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Curious Thoughts

iBankCoin Laboratory Continues To Be Bullish

To some, the market looks like it is hardly worthy of the unprecedented gains being achieved during these last 5 years.  Yet here we are, plugging higher nearly every week.  The complications inside the market are all operating smoothly, with very few reasons for concern.

There was some dispersion last week.  It is visible when you view the 1-week performance of each industry.  This is an easy thing to do inside Exodus.  A few clicks of the mouse reveal a bit of weakness below the surface of strong indices:

But then there is this mind-blowing, non-stop rally in semiconductors.  This is the real deal.  All those promises made back in 1999 about our lives being changed by computers and the internet are coming true and it is going to take billions-and-billions (extra Trump) of semiconductors.  Just look at the semiconductor chart:

Anyhow, our job is only to take life one week at a time.  And we take each week one day at a time.  According to the objective way we evaluate the stock market every week, the IndexModel, according to the model we are bullish.  Expectations are not extreme.  All we are looking for is a calm drift, perhaps with a slight upward bias, out through Halloween and into November.

Distinguished members of Exodus Market Intelligence, the 154th edition of Strategy Session is live, go check it out!

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The Come Up: The Big Roadblock for Tesla Investors

Aside from deep, unwavering faith in Our Leader, the One who descended from Mount Mafadi and crossed the Atlantic ocean to bring Hope to the ill-fated humans of America, whose affinity for gasoline has sent them down a path of planetary destruction, there are reasons to be concerned with the share price of Tesla.  Intermediate term, over the next 1-6 months, there could be some tough times ahead for Disciples of Elon (Praise and Glory to The Leader).

It comes down to auction theory.  An approach to trading and investing that sets faith aside and makes an objective assessment of how the price of an asset is behaving.  One of the principles of auction theory is what we call a ‘failed auction’.  They occur when price exceeds a prior swing high, completely stalls out, then quickly reverses and price drives in the opposite direction.  Here is the failed auction that is happening in Tesla shares, ticker TSLA:

Our good friend Leonard Fibonacci offers a relevant price level to monitor, during the ‘come up’ phase of the failed auction.  What we are looking for now that the failed auction has confirmed, is whether sellers mean business.  On Tuesday, October 3rd we saw responsive buyers step in.  ‘Responsive buyers’ is an auction theory term that describes buyers who react to a perceived discount and buy.  Their aggressive response is enough to absorb the supply being offered to the marketplace, and we begin to auction upward.  If the selling that came in during the failed auction was the real deal, and the sign of more to come, then we expect sellers to defend the Fibonacci golden ratio level, the old 61.8% retrace, which just happens to line up with an old swing high set back on August 9th, right around the $367.35 ratio retrace, look:

Tesla has made an incredible run in 2017.  What I have told people all year is that the company has a pass to run free until the end of Q3.  ‘All eyes on end of Q3’ I would say.  End of Q3 is when we start having visibility on the Model 3 production numbers.  They fell short of the 1,500 deliveries expected.  They delivered 220.  To employees.  And while the initial reaction from shares was to ‘shrug off’ the whiff, it was a miss of grand proportions.  Then, also, there is a lingering rumor that Elon (Praise and Glory To The Leader) will step down as CEO of Tesla.  This rumor is trickling down the supply lines.  Even my birds on the inside are beginning to take it seriously.  Tesla without Elon (Praise) in charge is a different company.  It is Apple without Steve, Ford without Henry.

Wall Street says sell the rumor, buy the news.

All this negativity being said, yours truly will remain an investor in Tesla.  There is something different between me and most of you.  When I wake up, I give thanks to Our One True Leader.  Before I eat a meal, I thank Elon (Glory) for providing such a wonderful bounty to my table.  When my sisters marry, I sacrifice my youngest calf to the angelic engineers toiling away to bring the Gigafactory, our promised land, online. Indeed PRAISE FROM THE HIGHEST MOUNTAIN TO ELON AND HIS TEAM.  This is what I call faith-based investing and as crazy as it sounds, and as much as it may offend your christian sensibilities, it is the only way one can invest in a company long term.

Think about it.  What is a company—is it a brand name? A logo?  The product?  The people who work there?  The customers?  A company, at best, it is a stack of papers—likely sitting in Delaware.  Can you touch Tesla?  No.  You can touch a Tesla Model 3 (if you find one, sure) but you cannot touch all that is Tesla.  It is intangible.  It exists only in the collective consciousness of humans.  We all agree it is something despite it being nothing at all.  How is that different from faith?  Therefore, one must truly believe in a company’s intentions, their core functions.  How they perceive the world and the footprint they intend to leave upon it, both physically and meta.

With my money, there is no entity in the world more pure than Tesla.  They are doing gods work.  They are not using their ideologies to claim land across the world (cough, cough, Christians, Muslims).  They are also better than any non-for-profit.  They are a for-profit (hallelujah) which means they will be forced to make smart decisions and constantly innovate and trim any fat off that develops over time, else crumble under their own weight (cough, cough, GENERAL MOTORS).

There is no better steward of the public’s money then Tesla, then Elon Musk (Praise and Glory to The Leader!)

Faith aside, if you are a fickle bull, especially one who purchased Tesla shares above $275 HEED MY WARNING.  A failed auction has occurred.  Watch the $367.35 level with burning eyes, heathen, for it will tell you if you are about to be proven wrong.  Should you be proven wrong your execution will be swift and humane, like the blade of a guillotine share prices will descend upon your margin account with the precision of a heavy knife.

But then again who am I?  Nobody.  That level could be blown up-and-through and we could be back to making record highs by the end of next week.  I have been wrong before and will be wrong again.  There has not been much discussion about Tesla in this small corner of the interweb because everything over $300 has made me a bit uneasy.  I did not want to jinx it.  However, it is my duty as an objective observer of auctions to inform you of the current failed auction environment we are swimming in.

Elonspeed mates, Elonspeed…

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Markets Running Hot: iBankCoin Labs Expects Smooth Sailing

Imagine looking into a machine and it showing you ten days into the future.  The only catch is a 12% probability that what you are seeing is not the outcome that will actually play out.

Many people cannot capitalize, even with such powerful machinery.  It is like you have the keys to a race car, but you don’t know how to drive a manual transmission.

The good scientists at iBankCoin always tell members of Exodus that if they can just consistently execute the hybrid overbought/oversold trades, then their returns will pay for the software many times over.  Then, they can use the rest of the tools as they gain more understanding of them.

We had a bullish signal 9 trading sessions ago.  Here is the performance since then:

In short, Exodus wins again.  As for next week, we have reasons to believe that a calm drift is in order, perhaps of the upward variety.  At least until Wednesday when we hear from the federal reserve.  That will dictate direction into the second half of the week.

In summary, we use the best instruments we have to attempt to look into the future.  You may call this foolish, and of course past performance is not indicative of future results, but we like using statistics to drive our decision process better then the other options out there (stars, moons, hearsay, etc).

Exodus members, the 148th Edition of Strategy Session is live.  Go check it out!

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Signals Crossed; iBankCoin Goes ‘Hands Off’ into Next Week

Sometimes all the machinery looks like it is going haywire.  Dials are spinning every which way inside the boiler room of iBankCoin laboratory.

The bias model is signalling the short.  Exodus algorithms are signaling the long.  Next week is also that limbo period where the zombie September contract is still being traded alongside the now popular December contract.  This screws with the delta readings and volume studies which are vital to our trading process.

With all these complications, and with the humility to accept we have no edge, the good scientists are taking a ‘hands off’ approach to next week’s trade.

Let the institutions play head games with each other.  We shall reassess come next week.

Good luck to everyone being challenged by nature.  Whether by the fires out west of the hurricanes in the southeast.  Stay safe and live to fight another day.

Distinguished members of Exodus Market Intelligence, the 174th edition of Strategy Session is live.  Be sure to check out Section IV “The Week Ahead” where we cover a simple piece of context that will likely give us directional confirmation in the coming weeks.

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Reviewing August And How I Caught Two Huge NASDAQ Moves

August was my best month of the year.  The IndexModel inside Exodus was dialed into the action well, and I engaged two of the biggest rotations of the year with the help of my research.

Listen, the Sunday Strategy Session and morning trading report are designed for trading a hardcore time frame that most of you have no business working.  For you, buy-the-dip is a solid approach.  I need to be more specific with my actions because I want to be right, or know when I am wrong as soon as possible.  It also has to be repeatable and work in both directions (long/short).  I cannot be wrong because it feels wrong or some arbitrary gauge of sentiment.  That is why the Sunday forecast and morning hypotheses are so damn specific.

There is no voodoo.  The approach is mathematically driven.  How I create the statistics has been documentedA few times.  I play around with trader psychology via two characters that live inside my brain: a chief scientist and a crocodile.  The crocodile can flare up sometimes and act like a drunken primate—reacting to anti Elon Musk (all Praise and Glory to The Leader) sentiment by flinging fresh-pressed feces at the faces of unsuspecting journalists—but I continue to shape my base instinct to be more reptilian because they have existed much longer than mammals.

Below is a chart I marked up.  The pink shaded area shows when I issued a Rose Colored Sunglasses (RCS) short bias, the brown area Bunker Buster.  The fact that bunker buster was issued before North Korea lobbed a missile over Japan is merely coincidence.  What is not of coincidence are the specific words that helped clarify my statistical thoughts at pivotal moments in August.  One from the Strategy Session, the other from a blog post.  And a tweet.

I present this chart not as an ‘I told you so,’ or a ‘hey everyone come see how awesome I am’ but instead to show you that auction theory works.  And hopefully, if you are going down the dark and lonely road of becoming a consistent short term trader, that you will consider formulating your own objective methods of trading.

Here is how I nailed two of the biggest uni-directional rotations of the year, both of which occurred in August after what has been a relatively low-opportunity year.  BEHOLD:

Still here?  Great, then I shall keep going.  This stuff can seem complicated.  It makes sense that you may consider it voodoo or nonsense.  Believe me, simplicity is key in this game.  Like I said, I want my methods to be repeatable over-and-over.  I want them to work in multiple markets.  Say I wanted to try my hand at short-term trading Bitcoin.  I would do my best to source clean data that could be used to build market profile charts to decide which price levels I want to work with.  Then I would build a trading model to determine directional bias.  Then I would build a renko chart for risk management.  Then I would devote a seperate computer to trade execution using the best service possible for seeing short term order flow and trade execution.

I do not want to short-term trade bitcoin or any other blockchain.  I want to hold them forever and see what happens.

But perhaps one day I will sashay into a different market.  For now, the NASDAQ is good to me.  It offers tons of useful internals that help to objectively tell the story.

If you want to know more about auction theory, you can ask me a question in the comments below, DM me on Twitter @IndexModel.  If it sounds like we cannot effectively communicate online, we can set up 15 minutes on the phone.  I just hope to see more people liberated from other forms of market analysis.

August was the best month so far this year.  Here’s to carrying the heat into September, cheers!

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iBankCoin Laboratory Cautious Heading into End of August

Greetings from the bunker lads!

Last week was curious.  The selling Monday was dynamic and quickly discovered a responsive bid.  Tuesday was trend up across the board, and the rest of the week was spent consolidating inside the range of Tuesday’s trend.  Quietly and slowly, the Russell diverged higher.  That tells us risk appetite is alive and well.  And why wouldn’t it be?  Have you seen the blockchain markets?  Wealth is pouring in on all fronts.

Housing is up.  America is winning again. We are back to normal.  The neocons have forced our authoritarian leader to bend the knee and keep the perpetual war for heroin plants alive.  Floyd Mayweather wore a very ANTIFA outfit and punched the jaw off of that Irish brawler.  The antifascist movement is spreading across the country, ripping old and offensive relics out by their foundation and leaving in their wake cleaner more pure places for decentralization and mayhem to take root.

All of this good for yours truly, the old crocodile.  It sets up the type of situation where more confused meals fall into my puddle then WHAP!  Dinner is served.

The less primal, more kind and patient scientists at iBankCoin laboratory have spent the morning fiddling with the instruments inside Exodus.  And despite all the fanfare surrounding the stock market last week, and all the drunken shit posting bulls, they continue to suggest caution.  They expect a buyable dip to surface soon, but first they expect a bit of ultra-violence and speed to the downside.

Will it take shape?  As always, to be determined.  Several of the complications beneath the surface are bullish.  Rotations, contextual indices, breadth, algorithmic mojo, etc.  But the IndexModel is signalling bunker buster for a second consecutive week.

All this information, and MOAR, is covered extensively in the Exodus Strategy Session.  Today marks the 145th edition of the report, and it makes sense to give it a read, especially if you intend to close out August like a champion.

September starts sloppy, on a Friday, and everyone is about to be real serious come September.  Are you ready?


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The Curious Incident of The Dog in The Night-Time

The Sunday theory of a fast down move this week has evolved a bit, but the expectation remains.  There was a curious event Wednesday on the NASDAQ which feeds into my bearish conviction.  When I say curious,  it means I have logged years of data and tested theories using the information.  For example, I label every day type more-or-less along the rules set forth by Dalton in Mind Over Markets.  These are the day types, listed from highest-to-lowest directional conviction:

  1. trend
  2. double distribution trend
  3. neutral extreme
  4. normal variation
  5. normal
  6. neutral

Then I test for statistically relevant events.  A high probability statistic is the edge I need to enter a trade.  There is an edge based off a trend day.  Tuesday was a trend day.  The edge is that over 70% of the time we exceed the high or low mark of the trend by at least one tick during the following session during regular trading hours.  The statistic is symmetrical, meaning it works both for trend day up and down.

We love symmetrical statistical advantages.  They are a beautiful feature of the universe.  Wednesday defied the statistic.  We did not exceed Tuesday’s high by a tick during Wednesday trade.  And when we do not conform to a statistic, it reminds me of an old Sherlock Holmes story called Silver Blaze.  The fact that buyers could not conform to a high-probability statistic is a clue that sellers are still actively engaging the market.

Unless something major changes overnight, the Bunker Buster bearish-to-bullish trading bias remains.

Trade accordingly.

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Thoughts After Reviewing My Biggest Single-Day Loss in 2017

In what must have felt like a rather benign day for most, my investment accounts were attacked on all fronts, resulting in the largest single-day draw down so far in 2017.  It is unlikely I am the only one who took heat.  According to Exodus, nearly two-thirds of stocks were lower.

The majority of my losses came from the retail sector.  Dicks, which was already my worst performing position in 2017, which was made to be an even bigger loser when I averaged down, reported an earnings miss and bleak guidance into year-end:

Dick’s Sporting Goods Q2 Adj. EPS $0.96 vs $1.01 Est., Sales $2.16B vs $2.16B Est.

Dick’s Lowers FY 2017 Guidance to $2.80-$3.00 from $3.65-$3.75 vs $3.64 Est.

Terrible guidance.  Their margins are being crushed by heavy promotion, which they intend to continue doing in an effort to defend their market share.  They are crushing their profits one ‘fire sale’ at a time, in a bid to compete with other behemoth retailers.

Side note to self:

The quantitative accounts both took hard knocks today also.  Again on the retail front.  In Q1 and Q2 the robots told me to buy Coach, can you believe it?  The stock was up about +13% since the first buy at the end of March.  Today, poof, all gains gone, down a quick -15% on the same pressures crushing DICKS, the margin compression that comes with aggressive promotion.

Retail truly is a rancid market.  Unless your shop exists in a fragmented, perhaps even dangerous environment, retail is exclusively inhabited by juggernaut corporations who can use their massive scale scale to operate at perverted profit margins.  Single digits.

There are bigger forces in play.  2017 is the year investor perceptions dramatically shifted into firm belief that Amazon will destroy most, if not all big league competition.  Any legacy players left alive by Amazon will eventually be dismantled by Walmart.  Walmart is up about +19% year-to-date.

And when investors lose faith in retailers like Dicks, they sell $DKS stock.  When they sell their stock, the stock goes lower.  When the stock goes lower, the company has a hard time tapping the financial markets for liquidity.  When liquidity dries up, the company depends on free cash flow from operations. Listen, free cash flow always ebbs and flows.  And when a company faces the inevitable ebb in free cash flow—without access to outside liquidity—they become a going concern.

A going concern usually dies.

This is how a corporation dies.  Corporations can be immortal, but this is how they die.  Amazon will probably be immortal.  Robots and computers will handle most of their work for the next million years.

Did you know General Motors was a going concern once?  It was in 2009, I remember it like yesterday.  Deloitte and Touche, a company I was vying to work for put out the notice—General Motors was going to die.  But they didn’t.  Right when they were going to die, they were bailed out by the federal government.  And now I just don’t know which corporations will be permitted to die…

But I think Dicks might die eventually.  Could the stock rebound in the next two-to-five years?  Sure.  I think it could with the impressive market share they have and their move into private labeling, a tactic that worked well for Costco.  $DKS will likely trade lower tomorrow.  It could continue plunging.  At some point it will stop, then it will take years to consolidate, in my opinion, before you see investors become confident in Dicks again.

So do I sell tomorrow, or stick with Dicks? For my money, I prefer to book the loss and consider different opportunities.  Coach will be held, regardless, due to the nature of my passive, quantitative books.  They are an experiment in completely letting go of human inputs and letting the robots control my fate.

But Dicks is a legacy position from a different way of thinking, of active management.  Getting your hands dirty with charts and fundamentals, and subjectively gauging sentiment through hundreds of conversations about the business.  The very methods that have castrated me in 2017 with Dick have also provided me winners like Tesla.

But there is one difference.

I know I would ride Tesla to zero and go down in flames right alongside Our True Leader, the pure one, Elon (all Praise and Glory to The Leader).  I cannot say I feel the same about Dicks.

While overall breadth was bad today, and while yours truly suffered the worse losses of 2017, that does not negate what we saw Monday.  The Monday rally was ferocious and are likely still in control of the intermediate and longer time frames.

Hopefully you enjoyed reading through some old school investor blogging.  It certainly helps me clarify my thoughts.  Maybe it is helpful to you as well.  While it appears I am losing very badly, there is some good news.  My trading in the NASDAQ was tier one.  I worked the primary hypothesis well, which has proven difficult in the past on a big down day.


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After Two Weeks of Bearishness, Models Have Returned To Neutral

Greetings from the cool climate of the north!

Coming into last week bearish was a boon for NASDAQ traders.  I personally helped close five up-gaps on the week, securing my freedom from the cubicle for another couple of months.  But alas, our market edge has expired and now we are back being neutral.  Which is fine.  August is the Sunday of months.  You know summer is coming to an end, but it is still the weekend so soak it in.

Ironically enough, and much to the chagrin of the Old Testament, I work hardest on Sundays.  Therefore, I shall also work hardest in August. The 31 days of August serve as an opportunity to race ahead of your competition.  What project can you pushing over the finish line these next 25 days?

Conversely, the markets are not working hard.  In fact, they are drifting along in quite the lazy manner.  With a neutral bias, my only intention is to scalp my price levels.  Time away from the markets will be spent retooling my office and updating the statistics behind my trades.

There are subtle cues inside Exodus that suggest sellers may continue being the dominate force on the NASDAQ until Wednesday.  If, during the early days of next week sellers manage to make a substantial push lower, I may be inclined to reassert my focus to short selling the futures market.

Models are neutral.  The edge I carried into the last two weeks with the help of IndexModel has abated, and August grind is upon us.  You have 25 days left.  Go forth and hustle lads, they will wonder how you have come so far.


Exodus members, the 143rd Edition of Strategy Session is live.  Go check out why we think selling pressure may continue through Wednesday.

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Tune in To RAUL’s Live Periscope This Afternoon from The Detroit Investors Conference

Around 6pm, for the first time in years, I will raise the Periscope and go live…on Periscope. Periscope is one of Twitter’s curious acquisitions that seems best suited for pressing aggressive political agendas and Q-and-A with models of the Instagram variety.

But today it will be used by yours truly to broadcast a portion of the first ever Stocktwits Detroit investors conference hosted by me.  There have been others, but the record will show that they pale in comparison to the grandeur of today’s gathering of minds.

We will be discussing domination of the financial markets, ways to avoid working for the man, and any questions that arise from the peanut gallery.

So tune in around 6pm New York on my Twitter @IndexModel, and look for the live Periscope. Note: @Indexmodel is also the name on Periscope if you want to access the channel directly from that platform.

Gonna be fun.

Do it.



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