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Curious Thoughts

Selective short selling is the plan this week

Sunday research is complete. IndexModel flipped bearish:

According to my trading plan, I am only allowed to short sell in the NASDAQ futures market when this signal is engaged. But I do not particularly feel comfortable pressing shorts this week. I will be taking small scalps off of market profile levels identified in the morning trading reports, looking to capture 10-15 handles at a time.

That is about all I care to discuss right now. It is my birthing day and I must be attending to all my hedonistic desires.

Good day.

Raul Santos, June 14th 2020

Exodus members, the 290th edition of Strategy Session is live. Check out those wild context charts in Section IV.

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Hoppy Easter, models forecasting a drop in volatility

Cheers everyone. Not much to write about. OPEC countries reached a deal on production cuts but it fell short of the production cut needed to align with demand. At least that is what the popular entertainment news sources are telling me.

As an oil man I seek information for more novel places like Amazon Flex. Amazon will pay anyone in Metro Detroit $72 fiat american dollars today to spend three hours of their Easter throwing caution to the wind to go deliver packages from their personal driver.

Easter has me feeling grateful. I slept until 10am then I heated my entire house up to 81 degrees with the furnace, a fire and a space heater and did two hours of hatha-style yoga. Then a made a nice marinara sauce and brought some to my dear old parents whist waving to them through the window. I came back here, did my research work, now I am going to boil some gluten-free noodles, saute some mushrooms and have a feast.

All systems I track point to bullish behavior and a drop in volatility in the upcoming week. I could see that happening, catch everyone off guard with a drift and spend the next few weeks burning the theta out of any overzealous option bets.

As always, I will be taking it one day at a time. Writing morning trading plans that upload around 9am New York time that outline exactly how I intend to trade the few hours around opening bell. Then I will occasionally tweet updates throughout the day.

All long positions have been added to and remain in tact.

May your Obama money come soon, and may it bring joy to your family.

Happy Easter lads,

Raul Santos, April 12th, 2020

Exodus members, the 281st edition of Strategy Session is live. Go check it out!

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Mixed signals into month-end

Spring vibes are in full effect up here in the murder mitten today, with birds chirping and an electric green hue taking hold on the ground and trees. Otherwise the local scene is rather grimy.

We have a governor mandated shelter-in-place, which quite honestly has only modestly changed my professional and personal routines. The hustle has always been a remote endeavor for humble Raul. Last week I traded well up until Friday afternoon, when I stuck around later than I normally do and gave back my morning gains. Normally, on a nice Friday in spring, I’d take my morning gains and head down into the city to cavort with the day drinkers, saving me money and allowing me to spread my brand of propaganda locally.

These skype chat happy hours and zoom meetings might need to replace my old routines.

This virus changes everything. I doubt I’ll ever go to a rave or unsanctioned after hours event again without wearing safety glasses and a mask. The human condition is worsening, pestilent and viral.

After preparing the Sunday research and publishing the Exodus Strategy Session, I have mixed signals. There is plenty of reason we could see continuation to the upside, but then Utilities led the charge last week and IndexModel is flagging Rose Colored Sunglasses.  Therefore I am only allowed to short sell the NASDAQ all week. I will be doing so on a limited basis. Ideally an up gap inside the prior day’s range for me to fade. I will not be pressing trades late into the day unless we really accelerate to the downside again.

That’s about it. I am looking to buy more Microsoft and Google and swap out my Goldman position for Square. Ideally I buy into big down days, when things appear their worst. But who knows, I may have to chase the great ones.

My oil positions don’t feel good, WES and PTR, but I never expected them to. I shall stick with them for quite a while.

On Wednesday morning my quant strategy rebalances, hopefully I have time to share my latest thoughts on that project here.

That’s all for now. Trade’em well.

Raul Santos, March 29th, 2020

Exodus members, the 279th edition of Strategy Session is live, go check it out.

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Sickness at the House of Raul

I’m sick.

So many red flags were raised before markets collapsed. Most significantly, the failed auction printed February 14th on the PHLX Semiconductor index. Legacy readers of the Humble Raul blog (HRb) will recall the promise I made to readers and myself on October 2nd, 2014, to never miss another failed auction. I didn’t so much miss our most recent failed auction, but I did not assign enough weight to this ominous print on the index that literally tracks the main industry driving out secular bull market:

I think I am sick. My mind is so constantly optimistic that I just sheltered in place and held all my positions into the downturn. And now, when a recession all but seems guaranteed, I am not even giving a single thought to selling. On the contrary, I am feeding fresh cash into my account and buying more equities.

I became an oil man last week. When has Raul ever been an oil man? I abhor the oil industry, an archaic space dominated by patriarchal fools more out of touch with reality than a hobo on PCP. This is what I am talking about, sick.

IndexModel, which is my foundation stone for decision making, signaled Bunker Buster finally. This signal calls for an acceleration to the downside eventually marked by a sharp, excess low that holds for weeks (sometimes months). It has been a challenge for me to day trade, historically, when this signal fires. Therefore I will back away from the futures despite riding some nice rips last week.

Instead I will be focusing on acquiring a few long-term stocks and/or adding to existing positions. I do not want to go too exotic with these holdings. I was talking with my China correspondent yesterday, ROBERTO BREGANTE, and he couldn’t speak highly enough about the effectiveness of Microsoft Teams for keeping their projects moving in our remote business environment. And we started reflecting on how well Google and Microsoft were prepared for us to go remote as a species. We mutually agree and realize that professionals are realizing how effective they can we without flying around and sitting in meetings. Flying in for a meeting is old school and the cognitive shift underway may render physical meetings nearly extinct. So a part of me is like, why not just add to my Microsoft and Google positions? They are not going away anytime soon and their profit margins are huche [sic].

This shift to remote work was supes overdue. Hotels and airlines suffer. Anyone empowering effective conduct of remote business wins. Robots also win. More necessary things, like doctors and cashiers need to be like car washes. the less physical human contact the better. Have you ever seen Demolition Man?

That’s it. I am all tapped out of Pacific Northwest mystic energy. I am hunkered down in Mothership and working—trading, taking lots of phone calls and emails, cooking tasty food and readying my plots for sewing. I have a variety of heirloom seeds and my only real regret is not having built the hot house yet that has been on my mind for years.

Sick I tell you. Infected with perma optimism and bullishness.

Raul Santos, March 22nd 2020

Exodus members, in Section III I discuss all the systematic signals I am leaning on in more detail. The  278th edition of Strategy Session is showing some interesting data, be sure to check it out.

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Month-end, Thanksgiving, less is more

I have little by way of commentary to add to the current economic narrative on this last Sunday in November.  Which is fine, less is truly more when it comes to investing.

The lot of yous would be better off fully investing your portfolios long equities and forgetting the pass codes to your brokerage accounts.  But yet many persist, trying their hand at active management, shorting companies like Amazon and expecting the whole system to revert back to some symbolism of reality they perceive more true than the collective reality demonstrated by Big Tech valuations.

Which is fine, as long as you aren’t a dick.  If you are a dick or jerk or whatever, that is fine too—the final outcome of such behavior ought to be no surprise though.  People will drift away.  Maybe that is fine too.

Oh wow this blog entry has taken a morose turn.  Listen, we are from the school of thought here on the old Raul blog that people are in general good.  And since humanity, despite their blood lust and greed, is in general good, that means their creations will continue to grow.  Big Tech is their most impressive creation to date.

It was not long ago, not long ago at all that World Wars were a thing.  Marching by foot and horse into foreign lands and claiming them as your own.  Now the war is economic.  Which is much less violent but a war nonetheless.  Less blood lust, same greed.  To gain control of foreign lands, all of them.

The war is being won by companies like Microsoft and Google parent Alphabet, Inc.  Because they have no sworn allegiance.  They have a seat at the proverbial “table” without the messiness of being public servants of tyrants.  Their only obliged responsibility is fiduciary.  Economic warfare.  War for moneys.

And while we call the entire notion of money into question with bitcoin and barter systems, there is no denying that this Grande Illusion has served to placate some of the most restless factions of our society.  Money and drugs.

This is all fine.  The economy is strong and owning capital goods like property and stocks and bonds and classic cars is a decent way of participating in the economic expansion.

So as we near the end of the decade, I am inclined to channel my own hedonism into making good food, enjoying spirits with family and friends, and allowing my investments to work while I idle around town spreading holiday cheer.

What is your plan this holiday season?

Final note—models have all flipped neutral into this last, holiday-shortened week of November.  With no systematic reason to push bets, the plan is to scalp key levels and otherwise chill.

Raul Santos, November 24th, 2019

Exodus members, the 262nd edition of Strategy Session is live, go check it out!

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Active trading is an art

Part of the reason I fire up the old blog-o-machine every Sunday is because I am contributing thought to an industry rife with frauds and hacks, hacks who maybe don’t realize they dish out droves of bad information on trading and frauds who would just as shamelessly convince nice old ladies to wire them money.  And I figure, well I better put out something honest and true to persist and resist.  My motivation is reverence for trading competency.  It is quite liberating, right up there with growing something out of the ground that sustains you. Which is why today I posit that active trading is an art.

No indicator guarantees success.  The last month or so, I have demonstrated my systematic approach to forming a bias, and that systematic approach has been dialed in.  It has kept me on the right side of the tape, and with that approach and the rest of my tool kit I have been extracting NASDAQs from the financial complex quite well.  Yet, at the same time, I have internet people giving me grief that my indicators don’t work.  They work just fine.  These people are not making a beautiful performance of their trading.  This is something I cannot teach.

None of us control how the market behaves.  It pops and drops and marks time.  There is no such thing as good or bad, the market simply is.  It is a numeric representation of the net interactions of hundreds-of-thousands of humans and the algorithms they have built to execute their human ideas.  The entire existence of all of this is completely intangible, a collective conscious that we do our best to measure.  How one interacts in this environment is an art.  Are they playful and light?  Or is the market rigged?  Choose your beliefs carefully.  They will tint every observation you see.

We only control our own reasoned choice.  What we choose to take in, what we ignore, and how we interpret that data is something we have power over.  Whether or not we position our capital into or out of a position is a reasoned choice.  The reasons behind our actions are art.  Are your impressions swayed by the words or actions of others.  That is hardly creative.

I blog to demonstrate a repeatable approach to trading and to offer clarity along the way.  My reasoning is simple.  I was new once and had to wade through this mess of online gurus to find real insight from real people who actually trade.  It sucked.  I paid lots-and-lots of money to phonies, money that would have been better spent on pole barns or solar panels.  To learn to trade you must trade.  And to trade well is an art.

That’s all I am in the mood to write today.

Raul Santos, October 13th, 2019

Exodus members, the 256th edition of Strategy Session is live.

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Better late then never

Just wrapped up Sunday research.  Now I am ready for the week.  I stayed up all night dancing to house music at an unsanctioned venue somewhere in southwest Detroit.  Then I did 90 minutes of hatha-style yoga and had a modest brunch.  This put me into a pleasant mid-day sleep and here we are.

IndexModel is back to neutral.

The algorithims have been dialed into the market these last several weeks and the morning trading plans have been solid.  On Thursday last week, I pulled a pivot that took a bit longer than I would hope.  There was an error in my execution that cost me about 200 NASDAQ points that I could have booked and then ripped back the other direction.

Regardless, I manage to flip around and trade on the proper side of the tape for the tail-end of the week.  It is okay to be wrong, it’s not okay to stay wrong.

Anyhow there is not much else on my radar.  I am bullish into the first full week of the fourth quarter.

The last quarter of the decade.

Cheers.

Raul Santos, October 6th, 2019

Exodus members, the 255th edition of Strategy Session is live, go check it out!

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There is a high probability something will take this market down next week

I don’t deal in geopolitical, fiscal policy or sensational narratives behind stock market moves.  I digest a bunch of raw data every Sunday in form of price and volume—and not just volume at a specific time—where it occurs and what it accomplishes.  Then I dig down into the internals, update my charts on a few key sub-indexes, review the big news from last week and how the market reacted, see which public companies rocketed or tanked on earnings or other news and then finally I add in a layer of sentiment.  Add all that up, and I am bearish heading into next week.  These are a few of the most pertinent details regarding my bearish call heading into the week.

IndexModel, my auction theory model, signaled Rose Colored Sunglasses, the only bearish signal it generates.  Other recent signals were August 11th and June 16th, and going back to 2015 the hit rate on this signal is high.  So when I write a blog title that says “high probability” it is actually backed by a data set that is measured and tracked.  Not just some careless tweet.

The PHLX semiconductor index printed a failed auction last week.  Here is a picture of what I mean:

Most of you jokers don’t pay attention to my work, but the upside down version of the failed auction above happened on the NASDAQ Transportation index at the beginning of September and was what precluded the rally.  This was my note on September 1st:

Since this week’s failed auction is on the semiconductor index, and since semiconductors are the key driver of the entire stock market rally since 2016, the situation deserves a bit more attention.

Thirdly, the current picture of the NASDAQ transportation index is rather bearish also.  Looks like an island top:

Fourthly, last week saw investors rotate into UTILITIES, the most risk-averse sector in the financial ecosystem.  The only other strength last week was seen in low quality sectors.  Meanwhile consumer discretionary was weak.  BIG RED FLAG:

If you drill down into the industry-by-industry performance from last week, the picture becomes more clear.  Key industry groups saw significant outflows last week:

The third move after the Fed rate decision was down.  That had me leaning bearish Wednesday and as you might imagine, I had to tuck and run when then powerful rally blew through late Wednesday.  I was on the road for business the rest of the week, but sure enough, sellers worked us back down to the weekly low.  I am talking NASDAQ prices.  Sellers took control of the tape.

Finally, I listen to other traders, the real OGs and otherwise, through a variety of methods—-Twitter, newsletters, internet videos, and so on.  Coming into the week I picked up on a tone of arrogance, borderline hubris.  My mentor always like to say though, which drives me nuts, “if you see it, you be it.” I know what it looks like because it is inside of me too.  And usually the market whips me back into obedience.

So there you have it, my bearish thesis over the next five days.  It’s an uncomfortable call with markets near record highs and the Fed LOWERING interest rates, which disgusts me.  Maybe some news bit or Presidential tweet will come to my bearish aide, or not, or the opposite.  I have no idea and anyone who claims to is a liar.

My plan is to establish a position short via SQQQ at some point early next week and ride the position through late Friday. I will also only be working the short-side of the NASDAQ 100 tape, intraday, fading overnight gap ups, “going with” downward crosses of the daily mid point if I have an open overnight or range extension stat, and selling into any rallies into the key price levels highlighted during the morning trading reports.

Nothing fancy.  It’s all quite simple actually, and wholly independent of any world happenings.  Do you know how satisfying it is?  To love thy discipline and let it support me?  Making my way through the world, no one’s master and no one’s slave?

Really nice.

Raul Santos, September 22nd, 2019

Exodus members, I basically outlined this Sunday’s Strategy Session above, but there are more details in the report, which is live now.  Go check it out!

 

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100% odds of a Fed rate cut, the greatest illusion ever, still bullish

Strategy session is complete.  Models are updated and bullish. I have a grasp on what could move the markets in the upcoming week.

Apple reports earnings Tuesday after-market-close.  They are an organization I still respectfully monitor, especially they’re product events and earnings calls, both which move the NASDAQ.

The Federal Reserve is hard to respect, but I do, just like the U.S. government.  The grande illusion.  What a pathetic attempt to remain in power, truly.  The gambling halls in Chicago, aka the Mercantile Exchange, are currently placing odds at 100% for a rate cut this Wednesday.  80% odds of a 25 basis points cut.  20% odds of 50 basis points.

Meanwhile there is more real estate development happening now then there was pre-Great Recession, the stock market is at all-time highs, and you know, things are just all around way too strong but hey, yeah cut rates.

We need to hike rates.  The devil knows that juggernaut of bleak corporate existence in downtown Detroit, where they HEY, they gamify the lives of thousands of sad humans who are anchored to auto-dialers for 6-7 days of selling mortgages, SELL THOSE DEATH CONTRACTS, fuck all of them, we know they’re doing better than ever.  Selling a lie of the American Dream.

Thank you for reading my rant.

None of it matters.

Because bless the hearts and minds of these crypto-anarchists they’ve done it lads.  They’ve actually come up with a way to derail this whole notion of nation states and corporate surveillance.  There is not much to do now.  Play the game, accumulate fiat cash and convert it as quickly as you can into land that won’t wash away with climate change, solar panels and wind wheels, and crypto currency.  The whole shit house will be up in flames again soon enough.

Anyways the Fed is the Fed, a political arm like any other.  Goodness do I miss Janet Yellen.

That’s all I have to say on this final July Sunday.  Now I must return to building a wall to keep these mortgage jockeys off my lawn.

RAUL SANTOS, July 28th, 2019

Exodus members, the 245th edition of Strategy Session is live, go read about semiconductors—an honest and meaningful industry.

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System update, weekly plan, solid quote, all around decent post with a bad title

Model remains bullish.  It has been bullish for the last four weeks.

Here’s the Executive Summary from this week’s Exodus Strategy Session:

I. Executive Summary

Raul’s bias score 3.88, medium bull*.  Expect price to consolidate at/near record highs, with any sizeable directional moves on the week being faded back near the mean.  Watch for the third reaction to Wednesday afternoon’s Fed Beige Book to provide direction into the second half of the week.

Watch for Netflix earnings Wednesday after-market-close and Microsoft earnings Thursday after-market-close to potentially provide tradable volatility in the late-afternoon, especially on the NASDAQ.

*extreme Rose Colored Sunglasses [e(RCS)] long bias triggered, see Section IV

The Sunday summary are the broad brush strokes I make heading into the week.  I know where the market likely wants to go, and I make my first few broad swipes on the proverbial blank canvas.

The quote on the Strategy Session comes from slave-born Greek philosopher Epictetus, and it reads like a compacted ‘how-to trade’ manual:

“First say to yourself what you would be; and then do what you have to do.” – Epictetus

That’s all wer’re doing over here folks—planning, trading, and refining our craft.  There is nothing fancy about this blog.  Come Monday, if it is the will of the gods, I will write up a trading plan then go to work trading it.  Again Tuesday and Wednesday and so on, then next Sunday a blank canvas and some new brush strokes.  Nothing to it but to do it.

Hope you all have a strong week of mental fortitude and physical strong cock-edness.

RAUL SANTOS, July 14th, 2019

Exodus members, the 243rd edition of Strategy Session is live, go check it out!

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