Last week I mentioned in the comments that I would do a post describing why I rely on IndexModel for directional bias instead of a coin toss. I did not forget. I will write about the statistics soon and explain where the trading edge exists and why I use thorough auction research to drive my decision instead of flipping a coin like Harvey Dent.
But for now you can rest assured that last week’s call for a calm, sideways drift was bang on. We drifted last week. Now the model is flagging bearish. It flipped from bullish-to-bearish, skipping over a neutral reading.
I will be shorting NASDAQ futures any time we gap up overnight and are inside the prior day’s range. I will be playing for range extension down after the first hour of trade. I will be a sellers at the logical price levels highlighted during the morning trading reports. I will also use SQQQ as a proxy position trade starting Monday.
I may close SQQQ before Thursday because we have a wildcard Thursday. But maybe I won’t. Nvidia reports Thursday. The company has been an absolute success and anyone shorting NVDA has been made to look like an imbecile. But much of the company’s recent success has been tied to crypto mining. Cryptocurrency has been in the doghouse all 2018. That could impact Nvidia’s recent growth trajectory.
If Nvidia reports soft revenues and guides lower on earnings, how will the markets react?
We don’t know.
But we do know that there is a wildcard Thursday. And we know the IndexModel is bearish. You don’t know whether or not the IndexModel is any more useful than a coin toss. But I do.
That’s everything we know.
Walmart report this week and so does Home Depot. The quarterly earnings from these two companies are much more indicative of the state of the overall economy than any government statistic. Pay close attention to them as well, but NVIDIA is the name I am watching the most.
The RAUL blog is bearish until otherwise noted.
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