Miserable Google quarter spooks NASDAQ, Apple on deck, here’s the month-end trading plan

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring elevated volume on normal range.  Price worked lower overnight, trading down into the lower quadrant of Friday’s range before settling into balance.

On the economic calendar today we have consumer confidence and pending home sales at 10am.

Also Apple is set to report earnings after the bell and is almost certain to put some volatility into the NASDAQ.

Yesterday we printed a neutral extreme down. The day began flat and with a tight two-way auction. Buyers began campaigning price higher, taking us range extension up, but were unable to make a new record high before closing bell. Then earnings from Google came out during settlement and the weaker-than-expected data resulted in sellers reversing all of the day’s gains and more, closing us at session low.

Neutral extreme.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7813.50.  From here we continue higher, up through overnight high 7816.  This sets up a move to tag 7833.75 before two way trade ensues.

Hypo 2 sellers gap-and-go lower, trading down through overnight low 7779 which sets up a test below last Friday’s low 7755.50.  This triggers a liquidation down to 7728.50 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 7833.75 setting up a full reversal of the Google sell-off, trading us up to 7869.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Monday flat after an overnight session featuring normal range on elevated volume.  Price worked higher overnight, probing up near Thursday highs before settling into balance.  As we approach cash open, price is hovering at the Friday high.

On the economic calendar today we have the Dallas Fed manufacturing index at 10:30am followed by 3- and 6-month T-bill auctions at 11:30am.

After the bell, Google parent company Alphabet is set to report earnings.  This is a NASDAQ moving report.

Last week began with a gap down then strength through Monday and into Tuesday where we saw conviction buying which pressed the NASDAQ to new record highs.  The other indices haven’t made new highs yet alongside the NASDAQ, and during the second half of the week, while the NASDAQ mostly marked time, there was a bit more weakness in the other indices.

On Friday the NASDAQ printed an odd-looking normal variation up.  The day began with a gap up in range that sellers pressed into.  The early selling drive pressed down into the conviction buying from Tuesday, and by 10am responsive buyers (responsive relative to the Friday open, initiative relative to the Tuesday conviction day) stepped in and began working price higher.  Price worked higher for the erst of the day, eventually closing the week out at session high and just a few points off of all time high.

Heading into today my primary expectation is for sellers to press down into the Friday buying, look for price to trade down to 7820 before two way trade ensues.

Hypo 2 buyers work up through overnight high 7859.75 setting up a move to target 7870 before two way trade ensues.

Hypo 3 stronger sellers trade down and tag the 7800 century mark.  Look for buyers down at 7792 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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Earnings season has been kind to the stock market thus far.  The only companies that matter are big tech, and big tech is stronger than ever.  Can you believe it’s the year 2019 and people are still investing in oil?  Investing in a commodity is not intelligent.  Especially a commodity that is losing its natural demand to cleaner alternatives.

If you must invest in a commodity or its ancillary businesses, let it be cannabis.  Be aware that commodity businesses are still a patriarchal stronghold, and that the same families who’ve ridden other commodity booms are shifting their fortunes over to cannabis.  They know commodity-based businesses require large capital investments, that the growth is slow but incremental, and they’re dealing in basic materials.  And the only reason cannabis is even remotely interesting to invest in is because the industry was artificially stifled by policy.  Had hemp and weed been legal all along, it would already be another blown out commodity industry with huge, stodgy, leaders cemented in place.  Boring.  We’d be back to investing in oil.

That said, I have zero interest in cannabis stocks.  Go talk about investing into that degenerate industry with your Uber driver.

Have you ever played Monopoly?  There’s only one winner, that’s the whole point of the game.  I only invest in companies that have a chance  to win the proverbial ‘Monopoly’ table of our current simulation.  Names that could win Monopoly: Microsoft, Amazon, Tesla, Salesforce, Goldman Sachs, GOOGLE.

I am aware that several, smaller Monopoly matches are taking place, and some 0f these themes are worth investing in.  There is a big one that will always satiate the desires of the hyper-wealthy: immortality. The philosophers stone.  If a company is promising to keep humans from dying, that’s investable a space I want to invest in.  Conversely, I wouldn’t touch drug makers.  Drugs are fucking trash.  People are finally realizing that they can medicate themselves 2-3 times per day with food.  This trend is not going away.  The trend in medicating problems away has matured and all that new age fluffy guff the flower generation latched onto is now mainstream, hallelujah.  But using viriuses to alter DNA, or building synthetic babies, that is something I will invest in.  Cyborg/regenerative stuff is investable.

AI and robotics must be invested into.  Robots will liberate the human spirit from its current miserable state of factory labor and driving and being accountants.  Mankind will be freed to focus on what truly matters: wisdom, self-control, justice, and courage—the art of living.

These are facts.  The arrow of progress is cutting through the air and there’s not much we can do to change its trajectory.  Humans don’t want to die.  Robots are growing in intelligence.  Capitalism is the chosen ethos and in the end of every capitalist simulation there’s only one winner.

Accepting these facts, and forming an investment approach around them requires holding positions for a very long time.  These changes happen slowely, then all at once!   The approach is strongly inspired by the book Sapiens and if you’re an investor that book is required reading.

Now I warmly welcome bear markets and corrections.  I don’t churn my fucking portfolio to bits chasing momentum or go to cash at the lows.  I just keep buying companies I think will win given the facts of life.

Listen, I know most of you want to go around flipping stocks for quick gains like some kind of nuance speculator, going back to cash as you wish.  I’ve found that behavior to decay both the body and mind. Why not just make highly concentrated bets on long-term winners, with a plan to dollar-cost-average for years-and-years, and patience? That’s the formula for wealth.

That’s all I have to say on this final Sunday in April.  Now I am off to chop some wood before attending an elaborate vegan dinner.

Exodus members, the 232nd edition of Strategy Session is live.  Check out the notes regarding the NASDAQ transportation index.

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NASDAQ futures are coming into Friday gap up after an overnight session featuring elevated range on extreme volume.  Price worked lower overnight, briefly probing below Thursday’s low before forming an excess low and coming into balance.  Headed into the 8:30am GDP announcement price was hovering near unchanged.  The 8:30am GDP data was much stronger than expected and caused a quick spike higher.  As we approach cash open, price is hovering just below Thursday’s midpoint.

The only other economic event today is a final April reading of sentiment by the University of Michigan at 10am.

Yesterday we printed a normal day, which is anything but normal.  THe day began with a gap up that sellers quickly resolved.  The morning selling was quite dynamic and formed a wide range, ultimately probing below the Wednesday low and forming a sharp excess low before coming into balance above the daily midpoint.  Then we marked time into the close.  Amazon and Intel earnings came out and sellers made one more attempt lower but were unable to take out the IB low before the market closed.

Normal day.

Heading into today my primary expectation is for buyers to trade up to 7854.50 before two way trade ensues.

Hypo 2 sellers press into the GDP spike and close the gap down to 7798.50.  Look for buyers down at 7794.75 and two way trade to ensue.

Hypo 3 stronger sellers trade down to 7756.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Thursday gap up after an overnight session featuring elevated range on normal volume.  Price worked higher overnight, trading to new record highs.  The overnight move came after earnings from Microsoft and Facebook exceeded investor expectations.  At 8:30am durable goods orders came in better-than-expected and initial/continuing jobless claims data were mixed.  As we approach cash open, price is hovering a few points off of all-time highs and about 20 point above Wednesday’s range.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am followed by a 7-year note auction at 1pm.

Amazon and Intel are set to report earnings after the bell, and investors are likely to take a cue from these heavy big-tech leaders.

Yesterday we printed a neutral extreme up.  The day began with a slight gap down and open two-way auction.  Buyers managed to press price range extension up (and a few point above ATH) before lunch, then sellers stepped in and pressed the auction neutral.  We then chopped along the bottom-side of the daily midpoint before a sharp move lower into the cash close.  But before settlement, Microsoft earnings hit and we spiked back to ATH.

Neutral extreme up.

Heading into today my primary expectation is for buyers to gap-and-go higher. trading up to the 7900 century mark before two way trade ensues.

Hypo 2 sellers press into the overnight inventory and close the gap down to 7848.  From here they continue lower, down through overnight low 7834 before two way trade ensues.

Hypo 3 stronger buyers trade up through 7900 and sustain trade above it, leading to a continued exploration of higher prices.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Wednesday flat after an overnight session featuring normal range on elevated volume.  Price worked to a new record high overnight before settling into balance along Tuesday’s high.  As we approach cash open, price is hovering at the Tuesday high.

On the economic calendar today we have crude oil inventories at 10:30am, a 2-year note auction at 11:30am, and a 5-year note auction at 1pm.

More importantly for auction behavior on the NASDAQ, we have Microsoft, Facebook, and Tesla reporting earnings after the bell.

Yesterday we printed a trend up.  The day began with a gap up and open-test-drive, with price opening just up beyond the Monday close.  A brief test lower discovered a strong responsive bid and price drove higher.  Up in open air, the auction continued exploring higher prices for the rest of the session.

Trend up.

Heading into today my primary expectation is for price to continue discovering higher prices.  Look for sellers to step in ahead of 7860 and two way balance to ensue.

Hypo 2 stronger buyers trade up the the 7900 century mark before two way trade ensues.

Hypo 3 sellers press down through overnight low 7816 setting up a move to target the 7800 century mark before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Tuesday gap up after an overnight session featuring elevated volume on normal range.  Price worked higher overnight, climbing to a new record high before coming into balance.  As we approach cash open, price is hovering above Monday’s range.

On the economic calendar today we have house price index at 9am, new home sales at 10am, a 52-week T-bill auction at 11:30am followed by a 2-year note auction at 1pm.

Yesterday we printed a double distribution trend up.  The day began with a gap down to near the Friday low.  Sellers were unable to test below Friday low during a brief 2-way auction at the open.  Instead price began to campaign higher, ultimately closing the overnight gap and continuing on to make a new all-time high.  The VPOC migrated higher throughout the session.

Double D trend up.

Heading into today my primary expectation is for buyers to gap and go higher, trading up through overnight high 7769.50.  Look for sellers up at 7769.50 and two way trade to ensue.

Hypo 2 sellers work into the overnight inventory and close the gap down to 7734.75 then continue lower, down through overnight low 7724.50.  Look for buyers down at 7713 and two way trade to ensue.

Hypo 3 stronger sellers trade us down to 7682 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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I just filed the Exodus (Sunday) strategy session about 36 hours later than normal, which means it’s a day late and maybe a dollar short we don’t know—but being able to sit down at my terminal and rip through a handful of screens has me feeling prepared for what has all the markings of an eventful week.

TSLA, MSFT, FB, AMZN, and INTC are set to report earnings.  These are our benevolent tech overlords.  How the report will tell the story.  The NASDAQ is out in front, taking its shot at sustaining all-time highs.  The right blend of good earnings could keep the tech-heavy NASDAQ on its upward trajectory.  The most bullish behavior would be, of course, if all these tech companies report below expectations and forecast weak yet we still rally.  Recall the reaction grid:

negative data, positive reaction – strong bullish

neutral data, positive reaction – medium bullish

positive data, positive reaction – bullish

negative data, negative reaction – bearish

neutral data, negative reaction – medium bearish

positive data, negative reaction – strong bearish

Trading is not rocket science.  It is a few simple tactics executed well.  Balance and discovery. Statistical probabilities. Risk management.  Over and over again.

Anyways this is becoming a fatigued ramble.  Here is the Exodus Strategy Session in it’s entirely, enjoy.

Exodus members, I am having difficulty uploading the 231st edition of Strategy Session into Exodus.  Hopefully I will have the issue resolved by next week.  In the meantime, if you would like to read the Strategy Session, it is published below in entirety.  Thank you.

Exodus Strategy Session: 04/22/19 – 04/26/19

I. Executive Summary

Raul’s bias score 3.38, medium bull*.  Calm drift until Wednesday evening, then watching for big tech earnings MSFT, FB, and TSLA to put a direction to the tape into the second half of the week.  Watch for Thursday afternoon earnings from AMZN and INTC to either affirm or conflict the direction established Wednesday evening-thru-Thursday.

*extreme Rose Colored Sunglasses [e(RCS)] bullish bias signal triggered, see Section IV

II. RECAP OF THE ACTION

NADSAQ leads a charge higher, Russell lags.  Dow and S&P not taking out their respective all-time highs alongside the NASDAQ.

The performance of each major index is shown below:

Rotational Report:

Odd mixed bag with Healthcare taking a hard hit.  Staples leading the way.

neutral

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.

Looking closer we see the broad weakness in Healthcare, along with precious metals.

bearish

Here are this week’s results:

III. Exodus ACADEMY

Catching up using Exodus

Being able to log into Exodus a day later than the Strategy Session is normally published and having the ability to work back a day into the data is a huge factor in my feeling confident in my ability to interpret the new information we’re set to receive.

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 June 2019) 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]:

Compression Watch: Semis really matter now

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 found the upper bracket.  Likely next move is back down through value.  The longer we linger near bracket high, the more likely it becomes that we enter a fresh leg of discovery up.

See below:

The semiconductor index came into some measured move targets (Fib extensions) and found sellers at the logical level.  However, one day of selling does not negate the clear discovery mode this index is in.

See below:

V. INDEX MODEL

Bias Model: extreme Rose Colored Sunglasses

Bias model bullish for a fourth consecutive week after being neutral four weeks back week and bullish the three week’s prior.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“It is not the man who has too little, but the man who craves more that is poor.”  – Seneca

Trade simple, with purpose

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NASDAQ futures are coming into Thursday with a slight gap up after an overnight session featuring normal range on extreme volume.  Price pushed lower overnight, discovering a bid ahead of the Tuesday low before forming a sharp reversal and trading back into the Wednesday range.  At 8:30am advance retail sales data and initial/continuing jobless claims data came out better than expected.  As we approach cash open, price is hovering below the Thursday midpoint.

We have a busy economic calendar today ahead of a four day holiday weekend.  US markets will be closed Friday in Observation of Good Friday and closed again Monday in observation of Easter.  At 9:45 we’ll hear the Markit manufacturing/service/composite PMI data, at 10am leading index and business inventories, and at 11:30am both 4- and 8-week T-bill auctions.

Yesterday we printed a normal variation down.  The day began with a gap up and push to new all-time highs before sellers stepped in and worked the overnight gap fil.  We then chopping along the unchanged level for the rest of the day with sellers defending the midpoint and buyers defending the unchanged mark.

Heading into today my primary expectation is for buyers to press off the open, taking out overnight high 7708.50 and sustaining trade above it to set up a probe above all-time high 7733.50 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the small overnight gap to fill down to 7689.  Look for sellers to trade down through overnight low 7660.25 to target the open gap at 7648.50 before two way trade ensues.

Hypo 3 stronger sellers trade down to 7624 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ futures are coming into Wednesday pro gap up after an overnight session featuring extreme volume on elevated range.  Price worked higher overnight, beginning to trend higher around 8pm New York and continuing to do so up until now.  As we approach cash open, price is hovering near all-time highs.

On the economic calendar today we have wholesale inventories at 10am, crude oil inventories at 10:30am, and the beige book at 2pm.

Yesterday the market printed a neutral day.  The day began with a gap up and two-way open auction that eventually gave way to a small push higher.  Sellers stepped in just ahead of the 7700 century mark and we went into a tight balance.  Volatility during settlement after Netflix and IBM earnings were released caused a spike that rapidly took the market range extension down, then range extension up, before ultimately closing near the midpoint.

Neutral.

Heading into today my primary expectation is for a gap-and-go higher, up through all-time hgih 7728.75.  Open air.

Hypo 2 sellers work into the overnight inventory and trade down to 7700 before finding a responsive bid (responsive relative to the open, initiative relative to the close) before two way trade ensues.

Hypo 3 stronger sellers close the gap down to 7680.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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