iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,039 Blog Posts

The Curious Incident of The Dog in The Night-Time

The Sunday theory of a fast down move this week has evolved a bit, but the expectation remains.  There was a curious event Wednesday on the NASDAQ which feeds into my bearish conviction.  When I say unexpected, it means I have logged years of data and tested theories using the information.  For example, I label every day type more-or-less along the rules set forth by Dalton in Mind Over Markets.  These are the day types, listed from highest-to-lowest directional conviction:

  1. trend
  2. double distribution trend
  3. neutral extreme
  4. normal variation
  5. normal
  6. neutral

Then I test for statistically relevant events.  A high probability statistic is the edge I need to enter a trade.  There is an edge based off a trend day.  Tuesday was a trend day.  The edge is that over 70% of the time we exceed the high or low mark of the trend by at least one tick during the following session during regular trading hours.  The statistic is symmetrical, meaning it works both for trend day up and down.

We love symmetrical statistical advantages.  They are a beautiful feature of the universe.  Wednesday defied the statistic.  We did not exceed Tuesday’s high by a tick during Wednesday trade.  And when we do not conform to a statistic, it reminds me of an old Sherlock Holmes story called Silver Blaze.  The fact that buyers could not conform to a high-probability statistic is a clue that sellers are still actively engaging the market.

Unless something major changes overnight, the Bunker Buster bearish-to-bullish trading bias remains.

Trade accordingly.

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Cross-currents Heading into Wednesday, Bunker Buster Still in Play

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring normal range and volume.  Price held Tuesday’s high mark for several hours before retracing back to about the midpoint of the cash session.  At 7am MBA mortgage applications came out lower than last week.

Also on the economic agenda today we have Markit manufacturing/service/composite PMI data at 9:45am, new home sales at 10am, crude oil inventories at 10:30am, then a 2-year floating rate auction at 11:30am.

Yesterday we printed a trend day.  This is the one of the cross-currents against our bearish bias on the week.  There is a high probability statistic that the day after a trend day up we will exceed the day’s high by at least a tick.  The day began with a decent gap up and drive higher.  Then, after stalling for a bit at some market profile levels, we continued higher into end-of-day.

Heading into today my primary expectation is for sellers to gap-and-go lower, but trade only down to about 5838.75 before two way trade ensues.

Hypo 2 buyers work into the overnight inventory and close the gap up to 5878.75.  If they manage to take out overnight high 5884 and sustain trade above it, the bunker buster short signal is negated.

Hypo 3 stronger sellers erase all of Tuesday’s gains, trading a gap fill dwn to 5795.  Look for buyers down at 5790 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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Bunker Buster Conditions Still in Effect: Here Is The Tuesday NASDAQ Trading Plan

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range on elevated volume.  Price worked higher overnight, exceeding the high print from Monday before stalling out around last Friday’s high.  The extended hours price action built nicely into the balance we are forming after the discovery down seen late last week (see Market Profile chart below).

The economic calendar today features House Price Index at 9am and a 4-week T-bill auction at 11:30am.

Yesterday we printed a normal day, which is anything but.  They only occur about 6% of the time.  The day began flat and sellers stepped in on the open.  They pushed hard for the first hour, forming a wide initial balance, before discovering a responsive bid.  We spent the rest of the day trading inside the initial balance range, earning the normal designation.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5795.  From here we continue lower, down through overnight low 5778.75.  Look for buyers down at the 5772 low volume node and two way trade to ensue.

Hypo 2 buyers gap-and-go higher and work towards 5862.25 before two way trade ensues.

Hypo 3 stronger sellers work down to 5737.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ Flat and Balanced Heading into Monday

NASDAQ futures are coming into Monday flat after an overnight session featuring normal range and volume.  Price was balanced overnight and held inside last Friday’s range.

The week kicks off with a light economic agenda.  The only scheduled events today are 3-and 6-month T-bill auctions at 11:30am.

Last week began with a short squeeze higher.  We worked higher up into the Fed minutes Wednesday afternoon.  Then sellers stepped in.  We spent the rest of the week working lower, rapidly at times, before settling into a wiry balance ahead of the weekend.

On Friday, the NASDAQ printed a normal variation up.  The day began with a sharp move lower, down through the prior swing low.  This revealed a strong responsive bid.  Buyers pushed through lunchtime before sellers ultimately faded the move, closing us below the daily midpoint by end-of-day.

Heading into today my primary expectation is for a move down through overnight low 5778.75.  Look for buyers down at 5767.50 and two way trade to ensue.

Hypo 2 stronger sellers work down to 5753 before two way trade ensues.

Hypo 3 buyers work up through overnight high 5816.75 triggering a spike up to 5850 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Quant Signals First Bunker Buster of 2017, Heading into Jackson Hole

Greeting and cheers and hello fellow humans of the interwebs!

Another lovely day.  Last week was fast, and according to the IndexModel next week shall offer more extreme conditions.  Emergency conditions offer special opportunity, therefore it is important we prepare ourselves.

Not only with research, but also the mind.  Remember that the market was here long before any of us, and will continue to exist long after we are gone, despite all the meddling of these American socialists.  Free markets will always exist because they jibe well with the nature of the human will.  All that being said, if you are feeling a bit off emotionally, you may want to step aside and wait until you return to an objective state.  Trades are like buses, another one is coming.

The kind and focused scientists at iBankCoin laboratory have spent all Sunday morning parsing through the complications of the marketplace and calibrating our instruments to ensure an accurate read out.  Extra care was taken after the quantitative model generated a Bunker Buster trading signal because a Bunker Buster signal carries serious implications.  It suggests that not only will the selling continue, but it will accelerate. It also calls for a moment of capitulation, a crescendo to form, something quite visible on your traditional time-based (silly) charts.

An excess low of sorts.  Which tells a story about strong underlying demand, and allows us to leg into some new longs.

All these reading are coming out ahead of the Jackson Hole economic symposium.  If you have never paid attention to the Jackson Hole symposium, it would behoove you to regularly tune into iBankCoin.com because for years we have provided better coverage of the event than anyone.  We are truly blessed to have people like Le Fly providing no-frills, real talk coverage of events that are otherwise obfuscated by the major media outlets.

There is major change afoot.  The central bank cartels are coming under pressure the likes of which they have never seen.  As society presses into the roaring ’20s, a period of economic prosperity better than any living person has ever experienced, there is a relevant push into decentralized currencies.  The Fed’s reign is coming to an end.  The internet is entering its mid-20s, starting to get a sense of how the world works, and soon it will have a clear view of the actions it needs to take to subdue the humans and their traditional banks.

But for now, our job is to trade next week well.  All the raw and objective information available for making an educated guess has been considered.  The plan is to press shorts until buyers make a strong reaction.  Our alternative theory is a strong gap up to start the week, and then a continuous, bear-bone shattering, rally.

In summary, if no big gap up, then press for lower until a strong low forms, likely late in the week, like Thursday New York lunch.  Or, if big gap up, press with the rally.

Distinguished members of Exodus Market Intelligence, it is with patience and humility that the 144th Edition of Strategy Session was created.  The Amelia Earhart quote at the end is extra relevant this week.  Be sure to check it out!

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Day After A Trend Day in August on Friday: Here’s The NASDAQ Trading Plan

NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme volume on elevated range.  Price was balanced overnight, briefly exceeding the low set during Thursday trade before settling into two-way trade in the lower quadrant of Thursday’s range.

The only economic event today is the primary reading of U. of Michigan Confidence at 10am.

Yesterday we printed a trend down.  The day began with a gap down.  Sellers defended an attempt back up into Thursday’s range and that was that cue to start shorting.  The selling accelerated into the Monday gap and we worked the weekly gap closed.  We continued lower, nearing last week’s lows before the session ended.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5800.75.  Then we continue lower, down through overnight low 5786.50.  Look for buyers down at 5773.75 and two way trade to ensue.

Hypo 2 heavier selling takes price down to 5753.75 before two way trade ensues.

Hypo 3 buyers gap-and go higher, work up through overnight high 5826 and trade up to 5860.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Mid-week Review of The Exodus Strategy Session

Greetings time travelers!

The Fed minutes are out, and some sellers have introduced themselves to the marketplace since they were dropped.  So far, the week is playing out much like our laboratory team anticipated in the Sunday Strategy Session:

Strategy session is long and filled with tons of technical trading guff that only hardcore traders understand.  That is why each report is capped off with an Executive Summary.  Despite being the first bullet point of the report, it is written last, after all the complications of the Index Model and other objective instruments have been calibrated and read.

It is for the C-suite types who have not the time nor care to sift through spreadsheets and charts.  Hopefully you guys are finding the research helpful.  It helps us immensely to put our research into as few words as possible—to make the words count—to clarify our findings.  Then execute.

This morning’s primary hypothesis played out almost exactly, as did yesterdays.  This has resulted in solid execution in the NASDAQ arena.  Hopefully, my demonstrating the power of auction theory live is also making a few of you connect the dots in your trading approach.

There was a bonus trade today, outside of the confines of the primary hypo.  It came just before the FOMC minutes.  It is a long-time favorite of mine and it ran congruent with the overarching forecast from the Strategy Session.  Put simply, the trade is triggered when price crosses the daily mid-point then retraces back to the mid-point from the other side.  It looks like this:

There was enough room between the mid-point and my only EMA to make a nice profit.

So now what?  That should be your question after reading through all the historical information above…

The day has gone neutral.  That means we went range extension up, and now we are range extension down.  The most likely outcome in a neutral scenario is a push back to value before we head anywhere else.  The interesting thing is, where we are sitting now, at neutral extreme low, is right at value, look:

My primary expectation is that we trade lower into end of day.  My conviction in afternoon trading is low, so I shall not partake.  But if I were, I would continue working the sell side, looking to target a probe below Tuesday’s low 5895.50 before two way trade ensues.

Given the strength seen Monday, it is unlikely sellers will gain any major traction and begin initiating aggressive selling this week unless an unexpected news item hits the wires.

So while the Exodus Strategy Session expected the sellers to step in around 2pm Wednesday, AFTER A SHORT SQUEEZE, which they are, it seems unlikely we go back down to last week’s lows, given the progress made Monday.  However, given the effectiveness of Sunday’s forecast, commentor Slippy is requested at this time to bend the knee and get to sucking on these plums:

#tradeaccordingly

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NASDAQ Balanced Out Ahead of FOMC Minutes

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, taking out the Tuesday regular trading hours high but not the high mark set during extended trade very early Tuesday morning.  At 8:30am Housing Starts/Permits data came in below expectations.

Also on the economic calendar today we have crude oil inventories at 10:30am and FOMC minutes at 2pm.

Yesterday we printed a normal day.  The day began right around an open gap from last Wednesday.  Sellers worked price lower, closing the overnight gap then trading a bit lower before settling into two way trade.  There was no range extension, hence the normal day designation.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5911.50.  Look for buyers to defend here, and then work up through overnight high 5938.50.  Look for sellers up around 5943 and two way trade to ensues ahead of the FOMC minutes.

Hypo 2 sellers press harder, down through overnight low 5903 setting up a move to target 5876.25 before two way trade ensues ahead of the FOMC minutes.

Hypo 3 stronger buyers trigger a rally up to 5976.25 before two way trade ensues ahead of the FOMC minutes.

Look for the minutes to give direction into end-of-day.

Levels:

Volume profiles, gaps, and measured moves:

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Thoughts After Reviewing My Biggest Single-Day Loss in 2017

In what must have felt like a rather benign day for most, my investment accounts were attacked on all fronts, resulting in the largest single-day draw down so far in 2017.  It is unlikely I am the only one who took heat.  According to Exodus, nearly two-thirds of stocks were lower.

The majority of my losses came from the retail sector.  Dicks, which was already my worst performing position in 2017, which was made to be an even bigger loser when I averaged down, reported an earnings miss and bleak guidance into year-end:

Dick’s Sporting Goods Q2 Adj. EPS $0.96 vs $1.01 Est., Sales $2.16B vs $2.16B Est.

Dick’s Lowers FY 2017 Guidance to $2.80-$3.00 from $3.65-$3.75 vs $3.64 Est.

Terrible guidance.  Their margins are being crushed by heavy promotion, which they intend to continue doing in an effort to defend their market share.  They are crushing their profits one ‘fire sale’ at a time, in a bid to compete with other behemoth retailers.

Side note to self:

The quantitative accounts both took hard knocks today also.  Again on the retail front.  In Q1 and Q2 the robots told me to buy Coach, can you believe it?  The stock was up about +13% since the first buy at the end of March.  Today, poof, all gains gone, down a quick -15% on the same pressures crushing DICKS, the margin compression that comes with aggressive promotion.

Retail truly is a rancid market.  Unless your shop exists in a fragmented, perhaps even dangerous environment, retail is exclusively inhabited by juggernaut corporations who can use their massive scale scale to operate at perverted profit margins.  Single digits.

There are bigger forces in play.  2017 is the year investor perceptions dramatically shifted into firm belief that Amazon will destroy most, if not all big league competition.  Any legacy players left alive by Amazon will eventually be dismantled by Walmart.  Walmart is up about +19% year-to-date.

And when investors lose faith in retailers like Dicks, they sell $DKS stock.  When they sell their stock, the stock goes lower.  When the stock goes lower, the company has a hard time tapping the financial markets for liquidity.  When liquidity dries up, the company depends on free cash flow from operations. Listen, free cash flow always ebbs and flows.  And when a company faces the inevitable ebb in free cash flow—without access to outside liquidity—they become a going concern.

A going concern usually dies.

This is how a corporation dies.  Corporations can be immortal, but this is how they die.  Amazon will probably be immortal.  Robots and computers will handle most of their work for the next million years.

Did you know General Motors was a going concern once?  It was in 2009, I remember it like yesterday.  Deloitte and Touche, a company I was vying to work for put out the notice—General Motors was going to die.  But they didn’t.  Right when they were going to die, they were bailed out by the federal government.  And now I just don’t know which corporations will be permitted to die…

But I think Dicks might die eventually.  Could the stock rebound in the next two-to-five years?  Sure.  I think it could with the impressive market share they have and their move into private labeling, a tactic that worked well for Costco.  $DKS will likely trade lower tomorrow.  It could continue plunging.  At some point it will stop, then it will take years to consolidate, in my opinion, before you see investors become confident in Dicks again.

So do I sell tomorrow, or stick with Dicks? For my money, I prefer to book the loss and consider different opportunities.  Coach will be held, regardless, due to the nature of my passive, quantitative books.  They are an experiment in completely letting go of human inputs and letting the robots control my fate.

But Dicks is a legacy position from a different way of thinking, of active management.  Getting your hands dirty with charts and fundamentals, and subjectively gauging sentiment through hundreds of conversations about the business.  The very methods that have castrated me in 2017 with Dick have also provided me winners like Tesla.

But there is one difference.

I know I would ride Tesla to zero and go down in flames right alongside Our True Leader, the pure one, Elon (all Praise and Glory to The Leader).  I cannot say I feel the same about Dicks.

While overall breadth was bad today, and while yours truly suffered the worse losses of 2017, that does not negate what we saw Monday.  The Monday rally was ferocious and are likely still in control of the intermediate and longer time frames.

Hopefully you enjoyed reading through some old school investor blogging.  It certainly helps me clarify my thoughts.  Maybe it is helpful to you as well.  While it appears I am losing very badly, there is some good news.  My trading in the NASDAQ was tier one.  I worked the primary hypothesis well, which has proven difficult in the past on a big down day.

#developing

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NASDAQ Higher into Tuesday After Starting The Week With A Big Move Higher

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring elevated range on normal volume.  Price worked higher, about halfway up into last Tuesday’s range before settling into two-way trade.  At 8:30am Advance Retail Sales data came out better-than-expected.

Also on the economic calendar today we have NAHB Housing Market Index and Business Inventories at 10am, 52- and 4-week T-bill auctions at 11:30am, and Long-term TIC flows at 4pm.

Yesterday we printed a double distribution trend up.  The week began with a pro-gap up and we spent the rest of the day slowly trending higher.  It was an extremely strong push, one that makes the expectation of sellers resurfacing later this week less likely than anticipated on Sunday.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5910.50.  From here we continue lower, down through overnight low 5905.75, tagging 5900 before two way trade ensues.

Hypo 2 buyers work up through overnight high 5945 and probe last week’s high 5972.75.  Sellers are just above and two way trade ensues.

Hypo 3 stronger sellers press down to 5876.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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