Greetings lads,

Floods coming.

And until then our job as humans is to establish a controlled grip on our facilities.  Not too firm a grip but steady and prepared for chaos.  One of our favorite tools for ensuring a prepared mind is objective observation of the financial markets.  A power shift is happening now.  Decentralization.  Less power to the government.  More to private enterprise.  The stone cold bankers at JP Morgan have formed a triumvirate with Amazon and America’s favorite privateer Warren Buffet to fix healthcare—one of societies biggest sore spots. Whether they succeed, as always, is TBD.

But we need to act now.  Not when we know if capitalism has fixed what politicians cannot.  We need to act, or not act, to extract wealth from the financial markets.  Said wealth will then be converted into real assets like land.  Northern land in mountainous territories.  High ground is insulated from the malaise of human propagation.

Because it is hard to live in those unforgiving regions.  But with the right gear they become happy oases of pure nature.

Therefore our job is to collect our thoughts and prepare for battle inside the financal complex.  We know who we are up against—the Chanoses and the burrito eaters.  The sheiks, the Chinese, and those crypto-loving Koreans.

The competition is institutionalized at a young age and trained to mathematically outperform your average football-loving American.

Oddly enough, rabidly successful teams like the Patriots have all enacted some form of moneyball analysis.  It has become abundantly clear that competing at the highest level in any game, from skis to /6e’s to chess or kung fu requires a statistical foundation.

Data does not lie.

Which is why we set out every Sunday to collect and parse out the best data available and use it to prepare for any chaos to come.  And the models lads, they are calling for conditions many perceive as chaotic.  The model is calling for a correction.

We are at a pivotal moment in history.  AI is on the Moores’s parabolic arc and climbing.  The good folks at Microsoft and Google are doing incredible work in quantum that will only serve to accelerate this truth.  Our Obama-era Fed chair is out.  Our sweet grandma from Brooklyn is being replaced by Jarome Powell, an old white man from Washington DC with an estimated net worth that ranges from $19-$112 million.

God bless America.

Chinese New Year is right around the corner and the gambling halls in Vegas favor the steady Patriots by 4.5 points.  An unexpected victory from the birds might be enough for society to finally snap and take to the streets with aluminum bats and ski masks, hellbent on altering the course of American history.

Their biggest enemy is the cold.  For 1000s of years cold weather has successfully thwarted attempts at revolution, from the fires of Byzantium to the French gallows.  Which is why it is our job to avoid all these chaotic times from the comforts of the north, letting nature insulate us from the recurrences of fanaticism.

All that being said, it is with great pleasure to announce I am headed to the mountains.  February is without question the worst month down on the Michigan flats.  It is time I seek steeper lands and deeper snow packs to hurl myself down. I am returning to the fringe life.  We have rented an RV and will be chasing powder until further notice.

During this time stock market communications will be limited.  The way I see it, we are due for a correction and the models are calling for a correction, and if we are correcting, then what purpose does it serve me to ring my hat over a violent market?  My time is better spent becoming one with winter nature.

If you would like to follow my adventure, be sure to follow me on Instagram, username vincalim.  I will be posting all sorts of content from the highlands.

Models are bearish lads.  We could establish a trading low at some point next week.  But a longer view suggests a correction is in the cards for the next several weeks.

Exodus members, the 168th edition of Strategy Session is live.  Go read more specifically what the model is calling for and see in much less colorful words what we are specifically looking for before we initiate new long.

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January is nearly complete. And then? February.

The trading model is bullish for a fourth consecutive week.  It is safe to say, in hindsight, that the model absolutely crushed January.  Which is nice.  While more-and-more rally skeptics voiced their concern about how far and high 2018 has already gone, the robots keep us on the right side of the tape.

Overall I think it makes sense to take some profits, but only if you intend to invest them somewhere else.  Like new windows for your house.  What is nice about investments in real estate is you can enjoy it.  The most you can do with a stock is take to Twitter and be a fan-boy.  Which is kind of enjoyable, especially with Tesla, because it is such a divisive concept.

There is a fed rate decision Wednesday.  The gambling halls in Chicago currently show a 96.4% probability of the target borrowing rate remaining unchanged at 150 basis points.  In my opinion they need to start hiking rates more aggressively, and pump the proverbial brakes, but it seems like we are really enjoying all this winning.  So it is not likely.

The March rate decision is a live meeting.  There is a 76.8% probability of a 25bp hike.

Because of the odd, mid-week ending of January, we will also have non-farm payroll on Friday.

All that important economic data is on top of us heading into a heavy earnings week.  Our tech overlords at Apple, Google, Microsoft, Amazon, and Facebook—AND Alibaba all report this week.

I spoke with a Google employee last night.  She is quite optimistic about the direction of her company.  She told me keep an eye on some specific parts of the business, but we were in the basement of a parking garage, crammed in an orange room filled with loud, repeating house music and cannabis smoke.  I think I may have caught a contact high, and I do not remember those specifics.

How’s that for a useless anecdote?

Through all the commotion of the upcoming week we have our quantitative signals to guide us.  They are calling for a calm drift.  We have Wednesday afternoon to watch as a pivot point.  And as always we have auction theory for clarity.  So we will do what we always do—take it one day at a time.

Raul Santos, January 28th, 2018

Exodus members, the 167th edition of Strategy Session is live.  Go check out a few caution signs we need to monitor next week.

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What feels good about this week is, well everything.

I have learned to take the good with the bad and treat them all the same.  I refined what makes me feel good.  It is not financial gain.  It is physical pain, but that is irrelevant to my professional life.  What makes me feel good professionally is doing the right work.

Research, plan, execute.

This was an important week, but I woke up late Monday.  The Sunday football had me all fired up. Bill Belichick is someone I admire, and seeing him take another set of athletes to the Superbowl gives me hope that I will have a long trading career if I do my job.

But the real fun was seeing the birds trounce those primitive norse men.

Through it all I forgot to set my alarm.

So I woke up late Monday.  Missing the opportunity to write a NASDAQ trading plan before opening bell threw me completely out of whack.  Suddenly everything else I needed to do this week started swirling around in my head.  It was overwhelming.

Just then I took a mental break.  I sat down in the office.  Turned off all the monitors.  Left the phone in the kitchen and folded a standard eight and a half by eleven piece of paper in half four times.  This yields the only size to-do list one can effectively tackle.

And I wrote down everything I need to do this week.  I took Monday off from trading.  I did not force myself to sit down and use my gut, or instinct, or whatever to go swing some trades around.

That was something I used to do.  It lost me lots of time and money.

I sat down and wrote a to-do list.  Then I starting knocking out the most enjoyable tasks.  The low-hanging fruit.

On Tuesday I traded.  I  cleaned up the overnight high before lunch and went back to work on the to-do list:

Primay hypo completed, all we were looking for was that move up through ONH. what's for lunch? https://t.co/wGqi7X8Sim

— RAUL (@IndexModel) January 23, 2018

Tuesday night I had an awesome Meetup downtown and made some real connections with people who I think will become better observers and traders.

Wednesday I nailed the trade up through overnight high THEN pivoted and rode a fast rip lower and went back to work on my to-do list:

Let history show that I was kind to my robots and we coexisted in peace??‍???

https://t.co/tomo41plAa

— RAUL (@IndexModel) January 25, 2018

Thursday I nailed the gap trade fast and magnificently and then worked on my to-do list:

??OMG I just slayed the open. Fuk. Primary hypo complete ? #nq_f https://t.co/2M2iR64sYT

— RAUL (@IndexModel) January 25, 2018

Friday, today, I pivoted to hypo 2 and slowly rode the trend higher:

Sellers had their shot, came into the open on right side of tape. Now it's looking like hypo deuce. Omaha Omaha https://t.co/vlAaZSADgf

— RAUL (@IndexModel) January 26, 2018

 

And now it is time to return to my to-do list.  There are a few items left and I scratched a few new items in the corners.  I may not even complete the whole list this week.  But the process of stopping—of sitting down and writing all the seemingly overwhelming tasks on paper, with pencil, on an eight and a half by eleven piece of paper folded in half four times—saved my entire week.  And I am happy that I stuck to an old habit that helps to clarify my thoughts and take proper action.

I am grateful I took a stop.

I like to think a week like this would make coach Belichick proud.  Not that that matters.

Meanwhile my quantitative portfolios are all at record highs and outperforming the S&P 500.  These truly are good times.  So much winning is occurring.

I know the inevitable snap back is just around the corner, like a hard northern wind just after passing beyond a building.  Don’t let it blow you over.  Keep you feet on the ground and stay balanced.

Have a great weekend everyone.  I am grateful for the connections I make here.  It means a lot to me that you guys share my work, and hopefully it finds someone who needs help with their approach.  Everyone takes a different path to consistency and sometimes it helps to emulate some of the traits they see in others.  Eventually, with experience they can begin creating their own recipe.  They become less of a cook and more of a chef.  But we can always go back to being a cook again if someone is more experienced and a worthy mentor.  And I hope people read my work and realize that it takes patience.

Raul Santos, January 26th, 2018

 

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Coming up for air.

We are in the midst of our first long liquidation of 2018.  Before sellers gained control we pushed higher and cleared out the globex high.  Markets rarely top out during extended trading hours.

Not that we know if we are topping out.

What we do know is sellers took control after a big round number on the NASDAQ behaved like a wall:

Man, 7000 was a wall #nq_f

— RAUL (@IndexModel) January 24, 2018

Listen, I have been bullish all week.  I was still bullish this morning.  But what the robots have been saying recently had me ready to pivot.  The robots have been saying some shit.

Like Sunday, January 14th when they said a big red day was coming:

you will notice that in every instance there has been a few more days of rally, like 2-to-5, then a couple big red candles.  THOSE RED CANDLES, those are distribution days.  A futures trader can make a few month’s worth of gains on those days if prepared to do so.

Or Monday, January 22nd when the Exodus 10-day bullish cycle completed:

Bullish cycle complete, here is the Tuesday NASDAQ trading plan

Yesterday, close-of-business marked the completion of a 10-day bull cycle that began on Friday, January 5th.

The surface of my desk is a balmy 76 degrees according to a laser thermometer.  There are various alerts singing out of the speakers of Mothership like, “POWER POWER,” and “warning…”

These are good days.  The renkos are dialed in, the impulses are seeing carry through.  A fast tape.  NASDAQs are coming quick.  And going.

The robots said a long liquidation was coming in 2-to-five trading days.  It happened in seven.  And only 2 days after the latest bull cycle completed.

If we can cut our inputs down to only the cold and dead and logical—what these robots tell us—and assuage the use of empathy and frustration and love for other parts of life, then we can morph our vision into something designed specifically to process information and act.

This is a much less confusing path to domination of the financial markets.  The robots are our only true friends in competitive finance.  Our companions.  Our amigos.

Loyal, focused, robots.

I am grateful to my robot sidekicks.  Let history show that I was kind to my robots and we coexisted in peace.

Raul Santos, January 24th 2018

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Shortly after knocking my head pretty good on the cement last summer I received an email from Stocktwits asking if I could be their community organizer in Detroit—my beloved home town—a place surrounded by a massive fresh water reserve.  And being only 24 hours off my deathbed I was experiencing the clarity one achieves when fate comes knocking.  I knew what had to be done.

The purpose of our Detroit Stocktwits Meetup is to liberate the small-to-medium investor from all the charlatans that plague the finance industry.  And also to cut away senseless fees using the latest tools in fintech.

My favorite investing method right now, hands down, is to pair Exodus and Motif to build a quant strategy that dominates the financial markets.  Our latest installment in the quant book is up +8% year-to-date, beating all other major indices.  Look:

And despite all my encouragement that normal small-to-medium investors stick to passively allocating to this type of quarterly strategy, they still want to know more about active trading.

What am I supposed to do?  Not share everything I have learned about active trading these last 9 years?  COME’ON…

SO WE GONE TALK ABOUT ACTIVE TRADING.

And it is going to make people uncomfortable.  Because the first thing I will tell them is how much money they are likely to lose whilst learning.  Hopefully they lose less than I did.  That is my goal.

If you have followed this blog for any amount of time then you know what tools I like for active trading, but I shall list them again, for any new readers.  It is a few more than two, so here we go:

• quality raw data – DTNIQ feed
• market profile charts – Ninja trader with the fin-alg TPO add-on
• automated trading and candle charts – MultiCharts
• home made tools for context/bias – switchboard and my trading model
• reading and interpreting order flow – Bookmap
• optional – audible order flow – Tickstrike
• news alerts – Benzinga Pro

Listen, I constantly refine and simplify my approach.  The less clutter, the better.  I trade one instrument, NASDAQ 100 futures.  If I can eliminate a tool or expense, I do. I need all the above tools to consistently receive and interpret what is happening in the world.

As useful as those tools are for me, you could sit at my trading desk with all the same inputs and have your jaw clean knocked off your face.  It is like sitting in the cockpit of a Formula 1 race car—there is no way you will drive like Mario Andretti.  What takes people far longer to cultivate is a winning mentally.

This takes time.  It took me a long time.  And I still do dumb shit sometimes.  The key to this game is staying power.   We are going to talk about the habits and lifestyle choices that, for better-or-worse, help you stay in the finance game for a long time.

Here is the thing.  I am just getting started.  I have another solid 50 years of trading and investing ahead of me.   That is a long time to learn and grow and advance my vocation.  The markets have existed long before me, and will continue to exist long after I am gone.

So I trade less now.  Only when the best opportunities surface.

Like those 20 points up we took off the open Tuesday morning.  That was a lay-up trade.  We had a plan, we had a directional bias, and we had a high probability target (overnight high).

Anyways listen.  We are meeting in the hood tonight, down in Corktown, by the rubble of old Tiger’s stadium to talk active trading.  If you want to ask any questions remote, I am going to go live on Instagram around 6:45pm eastern.  Go follow my account now @vincalim to receive an alert when I go live.

Here is a link with all the information in case you are nearby and want to come hang out:

ANNOUNCED: RAUL to host Detroit Meetup. Topic? Active Trading

If your goal is to dominate the financial markets from a position of confidence, then join us Tuesday evening at Brew Detroit.  Or remote.  Together we shall liberate ourselves from the Goliaths and roam the planet FREE, no ones master, no ones slave.

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Greetings lads,

Floods coming.

And until then it would benefit us to secure high ground, as far north as our constitution allows, and stock it with the necessary supplies to survive long stretches of human indignation. The frantic fools in politics and murderous ideologues of religion will never stop subjecting the general population to their fury.

An effective means of establishing a safe space in the north is domination of the financial markets, which are the most natural form of human interaction we have come up with yet.  A system of assigning numbers and letters to intangible things, like Fords or Googles.

The purity of the financial markets shall never be forgotten. They provide an immutable reality.  The collective beliefs of humanity, far superior to any doctrine or screed, all in one fair place.

From this innocent, child-like playground we will extract US Federal Reserve notes, which we will then convert into physical goods and artificial intelligence, which we will configure to handle the maintenance of our lands.  They will also generate enough goods to liberate us from the obligation to work, in the traditional sense.

This is our job.  To liberate the human spirit so that it may apply itself only to that which is loves.  Consuming only what is necessary to fulfill that love, and leaving the rest, lest it too become an obligation.

And the best way to extract US Federal Reserve notes from the financial markets is an augmented approach to trading that utilizes statistical biases and robotic decision trees.  It is by removing the human ego, the gut reaction, that we can consistently execute a profitable method.

Kora Reddy put up a great stat on Twitter over the weekend.  If you are not following @Paststat you are doing your mind and family a great disservice.  He dropped this data, which shows that historically, a government shutdown has been bullish, check it out:

government just shut down , what next ? https://t.co/1t5HeVhtBZ pic.twitter.com/SuBURZG5Y7

— Kora Reddy (@paststat) January 20, 2018

These are the type of inputs we can obsess over.  The clarity they provide is far greater than some passionate plea from a protestor or manufactured statement from a corporation.

Inside Exodus we deploy our working model, which spits out a directional trading bias every Sunday.  All it attempts to do is envision the next 5 trading days.  Four if there is a holiday.

It is bullish for a third consecutive week. The model is crushing 2018 already.  We put our faith in the model.  The model is our guide. Our friend.

Inside Exodus we also have predictive algorithms.  The two I pay attention to (and they pay US Federal Reserve notes to me) are the 36-month hybrid overbought and the oversold.  Each sets out to predict 10 trading days into the future.  These algorithms are twice as bold as the model I hand build.  They flagged bullish on Friday, January 5th.  The results so far? Sublime, look:

If you are not keen on counting, I will do you the favor of sharing that this 10-day cycle ends Monday, end-of-day.

Look at that Dow Jones. Would you just look at it? America is winning so much.

But do we need a government? Probably.  And only because most of mankind has to be told what to do.  They need handlers.  I just wish we did not.  How nice would it be if everyone could just take care of themselves and be kind to others?  And all the other animals?

There would still be a place for markets.  And internets.  But not bloated rulers who spend their life telling us what to do.

Investing in ideologies is how we invest.  The ideologies we believe in are those set forth by Our Only True Leader, Elon Musk (all Praise and Glory to The Leader).  We also believe 2018 is the Year of AI and have positioned accordingly.  Finally, we find CRISPR a novel science, and have thrown our hat in with the good folks at Sangamo, especially since their brand name sounds like a nice Italian town.

Trading we approach with cold, dead logic.  Statistics and AI and auction theory.  It is with these foundation stones that we go to battle, day-in-and-out, and return home victorious to make love to our women and drink wine.

The models are bullish lads.  They intend to carry us through the fourth week of the second year under our authoritarian regime.  People are more interested in the weekend’s games then petty government squabbles.  And come Monday we will be ready to fight, slowly, and win.

They’re greasing the poles in Philadelphia just in case the birds win.  The gambling halls in Vegas are giving the Eagles three and a half points.  The streets of Philadelphia are likely to degrade into drunken mayhem as this unseasonably warm evening progresses.

Godspeed, and Enya:

Exodus members, the 166th edition of Strategy Session is live, go check it out!

AND MATTHEW WILDER:

STILL HERE?  Great, you must be some kind of masochist.  If you are a masochist and live in the Detroit area, come out to our first Stocktwits Meetup of 2018.  It will be held Tuesday evening at a German beer hall, and it is free.  Here is a link with more info and to RSVP so I know how many freaking pizzas to buy: http://ibankcoin.com/raul3/2018/01/16/announced-raul-to-host-detroit-meetup-topic-active-trading/

 

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Exodus Members: there is a critical notice inside this week’s strategy session regarding some of the data showing on the historical ledger.  Please be sure to read Section III of the Sunday Strategy Session.

– RAUL Santos, January 14th, 2018

Good day kind people of the interwebs,

You must endure through any cynicism that may show up over these next few paragraphs because I have something important and actionable to share with you.  But first, I must bring your attention to the following tweet.  It was sent out from my account over the weekend:

Sauna etiquette should be taught in school but it's not so here we go:

1. shower your stankin' ass first
2. wear a bathing suit, a robe, a towel, or any combination thereof
3. flip-flops are advised but not required
4. no other footwear is permitted

— RAUL (@IndexModel) January 12, 2018

Just before year-end I picked up a case of the consumption from the gym sauna.  I took all the proper precautions—flip flops, mask over face, etc—but it seems a festering bacterium living inside the disgusting stranger next to me had too strong a will to live.  They saw my perfect body and decided to upgrade their host. Their vessel, to something infinitely more sexy.  Since then the disease has ebbed, but took a turn for the worse late last week.

I quit going to the aforementioned gym after 6 loyal years because it has become a dung heap.  Last week I found a new gym and worked out extremely hard.  Apparently I had not kicked the consumption yet, and with my immune system compromised from intense weight training, the illness regained a foothold in my lungs.

But I have something urgent to tell you so please bear with my cynicism.

The models are whispering.  The end of our current rally is near.

According to the robots you have, all of you have about five trading days left before a pullback materializes.

How can I make such specific predictions? So brazenly?  Because I speak to you from solid grounds, immovable boulders of quantitative logic and auction theory. The model lads, which draws its data from auction theory and the robust predictive algorithms inside Exodus, the very model that had us BULLISH AF last week, is generating some rare readings.  Extremely high readings.  The last instance of readings this high was October 15th, 2017.

I have noted October 15th, and all other instances of these extreme readings on the following daily candle chart of the NASDAQ 100:

You may notice, that long term this has not mattered to much.  That is fine.  We have been in a secular bull run.  But if you zoom your lens a bit, you will notice that in every instance there has been a few more days of rally, like 2-to-5, then a couple big red candles.  THOSE RED CANDLES, those are distribution days.  A futures trader can make a few month’s worth of gains on those days if prepared to do so.

Do these extreme readings mean you should adjust your long-term accounts?  No.

Do they mean we should start shorting the market as early as Tuesday, intra-day? No.

I am being as specific as possible here, to avoid any confusion in my own mind or yours.

What this means is we are frothy.  Individual stocks, especially garbage stocks (sub ~ $3.00) can make jaw-dropping upside moves in these final throes of bull passion.  Final throes, like just before the money shot.  The ejaculate.  Very exciting times for a mammal.

Then the male rolls over and goes to sleep.  Naturally.

The bull market is set to ejaculate all over the faces and hairs of its doubters next week, causing a magnificent mess, than he is going to take a nap.

I told you I am sick.

That nap period is when I can sneak into the arena and take some of the bulls hard-fought gains, then scuttle back into my hiding hole, never once forced to resist any idiot humans on armed horses wielding hooked javelins.

This is what I constantly seek in life.  Opportunities to make a few dollars without rambunctious mammals jabbing me with sharp objects.

The life of a reptile I suppose.

And that is it.  That is what I had to tell you.

To recap, mammals carry disease.  Sauna etiquette is what separates shit holes from Valhalla.  Robots help us better understand mammal behavior.  A lizard with robot friends is suited well for making a living in the futures markets. Prepare for ejaculate then a nap, however you want.

Inside Exodus you can see the high risk stock I bought last week. I intend to hold it long term as it jibs with my core investment theme of 2018.  Also it was brought to my attention by my chief scientists.  The same scientist who put us into SGMO at the beginning of 2017.  Though I intend to hold it long term, I love the price chart as we work through this late-cycle bull action and hope it puts a nice capital cushion below my entry point.

For all other raw insight into how I will attack the market this week and next, tune in to my morning trading plans which have been en fuego.

ciao

Distinguished members of Exodus Market Intelligence, the 165th edition of Strategy Session is live, go check it out!

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I just put down the nastiest morning trade session so far in 2018 and I am taking to the pen instead of using this chest full of courage to give back any gains.

Fuck.

Was long in the pre- per the primary hypothesis.  Let’s dissect the plan and take a magnifying glass to it, shall we? First:

Heading into today my primary expectation is for buyers to work into the overnight inventory and test re-entry into the Tuesday range 6667.25.

This expectation, that we would push into the overnight inventory had me long ahead of opening bell, targeting the Tuesday low.  Then I watched 6666 because I am weird but also because I wanted to see sellers step in.  THEY DID.  And then, a gift from the tape gods, a retracement for me to sink my teeth into, crocodile style. Look:

I had time to think but not much.  Why would I go short around 6662?  Because of some EMA or other chart magic?  Not really, the renkos just help to time entries and manage risk.  I went short because of the next part of the primary hypothesis:

Sellers defend here and we go down to take out overnight low 6640.50.

This is why I blog.  This is why I write a morning trading report before I even think of stepping into the arena.  I could not care less if the gen-pop reads my reports.  I hope some of you, the ones who really are totally immersed into investing and trading start to see how helpful this approach to trading is.  But I know there aren’t many hardcore trading nerds out there.

The morning plan clarifies my vision.  It has one piece left, but I will not engage.  I will take my quick 600 bucks and go pursue other interests.  If I were still trading, I would look for this action to continue lower, eventually tagging 6623.  Why? Sentence three of the primary hypothesis:

From here we continue lower, down to 6622.75 before two way trade ensues.

It could be wrong, how we trade the daily midpoint around 6650 is the pivot.  And I do not feel like mucking around inside choppy value.

Listen, this post is a bit robust and braggiose, I suppose I am happy that I stuck to my plan and did so with the tenacity of a crocodile.  I do not seek your admiration.  Just hoping to inspire anyone struggling to gain a grasp of how the auction works.

MOVING ON

We do not have much to go off of over on bitcoin.  The CME instrument is only a few weeks old.  These are the two hypotheses I laid out on Monday:

 

So here we go:

• 2-3 day trend : 2
• 2-3 week trend: 2.5
• magnets: 3.5
• strongest volume: 2.5
• Excess high/low: 2.5
• SCORE: 2.6 MEDIUM BEAR

It looks like primary hypo (hypo 1) is on the table.  We are bouncing along the range-lows of a messy balance.  Keep an eye on 14,340 as a pivot back to neutral, otherwise look for more selling.

Listen, like all facets of life we take trading one step at a time.  On Sunday we form a bias.  Every morning we write a plan.  Then we take it one trade at a time.  Trade THIS TRADE RIGHT NOW, then once it is complete, reassess the plan and get ready for the next trade.  THEN TRADE THAT TRADE.  I believe this is how best to achieve the coveted ‘zone’ so many professional athletes talk about.

Up in the mountains, there is no better feeling then when all your equipment is dialed in, a good song is playing in your helmet, a couple of bros are with you, and the mountain has good conditions below.  There is a similar feeling when trading.

Bias, plan, execution.

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Greetings good people of cyberspace,

I am refreshed.  From what I hear, last week was hectic.  Some big memes came out.  Politics were distracting, and the east coast was pounded with snow and ice and everything nice.  Week 1 is often lively.  Plans are put into action.  The schemers go live with their latest creation.  Volumes of new information come rushing into the world.  It can blow you right off your feet.

That is why I took to the mountains.  I drove to the nearest national park and spent all week observing the effect cold is having on the various inhabitants of the Great Smoky Mountains.

In chess the first few moves are called opening play.  I absorbed the opening play of my competition from high ground.  From this alpha position everything seemed far less serious.  Then my attention turned to the rare ice formations along the waterfalls and rivers. Fascinating.  Off in the distance, the sound of a woodpecker plugging away on some tree.  It brought my attention entirely to listening.  To tracking.

Then, I returned to Mothership and began twisting dials and calibrating the sensors.  The system is humming along smooth.  Some big changes are being detected.  Using only this data, along with a clean mental slate, I am fully equipped to declare my stock market bias for the upcoming week:

Really.freaking.bullish.

The robots think we head higher.  And the robots think we keep going higher for two weeks.

Observation is important.  It is what we do as humans to survive.  Aristotelian observation nvolves labeling.  It has limits, but if regularly audit your labeling mechanism to clear our any emotional bias, it is a useful way of accelerating your brains ability to parse through new information.

Perception is a lens.  We use two lenses to observe the market—auction theory and statistical analysis.  Both are far less likely to distort reality than media dependency or even technical analysis.  Both lenses can react to news, surprises, human mania, or any other external influence.  They are the foundation stones that we continue to build upon.

Look, this tweet was designed to help clarify the difference between observation and perception:

Observation vs. perception feat. frozen waterfall:

This place looks frozen. What a lovely place to be.

The water is crystal clear and cold. It is safe to drink and delicious.

The ice is blue. How absolutely brilliant. pic.twitter.com/S3Jt8I9pfV

— RAUL (@IndexModel) January 6, 2018

My goal in 2018, with all my content, is to make it meaningful.  I do not want to waste your time.  If I can inspire you to have a thought that progresses how you approach your trading, then well…then what I am doing is working.

Trading is constantly evolving and if you are a business owner, then you know that every industry behaves this way.  And change will continue to be a powerful force.  Especially as more and more AI is used to augment our realities.  This is one of my core investment themes of 2018.  You can read more about it by clicking here.  These developments will only accelerate the rate of change.  We need to stay sharp, as humans, if we are to continue existing.

Teamwork is our dominant skill against other apex predators.  Without it we would still be relegated to somewhere in the middle of the food chain.  How we choose to augment our existence with AI will be the sapiens next leap ahead in domination, for better or worse.

Models are bullish lads. Therefore we will press hard into this extended market, milking this stretched out rally for everything it has and MOAR.

Exodus members, the 164th edition of Strategy Session is live. Go see exactly what has us so bullish heading into the upcoming week, and the key context to watch for confirmation.

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One of the big projects of 2017 was designing a quantitative method of using our analytics software, Exodus Market Intelligence, to beat the stock market.  It began in March and by October 1st three of the legs of the portfolio were built and invested into use Motif Investing (no affiliation).   Here are the returns of each leg so far verse the S&P 500:

At market open tomorrow, I will build the final leg of this quant portfolio and buy the following stocks.  They will be held for 12 months:

These stocks were chosen during a YouTube live broadcast on the iBankCoin YouTube account.  I am like a real life YouTuber.  Here is the recording:

STILL HERE?  Good stuff.  You may be a bit of a masochist.  Totally fine.  Here is a bit more information on the process, which I am copy/pasting from an earlier post:

This is a very lazy approach.  There’s little need to babysit these books.  An hour is spent at the end of each quarter, parsing data, running the Exodus system, then making a few clicks in Motif.

Here’s how it all works.  At end of Q1, a 3-month top-down sector analysis is performed.  At the end of Q2, a 6-month.  Q3, a 9-month.  And you guessed it, at the end of Q4 a 12 month look back.

Each book is a 12-month hold.  Each book can hold a position held in another of the books, meaning certain stocks can have out sized positions.  This means greater micro risk—but also potential reward.

If the systems keep flagging a stock, like they are IMAX (which is getting slaughtered), then it will be bought quarterly and without second thought.

It is nice to not think about investing.  Humans tend to get in the way.  Robots are much better investors, advisors, and friends.

Loyal

This quarterly process jives well with my inner accountant.  Every quarter I make a contribution to my investments, and while doing so I re-balance one of my books.  This saves on overall expenses and lets me do some simple financial planning.

Do you love this approach?  Let me know in the comments below.  If you have any questions, you can hit me up on Twitter @IndexModel or leave them in the comments below.  If you think someone else could benefit from this type of investment approach, it would be really cool of you to share this post!

We are taking a quantitative approach to stock picking.  This effectively removes the emotion and allows us to focus our energy and time on other industrial pursuits.  Whether it actually works out is, as always, TBD.

 

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