The Slow Migration Higher

NASDAQ futures are set to gap up after an overnight session featuring elevated range on normal volume.  Price continued working lower during the evening, extending the late-day selling from Monday, before finding a strong responsive bid at the upper boundary of lower value and traversing the entirety of yesterday’s range.  The rally started around 3am.

On the economic calendar today we have New Home Sales at 10am.  This afternoon the U.S. is auctioning off lots of debt.  We have the 52-week and 4-week T-Bill auctions at 11:30am and the 2-year note auctions at 1pm.  These short duration note auctions will be followed closely by traders as the yield curve starts to flatten.

See Also – Danger: The Yield Curve Is Flattening

Yesterday we printed a normal variation down.  Value was attempting to migrate higher in the morning before we settled into balanced, two way trade.  Just after yesterday’s T-bill auctions [around 11:30am] sellers became more aggressive.  Eventually, by late afternoon they managed to push the market range extension down.  NASDAQ futures ended the day at session low.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the overnight gap down to 4352.75.  Look for a responsive bid right around these levels and two-way trade to ensue.

Hypo 2 sellers only work the half gap, trading down to about 4362.25 in choppy trade before responsive buyers step in.  We then go higher and take out overnight high 4382.25.  The auction stalls out just above overnight high, around 4385.50 and two way trade ensues.

Hypo 3 buyers gap-and-go higher.  Take out overnight high 4382.25 and sustain trade above 4385.50 early on, setting up a move to test 4397.  Look for a probe of the 4400 century mark before two way trade ensues.  Stretch target is 4418.

Hypo 4 strong selling, perhaps a drive after the T-bill auctions, fills the overnight gap down to 4352.75 then continues lower to take out overnight low 4341.75.  This opens the gates to explore lower value.  Target VPOC at 4318.75.  Stretch targets to downside are VAL levels at 4311.50 then 4298.50.

Levels:

Volume profiles, gaps, and measured moves:

Hundreds of tax officials and law enforcement flooded into Google Paris this morning.  Reports started around 7am.  Le Police nationale came rolling up with their silly sirens, and they’re out for black-and-white proof of something, anything, that can buoy the fledgling European Union.

The jig is up, global businesses.  Europe is a hell hole.  The safe havens in Ireland will soon be called into question.  Interesting times.

Here’s a link to the French news site breaking the news.  You may need to use Google Translate to work through it (IRONY!).

http://www.leparisien.fr/

UPDATE: The stock [ticker: $GOOGL] is set to gap up $3 bucks on the news.

Shares of Best Buy have been volatile early on this morning as rumors circulate that a ‘notable market-research firm’ said Q1 sales are trending above analyst estimates.

The retail climate has been absolutely atrocious.  If we go two weeks into the Exodus Strategy Session archives we can recall just how much bodily harm was inflicted on the industry set recently:

Yet over the same time period, Best Buy shares [ticker: BBY] have been more-or-less flat.  Quite curious yes yes?

The chart looks tight.  The kind of chart you can build a position into and manage risk without too much confusion.  However, you need to go into this idea accepting the potential of a 25% draw down before knowing if you’re wrong.  Or you could play it tighter, risk less, size in more, and look to scale sooner.  It is just a matter of how much time you’re willing to commit to the position.

Not many people expect Best Buy to come out swinging.  They are Amazon’s show room.  I imagine Bezos feels rather gay every time he sees a 10,000 square foot Best Buy brick and mortar outlet.  This could be the upside sleeper of summer ’16, like an old donkey winding its way up the mountain.

NASDAQ futures are set to start the week flat after an overnight session featuring normal range and volume.  Price held Friday’s range with sellers defending just below the Friday high and buyers defending just above the Friday morning conviction drive.  Rotations were equal, with bulls and bears taking the same sized swipes at each other.

The economic calendar is quiet to start the week and earnings season is coming to an end as we close out the month of May.  At 9:45am we have Markit Manufacturing PMI data due out, and at 11:30am both a 3- and 6-month T-bill auction are scheduled.

Last week the NASDAQ set balance by taking is already slightly balanced structure and firming it up by testing both the upper and lower boundaries of value.  Then Friday the bulls made a conviction drive off the open, successfully pinning price just above value to close out option expiration week.  The move, however, did not attract initiative buyers, and the resulting profile resembled the letter ‘p’.  This is indicative of a short squeeze.

Heading into today my primary expectation is for sellers to work down into the overnight inventory and take out overnight low 4348.25.  Look for a move to continue lower, down to 4342.75 before responsive buyers step in and two way trade ensues.

Hypo 2 strong selling takes price down through overnight low 4348.25 and sustains trade below 4342.75 setting up a move to target 4323.  Look for responsive buyers down at 4311.75 then two way trade to ensue.

Hypo 3 buyers work up through overnight high 4378.25.  Look for responsive sellers up at 4381 then 4385.25 before two way trade ensues.

Hypo 4 strong buyers take out overnight high 4378.25 then sustain trade above 4385.25 setting up a move to test 4396.25.  Stretch targets are the 4400 century mark then 4418.

Levels:

Volume profiles, gaps, and measured moves:

Shares of Apple, Inc are slight gap up heading into the week after Taiwan Media reports Apple is asking their suppliers to manufacture 72M-78M iPhone 7’s this year.  Of all the hardware in Apple’s collection, the iPhone is by far the most pivotal.

Also Goldman Sachs has a note out this morning, saying Universal Display [ticker: OLED] will be a ‘key beneficiary’ of Apple’s first-time adoption of organic LED displays.  Their stock is up over 5% heading into the open.

The Exodus algorithms flagged OLED overbought on Friday, with statistics showing a 92% probability the stock will be higher over the next 10 trading days.  In other words, Exodus wins again:

UPDATE: Taiwan’s stock market surged following the news that Apple is telling their supply chain to expect massive iPhone 7 output.  The TSEC ended the day up over 2.5% as USA industry is not the main beneficiary of manufacturing, but only the consumer of said wares.

God help the global economy is Americans decide to stop buying goods at gratuitous rates.

The 79th edition of Exodus Strategy Session has been completed, and after reviewing all the data, there is not much to go on.  Models are coming back neutral.  The only standout context heading into next week is what we saw in market rotations last week–investors abandoned safe haven sectors in exchange for allocations slightly higher up the risk profile, check it out:

There are a few other nuances that may tip the market’s hand next week.  They’re covered in the Strategy Session.  I elaborate on it a bit more, but basically we can also watch the NASDAQ transportation index, which has been a decent tell in the past.

You can also attend this week’s Boot Camp because we’re all going to put our minds together and hash out exactly what’s going on inside the market during the week-long seminar.  Here’s the link if you haven’t signed up yet:

http://ibankcoin.com/bootcamp/

If you decide to roll solo, taking the markets on via your own device, I understand.  Be sure to check in with my morning reports.  We’ll take it one day at a time.

I am a firm believer in the power of momentum in business and life.  When you get traction and start making progress, it behooves you to push said progress as hard and far as you possibly can because once you return to a static state–back to the grind you go.

And we love the grind sure, because we have to, because it’s the potential energy behind your next momentous push.  You create the compression and wait for nature to produce an opportunity.  The same goes for stocks.

You may have been involved in the morning drive higher on the NASDAQ if you were quick.  But we had a fairly strong expectation that said upward movement would fizzle out, leaving any late longs holding to proverbial bag.  Guys like me were fading the market lower all afternoon, grinding away like chumps for 5-10 handles, which is fine.  That’s my game.  But there is a better play out there for the stock trader.

Enter Exodus.  We have a special screen inside the software that feeds members stocks on the move and holding onto gains…suggesting the presence of accumulation and momentum.  Pull up an intra-day chart on almost any of these names and you will find a chart that trended higher all afternoon:

Those are just the top performers on the session.  Dig deeper in the list you’ll find even more afternoon momentum:

You could be taking shorts to pound town in the afternoons via the Exodus Momentum tool.

Business is grind grind grind nothing, grind grind grind nothing, grind grind POOF! MOMENTUM!  It just appears, and when it does you have to milk it for everything its got.  You think I’m messing with you?  See for yourself.  Bamboo is a perfect natural example.  It spends about 3 years underground, grinding, then all the sudden:

NASDAQ futures are priced to start the session gap up after an overnight session featuring normal range and volume.  Price worked higher overnight to return price back to the NASDAQ pin point before settling into two-way trade.  This upward action put price up through yesterday’s high.

On the economic docket today we have Existing Home Sales at 10am and Baker Hughes Rig count at 1pm.

Yesterday we printed a normal variation down.  Price worked lower, fast at first, down to about 4290 before stalling out and fading back up toward the mean, or value, or the pin point…whichever you prefer.

Heading into today my primary expectations are low.  Price is right on value and I am looking for chop and sideways, range bound between 4344 and 4310.

Hypo 2 sellers work into the overnight inventory and close the gap down to 4317.25 then take out overnight low 4314.75 before buyers step in and two way trade ensues.

Hypo 3 buyers push up through overnight high 4341.50 and continue higher, up to test 4360, luring in ambitious long, before reverting back to the pin at 4340.

Levels:

Volume profiles, gaps, and measured moves:

The New York Post is reporting that Tesla intends to open two permanent stores at popular east-coast tourist destinations this spring:

Just in time for summer, Tesla Motors, led by CEO Elon Musk, is tweaking its retail business plan and opening two stores at East Coast resorts — one in the Hamptons and another in Cape Cod, The Post has learned.

Noting the chilled-out vibe of both destinations, Tesla is promising a “low-pressure sales environment” that’s friendly to electric-car-curious families and flip-flops alike, spokeswoman Sonja Koch said.

“These will be permanent locations,” she noted, adding that Tesla is betting summer mobs will make up for the slow winters.

Located at 50 Newton Lane in East Hampton and 11 Central Square in Cape Cod’s Mashpee Commons, the new shops are among the first in Tesla’s chain that will cater primarily to tourists.

Note: Tesla stores are not like your traditional dealership, with greasy salesmen strung out on commission-based pay.  They are points of interest–something you peruse whilst eating an iced cream cone.

The investor class has mutually agreed that Elon Musk and his team of scientists needed and will make good use of an additional $2 billion dollars. Said funds are earmarked yo ramp up production of The Company’s Model 3 electro-wagon.

This a a car for the people, an offering to the well-shoed millennial, who is fed up with the auto industry and their flagging vehicles. Moreover, an electric Tesla car takes the owner one step closer to independence from the special interest behind energy and oil.

Like those backward ass oil pumpers down in Texas who glorify child pageantry.

So take a big black marker out and put an ‘X’ on May 19th, 2016 to remember that today was a victory.

This victory was brought to you by the good folks at Goldman Sachs.