Sunday, January 22, 2017
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Raul3

I turn dials and fiddle with knobs to hone in on harmonic rotations

BEHOLD: The Entire Exodus Strategy Session, Hot Off The Press

bane-behold

Since we are running free trials this weekend of Exodus, the entire 115th Edition of Strategy Session is publicly presented below.  This report is designed to build context and bias for 5 trading days—nothing more.  It gets through the week.

It has become an indispensable part of my own trading, and I’m grateful to share it with you guys.  It can come off as esoteric, but I have eliminated as much chaff as possible to focus only on what has shown value in predicting 5 trading days.  Regardless, if you have any questions, ask away.

Also, if you want to dig into the retail space (like I did below in Sections II and III) you can take a free trial of the software until midnight by clicking here.

Heading into Chinese New Year, this is my forecast:

I. Executive Summary

Raul’s bias score 3.20, Neutral*. Expect the low-volatility environment to continue this upcoming week, with index prices drifting along, perhaps with a slight upward bias.

Focus on retail and whether we rotate into the industry-group as investors transition away from Healthcare and Financials.

*Extreme Rose Colored Sunglasses e(RCS) bullish bias triggered, see Section IV.

II. RECAP OF THE ACTION

Week three of 2017, NASDAQ drifts higher, the Russell lower, Dow and S&P mark time.

For the week, the performance of each major index can be seen below:

01222017_IndexPerf

Rotational Report:

Rotations start to trend toward more cautious sectors.  The Financials take a hit after many weeks of outperformance following the November election results.  Healthcare hit hard.

Slightly Bearish

For the week, the performance of each sector can be seen below:

01222017-Sector-Performance-iBankCoin

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.

Buying one or two retail stocks was on the agenda last week.  I chose Dick’s Sporting goods [TICKER: $DKS].  This was based off a study shared by Jeff Macke on Twitter.

Other names of interest in retail are: TJX, CVS, ROST, GNC, SHW, and COST

Concentrated money flows were slightly bearish.  More industries populated the negative side of the ledger than the positive.

Slightly bearish

Here are this week’s results:

012252017_IndustryPerf

III. Exodus ACADEMY

Fundamentals to back up a long term position.  When looking for long-term holdings, I want to see a track record of excellence.  This means consistent growth of both the top (revenues) and bottom line (earnings).

When I scoured the retail landscape, only a few (of the 100s) of companies were doing a good job of growing their business.  Dicks was one of the best, see below:

DICKs-fundy

Compare those two charts to some of the other names out there, like Target (flat, stagnated growth) or Bed Bath and Beyond (top line growth, earnings trending lower), or Abercrombie and Fitch (fucked all around).

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 March 2017) 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.]

01222017_BiasBook

Here are last week’s bias trade results:

01222017_BiasBook_lstwk_Results

Bias Book Performance [11/17/2014-Present]:

01222017_BiasBook_counter

Compression Watch: Transports continue discovery up, Semiconductors too

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 made a big gap up off of the former resistance level we have been monitoring, leading me to wonder if the discovery mode up will continue.

See below:

tranx-01222017

Semiconductors just keep chugging higher.  The chart is ugly, and stretched, but still in an upward ascent.

See below:

01222017_PHLX

Bias Model: Extreme Rose Colored Sunglasses

Third consecutive week of extreme RCS, meaning, expectation for a calm drift with slight upward bias.  But, it is barely e(RCS), a few basis points lower and we would have a bearish signal.

The signal keeps me cautiously expecting upward drift, but it would not surprise me if volatility creeps in next week.

Here is the current spread:

01222017_Biasspread

V. QUOTE OF THE WEEK:

“At a certain point, if you chase two rabbits, you lose them both.” – Taylor Swift

Trade simple, one trade at a time, the one in front of you now

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Why Is Twitter on Instagram and Paying for Followers?

Screenshot_20170119-224905~2

Twitter is many things to many people.  For my niece and her friends it’s a giant group chat.  I count on my stream to interact with some of the most intelligent traders in the world.

They say Trump’s rise to the presidency is fueled on tweets.

So it’s powerful and valuable.  But it’s been a terrible stock to own.  I have tons of it.  From higher.

And just when I thought they couldn’t do anything else dumb, I have to stop and wonder why the hell they opened an Instagram account and began running promoted content Thursday.

So far they’ve posted three punctuation marks and hashtag Statue of Liberty.

Screenshot_20170119-224905~2

If Twitter is promoting their content in the traditional way, then they’re shelling out money to Facebook, owner of Instagram, and in return gaining one of the internet’s most highly coveted achievements—an audience.  Usually these ‘followers’ are phantom accounts who produce little if any interaction.

Twitter has to know this.  Why would they pay for it?  Perhaps they didn’t….

Could Facebook be dropping subtle hints that they’re preparing to blob Twitter into their social media hedgemony?

 

Developing…

 

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The NASDAQ Tempted Sellers To Engage, Then Trapped Them Ahead of The Inauguration

epaselect epa05517650 US Republican presidential candidate Donald Trump (R) shakes hands with President of Mexico Enrique Pena Nieto in Los Pinos, Mexico City, Mexico, 31 August 2016. Trump met with the Mexican President to discuss various bilateral issues, in particular migration policies, according to reports.  EPA/JORGE NUNEZ

This is my read of the tape heading into the Trump inauguration.

First off, if you recall, as it became clear Hillary would lose the general election, the markets went completely apeshit.

The peso was fucking destroyed.

The Dow was down a quick 800.

But by the time your average self-directed investor could put an order into the market, aka cash hours, most of the panic sell-off had been recaptured.

Since then we are about 500 NASDAQs higher.

Enter Pepe the slow-boil frog:

pepp

I cashed out a few positions into year-end.  Lots of people do that.  I watched it go down on my streams.  Some for the tax loss, others just to have cash to initiate fresh positions into 2017 ideas.

There was a recurring theme, and to be honest, I’ve participated in it slightly—hold some cash until after the inauguration because the world will end when the orange pussy grabbing gorilla takes the helm.

GOLD—GET GOLD cuz it’s good for trading in doomsday scenarios.  These people started being taken seriously again.  I’ve seen it with my own eyes and interactions.  Not fake news to me.

Meanwhile, on January 4th the equity complex tipped its hand and the algorithms inside Exodus picked up on it.

So when the Sunday Exodus strategy session spit out e(RCS) bullish readings two weeks in a row, a signal that alerts to the high probability of a calm drift, the idea of slowly boiling anyone not long enough or worse, short, became even more tantalizing.

Then Thursday, today happened, and it has all the markings of a trap to my eyes.  I’ve annotated the events as simply and minimally as I could below:

the-trap-trump-inaug

What happens next?

Well, I’d like to defer to my Sunday research.  The primary thesis heading into this week is still live:

ess-10158201783

Could I be wrong?  Yes, but this is my hypothesis heading into the Trump inaguration.

BULLISH.

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Tesla Up Eight Bucks After Lord Morgan Stanley Upgrades The Electric Future Super Company

dumblord

Analysts at Morgan Stanley are playing catch up Thursday morning by finally deciding his highest, our Leader and Savior Elon Musk (all Praise and Glory to The Leader) is running one hell of an electric motor company by bestowing an ‘overweight’ upgrade upon the plebeian Tesla investors.

The doughnut eaters at Morgan Stanley raised their profit target to $305.  Before today, they only were looking for a mere $245 from the scientists and engineers at Tesla.

$TSLA shares began Thursday sharply higher, up eight dollars, and trading at a new 8 month high.

My profit target is much higher.  iBankCoin laboratory’s profit target is set at $1000, and not a share will be sold before we achieve it.  It is our opinion that no better steward of the public’s money exists than noble Elon (all Praise and Glory to The Leader).

musky

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NASDAQ Back Inside High Value Ahead of Several Low-Impact Economic Events

nyse-traders-old

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, continually rising until finding sellers up near value high from late-last week.  At 7am MBA Mortgage applications came in worse than last week.  At 8:30am CPI data was in-line with expectations.  It appears earnings from Goldman Sachs $GS may have been the early market-moving event, however.

Also on the economic docket today we have Industrial/Manufacturing production at 9:15am, NAHB housing market index at 10am, Fed chair Yellen is speaking in San Fransisco at 3pm, and long term TIC flows at 4pm.

Yesterday we printed a normal variation up.  After beginning the holiday shortened week gap down we experienced an early selling drive.  However buyers stepped in and defended the upper-quad of last Thursday’s trend day and we worked range extension up.  Then price settled into two-way balance.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5040.50.  From here we take out overnight low 5037.25.  Look for buyers ahead of 5030 and two way trade to ensue.

Hypo 2 stronger sellers work us down to 5021.25 before two way trade ensues.

Hypo 3 buyers press up through overnight high 5057.25 to target 5059.50 before two way trade ensues.

Hypo 4 strong buyers sustain trade above 5059.50 setting up a trend day.  Stretch target is 5106.

Levels:

01182017_NQ_MP

Volume profiles, gaps, and measured moves:

01182017_NQ_VPgapsMeasuredMoves

 

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NASDAQ Begins Holiday Shortened Week Gap Down; Trump Inauguration Looms on The Horizon

MONTGOMERY, AL - MARCH 25:  Dr. Martin Luther King, Jr. speaking before crowd of 25,000 Selma To Montgomery, Alabama civil rights marchers, in front of Montgomery, Alabama state capital building. On March 25, 1965 in Montgomery, Alabama. (Photo by Stephen F. Somerstein/Getty Images)

NASDAQ futures are heading into Tuesday gap down after an overnight session featuring normal range on elevated volume.  Price worked lower, pressing down into the upper-quad of last Thursday’s range before balancing out.

The economic calendar is light today, but be aware there are multiple T-bill auctions at 11:30am.

Last week was dominated by the NASDAQ while the other major U.S. indices marked time.  The performance of each major index can be seen below:

01152017_IndexPerf

On Friday The NASDAQ printed a normal variation up.  Price drove higher Friday morning after opening gap up then churned sideways before a late-day thrust higher.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 5056.  Some struggle here before we continue higher to close the gap up to 5061.50 and two way trade ensues.

Hypo 2 sellers show up ahead of 5050.75 and work lower, down through overnight low 5030 setting up a move to target 5027 before two way trade ensues.

Hypo 3 stronger selling down to 5021.25 before two way trade.

Hypo 4 buyers sustain trade above 5059 setting up a fresh leg higher.  Stretch target is 5106.

Levels:

01172017_NQ_MP

Volume profiles, gaps, and measured moves:
01172017_NQ_VPgapsMeasuredMoves

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Systems Updated: All Signals Say We Boil Shorts Slowly Ahead of The Inauguration

pepp

Greetings and warm welcome lads!  I am reporting to you from the bathhouse adjacent to iBankCoin laboratories where an old Russian man is beating me with oak branches.  After a long morning toiling away inside the furnace room, it’s a welcome relaxation. It appears short sellers are in hot water heading into the holiday-shortened week, doesn’t it?

The pesky NASDAQ keeps rising, slowly, keeping dip buyers sidelined and shorts from leaving.  All very kind and clean.

The others majors, simply marking time.  Perhaps they begin to drift higher Tuesday?  This is what the IndexModel suggests heading into next week.

Ice bucket to the head, my best guess is we drift through next week then blast higher Friday morning during the inauguration—leaving anyone who is waiting until after the seismic geopolitical shift sidelined.

This hypothesis was derived from the objective findings inside the 114th Edition of Exodus Strategy Session, which is now live.

There is another key seasonality opportunity setting up that we need to act quick if we intend to capture it.  Check out Section II for more info.

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Spirit Airlines Claims All Other Airlines Are FAKE NEWS

LUV-Jan2-17mailer

Spirit Airlines blasted out an email promotion which claims their competitors are nothing but fake news:

fakenews-LUV

Brilliant.

Most of my flights are via Contortionist Airlines aka Spirit because my body is limber, and their no frills approach appeases my inner stoic.  The entire process of traveling is a mental test.  Humans are, vile creatures by nature.  The smell, and the shedding.

Turbulence often rattles loose air trapped in the gastrointestinal system.  The spittle from a sneeze.  Drunks.

These are my people, the derelicts who jam into small aluminum cylinders by the 100s to travel above the clouds on ghetto Spirit flights which are most often filled to capacity.

And the fuckers get you to spend as much as you would for a conventional flight from United or someone better.  They fleece you once you’re in their web.  Their bag weight limit, for instance, is 40 pounds instead of the standard 50.  Go over and you’re forking out another 30 bucks or some bullshit.  Just one example.

Overall, when a company stays up to date with their marketing, and pulls stunts like this, it tells me they get it.

Spirit air officially claims the “other guys” are fake news.

BULLISH

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Understanding A Basic Tenent of Technical Analysis: Range Trading

switchBkid

You may notice I’ve slightly backed off the mouth foaming rhetoric about my bullishness in Tesla Motors.  While still my absolute favorite long-term investment, it’s now trading above intermediate term value.

Does that mean I will sell?

No.  Nah son, that’s a petty move.

But you need to understand a few basic tenents of technical analysis.  One is balance, also known as range.  Stocks spend the majority of their time in balance.  Identifying and plotting the territory is key to assessing whether your idea is ‘working’ and also when and where to take action.

If I were a more fickle Tesla investor, thank goodness I am not, then I would consider capturing some of the recent gains from sub-200 as we approach range high, see below:

tsla-monthly

The same method of trading can be applied to any instrument.  Buy range low, sell range high.  Eventually you’ll need risk parameters in place to get you out of the way when the break happens.  When the break happens, it will be explosive due to one ‘side’ of the tape being wrong.

For now, and despite political transition, an end to California’s drought, an acquisition of a solar company, and massive updates to the Autopilot feature, there has not been a shift in the perceived value of $TSLA equity.

Understand range trading, and you will be well on your way to better stock market decision making.

Tech Analysis 101

#STUDY

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Robots Continue To Bid NASDAQ Heading into Friday

robotsOFfutureamam

NASDAQ futures are coming into Friday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight in the same manner it ascended since about 11am Thursday—a slow, steady, churn higher.  At 8:30am Advance Retail Sales came in below expectations.

Also on the economic docket today we have Business Inventories at 10am, the preliminary January reading of U. of Michigan confidence at 10am, and the Baker Hughes rig count at 1pm.

Yesterday we formed the second consecutive neutral extreme up.  After starting the day gap down sellers drove lower, pressing down around the 5000 century mark before a bid stepped in.  WE then spent the rest of the day algorithmically grinding higher.  Interesting note, value never shifted higher on the day, instead remaining down in the lower quardrant.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5035.25.  This sets up a move down through overnight low 5034.  Look for bidders around 5015 and two way trade to ensue.

Hypo 2 we press up and close the Thursday gap at 5046.50 then continue higher, up to 5054 before two way trade ensues.

Hypo 3 a short squeeze takes hold after we sustain trade above 5058 and we trend higher into the weekend.

Levels:

01132017_NQ_MP

Volume profiles, gaps, and measured moves:

01132017_NQ_VPgapsMeasuredMoves

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