Tape opened up nice and slow. Orders are working into the tap in an orderly manner. We just had 10am data. This is quite the pleasant Monday morning—like a lullaby.
Stay sharp, these opens outside of range can be big days.
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First off, I loved posting this savage entry earlier today–it was a wholesome gathering of words, imagery, and music for the Sunday audience. But I figured do a dry follow up to support the colorful case made. Below I list the supporting data, enjoy.
MODEL AND CONTEXTUAL CASE:
WHY BIOTECH?
SOURCE: Exodus Market Intelligence
SOURCE: Exodus Market Intelligence
THE SETUP AND PLAN
THE VEHICLE
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I’ve just completed my scrupulous Sunday analysis and we are in trouble.
Call your perception of the world into question. Wipe the fog off your lenses and form an objective judgment of this moment. Is your favorite coffee shop casting a rich pumpkin spice aroma into the air? Maybe you’re seeing the wonderful second bloom; trees changing from green to opalescent crimson and gold.
The markets bounced hard Friday—that’s always a good feeling heading into the weekend. USA football is on the teevee. All is well in the world of the fat American, the dream is alive. Fine, let us breathe a collective sigh of relief. Then let’s put our guard up. We are still in trouble here.
When you peel back a few layers of this market, like an onion, you expose a rotting core. One industry after another is being ferociously corrected. Heading into year-end biotech is the sacrificial cow. These investors will be killed and their blood spread across the fields to insure the next planted crop.
I’m real bearish and looking for a rally early this week to raise cash and initiate some shorts into. That is all. Enjoy your Sunday.
Exodus members – the latest Strategy Session is out. Get in there and have a look at Section I & IV.
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Watching the Nonfarm payroll reaction this morning was an odd way to start the day. Some speculators swear they don’t care about data like NFP, others watch it real close. Some people chart the data out using Bloomberg Terminals. They pay good money for that data, too much money in my opinion. I just log the events on my daily Switchboard and conduct third reaction analysis on high impact events.
There was no third reaction this morning—at least not in my traditional, short-sighted sense. Instead was just sold, and sold, and sold some more.
It was so ridiculous, I considered it noise and wrote my morning plan like I always would.
I do a few things well. One is treating news driven moves differently than ‘real’ moves. I expect the old check back, the old knee tap, the old turn your head and cough. With that in mind I watched the open then started my buying campaign.
So nice, so clean, so in accordance with a working hypo. I hope by demonstrating this stuff enough times you guys will give this form of analysis some credence and implement it into your own practice.
Otherwise you are a puppet of your emotions and certain to be corrected repeatedly and without relent by the markets. Have a great weekend!
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We talked about taking our perspective out a bit and viewing the higher timeframe heading into October.
This interesting context level, the 14-year gap, is/was in play. Heading into the weekend, and especially if we close out strong, look how nice this candle looks. This candle is how babies are made:
News driven moves are great context. Typically, and eventually, the market likes to ‘check back’ to the price level where the move initiated. We call it returning to the scene of the crime. It was the basis behind my primary and 3rd hypo this morning—this proclivity to return to the crime scene.
The Nasdaq is doing just that and almost exactly how we envisioned in hypo 3 this morning. I am done trading futures for the day. We hit my hypo 3 mark at 4160 and I am cashed up for a weekend of cider, pumpkins, and fast women. But I will stick around and see if I can hunt down a nice little stock to take into the weekend.
There’s order to these markets. There has been for weeks, despite the downward directional force. I like it.
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We have been operating within the confines of a 6-month Exodus hybrid overbought signal for 9 sessions and tomorrow marks its arbitrary completion. It has been a successful mark for the algo, and one that I won’t soon forget. I was headlining the day it fired. I was juiced up and convinced we were going to the moon.
My headline rights were revoked, both OA and FLY said, “dude, chill” as did Exodus. Here’s the performance of every major index since:
The NASDAQ went down over SIX PERCENT during the cycle—a tad extreme no?
I now look for an extreme snap back to start October. The real fun starts next Monday.
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One of the reasons I write morning trading plans is to lay out a few ways the day could progress that wouldn’t surprise me. Today was a primary expectation day, my favorite kind a day, the kind day I clean up on—killing unsuspecting and unprepared enemies. When markets behave as I expect I start pushing on more risk. Today I put on more risk.
Tier one tech has been my preferred theme of late. When all the dust clears we will remember that technological innovation is the only virtuous capital endeavor left to man.
Nothing else interests me, which is why I outsource most of my stock picking to the GARP portfolio. I added some funds to my GARP motif as well.
From order comes chaos, chaos for the enemy, chaos for the bear.
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There is a warm spot in my heart, right on the bottom, next to the lodged sausage, for how little interest you show in my morning report. It sure is boring, isn’t it? If you have stuck around for a while, you may notice I am a routine person.
Morning reports, meals, Exodus Strategy Session, and pumping iron. These are looping events in my life. The whole world could be crumbling around me [like the stock market for the last year] and I will still do my best to keep my routines intact. It’s how I keep my grit.
This morning, in hypo 3 we highlighted 4166.25 /NQ_F as a price level of interest. Then, mid trade, because I love you guys, I even blasted out an update:
Hypo 3 and seeing sellers show up at this level $NQ_F https://t.co/5tD4XgtmnS
— Raul (@IndexModel) September 30, 2015
This is the only trade I’ve taken today, a short. I also reinitiated BIS at that level. So while they were having an orgy on CNBC over these sick market gains (Were they? I don’t run that distraction ever.) I was selling my level in a routine fashion.
I don’t draw these lines on a market profile chart for artistic reasons—they are how I make my living. How do you make yours? I’d love to know—big ups to the accountants out there. More respect to the laborers—picking sugar beets or laying bricks.
Want more Raul in your life? Follow me on Twitter @IndexModel.
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I expected choppy conditions heading into today. If the surprise nature of the early strength paired with the digestion of Uncle Carl’s special video wasn’t enough, we had the added chopping effect of a Consumer Confidence report. A younger Raul would attempt to press trades on days like this, often firing 20-30 trades by noon only to open up the old p/l which would be a mild shade of green before my broker got paid. Then it was a losing endeavor. At that point I would overeat at lunch, usually an extra fatty burger, then sit in a comatose state until I was dismissed, completely controlled by mother market.
Gone are these days, I tell you. I have bigger battles, like world dominance. With new responsibilities came the need to streamline my process. In short, I trade less.
Anyhow, I only had one trade thus far this morning, right around 11:25am, a long. It lasted just under 4 minutes and earned me another week of freedom from corporate oppression. It’s cool, yes?
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