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Raul3

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

The work behind every trade

A nice old man I understudied in my early years as a speculator used to say, “the harder I work, the luckier I am.”

He may have stolen (borrowed?) that saying from Mike Jordan or something. I have no idea. It doesn’t matter. Nothing matters, really. See how quickly I go dark?

Nevermind that.

Nothing matters and it’s fine.

Just because something is important to my well being doesn’t mean it matters. I hear dudes work themselves into a fit, full-grown ‘men’ mind you, over the lack of respect they perceive. From women. From kids. From peers.

Like who the fuck are you? And what makes you think you deserve respect?

And why does this perception of respect even matter? The stock market sure as heck won’t respect you.

No speculative market will.

Look at Jim Powell. He heads the Federal Reserve and we care less about him then we do the latest earning’s call from Tim Apple. Jim Biden? You knuckleheads don’t respect the President.

The reality teevee host turned president. I suppose he brainwashed a few cucks into submission.

We’re revolting against the SEC as a society. This agency, for the love of xmas, an overreaching enforcement bureau that does what? Protect the mom and pop investor? Bullshit. They are suppressing your average americans ability to participate in the greatest wealth creation scheme of the last twenty years.

All while Tom Brady is deep dickin’ FTT tokens.

No respect. And that’s okay friend. Dear reader you made it to this here humble Raul blog [hRb]. We know that we can make our way through the world rosy, passing out good mornin’s and giving respect to all sentient beings without any expectation of it in return.

Renunciate yourself from the trapping of modern society child. Cleanse yourself of desire until all that is left is an orb of light, whichever color you choose. That’s it. Then vibe with the waves of the universe.

See how quickly I go psychedelic?

Right then. Let’s reign this journal entry in and send you on your way. How the fuck much can the souped up time machine Fly built point and boop and jingle-guide us along our path? On Friday, September 10th we went technical oversold on the mother algo.

What is our job when this happens? Show of hands…

We go to the stats section. We pull up the stats. We interpret the stats as objectively as one can a number chart, and then we formulate a plan. I wrote about it last week in my diary:

VII. Twelve Month Technical Oversold

On Friday, September 10th Stocklabs went technical oversold on the 12-month algorithm. This signal has bearish statistics. The cycle runs through Friday, September 24th end of day. [added emphasis]

With the 12-month technical oversold you need to broaden the sample set out to ten years have even 25 samples, which is still really a small set but better than like 3 samples.

Okay so 25 samples. Going out to day 3-through-7 it is slightly better than a coin toss (and that’s pretty good, we want to be on the right side of large numbers even if the skew is slight) that the market will be lower. About 58% of the time the signal saw the S&P 500 lower by about -0.13% to -0.34%.

Since September 10th the S&P is down -0.59%. Down slightly more than past performance:

Past performance is not indicative of future returns. But what the heck else are we going to build our decision tree from? Strangers on the internet anon? Real life blowhards on the teevee?

I’d rather use the moon.

And the moon works if you wrap the right risk protocol around it.

Hey man I’m not here to tell you how to speculate. Choose whatever approach fits your sensibilities. For me I like cold, dead, indifferent data. I parse it into groups, I run little statistical analyses, I see probabilities and I write plans based off those probabilities.

When the trades work out. Great. When they fail. Fine. All mine to own.

I don’t need no respect.

I need to be responsible for my actions and a decent human.

Okay for now.

Raul Santos, September 19th 2021

And now the 356th edition of Strategy Session. Enjoy:


Stocklabs Strategy Session: 09/20/21 – 09/24/21

I. Executive Summary

Raul’s bias score 2.70, medium bear. Chop along last week’s low through Tuesday afternoon. Then a pause ahead of the Wednesday afternoon FOMC announcement. Then look for third reaction to the FOMC to dictate direction into the second half of the week.

II. RECAP OF THE ACTION

Choppy volatility that gradually drifted lower while chopping along. Strong selling action into the weekend. The Russell 2000 was bullish divergent.

The last week performance of each major index is shown below:

Rotational Report:

Interesting bullish divergence from Discretionary. Rotations slightly negative on the week but the worst hit sectors are some of the least desirable places to see strength. Energy continues to trade on its own planet.

neutral

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

Concentrated Money Flows:

Money flows slightly negative after a big bullish skew three weeks back. Not really seeing any important industry groups populating either side of the ledger.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

Keep an eye on risk

More than a few lads I interact with have expressed frustration with recent market conditions. What we need to be aware of at all times is two things—market behavior can shift at any moment and that is completely beyond our control and secondly the only thing we do have control over is our risk.

Having solid risk management in place is the only thing that will save the independent trader during cold streaks. There is no manger keeping an eye on the independent. The independent is the operator and the manager. No one’s master. No one’s slave. Without the discipline to make a real risk plan, something written down outside the heat of battle, and stuck to with militant dedication, the independent will soon find themselves bust.

Ironically enough, the path to freedom requires discipline.

I do my best to keep it light, even when I want to go dark. All we can do is take it one day at a time. If it feels like I am pushing too hard, forcing, attempting to exert my will on something far greater than me, the market, that is a good indication to step away.

The markets were here long before us, they’ll be here long after we’re gone.

Right now the conditions may not suit a given approach. That is fine. All the big hitters are back on their desks after the summer, ready to make their nut.

Keep in mind who else is participating in the markets we trade. The most sophisticated and resource rich institutions in the world. The only thing we can manage is our own plan and our own risk.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Chop along last week’s low through Tuesday afternoon. Then a pause ahead of the Wednesday afternoon FOMC announcement. Then look for third reaction to the FOMC to dictate direction into the second half of the week.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

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

Semiconductors still telling the whole truth

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 continuing to hold range.

See below:

Semiconductors probed recent highs and sharply reversed. In auction theory this is referred to as a failed auction. They can pivot the market. The longer the duration between the prior swing and the failed test, the more ominous the signal. The instance noted below is a bit less drastic, the prior swing and the failed auction were only 13 trading days apart, but it merits our attention nonetheless.

This index has guided us throughout the entire secular bull run that kicked off back in July 2016. The long term chart is practically bull porn:

Focusing back in. This chart has continued to make higher highs and lows. That could change at any time but for now it is difficult to become overly bearish until we see this index break down.

See below:

V. INDEX MODEL

Bias model is neutral for a second consecutive week after being Rose Colored Sunglasses [RCS] bearish two weeks back after being neutral three reports back and Rose Colored Sunglasses bearish for two consecutive weeks prior to that.

We had a Bunker Buster twenty nine weeks ago.

Neutral heading into next week.

Here is the current spread:

VI. Six Month Hybrid Overbought

On Friday, August 27th  Stocklabs went overbought on the 6-month algorithm. This is a bullish cycle that runs until Monday, September 13th. Here is the performance of each major index so far:

VII. Twelve Month Technical Oversold

On Friday, September 10th Stocklabs went technical oversold on the 12-month algorithm. This signal has bearish statistics. The cycle runs through Friday, September 24th end of day. Here is the performance of each major index so far:

VIII. QUOTE OF THE WEEK:

“When a man cannot choose, he ceases to be a man.” – Stanley Kubrick

Trade simple, make sound choices

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Quad witching is upon us // here is Friday NASDAQ trading plan

NASDAQ futures are coming into Friday with a slight gap down after an overnight session featuring elevated range on elevated volume. Price was balanced overnight, balancing along the upper half of Thursday’s range. As we approach cash open price is hovering about 50 point above the Thursday midpoint.

On the economic calendar today we have consumer sentiment at 10am.

Yesterday we printed a normal variation up. There was a brief range extension down, and one could argue it was a neutral extreme, however the probe below initial balance low came in the moments after 10:30am and was a short duration. The next thing to happen was a strong rally up through the midpoint. Then after basing along the mid for a bit a ramp higher into the afternoon and another ramp higher into the bell that saw price nearly take out the weekly high.

Heading into today my primary expectation is for buyers to press up through overnight high 15,528.25 setting up a tag of 15,571.50.

Hypo 2 stronger buyers rally up to 15,600.

Hypo 3 sellers press down through overnight low 15,458.25 on their way to tagging 15,400.

Levels:

Volume profiles, gaps and measured moves:

Comments »

Gap down in range ;-) here is Thursday NASDAQ trading plan

NASDAQ futures are coming into Thursday with a slight gap down after an overnight session featuring elevated range and volume. Price drifted lower overnight, drifting down near yesterday’s open. At 8:30am the economic data came out about as ideal as bulls want to see—jobless claims worse than expected, Philadelphia Fed data much better than expected and retail sales data stronger than expected. As we approach cash open price is hovering about +50 point above the Wednesday midpoint.

Also on the economic calendar today we have business inventories at 10am followed by 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a double distribution trend up. The day began with a slight gap up. After an open test higher sellers stepped in and worked price down through the weekly low. Price bottomed out before going range extension down, just after 10:30am. Initial test back to the midpoint was defended by sellers, but midway through New York lunch a second buy pushed through the mid and triggered a rally. Price made new high-of-day before 1pm and continued to rally up into the closing bell. We did not exceed the Tuesday high.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 15,499.75 before two way trade ensues.

Hypo 2 stronger buyers trade up to 15,571.50 before two way trade ensues.

Hypo 3 sellers press down through overnight low 15,433 and tag 15,400 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ drifts into Wednesday slightly gap up // here is trading plan

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing along the bottom-side of the Tuesday midpoint. As we approach cash open price is hovering down below the Wednesday midpoint.

On the economic calendar today we have industrial production at 9:15am followed by crude oil inventories at 10:30am.

Yesterday we printed a double distribution trend down. The day began with a gap up in range. The gap was up into a conviction selling zone printed Monday and after a brief open-test higher sellers stepped in and defended their region. Said selling worked the overnight gap shut and pressed beyond it before finding some responsive buyers in the lower quadrant of Monday’s range. Said buyers shot price up through the daily midpoint a bit before an excess high formed and sellers reclaimed the mid. Selling continued into the late afternoon but did not quite exceed the Tuesday low. Instead there was a bit of a ramp higher into settlement.

Heading into today my primary expectation is for buyers to press higher on the open, pressing up through overnight high 15,434 on their way to tagging 15,500.

Hypo 2 stronger buyers tag 15,571.50 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory and close the gap down to 15,398.75. Sellers continue lower, tagging 15,328.

Levels:

Volume profiles, gaps and measured moves:

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Bulls react positively to cooler-than-expected CPI data // here is Tuesday NASDAQ trading plan

NASDAQ futures are coming into the second day of the first full trading week of September with a slight gap up after an overnight session featuring extreme range and volume. Price was balanced overnight, balancing along the bottom-side of Monday’s midpoint until 8:30 CPI data introduced some buyers. CPI data came in a bit below expectations and investors reacted with buyer orders that worked price up to 15,500 which is still well within the Monday range. As we approach cash open price is hovering around 15,00.

There are no other economic events scheduled for today.

Yesterday we printed a double distribution trend down that kind of also resembles a normal variation down. The day began with a gap up in range. After a brief open two-way auction sellers stepped in and drove price lower, effectively closing the overnight gap and continuing down through the Friday low. Sellers worked down into the Friday 08/27 range before any responsive buyers appeared. Price then chopped along the lows for the rest of the session, making little new lows along the way and pinning the value point of control down near the lows but eventually closing back near the daily midpoint. The day structure resembles a lowercase letter-b shape indicating a long liquidation.

Heading into today my primary expectation is for buyers to continue the buying campaign spurred on by CPI data. Look for buyers to claim 15,500 and sustain trade above it early on setting up a run to 15,571.50.

Hypo 2 sellers to work into the overnight inventory and close the gap down to 15,439.50. Look for buyers below at 15,400 and for two way trade to ensue.

Hypo 3 stronger sellers trigger a liquidation down to 15,311.75.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ up a quick +90 into Monday, here is trading plan

NASDAQ futures are coming into the first full trading week of September up +90 after an overnight session featuring extreme range and volume. Price was balanced overnight. Just before 2am price poked below the Friday low and was met with strong responsive buying. Since then price has worked back up into Friday range and as we approach cash open price is hovering just below the Friday midpoint.

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.

Last week featured a bit of strength Tuesday morning was faded. Then steady selling all week. Eventually closing out the week on the lows after Friday of heavy selling.

The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend down. The day began with a gap up in range. After an open-two-way auction failed to take out the Thursday high sellers stepped in and drove down into the gap, effectively closing it before New York lunch. Around noon price probed below the Thursday low before making a sharp move back to the daily midpoint. Sellers defended the mid and we sold off into the close and closed on the lows.

Heading into today my primary expectation is fora gap-and-go higher. Buyers sustain trade above 15,500 setting up a run to 15,570.25.

Hypo 2 sellers to work into the overnight inventory and close the gap down to 15,447 before two way trade ensues.

Hypo 3 stronger sellers press down through overnight low 15,405.75. Look for buyers down at 15,400 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

Comments »

An outcast drifts into the metaverse

Greetings lads. I am in a strange place out here in the budding metaverse.

The old guard and/nor the cool kids of finance twitter never accepted me. I am not one of them. You can’t interact with a guy who tweets the types of things I tweet at 3am. They have like rules and clients and stuff.

Crypto folks are a bit nicer, but I am certainly not one of them either.

I’m not really one of us.

Sometimes I feel like a stranger in my own life.

This is in some ways by design.

My old man is a foreigner. Italian. Yet I’ve never been Italian enough for the local Italian clans. Fuckin’guys.

Mum is as American as a barnyard who ha, and I suppose I am most like her. Momma Raul is strong. She can pry a cow’s mouth open and pull its tongue out. She can punch the window out of a Buick and pull the driver out by their collar. Mom Raul is mellowing out as we enter the ’20s but her hot hotheadedness back in the ’90s was really something.

I come from a long line of angry men.

The only place I feel at easy is amongst the freaks. Fellow outcasts. Mangled up scar faces with tangled up minds. I find a splendid tranquility when I am surrounded by druggies and transvestites and the whole carnival of taboo types who inhabit the local underground.

Yet drugs aren’t really my thing. Lately my drug of choice is diesel fume. It makes me feel like I’m on a military campaign and by golly if you’re not with it look out. Haven’t touched a mushroom or the reefer since like early June. I like coffee and beer.

Not even liquor so much. Liquor takes the wind out of my sails but cheap ale gives me vigor on the farm. It fortifies my muscles and mind for the seemingly insurmountable task of hand clearing nearly an acre of urban land inhabited by transients and pheasant.

There are good lads who I graduated with that have built families of their own and it makes me happy to see it. I keep the idea of building a family on the back burner…just a little more success. Then a little more.

Anyhow I feel myself being pulled in two directions as I test settling into domestic life. One is acquiescent to sitting around doing nothing. Watching movies and petting dogs. The other is angling to strap into some virtual reality and be a bunny.

Welp. That’s all I’ve been thinking about this morning.

I am super duper big leauge bullish on TWTR. This is financial advice. You are receiving financial advice from a man high on diesel fume who wakes up at 4am Sunday and toils until his mind gives out, then toils until his body gives out, then eats a giant plate of vegetables. Sometimes some FISH MEAT. Then sleeps on the ground.

I’ve been sleeping on the ground lately. Beds too soft. I unrolled my hiking pad in the living room and sleep on the ground. My financial advice is to buy TWTR.

I am trying to figure out when their next earnings announcement is because I want to buy call options. I haven’t bought any puts or calls yet in 2021 and this feels like the right time to lever up. Twitter is exploding with interaction and advertisement and if Jacked Dorsey doesn’t blow the doors of expectations this quarter idk maybe Twitter never will.

The next real bloody daily candle to print on TWTR (hopefully this week) know dear humble Raul [dhR] is shopping for either November or December out-of-the-money TWTR call options.

Okay for now.

Raul Santos, September 12th 2021

And now the 355th edition of Strategy Session. Enjoy:


Stocklabs Strategy Session: 09/13/21 – 09/17/21

I. Executive Summary

Raul’s bias score 2.44, medium bear.  Strength Monday. Sellers to pressure the tape into mid week. Reflex rally back to unchanged by the weekend.

II. RECAP OF THE ACTION

Bit of strength Tuesday morning was faded. Then steady selling all week. Eventually closing out the week on the lows after Friday of heavy selling.

The last week performance of each major index is shown below:

Rotational Report:

Steady selling all week long (holiday-shortened week). NASDAQ slightly bullish divergent.

bearish

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

Concentrated Money Flows:

Negative skew after a major positive skew two weeks back.

slightly bearish

Here are this week’s results:

III. Stocklabs ACADEMY

Holiday pivot?

Sellers pressured the tape all last week. The idea behind the holiday pivot is simple. That collective investor sentiment shifts around a major U.S. holiday and leads to a change in the overall direction of the markets.

With quad witching on deck and risk sectors all running hot, we are contextually set up for an uptick in volatility.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Strength Monday. Sellers to pressure the tape into mid week. Reflex rally back to unchanged by the weekend.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

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

Semiconductors on watch

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 appear to be back into balance.

See below:

Semiconductors printed a somewhat bearish candle on Friday but the recent activity still has the look of discovery up. Seeing this index hold up makes it difficult to become overly cautious. As long as this index is printing higher lows, bulls have the overall edge.

See below:

V. INDEX MODEL

Bias model is neutral after being Rose Colored Sunglasses [RCS] bearish last week after being neutral two reports back and Rose Colored Sunglasses bearish for two consecutive weeks prior to that

We had a Bunker Buster twenty eight weeks ago.

Neutral heading into next week.

Here is the current spread:

VI. Six Month Hybrid Overbought

On Friday, August 27th  Stocklabs went overbought on the 6-month algorithm. This is a bullish cycle that runs until Monday, September 13th. Here is the performance of each major index so far:

VII. Twelve Month Technical Oversold

On Friday, September 10th Stocklabs went technical oversold on the 12-month algorithm. This signal has bearish statistics. The cycle runs through Friday, September 24th end of day.

VIII. QUOTE OF THE WEEK:

“Improvise. Adapt. Overcome.” – Bear Grylls

Comments »

Sneaky rollforward day, expect chicanery, here is Thursday trading plan

NASDAQ futures are coming into Thursday flat after an overnight session featuring elevated range on extreme volume. Price was balanced overnight, balancing inside the Wednesday range. At 8:30am jobless claims data came out better than expected. As we approach cash opne price is hovering above the Wednesday midpoint.

Today most active traders rollforward to the December contract. However this report will quote prices from the September contract through Friday.

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

Yesterday we printed a normal variation down. The session began with a slight gap up. Sellers drove down into the open, resolving the gap and nearly taking out the Tuesday low before a responsive bid stepped in. Said bidders worked price a few handles above the midpoint before sellers stepped back in and made a new low, effectively making a new low for September. There was one final attempt lower right around New York lunchtime before buyers stepped back in. We then spent the rest of the session grinding higher, eventually buyers recaptured the midpoint and we ended the day chopping above it.

Heading into today my primary expectation is for buyers to work up to 15,700 before two way trade ensues.

Hypo 2 sellers press down through overnight low 15,546.75 and tag 15,500.

Hypo 3 stronger buyers work up to 15,800.

Levels:

Volume profiles, gaps and measured moves:

Comments »

NASDAQ flat into holiday-shortened week // here is Tuesday trading plan

NASDAQ futures are coming into the second week of September about five points below the Friday close after an overnight session featuring extreme volume on elevated range. Price drifted slightly lower overnight after printing a new record high early in the globex session. As we approach cash open price is hovering in the upper quadrant of last Friday’s range.

On the economic calendar today we have 3- and 6-month T-bill auctions at 10am, 52-week T-bill auctions at 11:30am and a 3-year note auction at 1pm.

Last week the major indices had a bit of strength early in the week and then a steady drift along the highs into the weekend. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation up. The day began with a gap down in range. Buyers drove into the open, quickly resolving the gap. Buyers continued the drive for the first 30 minutes of trade but a sharp excess high formed before buyers could take out the Thursday high. Instead price checked back to the daily mid. Buyers defended the mid sending price into a steady drift along the daily high, eventually making a range extension around 1:45pm New York. Price drifting along the high into the close.

Heading into today my primary expectation is for buyers to work up through overnight high 15,708 before two way trade ensues.

Hypo 2 sellers press down to 15,609.75 before two way trade ensues.

Hypo 3 stronger sellers tag 15,500 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Comments »

Overconfidence is trouble

Speculating is a game played best when the spirit is zen and the body sufficiently depleted. I’ve been at this trading business full time now for nearly ten years. Admittedly, I do not sit in front of the markets from open-to-close, lording over a set of computer screens. My approach is more akin to a sprint.

I used to be one hell of a sprinter in real life.

Anyhow I noticed myself becoming overconfident last weekend and wrote a little note in red marker to myself saying, “Cut risk in half.”

And I did.

Last week I traded with half the size I normally do and I traded it just as earnestly as I would normal size. The win streak continued. I earned less than I could have. Which is fine.

Now I feel some humility. Perhaps that is a good thing. We don’t know.

Heading into next week my signals are crossed. Stocklabs remains in a bullish cycle clean through to the Monday after Labor Day but Indexmodel is Rose Colored Sunglasses bearish for the third time in four weeks.

Seasonality stats indicate September is the most bearish month of the year for the equity complex.

Summer is coming to an end. People are finally dropping the pandemic cosplay shtick and acting like normal fucking humans again, for better-or-worse. We are in another transitional phase.

I suppose I’m just typing out my thoughts and not really adding any value to you there, the reader. So be it. I’ll say okay for now and we’ll pick things back up Tuesday.

Raul Santos, September 5th 2021

And now the 354th edition of Strategy Session.


Stocklabs Strategy Session: 09/06/21 – 09/10/21

I. Executive Summary

Raul’s bias score 3.40, medium bull*.  Choppy week that perhaps sees selling pressure early in the week but recovers and holds the highs into the weekend.

*Index model flagged Rose Colored Sunglasses bearish bias, see Section IV.

U.S. markets will be closed Monday, September 7th in observation of Labor Day.

II. RECAP OF THE ACTION

Bit of strength early in the week and then a steady drift along the highs.

The last week performance of each major index is shown below:

Rotational Report:

A second week of non-ideal sector leadership. Tech hanging tough but investors can be seen rotating into more risk averse areas of the complex.

neutral

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

Concentrated Money Flows:

Ledger skewed slightly positive after majorly skewing positive on the prior report.

slightly bullish

Here are this week’s results:

III. Stocklabs ACADEMY

Season change

September is a vibe for sure. Summer is coming to an end. Fields are being sown once more before winter. Kids are headed to college and school. Folks really like American football this time of year. Pumpkin spice lattes.

I don’t often check out the seasonality tab inside Stocklabs, but when I am feeling moody I do. Turns out September is statistically the most bearish month of the year.

Perhaps folks check back in with reality after savoring their final few weeks of summer freedom?

We don’t know. And also past performance is not indicative of future results. That said, what is better to back our decision process than data?

Seasonality paired with the Rose Colored Sunglasses signal issued by IndexModel this week has me considering cutting my risk a bit via raising some cash.

Developing…

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?

Weekly forecast:

Choppy week that perhaps sees selling pressure early in the week but recovers and holds the highs into the weekend.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

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

Semiconductors put in a higher low, transports interesting

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 broke their downtrend a few weeks back and have been consolidating above it since. This is a nice clean chart to read here. My primary expectation is for buyers to make a push out of the current intermediate term range.

See below:

Semiconductors may have printed a higher low on the way to continuing discovery up.

See below:

V. INDEX MODEL

Bias model is Rose Colored Sunglasses [RCS] bearish again after being neutral on the last report and Rose Colored Sunglasses bearish for two consecutive weeks prior to that

We had a Bunker Buster twenty seven weeks ago.

Bearish heading into next week.

Here is the current spread:

VI. Six Month Hybrid Overbought

On Friday, August 27th Exodus went overbought on the 6-month algorithm. This is a bullish cycle that runs until Monday, September 13th. Here is the performance of each major index so far:

VII. QUOTE OF THE WEEK:

“Keep focused on the step in front of you. Nothing else matters.” – Bear Grylls

Trade simple, totally focus on the next trade

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