Coming into the week bearish has inspired several of the townsfolk who cavort around iBankCoin and FIN-Twitter to throw cabbage and tomatoes at my person. Which is fine. I imagine they do not fully understand the purpose of forming a directional bias heading into the trading week.
What I set out to do every Sunday is choose which side of the NASDAQ futures market to day trade during the week. None of these trades are held overnight. One trade that has proven effective during weeks with a short bias is playing for a break of *initial balance* low.
*initial balance is the first hour of trade.
Here’s how it works. The first hour of trade sets a range–a high and a low. Once I suspect the initial balance high is in, I find ways to initiate a short position on the NASDAQ. One of my favorite trades is when we cross the *daily mid*.
*daily mid is the halfway point between the high and the low. Rocket science, I know.
The trade worked Monday and Wednesday.
Will it work Thursday and Friday? The statistic suggests there is a high probability at least one of those days will take out initial balance low first.
Where the IndexModel has proven ineffective is in deciding when to close out long-term positions or initiate a multi-day hedge. However, if we trade a bit higher, I may be inclined to enter a position short into the weekend. I want to see how the /NQ futures behave at 5974. If sellers step in, I shall likely join.
In terms of earnings, goodness. The big players are crushing expectations. Look at just this afternoon’s batch of winners:
PayPal Reports Reports Q2 Adj. EPS $0.46 vs $0.43 Est., Sales $3.136B vs $3.09B Est.
Facebook Reports Q2 Adj. EPS $1.32 vs $1.13 Est., Sales $9.321B vs $9.2B Est.
Gilead Sciences, Inc. Reports Q2 Adj. EPS $2.56 vs $2.15 Est., Sales $7.141B vs $6.35B Est.
Las Vegas Sands Reports Q2 Adj. EPS $0.73 vs $0.59 Est., Sales $3.14B vs $3B Est.
So it is hard to be bearish beyond first few hours of the trading day. Afternoons are for the boys.
The Exodus Strategy Session is for hardcore traders who work time-frames most of you should never even consider. There is no dabbling with the futures markets. If you can sit down without distraction and focus on order flow and the complications of your charts then yes, you can consider working these kind of trades.
In summary, the short bias generated is currently batting 2-for-3 and has two more at bats.
Trade accordingly.
Still on this page? Great, than I will keep going. We can talk about any of the concepts discussed above better at the first ever Detroit investors conference next Thursday, August 4th. So RSVP. It is free, and I am not putting you on a mailing list or selling you timeshares in the Bahamas. There will be pizza.
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