NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume. Price worked higher overnight, trading up into the 10/4 range (a liquidation day) before forming a p-shaped balance profile. This profile shape is often indicative of a short squeeze. As we approach cash open, price is hovering near the overnight high, around the midpoint of the 10/4 liquidation day.
On the economic calendar today we have ISM non-manufacturing at 10am followed by crude oil inventories at 10:30am.
Yesterday we printed a normal variation up. The day began with a slight gap up that was resolved during opening trade. Sellers were unable to break down through the upper quad of Monday’s range before buyers stepped in. From then onward, it was a slow ascent higher until the very end of the session when some responsive selling stepped in.
Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to tag 7600 before two way trade ensues.
Hypo 2 stronger buyers sustain trade above 7600 setting up a move to close the open gap at 7665.50 before two way trade ensues.
Hypo 3 sellers work into the overnight inventory and close the gap down to 7518.75. Sellers continue lower from here, working down through overnight low 7513.25. Look for buyers down at 7509 and two way trade to ensue.
Tue Apr 2, 2019 8:45am ESTComments Off on NASDAQ inches higher overnight, here’s the Tuesday trading plan
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range on elevated volume. Price held Monday’s upper quad overnight before working higher. At 8:30am durable goods orders came in below expectations. As we approach cash open price is hovering near the 3/22 (two Friday’s back) highs.
There are no other important economic events today.
Yesterday we printed a double distribution trend up. The day began with a gap up after strong economic data came out of China Sunday night. Sellers initially pushed price lower off the open but were unable to regain last week’s high, the 3/26 high was rejected by buyers before the first hour of trade completed. We then began to campaign higher, trending slowly upward for the rest of the session, with the volume profile marked by value building then ascending higher.
Double distribution trend up.
Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7497.75. From here we continue lower, down through overnight low 7483.75. Look for buyers down at 7464.25 and two way trade to ensue.
Hypo 2 stronger sellers trade down to 7415 and close the gap at 7410.50. Look for buyers down at 7400 and two way trade to ensue.
Hypo 3 buyers work up through overnight high 7511.75 setting up a move to close the swing high gap at 7535. Look for sellers up at 7538.50 and two way trade to ensue.
Mon Apr 1, 2019 8:44am ESTComments Off on Economic data pushing futures around overnight, here’s the Monday NASDAQ trading plan
NASDAQ futures are coming into April 1st, the first day of Q2, gap up after an overnight session featuring extreme range and volume. Price went gap up into the Globex session Sunday evening on the heels of strong economic data from China:
China PMI was a huge beat…everyone looks at that as a potential bottom forming in the global slowdown narrative..US futures opening gap up should have been no surprise
At 8:30am advance retail sales data came out below expectations and knocked futures off their session high. As we approach cash open price is hovering in the upper quadrant of the 3/22 range (two Friday’s back).
Also on the economic calendar today we have ISM employment/manufacturing, construction spending, and business inventories at 10am followed by 3- and 6-month T-bill auctions at 11:30am.
Last week marked time. Indices were weak to early on then finished out strong. The Russell was bullish divergent throughout the week. The last week performance of each major index is shown below:
On Friday the NASDAQ printed a neutral extreme up. The day began with a gap up and tight range. Sellers stepped in and pushed us range extension down but were unable to close the overnight gap before we discovered responsive buyers. Buyers eventually turned initiative late in the session pushing us neutral and we ended the day at the highs.
Neutral extreme up.
Heading into today my primary expectation is for buyers to gap and go higher, trading up through overnight high 7487.50 to tag 7502.25 before two way trade ensues.
Hypo 2 sellers work into the overnight inventory and trade down through overnight low 7425.75. Sellers tag the naked vpoc at 7425.75 then continue lower to close the Friday gap down at 7410.50. Look for buyers down at 7400 and two way trade to ensue.
Hypo 3 stronger buyers sustain trade above 7500 setting up a move to close the swing high gap at 7535 then a probe above swing high 7537.25. Look for sellers up at 7538 and two way trade to ensue.
Sun Mar 31, 2019 2:10pm ESTComments Off on Lyft did not kill the equity markets (yet) what you need to watch heading into Q2
Late last week I allowed my mind to paint a negative bias onto the market. My ego took a commanding lead on my thoughts for petty reasons—I never liked LYFT really, begin in bed with General Motors and all, with their money losing livery service. For that matter I’ve got a bit of a bias against these unicorn IPOs, probably because they’ve lost me so much money (see: Snapchat o_0). My pride has been assaulted by hyped up IPOs, but so what? Other factors were at play.
As solid as my March Madness stock looked heading into last week, I lost to Operator, whose stock also looked real nice heading into the week. When I say, ‘looked nice’ I mean the daily price charts looked, to my trained eye, like charts that would go up. Anyways, as much as one week doesn’t matter to my position, I lost. Again, petty. I lost a game.
Anyways, the models lads, throughout my emo Friday, were expecting higher prices. They couldn’t care less that one percenters were dumping their unicorn shares into public markets by the billions, or that RAUL was losing some website tournament. Never. They do not concern themselves with the petty.
The models are a better guide than emo RAUL any day. Heading into Q2 they are bullish.
I have a long list of reasons ‘why’ this market should (such a nasty word) be selling off but by golly it isn’t. It could. And maybe it will. If I want to know ahead of time I think I know how. The only way to think beyond the logical parameters of IndexModel is to watch the PHLX semiconductor index. It has told the story for years, often a few weeks ahead of the broad market. You don’t have to take my word for it. Go back and look for yourself how the October 2018 breakdown preceded the market-wide selling. Or what it has done since.
Any reasonable reader should now be asking me what will happen next. Of course I don’t know. But I do know exactly what level to watch and a few ways we could behave around that level and that will give me the conviction I need to take action. That level, until further notice, is called ‘Resistance becomes support’ and is shown below in black:
Saturday was a lovely spring day, with heavy rains falling from sunrise to sunset, then turning to snow overnight. Today I woke to a surreal landscape of snow and ice, and it felt like some much needed breathing space. I was not ready for the second quarter. For spring. Now I am.
You can be too.
RAUL SANTOS, March 31st, 2019
Exodus members, the 228th edition of Strategy Session is live, go check out my notes in Section IV where I lay out the two scenarios for upside/downside on the PHLX.
Fri Mar 29, 2019 9:00am ESTComments Off on Quarter-end :) NASDAQ up +35, flat on week, here’s the Friday trading plan
NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme volume on normal range. Price worked higher overnight, balancing for several hours near the Thursday high before breaking away from the balance around 7am New York. At 8:30am PCE core came out below expectations.
Also on the economic calendar today we have new home sales at 10am and University of Michigan’s final March reading of sentiment.
Yesterday we printed normal variation down. The day began with a slight gap up. Sellers resolved the overnight gap and then we worked higher, eventually stalling out before the first hour of trade completed and well below the Wednesday high. Sellers then pressed us range extension down but the selling dried up well ahead of the Wednesday low. Price eventually worked back above the daily midpoint and closed as we started to rally up-and-away from it.
Normal variation down. Inside day.
Heading into today my primary expectation is for buyers to take out overnight high 7390.75. Look for a tag of the naked VPOC at 7415 before two way trade ensues.
Hypo 2 stronger buyers trade us up to 7460.25 before two way trade ensues.
Hypo 3 sellers work into the overnight inventory and close the gap down to 7352.50. Sellers continue lower, down through overnight low 7349.75. Look for buyers down at 7309.25 and two way trade to ensue.
Thu Mar 28, 2019 9:10am ESTComments Off on NASDAQ coiled into Thursday open, here’s the trading plan
NASDAQ futures are coming into Thursday flat after an overnight session featuring elevated range on extreme volume. Price held Wednesday’s range overnight. At 8:30am GDP data came out worse than expected and initial/continuing jobless claims data came out better than expected. As we approach cash open, price is coiled up just below the Wednesday midpoint.
Also on the economic calendar today we have pending home sales at 10am, 4- and 8-week T-bill auctions at 11:30am, and a 7-year note auction at 1pm.
Yesterday we printed a normal variation down. The day began with a gap up and attempt higher which resulted in an excess high. Sellers then stepped in and drove the overnight gap shut then continued lower, tagging the weekly ATR band low before we bounced back to the mid. Price chopped along the midpoint for the rest of the day.
Heading into today my primary expectation is for sellers to press down through overnight low 7289.50 setting up a move to close the gap down at 7266.75 before two way trade ensues.
Hypo 2 buyers work up through overnight high 7346.75 setting up a move to tag 7400 before two way trade ensues.
Hypo 3 stronger buyers trade us up to the naked VPOC at 7415 before two way trade ensues. Stretch target is 7460.25.
Wed Mar 27, 2019 8:39am ESTComments Off on Flat chop overnight, here’s the Wednesday NASDAQ trading plan
NASDAQ futures are coming into Wednesday flat after an overnight session featuring elevated range on extreme volume. Price was choppy overnight, with price bracketing in a wide range below the Tuesday midpoint. As we approach cash open, price is hovering below the Tuesday midpoint.
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.
Yesterday we printed a normal variation down. The day began with a gap up and spike higher. We formed a sharp excess high at the Monday midpoint and began to auction lower. Sellers eventually closed the overnight gap. Late in the session, around 3:45pm, we ramped higher into the bell but still closed well-below the daily mid.
Heading into today my primary expectation is for buyers to work up through overnight high 7403.75 setting up a move to tag the Tuesday VPOC at 7414.50 before two way trade ensues.
Hypo 2 stronger buyers trade us up to 7460.25 before two way trade ensues.
Hypo 3 sellers work down through overnight low 7359.50 setting up a move to target 7314.50 before two way trade ensues.
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme volume on elevated range. Price worked higher overnight, trading up beyond the Monday high in the early evening and then catching a bid off the high later at night. As we approach cash open price is hovering in the lower quadrant of last Friday’s double distribution trend down.
On the economic calendar today we have case-shiller home price index at 9am, consumer confidence at 10am, a 52-week t-bill auction at 11:30am, and a 2-year note auction at 1pm.
Yesterday we printed a normal variation up. The day began with a gap down-and-away from the Friday range. Sellers drove down off the open but a strong responsive bid was found before we could go range extension down. When sellers attempted to push the market neutral during the afternoon, a responsive bid was again discovered and we worked back up near the daily high by end-of-day.
Heading into today my primary expectation is for buyers to gap-and-go higher. Look for a move up through overnight high 7403, then look for sellers up at 7414 and two way trade to ensue.
Hypo 2 stronger buyers trade us up to 7460.25 before two way trade ensues.
Hypo 3 sellers work into the overnight inventory to close the gap down to 7355.75. From here we continue lower, down through overnight low 7351. Look for buyers down at 7313.75 and two way trade to ensue.
NASDAQ futures are coming into Monday gap down after an overnight session featuring extreme range and volume. Price spiked lower overnight, with [pajama] traders having their first chance to digest the Mueller/Trump news which came out right after closing bell Friday. The Mueller news determined Trump had not colluded with the Russians. The selling went down through last week’s low, trading down into the 3/14 range before printing a mini failed auction and reversing higher. As we approach cash open, price is hovering right above Friday’s close.
On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.
Last week featured a choppy sideways drift, with the major indices diverging and converging around each other during the week, accomplishing very little directional discovery. Accepting and building value instead. After the Wednesday afternoon FOMC rate decision [left unchanged, tone of statement dovish] buyer stepped in and drove price higher. The buyers continued to explore higher prices through most of Thursday. Aggressive pressure from sellers on Friday resulted in a big red daily candle print, which resulted in all indices except the NASDAQ to end the week at or near weekly lows.
Last week’s performance of each major index is shown below:
On Friday the NASDAQ printed a double distribution trend down. The day began with an exhaustion style gap down away from swing high (after a trend day up). After a two-way auction at the open price drove lower, erasing all of Thursday’s trend up by New York lunch. Then, after some very wide chop which was being bought along Wednesday’s naked VPOC, price eventually drove a bit lower to end the week near Wednesday’s low, and at Friday’s session low.
Double distribution trend down.
Heading into today my primary expectation is for sellers to attempt a rejection down and away from the Friday low 7353. Look for price to move down through overnight low 7290. Look for buyers down at 7280.75 and two way trade to ensue.
Hypo 2 buyers close overnight gap up to 7368.25, regaining the Friday range. Then we continue higher, up through overnight high 7390.50 setting up a move to tag 7400. Look for sellers up at 7414.75 and two way trade to ensue.
Hypo 3 stronger sellers trade down to close the gap at 7266.75 before two way trade ensues.
Sun Mar 24, 2019 2:50pm ESTComments Off on Last weeks selling was logical, you can be logical too
What popped out during my Sunday research was how most of last week’s selling pressure was focused on industry groups that are sensitive to interest rates—industries that would, in traditional finance theory, stand to turn more profits if interest rates went up. The below graph displays last week’s returns from the best and worst performing industries:
When you take into consideration the unexpectedly dovish statement from the Federal Reserve last Wednesday, which suggested they have no intention of lifting interest rates for the rest of 2019, the selling pressure seen above appears logical. The money is flowing away from potential loser industries, but is it completely leaving the equity markets?
I doubt it.
All the real hitters know that the rally we’ve enjoyed since 2016 has been driven by big tech. Big tech is all that matters and listen.
Soon there will be no regional banks. What? Did you think the tech invasion would just stop at the gates of finance? Bankers lack the means to build a mote sophisticated enough to keep out all the AI goblins crawling out of Silicon Valley. Those coastal elites have their minds set on bankrupting your local spendthrift with some gamified phone app that lives in a cloud. And that’s okay.
All I want is to be helpful to folks who want to draw money out of the stock market via investments and trades. When you speculate, there are only a few important actualities you need to accept about the present.
First, this is Jeff Bezos’s world we’re just living in it. The man literally reneged on a promise to the capitalists of New York (the capital of capitalism) to distract everyone away from some unsavory penis pictures The National Enquirer managed to get their hands on.
Next, nothing is sacred in the battle to control the way we think as a society. Projects like bitcoin reveal how national governments are losing a grip and they don’t like it.
The Federal Reserve and the Internal Revenue Service are the first and second most powerful government agencies in the world.
And finally, ‘we were here first’ is an irrelevant argument made by old generations desperately clinging to an expectation for order in a completely random and indifferent universe.
If you’re reading this blog you have, all of you have one reason to continue coming back to read me hammer the same few principles week after week, and that is for the explicit intent of watching how a hardened speculator prepares to extract fiat US Federal Reserve notes from the global financial markets. Ruthlessly. Impersonally, like a robot. This isn’t some knitting circle where we gossip about the latest news bit bullshit. Believe me, if a news thingy happens that really truly matters, someone in real life will tell you.
I show up 2-5 hours every Sunday and do research. I write super boring trading reports that most of you will never bother to understand. Then I plug my brain into the machines and fight like a ravenous dog for US Federal Reserve notes. If along the way we can interact for the sake of improving our craft let’s do it.
The models lads, which are built on the foundation stones of raw market data, they’re neutral. This is the last week of Q1. If you have managed to harvest gains over these last three months, I saute you. For those of you who didn’t, maybe now is a good time to meditate on what has real value in this world. Then get some more of that. I am in no rush to declare a strong directional forecast for the next five days. Therefore I will be taking it real easy and only scalping the highest probability setups, like the manna regularly offered by the stock market gods in the form of an open gap in range.
All very logical you see?
ciao ciao kiss kiss
RAUL SANTOS, March 24th 2019
Exodus members, the 227th edition of Strategy Session is live. You need to see the notes on semiconductors and transports, be sure to check out Section IV.
