iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,780 Blog Posts

Pro gap up into final days of September, here is NASDAQ trading plan

NASDAQ futures are coming into Monday pro gap up after an overnight session featuring extreme range and volume. After a two way auction from Globex open until about 10pm a steady campaign higher took hold. Price has rallied unidirectional up since, and as we approach cash open price is hovering inside the upper quadrant of the 09/17 range (two Thursday’s back).

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.

Recall last week started with a big down gap then lots of chop. Price chopped higher through Tuesday then lower until Friday morning. Then a big trend up Friday and into the weekend. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a trend up. The day began with a pretty wide and choppy two-way auction, chopping all over the midpoint several times before around 10:20am when buyers took control of the tape. From then on we were trend up, ending the week just below the weekly high and near session high.

Heading into today my primary expectation is for a short squeeze on the open, squeezing up to 11,442.75 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 11,135.25. Sellers continue lower, down through overnight low 11,125. Look for buyers down at 11,100 and for two way trade to ensue.

Hypo 3 stronger sellers liquidate down to 10,960 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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Models are neutral into quarter end, jaded Raul is bearish as can be

The purpose of this Sunday blog entry is to inform you all of my five day stock market forecast while also making a few program notes. First the programming notes. For 305 weeks or about 5.8 years I have put out a report on Sunday somewhere here at iBankCoin—usually behind the paywall. It was a task I reluctantly took over from another anonymous twitter trader named ChessNwine. ChessNwine went full nuclear around 5.8 years ago when we started all meeting each other in real life. The thought of the veil being lifted terrified the lad, he high tailed it out of here and blocked ever one of us.

The show had to go on.

I had no desire to put out a Weekly Strategy Session like ChessNwine did. His was long as hell and peppered with dozens of tickers he deemed bullish or bearish. It was all around not suited to my style of trading. I rebuilt the report to suit my interests—day trading index futures.

Since the amount of people interested in all the work, work, bloody self discovery, work and other work needed to be a consistently profitable futures trader is extremely small, the weekly report became wildly unpopular.

Ocassionally people would ask us to do little things to it, like fix the formatting of the damn thing so it was actually readable on a mobile phone. Little things that were beyond my abilities as an internet person. I am just a humble trader and a heck of a gardener and beyond that I rest easy on the fact that I am a beautiful man. Being beautiful makes life easy. I simply show up places, looking beautiful, and enough money comes my way to supplement and hard months I have out in the futures markets. The fixes were never made.

The report is now slated for retirement. It will no longer be tasked with preparing the report once we upgrade to Stocklabs. Which is fine. Stocklabs is shaping up to be a really badass tool and I cannot wait to see it move out of beta.

That said, the heckin’ report made me. Accountability for my research elevated my trading performance in a meaningful way. I mean, be honest, anyone reading this unpopular blog even casually over the last four years or so has to be like, “damn, that fucker Raul was right again.” I have been bowling strikes for years, hitting doubles and triples with a high average and I nailed a grand slam on Tesla, Match and Square.

I steered my flock away from crack head ticker lottery and into big tech. These weren’t massive feats on their own, but collectively they made a mint. Still, my popularity on the internet has never been like real life. The old Raul charisma just doesn’t sink its hooks in the reader. If I wasn’t so sure of my ability to trade well, the whole thing might be depressing.

The way my equity grows and my mind develops makes the whole thing worthwhile. And I know that if I were to give up my Sunday research now, I risk taking a big step backward—back to being an impulsive dullard, taking positions in the stock market for no damn good reason beyond some base reaction to a jolt in price or some other nonsense like a recommendation from some boob on teevee.

The show must go on lads. Therefore starting today and going forward, I will write a brief odd Sunday blurb as always, then it will be followed by the Sunday Strategy Session. Free of charge.

The models are neutral. Exodus is neutral. There is one tiny whisper of data that give a slight edge to the bears. I am personally bearish as hell and remain cashed up and hedged into quarter end. This position is based merely on prevailing sentiment as it appears through my crusty, jaded, hardened and otherwise indifferent perspective and not anything concrete like data. Maybe once October comes the data will support my perspective. Otherwise I will be forced to cut anchor, drop the SQQQ and chase my favorite names higher.

As always, TBD.

Raul Santos, September 27th 2020

And now the Sunday Strategy Session. Enjoy:


Exodus Strategy Session: 09/28/20 – 10/02/20

I. Executive Summary

Raul’s bias score 2.9, neutral. Volatility remains high as market struggles to find direction into quarter end.

II. RECAP OF THE ACTION

Big down gap to start the week. Choppy. Chopped higher through Tuesday then lower through Friday morning. Then a big Friday rally.

The last week performance of each major index is shown below:

Rotational Report:

Sector rotations skewed bearish, with the key Tech sector diverging and remaining strong. Alongside the strong Tech performance however was the risk averse Utilities sector.

bearish

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Exodus [PPT 2.0] streamlines how we can research the individual behavior of each industry and how it pertains to overall market sentiment.

Using the Industries screen, we can filter for the Median Return [1 week] of each industry.  I have established an arbitrary -/+ 3% cutoff for qualifying industries of interest.

Money flows skewed bearish. Nothing extreme yet but certainly not bullish.

slightly bearish

Here are this week’s results:

III. Exodus ACADEMY

Same call as last THREE weeks: Neutral means very minimal trading

I have very low conviction without some kind of directional bias from either IndexModel or Exodus. I’ll trade open gaps in range, especially a gap up that I can fade lower. But that is about the only risk I am willing to be exposed to.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for sellers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Bias Book:

The following biases were formed using basic price action and volume profile analysis. By objectively observing these actual attributes of the market we gain a sense of the overall market context. To quantify the effectiveness of this approach, each of the 4 equity indexes (/ES, /NQ, /YM, and /TF) has been assigned a fixed long/short target using a standard 14-period ATR. Each week there will be an outcome of win, loss, or timed stop on all four indexes. The first bracket level hit is deemed the winner in the event that both sides are tagged. This will be tracked and included in the Exodus Strategy Session.

Here are the bias trades and price levels for this week:

[Note: All levels are as quoted on the front month future contract (currently December 2020) by the IQFeed Data Servers. Prices may differ slightly from your data provider. If you do not have a platform which provides real-time futures quotes, please click here for a free (but limited) alternative.]

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

Semiconductors found balance, Transports blew their energy and came into balance

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports did exactly what we expected last week, testing lower after failing higher out of the coil. Now the key sub index appears to be in some kind of a mini discovery down. There was a potential excess low Thursday when price worked down into a cluster of support below.

There is still some more room to the downside but not much before we tag the low-end of our multi-year range.

See below:

Semiconductors are holding range, slightly off all-time highs. Consolidation remains the call until we see this range break.

See below:

V. INDEX MODEL

Bias model is neutral for a fourth week after three prior consecutive bullish readings.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“To be prepared against surprise is to be trained. To be prepared for surprise is to be educated.” – James P. Carse

Trade simple, prepare your trades before you enter the market

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Back on the lows after anticipated jobs report, here is Thursday NASDAQ trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, balancing below Wednesday’s low for much of the Globex session before about 8:30am. At 8:30am jobless claims came out in-line with analyst consensus. Still, it sent price lower and as we approach cash open, price is trading right along the Monday low.

Also on the economic calendar today we have new home sales at 10am along with Fed Chairman Powell speak. At 11:30am there are 4- and 8-week T-bill auctions at there is a bunch of Fed speak due out from less important bankers from 12-1pm.

Yesterday we printed a trend down. The day began with a very slight gap up that was resolved during an open two-way auction. That would be the extent of the control buyers would have on the day. Price quickly drove down below the Tuesday midpoint and the daily midpoint wall until about 11:30am when sellers became initiative and drove lower, taking out the Tuesday low by about 2:30pm and eventually tagging the Monday naked VPOC. We ended the day near the low.

Trend down.

Heading into today my primary expectation is for a choppy battle. Buyers are seen defending ahead of 10,600 and we chop in this 10,600-10,700 range.

Hypo 2 stronger sellers gap-and-go lower, taking out 10,600 and sustaining trade below it to set up a run to 10,553.75. Look for buyers down at 10,527.50 and for two way trade ensue.

Hypo 3 buyers press into the overnight inventory and close the gap up to 10,830. Buyers continue higher, taking out overnight high 10,847 on their way to tagging 10,900.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ up +70 here is Tuesday trading plan

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Price was balanced overnight, chopping along the Monday high until about 1am when sellers made an attempt lower. Said sellers reversed much of the late Monday afternoon ramp before discovering a strong responsive bid. Buyers took price back up and beyond the Globex high, and as we approach cash open price is hovering up near last Thursday’s high.

On the economic calendar today we have existing home sales at 10am, Fed Chairman Powell speaking at 10:30am and a 2-year note auction at 1pm.

Yesterday we printed a neutral extreme up. The day began with a gap down in range and after a choppy open two-way auction sellers made a move on the lows. Sellers took out last week’s low, trading down into the July 30th range briefly before a strong responsive bid stepped in. There was a battle at the midpoint and we chopped over it a few times before buyers pushed away from it and into a neutral print. Around 3pm we worked back to the midpoint again, buyers defended, setting up a powerful ramp higher into the closing bell. The ramp saw price climb back above last Friday’s midpoint and we ended on session high.

Heading into today my primary expectation is for buyers to gap and go higher, squeezing up to 11,138.25 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 11,138.25 setting up a tag of 11,200 and a gap fill up to 11,252.75 before two way trad ensues.

Hypo 3 sellers press into the overnight inventory and close the gap down to 10,989. Sellers continue lower, down through overnight low 10,89750 setting up a tag of the Monday VPOC 10,808 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ down a quick -150 into Monday, here is trading plan

NASDAQ futures are coming into the last full week of September gap down after an overnight session featuring extreme range and volume. Price was balanced overnight until about 3:20am when sellers stepped in and drove price down through last Friday’s low. As we approach cash open, price is bouncing along, right around the Friday low.

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.

Last week featured a three day rally—rallying up into the FOMC rate decision then selling off for the rest of the week. There was a decent ramp higher into the Friday close. The Russell was divergent strong, suggesting a decent risk appetite still exists. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend down. The day began with a slight gap up that sellers drove down into at the open. This selling continued until tagging Thursday’s volume point of control. A strong responsive bid stepped in here and formed a sharp excess low. The low would not hold, however, by late morning sellers were pressing into the tap again and before lunch the Thursday low was taken out. There was a minor battle along the Thursday low before the selling campaign continued, trading down into levels unseen since July 31st. Then around 1:45pm the auction reversed. We spent the rest of the day ramping higher. We closed just below the daily midpoint.

Heading into today my primary expectation is for buyers to work into the overnight inventory and work a partial gap fill up to 10,880 before two way trade ensues.

Hypo 2 gap-and-go lower, liquidating down through overnight low 10,708.50. Buyers cannot hold 10,700 setting up a move down to 10,630.25 before two way trade ensues.

Hypo 3 buyers work a full gap fill up to 10,927.50 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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We could see some panic soon

If the top is in, we’re still pretty early in the process. To sit here and type an entry saying the top is in would be irresponsible. We don’t know if a top is in. We’ve made several observations that match-up with the type of sentiment we look for near tops. There are some major upcoming events geopolitical and otherwise that at some point will force the invisible hand to slap markets around in a fit of reprice. How and when the hand strikes, we don’t know. Winter is coming but not before spooky season. The possibility of putting a good scare into everyone is present. But without a solid data set there is no way to put a probability to it, and I’d rather go sit in the woods and eat with sticks then put the fear in any of yous.

I’ve been positioning for a correction. I panicked first—some time near the end of August I raised a decent chunk of cash since then resisted the temptation to redeploy it.

Then I put a big SQQQ position on Thursday morning. Decent entry. Not great, but certainly not as reactive and impulsive as some of the other entries I saw folks calling out:

So I am cashed up and hedged. Money has met mouth and together they are synchronized in expecting some kind of a correction. Either the market will prove me wrong, moving higher, forcing me to cover the hedge at a loss then chase prices higher. Or I think and fast and wait…until a good scare sets in so I can cover the hedge and begin to pepper some buy orders in.

I won’t be gung ho to buy the next dip. Not into the election. Too much uncertainty. I’d rather have funds earmarked for my latest project—a sweat lodge. They took away my precious hot yoga. I haven’t had it since the very beginning of March. This was fine during the initial COVID freakout. I was busy gathering supplies and whatnot. Then summer came and the warmth was ever present. But now winter is coming. A long one, by any measure. I am going to need a hot and dark and quiet place to sit and think.

You want to know my secret? Thinking. Fasting. Waiting. These are skills 99% of the competition lack. Master these and you’re well on your way to competency in investing and trading.

Winters are harsh in the murder mitten. They can twist the psyche and render the mind vulnerable to self deception. Ask me how I know.

The sweat lodge must be built and there must be some damn urgency behind the project. Winter is coming.

So I will not be buying heavily into the next dip. I will pepper in some buy orders. I expect the next dip is coming soon.

I could be wrong.

Models are neutral. There are whispers from the model and algorithims that a big down move is coming, but as of yet there is nothing probable. If selling accelerates this week. I will buy more SQQQ. Otherwise, assume your humble boy Raul is simply thinking, fasting and waiting.

Raul Santos, September 20th 2020

Exodus members, the 304th edition of Exodus Strategy Session is live. Go check it out.

 

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Not trading the quad witching; some high level thoughts

Let this entry serve as a reminder to the reader that while most week day mornings Raul is a humble market practitioner, there exists a wild impulse that writhes in the background of my subconscious, fighting to break free from its cage and click-punch orders in a wild melee at the exchanges. The “boring” research I present in public forum and on Sundays behind the paywall is constructed to keep my carnal side contained. If it were not, my ability to survive trading would come to an abrupt end. The stock market gods would pick up this old crocodile by the hind legs and hammer toss my body off a high cliff.

It may sound a bit bourgeois, but all I care about is financial independence. I’ve tried the whole working thing—blue and white collar. I’ve even wrapped a rag around my neck and worked Latino style. Of all thesee workneck dressings, the only one I can feel right about is Latino style, and I can assure you even a structure as well fed and fit as mine is limited in the amount of honest labor it can perform.

A work horse dies toiling in the fields. That is no way to live. Therefore I must do what on the surface appears easy but when done right is simple at best and damn impossible for the 95 percent; to consistently extract a meaningful amount of fiat american dollars from the global equity complex.

Today I shook myself awake from a long-form dream where I was back at my last corporate employer, touring the facility and catching up with all my old comrades. They were all still where I left them. Poking away at keyboard in little foam and steel divided cubes except for one—the young feller of Bangladeshian decent who I trained to be my replacement. He transferred to the “product” department. It was on the ground floor and no cubes. It had smooth cement floors and giant screens everywhere and gorgeous women all around—some of them smoking. In short, he had ranked up to some kind of interesting role. The stress levels were high, so was his pay and there was a real sense of urgency.

Read into that how you will. I woke up feeling a bit off. Was part of me considering phoning my manger and begging to be reinstated as an Excel monkey? Mothership was a cool 61 degrees. The bedside fire had gone out while I was asleep.

Now I am on the desk and NASDAQ futures are up +70 or so and I don’t want to trade. I traded great yesterday morning, capturing over 100 handles, traded according to a plan constructed before the open. Good trading. I made enough this week. Today poses too much risk of sullying my mood heading into the weekend. But before this existential prose drags on any longer I want to share some of the reasoning behind the SQQQ position I initiated yesterday. First, here are the daily levels to be aware of on NASDAQ futures:

The main chart that has me carrying a hedge into today and possibly the weekend is the semiconductor index. I imagine most of you are tired of seeing the old sentiment cycle analogue I hitched onto my wagon when OptionsAddict presented it a few years back, but I don’t care. It works for me and helps me wrap context around all the noisy external events we’re constantly wading through. More on this later. First, check out the semiconductor index:

Nothing about the above chart is bearish. That is a strong up trend with a slight break recently. My brain however can’t shake the image of the giant GPU NVIDIA recently put out. It really seems glutinous. This is my subjective brain, not the analytical one used above. But look at this thing:

In my brain that hog of a GPU is the chrome spinner wheel that infested public streets back in 2006 before the Great Recession. A warning that seems so obvious in hindsight. It may be a stretch of the imagination. I will be first to admit that. But come’on man.

Next let’s look at the daily chart of the NASDAQ-100 rolling futures contract:

If you read my entry last Sunday you’ll recall my loathing these big instagram influencer accounts that have suddenly, in the absence of stimulus from posting videos of themselves doing things, became fucking stock market commenters. Another dude comes to mind with a green mallet. On Instragram it was not just an Amanda Cerny in on the act. KrispyShorts also was all over his story these last couple months talking about how he made millions in the stock market using a loan from the bank. What does this all look and sound like? To me it picks up a megaphone and shouts RETURNING CONFIDENCE…see Exhibit III:

Now I may be just a humble Latino laborer, but part of my brain has an obsession with waves, stock markets, Hellenic philosophy, statistics, crowd psychology and a whole other slew of intellectual pursuits. Am I a bit jaded? Hardened emotionally from watching the entire Faces of Death VHS collection as a pre-teen? Four years fighting and fucking my way through a parochial college prep academy? Paying for a bachelor in finance and half a master in accounting only to abandon that career path? Heading into the wild? Alone? Living in a van down by the river trading stonks?

We don’t know.

All I venture to do on this here blog is present the facts as I see them in a time stamped matter. Let history be thine judge.

summarily,

Raul Santos, September 18th 2020

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Edit->Undo: NASDAQ erases early week gains, here is Thursday trading plan

NASDAQ futures are coming into Thursday pro gap down after an overnight session featuring extreme range and volume. Price drove lower overnight, continuing on the momentum of Wednesday afternoon’s selloff until about 2:30am, when responsive buyers stepped in slightly below last Friday’s open gap. Those sellers managed to put together a 110 point rotation higher that ran until about 6am. Since then sellers have been in control. At 8:30am initial/continuing jobless claims data came out very slightly worse than expected. At the same time housing starts came in soft and Philadelphia Fed data came out in line. As we approach cash open, price is in a bit of a free fall and nearing last Friday’s low.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am followed by a 10-year TIPS auction at 1pm.

Yesterday we printed a normal variation down. The day began with a slight gap up and after a tight open two way auction sellers stepped in and erased the open gap. Said sellers managed to take out the Tuesday low and press rang extension down by a few points before responsive buyers worked price back up to the daily midpoint. Sellers defended the mid, setting up a new low of the day. Third reaction to the FOMC rate decision was down and we spent the rest of the session working lower, eventually closing on session low, down in the lower quadrant of Monday’s gain.

Heading into today my primary expectation is for buyers to work into the overnight inventory, working up to 11,000 before stalling out and going into chop.

Hypo 2 sellers gap-and-go lower, tagging the open gap at 10,903.50 before two way trade ensues.

Hypo 3 full on liquidation. Downside targets 10,875 — 10,823 — 10,719 — 10,695.

Levels:

 

Volume profiles, gaps and measured moves:

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Retail sales come in below expected, Fed day, here is Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday with a slight gap up after an overnight session featuring extreme volume and range. The campaign higher continued overnight, with buyers bidding the Globex market back up near last Thursday’s high (but not exceeding it) before discovering responsive sellers. Said sellers stepped in around 7am New York and knocked price back down into Tuesday’s range. At 8:30am retail sales data came out weaker than expected. The market hasn’t shown much reaction to the data point so far, and as we approach cash open price remains hovering in the upper quadrant of yesterday’s range.

Also on the economic docket today we have business inventories and housing market index at 10am followed by crude oil inventories at 10:30am. Then comes the FOMC rate decision at 2pm followed by a press conference from Federal Reserve Chairman Powell at 2:30pm.

Fed fund futures are currently pricing in a 100% probability that the Fed will keep their benchmark borrowing rate pinned at 0%. The event is likely to cause an uptick in volatility as investors attempt to price in any further clarity they gain on the changes announced by Powell at the Jackson Hole symposium last month along with other factors like new economic forecasts and whether the central bank will commit to allowing inflation to overshoot their 2% target before tightening.

Yesterday we printed a neutral day. The day began with a gap up beyond Monday’s range. There was an open drive higher which stalled out within the first 30 minutes. Sellers managed to press the market range extension down right around 10:30am but buyers rejected an attempt back into Monday’s range. Instead price recovered the daily midpoint by late morning. Around 1:15 the market went range extension up, pressing into a neutral print. Sellers quickly reverted that move back to the midpoint before crossing down through it and making a new low of day. Again buyers were seen rejecting a move back into Monday’s range. Price ramped back up through the mid and ended the day in the upper quadrant of range.

Choppy neutral day.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 11,452.75. From here sellers continue lower, taking out overnight low 11,388.50 before two way trade ensues. Then watch for third reaction to the FOMC announcement to dictate direction into the close.

Hypo 2 stronger sellers trade down to 11,300. Then watch for third reaction to the FOMC announcement to dictate direction into the close.

Hypo 3 buyers press up through overnight high 11,539. Look for sellers just above at 11,545.25. Then watch for third reaction to the FOMC announcement to dictate direction into the close.

Levels:

Volume profiles, gaps and measured moves:

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Volatile and choppy, NASDAQ up another +140 into Tuesday, here is trading plan

NASDAQ futures are coming into Tuesday pro gap up after an overnight session featuring extreme range and volume. Price was balanced overnight until about midnight New York when initiative buyers stepped in and bid the market higher. Price has been on a unidirectional campaign since, trading up to levels unseen since last Thursday. At 8:30am Empire State manufacturing index came out much stronger than expected:

As we approach cash open, price is hovering around the upper quadrant of the Thursday (rollforward) range.

Also on the economic calendar today we have industrial production at 9:15am and a 20-year bond auction at 1pm. The Fed meeting has begun and we will hear their announcement tomorrow at 2pm tomorrow.

Yesterday we printed a normal variation down. The day began with a gap up and after a brief open two way auction price drove higher, driving higher right up until about 10:30am. Buyers could not, however, press the market range extension up. Instead price stalled just above last Thursday’s midpoint. Price then consolidated just below the daily high until about lunchtime when sellers stepped in and drove price back down through the midpoint and eventually to a brief range extension lower. Sellers were rejected from closing the overnight gap. Instead, only a few points below low of day responsive buyers (responsive relative to Monday’s open, initiative relative to Friday’s close) stepped in and worked price back up through the midpoint. We ended the day a bit above the midpoint.

Heading into today my primary expectation is for buyers to hold price above 11,381 setting up a run to 11,500 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 11,261.75. Look for buyers down at 11,237 and two way trade to ensue.

Hypo 3 stronger buyers drive up to 11,546.75 before chop ensues.

Levels:

Volume profiles, gaps and measured moves:

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