January Ends With Face Ripping Rally

The best rallies in the world come during downtrends.  The first bounce is always shorted too soon, and when these ‘hole’ shorts realize the natural geyser forces are erupting, they are forced to join the bid.

Breadth is nearly 90% on the session, and with February starting on a Monday [and it being a leap year] we are likely to see continued strength through the first three days of the month.

And I am without any position trades.

However I have investments.  Some are doing better, others are Twitter.  But I added a new one this morning–AT&T.  I love the look of this chart, long term, as it finally breaks from a multi-year consolidation.  We are addicted to our smartphones from age 8-80 as Howard would say.  I only want extremely big, stable stocks, and I don’t want to think about them often. Look at this massive consolidation…here’s to hoping the breakout sticks:

This way I can focus on dominating the futures markets without distraction.

Programming note: I will be around the interwebs all weekend.  I am doing Exodus demonstrations for members only.  If you want one, email me [email protected]

NASDAQ futures are priced for a gap up after an overnight session featuring extreme range and volume. Price managed to mark overnight low early in the session after Amazon earnings spiked the market.  From there price went on to take out the high print from yesterday before settling into balance.  At 8:30am GDP data came out slightly weaker than expectations [0.70% vs 0.80% est] but end consumption beat nicely [2.2% vs 1.8% est].

Also on the economic calendar today, we have Chicago Purchasing Manager at 9:45am, U. of Michigan’s Final January read of Confidence at 10am, and the Baker Hughes rig count at 1pm.

Yesterday we printed a normal variation down.  The market opened gap up and sellers worked into the tape early.  Price managed to go range extension down briefly after 10:30am and found a sharp responsive buyer ahead of Wednesday’s low.  From there the market formed an excess low and initiative buyers [initiative relative to the excess low, responsive relative to the open] struggled and were unable to take out session high.  Price ultimately settled at the mid after Amazon earnings spiked price lower during settlement period.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4154.50.  Look for responsive buyers ahead of 4135 and two way trade to ensue.

Hypo 2 sellers close overnight gap down to 4135 then take out overnight low 4128.50.  Look for a move down to 4110 before responsive buyers step in.

Hypo 3 buyers work in early and push price up through overnight hgih 4198.50 to test the 4200 century mark.  Look for responsive sellers at the NVPOC at 4202.

Hypo 4 buyers sustain trade up around the 42020 NVPOC setting up a move to target the open gap up at 4226.75.

Levels:

Any decent person should be asking themselves, “How can I take advantage of the dire situation faced by the citizens of Flint, Michigan?”  A more basic thinker may become outraged and channel their energy into standing on the street holding signs and shouting.  Emotions are not going to fix Flint’s water.  Actions will.  In the process a select few will make a fortune.  They always do.  However, the speculator has a potential swing trade opportunity in this mess: the Water Utility Industry.

Today’s rally is meh..concentrated to oil plays and internet stuffs (Paypal, Facebook, Amazon, Google, all good things).  On a sector-wide basis Utilities are leading.  And which Utility industry is taking home the win?  Water.

These stocks have been on insane runs already, over the years but with ‘The Nerd” aka Michigan Governor Snyder poisoning hundreds of thousands of children there may be room for Water Utility stocks to keep running.

There is something to learn from this mess.  For-profit companies do a better job of managing municipal water systems then the state.  It is an inherent victory for capitalist and sends a distinct message to the socialists heavily populating the Face’dbook–capitalism wins.  Here are the companies avalible for ownership in the water industry:

My favorites are AWK and AWR.  Now listen closely to me–nothing in life is free.  Just because you came to exist on planet earth doesn’t mean you are entitled to water.  You want good water, you pay, else drink from the wretched river ways of the industrial complex.

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I will walk you through the features and answer any questions you have.  iBankCoin offers my services to you as part of your membership.  These live demonstrations take place over the phone and usually last about 30 minutes.

If you are interested, send me an email at [email protected]

You already invested in yourself by signing up for Exodus.  Let us help you be successful.  I am a nice guy.  If you have a one-off question, ask it in the comment section below, on Twitter @IndexModel, or on Snapchat at VCali.

Cheers and good luck!

NASDAQ futures are coming into Thursday gap up after an overnight session featuring extreme range and volume.  Price managed to trade within yesterday’s range in nearly symmetrical balanced trade.  At 8:30am Durable Goods data came out way below expectations.  At the same time, Initial/Continuing Jobless claims data was mixed.  The initial reaction is selling.

Also on the economic calendar today we have Pending Home Sales at 10am and a 7-Year Note auction at 1pm.

Yesterday we printed a neutral extreme down.  The data started with a gap down and sellers driving price lower.  Just moments after the first hour of trade completed, a strong responsive bid was found right at last Thursday’s naked volume point of control 4153.  Buyers pressed through the entire range and put the market Neutral ahead of the FOMC rate decision.

Third reaction yielded a mixed, but consensus sell signal and we pushed lower, taking out the lower ATR band before finding responsive buyers deep inside last Thursday’s range.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4128.50.  Look for responsive buyers to defend here, keeping us from testing yesterday’s low 4102.  Two way trade ensues with a price ceiling around 4180.

Hypo 2 sellers push the gap fill down to 4128.50 then continue lower to test below yesterday’s low 4102.  This triggers a liquidation.  Downside target is 4070.

Hypo 3 buyers gap-and-go.  Price works up though 4180 and sustains trade above it setting up a move to take out overnight high 4190.  Responsive sellers step in at 4211 and two way trade ensues.  Stretch targets are 4225 then 4247.50.

Hypo 4 sellers push into overnight inventory but cannot fill gap down to 4128.50.  Instead buyers defend 4140 and the market spends the rest of the session working higher to take out overnight high 4190.

Levels:

The patient NASDAQ resumed its tenacious 2016 fits this morning as it chewed on a stinky -5% gap down in Apple.

Buyers stepped in front of the early selling, and with Yellen still on deck, they had reason to back off and allow buyers their fun.  Sometimes the price action looks like ping pong.  Today it more resembled volleyball.

The game ended and sellers took home the victory.  Participants expect rates to continue higher–today’s primary industry rotation suggests exactly that.  A concentration of Regional Banks spattered across the top gainers list:

Market behavior suggests participant are not too thrilled about the tone of The Fed, nor do they desire to fight with Grandma Yellen.

I like the volatility The Fed’s liftoff path is putting into the futures.  There are lots more nuts for a squirrel like me to collect.  But I also do not intend to resist The Fed.  I have no position trades (2-12 day holdings) on the books.

So everything sucks in 2016 except Utilities and now Regional Banks.  My REIT is kicking ass too–something I was told would not happen in a rising rate’s environment.  Meh…

Industry is dead.  Long live the regional bank manager.

NASDAQ futures are priced to come into Wednesday gap down after an overnight session featuring extreme range on elevated volume.  The session’s price action was balanced overall and price was contained within yesterday’s range while traversing most of it.  At 7am MBA Mortgage Applications came in slightly below expectations.  The initial reaction was buying.

The economic calendar is busy today.  The biggest event comes at 2pm when we hear the FOMC Rate Decision.  This is the highest impact event for the marketplace.  We also have New Home Sales at 10am, crude oil inventory at 10:30am, a 2-Year Floating Rate Note auction at 11:30am, and a 5-Year Note auction at 1pm.

Yesterday we printed a normal variation up.  The morning gap up was faded and filled.  A push back down into last Thursday range (01/21) was rejected by responsive sellers who spent the rest of the session working higher.  Price stalled out at the Monday VPOC around 4236 and closed just below the level.  After the bell, Apple earnings caused a bit of volatility.

Heading into today my primary expectation is for buyers to press into the overnight inventory but struggle to close the gap up at 4226.75.  Instead sellers stall out around 4222 and two way trade ensuses, taking out neither overnight high or low until we hear the afternoon FOMC rate decision.

Hypo 2 buyers push a full gap fill up to 4226.75 and sustain trade above it.  Initiative buyers come in ahead of the FOMC rate call and work price up through overnight high 4237.25.  Look for price to continue higher to target 4247.50 before finding responsive sellers and two-way trade ensues.

Hypo 3 sellers push off the open and work down to 4183.75 before tight, two-way trade takes hold ahead of the FOMC rate decision.

Hypo 4 sellers accelerate down through 4183.75 and sustain trade below it to set up a leg lower to take out overnight low 4177.50.  Look for responsive buyers just below the level and two way trade to ensue ahead of the Fed.

Watch for the third price reaction after the FOMC rate decision to provide market direction into the end of the week.

Levels:

This comes from Politico writer Esther Whieldon.  Apparently Nevada Public Utilities Commission wants to allow about 15,000 rooftop solar customers the right to sell back power to the grid for 20 years.

Solar City is going bananas on the news, but is still down a whopping -30% year to date.

Stocks managed a smooth transition from fast downward price discovery to a neutral balance.

It started with the formation of a mega balance back on 01/20:

Then Globex volumes and ranges began to settle.  Something that likely had to happen, which was my first talking point after mega balance happened.

This week has also seen decent breadth.  Even today, which on the NASDAQ is flat since the open, the gap up managed to push several industries, real industries that run on brawn and steel,  over +3% on the session:

How perfectly methodical has the 2016 auction been?  Perhaps perfect is a stretch, but going into Apple earnings and a high impact FOMC rate decision tomorrow we eased into neutrality.

There are some face rippers out there in the individual stocks also, like SCTY.

They are waiting.  I shall do the same.

Reports are coming in of an active shooter inside the San Diego Naval Medical Center.

The shooter is in reportedly in building number 26.

We will continue to follow the news and update this stream as more information becomes available.

Here is the Facebook PSA from Naval Medical Center San Diego:

The childcare facility is safe, and all children are accounted for, per a tweet from NCSD:

!UPDATE! For all concerned, the childcare facilities at NMC are currently secured. All children are accounted for… https://t.co/MaEqH3CozP

— Naval Base San Diego (@NavBaseSD) January 26, 2016

Police have confirmed shots were fired outside the facility.  So far no word of shots inside the building.

Market Update: The indices have continued to rally as the news out of San Diego becomes available.  The gun trade, $SWHC and $RGR initially catching a strong bid off the news.

Helicopter footage and emergency response teams on the ground:

Update: this is a huge facility with over 6,500 employees.

Update: The threat appears to be isolated and controlled.  The situation outside is calm and directed by military and emergency personnel.

Update: Former FBI Assistant Director Ron Hosko on the shooting:

12:45 p.m. update: Navy spokesman says a report of three gunshots heard at Naval Medical Center San Diego came from a single witness.

1:35 p.m. update: Navy spokesperson N. Scott Sutherland said military police checked Building 26 and the initial inspection found no sign of a gunman or a shooting.