NASDAQ futures are heading into Friday flat after an overnight session featuring normal range and volume. Price worked sideways after a spike higher during Thursday settlement period, fueled by earnings from Amazon. At 8:30am annual GDP data were released, worse than expected, and cause little effect to the market.
Also on the economic docket today we have Chicago Purchasing Manager at 9:45am and Baker Hughes rig count at 1pm.
Yesterday we printed a normal variation up that morphed into a double distribution-type trend day during settlement period. Thursday morning marked the third gap up left behind during the week, including the major gap up Monday following the French election results.
Heading into today my primary expectation is for buyers to work higher, up through overnight high 5597.75 and continue probing all-time highs. Price stalls just beyond 5600 and two way trade ensues.
Hypo 2 sellers push down through overnight low 5582.75 and flush lower, down to 5559.25 before two way trade ensues.
Hypo 3 sellers push lower, down to about 5575 before two way trade ensues.
Hypo 4 buyers work up through 5600 and continue working higher, into open air as we wrap up the week.
The White House Snapchat account was active Wednesday, going live for the first time since misspelling Education during the ceremonial ‘rolling of the egg’ which took place on the White House lawn the day after christian Easter. The account came live just in time for a Thursday visit from the President of Argentina, and also the South American country’s very attractive First Lady Juliana Awada.
The snaps leading up to seeing Juliana and Melania walking from the east to the west wing of the White House are rather dumb, as if the person operating the account doesn’t fully understand how to use the platform. The intern just started taking photos and labeling who was in them:
The story also featured Trump surprising a group of children, who thought they were just sitting on a White House stoop, eating peanut-free sandwiches then lo,from the shadows, a jolly man appeared to greet them.
Right at the last second one of the kids makes a move on the President, sprinting at him before disappearing off the screen—likely tackled and detained by a Blackwater security agent.
Now you are all caught up on the latest snaps from the White House.
NASDAQ futures are starting Thursday gap up after an overnight session featuring normal range and volume. Price worked higher overnight after briefly poking below the Wednesday low yesterday evening. At 8:30am a slew of economic data were released including Advance Good Trade Balance (beat), Durable Goods Order (miss), and Initial/Continuing jobless claims (mixed).
Also on the economic agenda today we have Pending Home Sales at 10am and a 7-Year Note auction at 1pm.
Yesterday we printed a normal variation down. After a brief spike to all time highs shortly after the open, the session was quiet, working sideways with a slight downward drift.
Heading into today my primary expectation is for buyers to work higher, up to test all-time high 5562.50 before two way trade ensues.
Hypo 2 sellers work down through overnight low 5534.25, down to 5511.50 before two way trade ensues.
Hypo 3 tight chop, range bound from about 5553 to 5527.25.
NASDAQ futures are flat heading into Wednesday after an overnight session featuring normal range and volume. Trade was balanced overnight, holding inside the upper quadrant of Tuesday’s range. At 7am MBA mortgage applications came out better than last week.
Also on the economic docket today we have crude oil inventory at 10:30am, a 2-year floating rate note auction at 11:30am, and a 5-year note auction at 1pm.
Yesterday we printed a double distribution trend up. Price opened gap up and ran higher nearly the entire day, exploring the open-air of all-time highs.
Heading into today my primary expectation is for sellers to push into the overnight inventory and close the gap down to 5548.75 then continue lower, down through overnight low 5543.75. Look for buyers down around 5530.50 and two way trade to ensue.
Hypo 2 buyers work up through overnight high 5554.75 then test up above all-time high mark 5557.25 and continue exploring higher prices.
Hypo 3 strong sellers trigger a liquidation down to 5511.25 before two way trade ensues.
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume. Price worked higher overnight, briefly resting at the Monday high before continuing to work higher. As we head into cash open, prices are hovering at all-time highs.
On the economic docket today we have House Price Index at 9am, New Home Sales and Consumer Confidence at 10am, 4- and 52-week T-bill auctions at 11:30am, and a 2-year Note auction at 1pm.
Yesterday we printed a normal variation up. The details of the session were recapped yesterday afternoon.
Heading into today my primary expectation is for sellers to push into the overnight inventory and close the gap down to 5504.50. Look for price to continue lower, down through the 5500 century mark and testing 5495.50 before two way trade ensues.
Hypo 2 buyers gap-and-go, continue exploring higher prices beyond the current swing high 5524.
Hypo 3 strong selling takes price down to 5462.25 before two way trade ensues.
Pro gap is loosely defined, per my own statistics, as a gap greater than 40-60 points on the NASDAQ, roughly. Greater than 60 points and we truly are dealing with something unique. Let’s discuss the forces behind a pro gap and the implications they carry into the trading day.
A gap usually occurs when information deemed material by investors and traders is discovered outside of open market hours (9:30am-4:15pm, New York Time). When the market resumes trading, many participants (including institutional, the higher or ‘other’ time frame) are put in a position that may require them to adjust their exposure.
In Monday’s instance, the large move higher may have pressured short sellers to cover their positions, creating a natural demand force inside the market. The move was deemed macro driven, tied to the first round of French Elections.
And buyers were the first ones to attempt a move after the opening swing, but by late morning, NQM17 (the front month futures contract) had fallen back around the opening prices. This is when the day became interesting. The first trade of the week set up, a zipper, affectionately named by the image it resembles on my renko trigger chart. See below:
The trade was scratched at cost. I managed to cover one unit at the exponential moving average then due to the day’s context scratch the remaining units instead of re-adding to the shorts and pressing for the range extension down.
Range extension is a move beyond the first hour’s range. Understanding range extension is only important because it unlocks a high probability edge for day trading. You can run a study yourself (and you should for added conviction) where you calculate what percentage of the time the first hour’s range is exceeded. It happens 94.3% of the time.
94.3% probability, does that sound like an edge to you?
The trick of it is guessing which side of the range is going to break. On a big gap day like today’s, the range extension could carry big order flow with it, and implications that could last days, even weeks into the future. Historically, the high of the 1st hour’s range (aka initial balance) is taken out 66% of the time, while the low is breached 52% of the time. The high breaks more often mainly due to the long term trajectory of the NASDAQ, which is up.
Below you will see Monday’s initial balance, which is clearly marked—observe:
When sellers failed to take out IB low it became evident that the primary expectation from this morning’s trading report was still in play. For added context, we had a clear pivot zone, the old zipper that triggered the late-morning short trade.
The final layer of context is a statistic that needs to be dug up (it is archived in the laboratory somewhere, SMH) which states that if a gap outside of the prior day’s range is not filled by 1pm, the market is likely to continue in the direction of the gap.
Mix all these little contextual quirks, expectations, trade set-ups, and high probability events and you have an excellent foundation for justifying taking longs—afternoon day trades.
Overall, the day had a wait-and-see feel to it, with buyers hardly initiating fresh risk beyond opening balance. This suggests the institutions are waiting for more information before they become aggressive in either direction.
In short, it seems, for now, the market remains out of balance which means it is interesting. Interesting, because of the potential opportunity it holds.
NASDAQ futures are coming into the last full week of April pro gap up after an overnight session featuring elevated range and volume. When Globex trade opened Sunday evening, futures were 30 points higher and the rally continued overnight, pushed price nearly 60 points above last week’s closing price. This sort of gap throws the market out of balance and could lead to institutional activity at the opening bell.
The economic calendar is light this week. Today we have only the 3- and 6-month T-bill auctions at 11:30am.
Last week U.S. markets worked higher, lead by the small cap Russell Industrial Average. There were bouts of selling throughout the week, but the sellers never managed to gain much traction, and most mornings featured a gap up. The last week performance of each major index can be seen below:
Last Friday the NASDAQ printed a normal variation down. Price opened more-or-less flat, and after some early chop a brief range extension down was achieved by the sellers before two-way trade ensued.
Heading into today my primary expectation is for a two-way auction at the open, pushing up-and-down to establish an early range, then either the buyers or sellers will make an attempted move out of it. The move away from early balance will likely be significant and could drive direction all day.
If move is higher we only have one reference point—a Fibonacci level at 5517.75. Primary hypo is sellers hold this level and two way trade ensues.
Hypo 2 buyers push up through 5517.75 and continue exploring higher prices, trend day, open air, all-time highs.
Hypo 3 sellers break early balance and begin working into the overnight inventory, pushing a half gap down to about 5484.50 before two way trade ensues.
Hypo 4 full-on liquidation off the open, selling down through overnight low 5470 and a test of 5462.50 before two way trade ensues, or even a full gap fill down to 5441.50.
Earth day saw scientists and activists nationwide marching for science. For whatever reason, some of the marches had socialist undertones, which is gross, but nevertheless the ultimate theme was preserving spaceship earth despite it being infested with sapiens.
Now is a good time to run through the interactive graphics Bloomberg published back in 2015, which help, with pictures, to demonstrate the human effect that is driving global warming.
Moving on, the 128th Edition of Exodus Strategy session has been published. Much of what caused concern last week was negated. Those topping patterns in Transports and Semiconductors turned out to be so obvious looking that they were fake (a classic reason of why technical analysis is a bit silly). It was a good reminder that directional bias is best driven by statistical analysis—cold numbers, dead to the emotions of our monkey brains—statistics that offer advice in the most logical means available.
There is no bias heading into next week, we cannot call it. April ends in a sloppy manner, with the last trading day of the month falling on a Monday, very sloppy. Not good! Therefore, this week sits in a strange realm where options have expired and the month is not ending and no major economic events are scheduled.
Perhaps the best course of action, if I may be so bold, is to explore the nearby woodlands. Perhaps sit quiet and still for 10 minutes and watch the trees and streams come alive with life. Then plug back into the internet/news/market matrix with your batteries refreshed.
Earth day is a serious day for science. The good folks at iBC labs will continue working to ensure the day is not bastardized by the socialists—whose agenda best resembles that of the pigs on Animal Farm. Ultimately, thus far, history has shown the capitalism jives better with science than any other ethos, because where science discovers utility, capitalism sees opportunity. Opportunity which drives money flow, money flow which is funneled back into science.
Everyone say a prayer today to our savior, capitalists and scientist employer Elon Musk (all Praise and Glory to The Leader) and buy one indulgence in the form of a Tesla share Monday to clear your soul of all the industrial red meat you consumed so far in 2017.
Let the record show my Sunday analysis, which suggested US markets had a ‘scary look to them heading into OPEX’ was off base.
NASDAQ futures are coming into Friday, option expiration Friday, gap up after an overnight session featuring normal range and volume. Price worked up to the Thursday high, and has been treading water right at the high since. The high has been tagged many times but so far not exceeded. Therefore the profile has taken on a blunt shape on top, suggesting the high is ‘weak’ and prone to a test above it.
The economic calendar is light today. We have Markit Manufacturing/Service PMI at 9:45am, Existing Home Sales at 10am, and the Baker Hughes Rig count at 1pm.
Yesterday we printed a double distribution trend up. Price opened gap up for the third time this week, and for the third time this week sellers were unable to close the gap. Instead the market pushed higher off the open, at one point before lunch trending up into the 04/05 liquidation zone before settling into two way trade.
Heading into today my primary expectation is for buyers to work up through overnight high 5454.75 continue up to 5461.50 before two way trade ensues.
Hypo 2 sellers work down through overnight low 5440 triggering a liquidation down to 5415 before two way trade ensues.
NASDAQ futures are coming into Thursday gap up after an overnight session featuring normal range and volume. Price worked higher overnight, reversing the Wednesday afternoon selling but holding inside the Wednesday range.
On the economic calendar today we have Initial/Continuing jobless claims at 8:30am. At the same time, the Philadelphia Fed data is out. Other economic events include Leading Indicators at 10am, and a 5-year TIPS auction at 1pm.
Yesterday we printed a neutral extreme down. Price opened pro gap up, saw an early rally that briefly went range extension up before reversing down through the entire range and giving back most of the gap.
Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5396.50. From here we continue lower, down through overnight low 5394 and close the open gap down at 5389.50 before two way trade ensues.
Hypo 2 buyers gap-and-go, up through overnight high 5418.25, Buyers continue higher, up to 5424.50 before two way trade ensues.
Hypo 3 strong buyers rally up to 5432.25 before two-way trade ensues.