NASDAQ futures are coming into the last Tuesday in June down about-20 after an overnight session featuring elevated range on normal volume. Price was balanced overnight, balancing along the upper quadrant of Monday’s range after briefly exceeding Monday high around 7:45pm New York. As we approach cash open price is hovering about in the upper quad.

On the economic calendar today we have case-shiller home price index at 9am followed by consumer confidence at 10am.

Yesterday we printed a double distribution trend up. The day began with a gap-and-go style drive up shortly after opening bell which saw price to a new all-time high. Then we spent several hours churrning higher before a bit of selling saw price fade a bit lower. Price could not return to the midpoint however before buyers became initiative and made a new high. We ended the session near the high.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap to 14,503.75 on their way to taking out overnight high 14,519.75 before two way trade ensues.

Hypo 2 sellers press down through overnight low 14,468.75. Look for buyers just below at 14,447.50 and for two way trade to ensue.

Hypo 3 stronger sellers reverse the Monday short squeeze by taking out 14,447.50 early on and sustaining trade below it, setting up a quick move down to 14,400.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are heading into the final three days of June gap up after an overnight session featuring elevated range and volume. price was balanced overnight, balancing while steadily ascending up through last Friday’s range. As we approach cash open price is hovering up near last Friday’s high.

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

Last week featured a week-long rally that kicked off early Monday with a strong conviction buying drive shortly after opening bell. The Russell 2000 lead the way suggesting risk tolerance remains elevated. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal day which is anything but normal, occurring a bit less than 20% of the time. Normal days typically feature a dynamic first hour of trade which sets a wide range, allowing the rest of the session’s range to be contained within initial balance. It suggest the higher time frame is not active. The day began with a gap up in range, just above the Thursday midpoint. After an open two-way auction sellers stepped in and drove down into the gap fill then briefly exceeded the Thursday low before a sharp excess low formed. Price then bounced back up to the Thursday midpoint, sellers defended, and we spent the rest of the day chopping below the daily mid but never going range extension down.

Heading into today my primary expectation is for buyers to gap-and-go higher, tagging 14,400 before two way trade ensues.

Hypo 2 stronger buyers probe beyond all-time high 14,422 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory and close the gap down to 14,324. Look for buyers down at 14,300 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

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June is nearly complete. For the most part, it was RAUL’s month. Fate had interesting plans — I was made to cope with many a challenge in what would become a contemplative period filled with obstacles between your dear humble raul and all these planned goals. We took them as they came though, and given the circumstances I am grateful that the foundation stones I’ve build my entire compound upon remained an unshakable foothold on this derelict path to freedom.

Yes I work too hardt sometimes but you know what? I have been liberated from the monotony and mediocrity of generic american existence. I am doing my best.  I’ve sacrificed the amount of attention I give the markets and it shows (fair enough) but now I am dialing back in.

Weekend research has been filed, and I intend to resume morning reports come Monday. The quarter is ending and I need to be back in ship speculative shape come Q3.

Mentally and eventually physically.

Okay for now. Enjoy this week’s report.

Raul Santos, June 27th 2021

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Stocklabs Strategy Session: 06/28/21 – 07/02/21

I. Executive Summary

Raul’s bias score 3.55, medium bull.  Sideways drift with slight upward bias into the holiday weekend.

II. RECAP OF THE ACTION

Strong buyers early Monday reversed the tape and set up a week-long rally.

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

Rotational Report:

Full on rotation back into the equity complex. Leadership in mostly the right places. Energy on its own planet.

bullish

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

Concentrated Money Flows:

Money flows skewed heavily to the positive side of the ledger, negating last week’s bearish reading.

Volume delta might be broken or just be a strange lagging indicator. It is back to being pinned negative.  Median return was about +330 basis points.

bullish

Here are this week’s results:

III. Stocklabs ACADEMY

Distracted but dialing back in

One of the greatest values about Stocklabs is its ability to keep us up to speed when we’re unable to give our full attention to the markets or at least the amount of attention we prefer to give markets. The thing is, it is only useful if we properly interperate the data.

We had a good oversold reading heading into last week yet my forecast was bearish. My bearish leaning was due to giving too much weight to the negative money flows we saw last week.

In hindsight this was an error. The oversold signal presses right up into the Fourth of July holiday. That is bullish.

I have been distracted outside of the market lately but plan to dial back into the morning reports this week.

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:

Sideways drift with slight upward bias into the holiday 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]:

Will range hold or do we rally?

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 found a bid near the low-end of range and appear to be holding balance.

See below:

Semiconductors managed to bounce off that ‘eroding support’ last week and now they are near the top of their double range. I expect this level to hold as a ceiling but if not the continued semiconductor rally is likely to carry the whole stock market along with it.

See below:

V. INDEX MODEL

Bias model is back to extreme rose colored sunglasses bullish after being neutral last week after being extreme Rose Colored Sunglasses bullish bias for three consecutive weeks after being neutral for the two weeks prior after being e[RCS] bullish seven weeks back and RCS bearish eight weeks prior.

We had a Bunker Buster seventeen weeks ago.

Extreme Rose Colored Sunglasses calls for a calm drift perhaps with a slight upward bias.

Here is the current spread:

VI. Stocklabs Hybrid Oversold (6-month)

On Thursday, June 17^th Stocklabs went hybrid oversold on the six month algo. This bullish cycle runs through July 1^st end of day. Here is the performance of each major index so far:

VII. QUOTE OF THE WEEK:

“Every new beginning comes from some other beginning’s end.” – Seneca

Trade simple, one trade at a time

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NASDAQ futures are coming into the second day of the final month of Q2 up about +20 after an overnight session featuring normal range and volume. Price was balanced overnight, balancing along the lower half of Monday’s range. As we approach cash open price is hovering below the Monday midpoint.

On the economic calendar today we have the Fed’s beige book at 2pm.

Yesterday we printed a normal variation down. The day began with a gap up inside range. After a brief two-way auction sellers stepped in and drove the overnight gap fill then continued lower, briefly probing into last Monday’s conviction buying range before discovering a bid. Responsive buyers were found ahead of that Monday’s midpoint and we spent the rest of the session slowly chopping our way back tot he daily mid. Then late in the session sellers defended the mid and we faded into the close.

Heading into today my primary expectation is for sellers to close the overnight gap down to 13,649.25 setting up a move down through overnight low 13,616.75. Look for buyers at 13,600 and for two way trade to ensue.

Hypo 2 buyers gap-and-go up through overnight high 13,673.50 and tag 13,700 before two way trade ensues.

Hypo 3 stronger buyers make a run to 13,800 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures were balanced overnight and are heading into the final month of the second quarter gap up after an overnight session featuring extreme range and volume. As we approach cash open in this holiday shortened week price is hovering near last week’s high.

On the economic calendar today we have ISM manufacturing index and construction spending at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week we saw a strong rally Monday then a slow and steady upward drift for the rest of the week. Russell 2000 outperformed suggesting risk tolerance remains elevated.

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

On Friday the NASDAQ printed a neutral extreme down. The day began with a gap up in range and after an open-two-way auction price sort of chopped the mid for an hour and a half before rallying to a new qweekly high. Price held the highs for about an hour before falling back down through the mid. Then, sellers held the mid and pushed into a late-day neutral print, closing on the lows.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the Friday gap down at 13,693 before two way trade ensues.

Hypo 2 buyers gap and go up to 13,800 before two way trade ensues.

Hypo 3 stronger buyers tag 13,833 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are set to gap up into the week with prices trading up above last Friday’s midpoint and over +100 from last week’s close. Price was balanced overnight until about 3:30am New York when it began to probe beyond the mini balance. Price has been on a steady campaign higher since then and as we approach cash open price is hovering near the upper quadrant of last Friday’s range.

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

Last week was choppy through Tuesday then there was some late Tuesday selling. Pro gaps down across the board Wednesday that were bid into resulting in an all-day rally. Rally carried into Thursday. Then we essentially marked time Friday.

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

On Friday the NASDAQ printed a normal variation down. The day began with a gap up slightly above Thursday range. Sellers resolved the gap with an open-drive-down, driving down into the gap fill rapidly and then finding a responsive bid there. Said bidders could not take out the opening swing high. Instead sellers reasserted themselves and pushed an early range extension down. The selling continued until about noon, rotating price down to Thursday’s midpoint where we then bounced and marked time for the rest of the session.

Heading into today my primary expectation is for buyers to gap and go higher, probing above Friday high 13,570 and tagging 13,600 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 13,410.50. Look for buyers ahead of 13,410 and for two way trade ensue.

Hypo 3 stronger sellers tag 13,300 before two way trade ensues.

Levels:

V0lume profiles, gaps and measured moves:

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NASDAQ futures are coming into the second-to-last Friday in May with a slight gap up after an overnight session featuring elevated range on elevated volume. Price was balanced overnight, balancing along and often exceeding the Thursday high. As we approach cash open price is overnight a touch above Thursday high.

On the economic calendar today we have existing home sales at 10am.

Yesterday we printed a double distribution trend up. The day began with a gap up beyond the prior day range and drive higher, driving up clean thru to a new seven day high before chopping a bit inside the 05/10 conviction selling range. We ended the session flagging along the highs.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 13,600 before two way trade ensues.

Hypo 2 stronger buyers tag 13,638.25 before two way trade ensues.

Hypo 3 sellers take out overnight low 13,479.25 on their way to tagging 13,400.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into Thursday up a quick +80 after an overnight session featuring extreme range and volume. Price was balanced overnight, balancing along the upper quadrant of Wednesday’s range until about 8:30am when jobless claims data came out better than expected and sent price higher. As we approach cash open price is hovering near the Tuesday midpoint.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am followed by a 10-year TIPS auction at 1pm.

Yesterday we printed a double distribution trend up. The day began with a gap down to a new weekly long and then a drive higher at the open. Price drove higher, then chopped back to the mid before beginning a steady campaign higher. The buying ultimately closed the overnight gap before checking back to the mid around the release of the 2pm FOMC minutes. Buyers defended the mid and price campaigned higher into the close, closing in the lower quad of Tuesday range.

Heading into today my primary expectation is for buyers to gap and go higher to 13,333 before two way trade ensues.

Hypo 2 stronger buyers trade up to 13,372.50 before two way trade ensues.

Hypo 3 sellers press down through overnight low 13,150 setting up a tag of 13,100 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures drove lower overnight on extreme range and volume. Price has been steadily campaigning lower since midnight, and as we approach cash open prices are flirting with last week’s lows.

On the economic calendar today we have crude oil inventories at 10:30am, a 20-year bond auction at 1pm and FOMC minutes at 2pm.

Yesterday we printed a neutral extreme down. The day began with a slight gap up near prior day highs. Sellers resolved the overnight gap during an open two way auction, then buyers worked higher and resolved the Friday gap. That led to an early range extension up before sellers knocked price down through the daily mid. Price walked over the mid a few times before sellers ultimately pressed an afternoon neutral print and accelerated their selling into the close, closing on the lows.

Heading into today my primary expectation is for sellers to gap-and-go down to 12,900.

Hypo 2 stronger sellers tag 12,818 before two way trade ensues.

Hypo 3 buyers work into the overnight inventory, tagging 13,100 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ future are heading into OPEX Tuesday with a slight gap up after an overnight session featuring elevated volume on extreme range. Price drove higher overnight, working up beyond the Monday high and briefly exceeded last Friday’s high before discovering responsive sellers. Since then price has retraced lower a bit. At 8:30am housing starts/permits data came out mixed, and as we approach cash open price is hovering above the Monday high.

Walmart is up +3.25% in pre-market trade after reporting earnings.

Also on the economic calendar today we have 52-week T-bill auction at 11:30am.

Yesterday we printed a normal variation down. The day began with a gap down in range, right along the midpoint of last Friday’s range. There was a big/choppy open two-way auction which ultimately gave way to selling. Sellers worked an early range extension down after chopping along the mid for a bit and eventually took out last Friday’s low by a few points before a responsive bid stepped in late in the afternoon and ramped price back up through the mid.

Heading into today my primary expectation is for buyers to reject a move back into Monday high 13,343 setting up a move to 13,486 before two way trade ensues.

Hypo 2 stronger buyers tag 13,500.

Hypo 3 sellers press back into Monday high 13,343 and sustain trade below it, setting up a move down through overnight low 13,290 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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