Wednesday, May 25, 2016
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I turn dials and fiddle with knobs to hone in on harmonic rotations

Day After A Trend Day on The NASDAQ Exchange

Traders call out trades on the floor of the Chicago Mercantile Exchange, April 25, 2007, after the Dow Jones industrial average cracked the 13,000 mark for the first time. The Dow leapt to an intraday record of 13,036.99 within minutes of the market's open, with investors also buoyed by data that showed orders for durable goods -- costly and long-lasting manufactured items -- rose more than expected in March.  REUTERS/John Gress (UNITED STATES) - RTR1P16Q

NASDAQ futures are priced to gap up into Wednesday after an overnight session featuring elevated range on normal volume.  Price continued working higher during Globex after a trend up took hold all day yesterday.  The market continued higher, up to the 04/26 range before coming into balance.

The economic calendar is spattered with medium impact events today.  At 9:45 we hear Market Service PMI, at 10:30am crude oil inventories, at 11:30am there is a 2-year Floating Rate note auction, and at 1pm they’re auctioning off 5-year notes.

Yesterday we printed a trend up, conviction day.  The session started with a gap up to the top of Monday’s range that was quickly followed by an opening drive.  Buyers were initiative well-beyond the first hour of trade, pushing range extension up just after 10:30am and continuing to slow grind higher for the remainder of the session.  We did start to see value for near the end of the day, giving the profile a slight P-shape.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4445.75.  From here the continue lower to take out overnight low 4443.  Look for responsive buyers at the low volume node print at 4440 before two way trade ensues.

Hypo 2 sellers cannot fill overnight gap.  Instead responsive buyers (responsive relative to the open, initiative relative to yesterday’s close) step in and work price higher.  They take out overnight high 4472.75 and continue working higher to target 4492.50 before two way trade ensues.  Stretch target is 4500.

Hypo 3 strong sellers take price down, close overnight gap 4445.75 and take out overnight low 4443 early.  Then they sustain trade below 4443 setting up a move to 4418 before two way trade ensues.



Volume profiles, gaps, and measured moves:


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Reviewing The NYSE $TICK Internals That Preceded Swing Low and Yesterday’s Rally


Every serious trader mixes their own special ‘contextual’ sauce to guide their trading.  And while most people monitor the NYSE TICK, they use it about the same–looking at how the TICK trends intra-day and roughly eyeballing where extreme readings occur.  The simpletons like to perk up when the +/-1000 line is crossed because their minds are filled with lust for round numbers.

Also, most TICK observers use a calculation slightly different than mine.  In fact, so many users of my premium data feed wanted to be like everyone else that the company catered to them.  Per IQ Feed:

Available by customer request, we’ve added a new NYSE ONLY NET TICK: symbol JTYT.Z to DTN.IQ/IQFEED.

This new symbol:

Only includes NYSE Exchange trades (excludes regional exchange trades)
Trends the same as our NYSE NET TICK indicator
Shows higher highs and lower lows
Crosses +1000 or -1000 more often

You have to imagine how happy this made me, to know people wanted a more crude, less encompassing TICK.  Yes, please leave the quality TICK just for me!

Anyhow, I take 5 years of TICK data and run a 3rd sigma study on it.  This tells me the specific levels that are truly extreme events, TICKs bigger than 99.7% of all other ticks.  When one of these rare events hits, I have a rather jolting audio alert that resonates throughout my entire office.

Leading into the rally, in the final throws of balance, we had two extreme low ticks.  The second one marked the low nearly to the minute. BEHOLD:


Take a look at where those TICK BOMBS hit on the NASDAQ futures:


Doing your own research, with quality raw data, is how you build an edge in the market.  This is how I go about creating a new trade for my repertoire.

Pretty cool stuff right?  Perhaps you’re starting to understand the process of becoming an objective trader yes yes?  I hope so.

Good luck out there lads.


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The Slow Migration Higher


NASDAQ futures are set to gap up after an overnight session featuring elevated range on normal volume.  Price continued working lower during the evening, extending the late-day selling from Monday, before finding a strong responsive bid at the upper boundary of lower value and traversing the entirety of yesterday’s range.  The rally started around 3am.

On the economic calendar today we have New Home Sales at 10am.  This afternoon the U.S. is auctioning off lots of debt.  We have the 52-week and 4-week T-Bill auctions at 11:30am and the 2-year note auctions at 1pm.  These short duration note auctions will be followed closely by traders as the yield curve starts to flatten.

See Also – Danger: The Yield Curve Is Flattening

Yesterday we printed a normal variation down.  Value was attempting to migrate higher in the morning before we settled into balanced, two way trade.  Just after yesterday’s T-bill auctions [around 11:30am] sellers became more aggressive.  Eventually, by late afternoon they managed to push the market range extension down.  NASDAQ futures ended the day at session low.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the overnight gap down to 4352.75.  Look for a responsive bid right around these levels and two-way trade to ensue.

Hypo 2 sellers only work the half gap, trading down to about 4362.25 in choppy trade before responsive buyers step in.  We then go higher and take out overnight high 4382.25.  The auction stalls out just above overnight high, around 4385.50 and two way trade ensues.

Hypo 3 buyers gap-and-go higher.  Take out overnight high 4382.25 and sustain trade above 4385.50 early on, setting up a move to test 4397.  Look for a probe of the 4400 century mark before two way trade ensues.  Stretch target is 4418.

Hypo 4 strong selling, perhaps a drive after the T-bill auctions, fills the overnight gap down to 4352.75 then continues lower to take out overnight low 4341.75.  This opens the gates to explore lower value.  Target VPOC at 4318.75.  Stretch targets to downside are VAL levels at 4311.50 then 4298.50.



Volume profiles, gaps, and measured moves:


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French Regulators Raid Google Paris Headquarters

French police arrests Frank Abagnale in the Steven Spielberg movie "Catch Me If You Can"

Hundreds of tax officials and law enforcement flooded into Google Paris this morning.  Reports started around 7am.  Le Police nationale came rolling up with their silly sirens, and they’re out for black-and-white proof of something, anything, that can buoy the fledgling European Union.

The jig is up, global businesses.  Europe is a hell hole.  The safe havens in Ireland will soon be called into question.  Interesting times.

Here’s a link to the French news site breaking the news.  You may need to use Google Translate to work through it (IRONY!).

UPDATE: The stock [ticker: $GOOGL] is set to gap up $3 bucks on the news.

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Could Best Buy Actually Win And Not Be Another Loser Retail Stock?


Shares of Best Buy have been volatile early on this morning as rumors circulate that a ‘notable market-research firm’ said Q1 sales are trending above analyst estimates.

The retail climate has been absolutely atrocious.  If we go two weeks into the Exodus Strategy Session archives we can recall just how much bodily harm was inflicted on the industry set recently:


Yet over the same time period, Best Buy shares [ticker: BBY] have been more-or-less flat.  Quite curious yes yes?


The chart looks tight.  The kind of chart you can build a position into and manage risk without too much confusion.  However, you need to go into this idea accepting the potential of a 25% draw down before knowing if you’re wrong.  Or you could play it tighter, risk less, size in more, and look to scale sooner.  It is just a matter of how much time you’re willing to commit to the position.


Not many people expect Best Buy to come out swinging.  They are Amazon’s show room.  I imagine Bezos feels rather gay every time he sees a 10,000 square foot Best Buy brick and mortar outlet.  This could be the upside sleeper of summer ’16, like an old donkey winding its way up the mountain.



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Overnight Session in Super Balance


NASDAQ futures are set to start the week flat after an overnight session featuring normal range and volume.  Price held Friday’s range with sellers defending just below the Friday high and buyers defending just above the Friday morning conviction drive.  Rotations were equal, with bulls and bears taking the same sized swipes at each other.

The economic calendar is quiet to start the week and earnings season is coming to an end as we close out the month of May.  At 9:45am we have Markit Manufacturing PMI data due out, and at 11:30am both a 3- and 6-month T-bill auction are scheduled.

Last week the NASDAQ set balance by taking is already slightly balanced structure and firming it up by testing both the upper and lower boundaries of value.  Then Friday the bulls made a conviction drive off the open, successfully pinning price just above value to close out option expiration week.  The move, however, did not attract initiative buyers, and the resulting profile resembled the letter ‘p’.  This is indicative of a short squeeze.

Heading into today my primary expectation is for sellers to work down into the overnight inventory and take out overnight low 4348.25.  Look for a move to continue lower, down to 4342.75 before responsive buyers step in and two way trade ensues.

Hypo 2 strong selling takes price down through overnight low 4348.25 and sustains trade below 4342.75 setting up a move to target 4323.  Look for responsive buyers down at 4311.75 then two way trade to ensue.

Hypo 3 buyers work up through overnight high 4378.25.  Look for responsive sellers up at 4381 then 4385.25 before two way trade ensues.

Hypo 4 strong buyers take out overnight high 4378.25 then sustain trade above 4385.25 setting up a move to test 4396.25.  Stretch targets are the 4400 century mark then 4418.



Volume profiles, gaps, and measured moves:



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Apple Rumors from The Far East and The Key Beneficiaries in New Jersey


Shares of Apple, Inc are slight gap up heading into the week after Taiwan Media reports Apple is asking their suppliers to manufacture 72M-78M iPhone 7’s this year.  Of all the hardware in Apple’s collection, the iPhone is by far the most pivotal.

Also Goldman Sachs has a note out this morning, saying Universal Display [ticker: OLED] will be a ‘key beneficiary’ of Apple’s first-time adoption of organic LED displays.  Their stock is up over 5% heading into the open.

The Exodus algorithms flagged OLED overbought on Friday, with statistics showing a 92% probability the stock will be higher over the next 10 trading days.  In other words, Exodus wins again:


UPDATE: Taiwan’s stock market surged following the news that Apple is telling their supply chain to expect massive iPhone 7 output.  The TSEC ended the day up over 2.5% as USA industry is not the main beneficiary of manufacturing, but only the consumer of said wares.

God help the global economy is Americans decide to stop buying goods at gratuitous rates.


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Closing Out The Month of May Clueless


The 79th edition of Exodus Strategy Session has been completed, and after reviewing all the data, there is not much to go on.  Models are coming back neutral.  The only standout context heading into next week is what we saw in market rotations last week–investors abandoned safe haven sectors in exchange for allocations slightly higher up the risk profile, check it out:


There are a few other nuances that may tip the market’s hand next week.  They’re covered in the Strategy Session.  I elaborate on it a bit more, but basically we can also watch the NASDAQ transportation index, which has been a decent tell in the past.

You can also attend this week’s Boot Camp because we’re all going to put our minds together and hash out exactly what’s going on inside the market during the week-long seminar.  Here’s the link if you haven’t signed up yet:

If you decide to roll solo, taking the markets on via your own device, I understand.  Be sure to check in with my morning reports.  We’ll take it one day at a time.

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The Important Matter of Momentum


I am a firm believer in the power of momentum in business and life.  When you get traction and start making progress, it behooves you to push said progress as hard and far as you possibly can because once you return to a static state–back to the grind you go.

And we love the grind sure, because we have to, because it’s the potential energy behind your next momentous push.  You create the compression and wait for nature to produce an opportunity.  The same goes for stocks.

You may have been involved in the morning drive higher on the NASDAQ if you were quick.  But we had a fairly strong expectation that said upward movement would fizzle out, leaving any late longs holding to proverbial bag.  Guys like me were fading the market lower all afternoon, grinding away like chumps for 5-10 handles, which is fine.  That’s my game.  But there is a better play out there for the stock trader.

Enter Exodus.  We have a special screen inside the software that feeds members stocks on the move and holding onto gains…suggesting the presence of accumulation and momentum.  Pull up an intra-day chart on almost any of these names and you will find a chart that trended higher all afternoon:


Those are just the top performers on the session.  Dig deeper in the list you’ll find even more afternoon momentum:


You could be taking shorts to pound town in the afternoons via the Exodus Momentum tool.

Business is grind grind grind nothing, grind grind grind nothing, grind grind POOF! MOMENTUM!  It just appears, and when it does you have to milk it for everything its got.  You think I’m messing with you?  See for yourself.  Bamboo is a perfect natural example.  It spends about 3 years underground, grinding, then all the sudden:


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NASDAQ Pinned Down Heading into OPEX


NASDAQ futures are priced to start the session gap up after an overnight session featuring normal range and volume.  Price worked higher overnight to return price back to the NASDAQ pin point before settling into two-way trade.  This upward action put price up through yesterday’s high.

On the economic docket today we have Existing Home Sales at 10am and Baker Hughes Rig count at 1pm.

Yesterday we printed a normal variation down.  Price worked lower, fast at first, down to about 4290 before stalling out and fading back up toward the mean, or value, or the pin point…whichever you prefer.

Heading into today my primary expectations are low.  Price is right on value and I am looking for chop and sideways, range bound between 4344 and 4310.

Hypo 2 sellers work into the overnight inventory and close the gap down to 4317.25 then take out overnight low 4314.75 before buyers step in and two way trade ensues.

Hypo 3 buyers push up through overnight high 4341.50 and continue higher, up to test 4360, luring in ambitious long, before reverting back to the pin at 4340.



Volume profiles, gaps, and measured moves:


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