hadn't been in the office in a week walked in to grab something from his desk. He sees us on the other side of the room, about 250 feet away. This 250 feet of separation represented traders making millions versus traders making squat.  He decided to stroll down to the other side of the office and I'll never forget what he said,

"Boys, if you're trading the 52nd week of the year, you didn't make enough the first 51." 

He was right but what I didn't realize at the time, is that there are 'easy times' to kill it, and 'hard times' with a lot more random, sporadic action. The low volume markets are typically more random, so I sit these weeks out these days and look forward to 2025. I will spend the week reviewing my 2024 trading and getting mentally ready to give 2025 everything I've got.

 

Easy Mode vs Hard Mode 
In this bull market the past 2 years, we have seen consistent action from a trend standpoint. We go on 3ish month runs, selloff and consolidate for a month, then go back into easy mode with a 3 month trending run higher. With Wednesday's Fed-induced selloff, it was the first time the Q's closed down over 3% since July, 3ish months ago. 

I'm personally looking at this as the 3ish month 'easy' run just ended with Wednesday's selling. We saw warning signs across the market with leadership becoming extremely narrow as TSLA and a few others kept the broad market pumping. Under the hood we had seen the Dow Jones complete 9 straight days of selling before the major selling hit the tape, same with small caps. Rates have been ripping higher along with the dollar, negative signs for equities.
 
We DID bounce back in a major way Friday. There is of course the possibility the market was just stretched to the upside and needed a big rinse out, and Friday is a bottom. If this were the middle of March, I would probably have looked to buy some stocks Friday on the bounce back. But it's not, we're approaching weeks 51 and 52 of the year, after the market gave us 9 of 11 big green months so far this year. Also, the selling we saw last Wednesday was pretty unruly. In my experience, selling that drastic doesn't just go away in two days, it leads to weeks of tricky action. 

 
Economic Data This Week

 
Upcoming Earnings

 
Put/Call Ratio
Surprised to see the put/call ratio never got over 1.0 (bearish positioning) even with Wednesday's 3% down day.

 
 
Thought semi conductors were out of the woods when AVGO ripped on earnings. Wednesday's selling brought them right back to the vulnerable area where if broken, I would expect a sharp selloff. Watching whether or not Friday's low holds as a big market clue to whether lows are in or not. 

 
RBRK Long
 
RBRK is the best setup I see coming into the week. Huge gap up on earnings, ran after the fact. Controlled pull back over the last 4 days to the bottom end of the earnings range, while holding gap support. Now looking to turn higher. Looking for entry up through Friday's high 68.
 
Trigger: $68
Stop: $63.84
Target: $82+

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