Tue Jan 26, 2016 9:09am ESTComments Off on NASDAQ Buyers Defend Fast Down Move
NASDAQ futures are priced to gap up after an overnight session featuring elevated volume and extreme range. Price managed to work down to the close from last Thursday before responsive buyers stepped in. Buyers then pushed up through the entire range and as we approach cash open, the market is near Globex high. At 9am a slew of housing data was released. The initial reaction is flat.
On the economic calendar today we have Markit Service/Composite PMI at At 9:45am. The biggest data on the session comes at 10am when we hear the latest Consumer Confidence read.
Yesterday we printed a neutral extreme down. Price opened gap down and formed a tight range through most of the morning. During the morning chop sellers managed to push the market range extension down. Buyers quickly reversed the RE down and pushed to a new weekly high. Price stalled out just below overnight high [after closing the 01/14 gap at 4258.75] and traversed the whole range a third time. Sellers then accelerated down into last Thursday/Friday’s gap and we closed out near session low.
Heading into today my primary expectation is for buyers to squeeze off the open. Look for a move up to 4227.50. From here responsive sellers step in and work a gap fill down to 4186.50 before two way trade ensues.
Hypo 2 sellers work the gap fill down to 4186.50. Responsive buyers step in around 4169.25 and a tight range, two way trade ensues.
Hypo 3 sellers close overnight gap down to 4186.50 early and accelerate down through 4169.25 to set up a move to take out overnight low 4133 and close the Thursday gap down at 4130.25. Look for responsive buyers just below at 4128.50.
Hypo 4 strong buying pushes the pole climb up to 4227.50 early and trade is sustained up at these levels. This sets up a secondary move to target 4247.75. Stretch target is a test above the Monday high 4259.75.
Like every other negative moment in the last two stagnant years at Twitter, internet people [me included] are again tussled into the great online pastime of debating how to make Twitter work. CNBC found a nice fella who thinks they need to focus more on video. There were other good talking points, but right now let’s talk about Periscope.
Live streaming video is not for everyone. If I don’t like a snap I don’t send it. I am not a news anchor. I have watched 100s of Periscopes and the energy level is low. The social media game is about who can get one billion active users. One billion people cannot generate quality live video streams. Nor does it seem like they want to watch them. Twitter is at a huge disadvantage in the video department.
Can a 10,000 character limit right the ship? This is a way to curb Twitter users being sent away via hyperlinks. Facebook does it with Instant Article. More characters could work if executed properly [small tweets that can be expanded, if desired]. However both Facebook and Twitter are chasing Snapchat’s tail when it comes to in-app news. Mobile content is brilliant and easily shared in the app. If you share a Snapchat news piece via text message it sends the write up as a long scrolling image. The words are shared as an image, sort of like how @Jack tweets.
Getting outpaced in active users by Instagram is a huge blow. IG has lured anti-establishment folks back onto social media. They tag each other on posts at rabid rates. Instagram, Facebook’s little side purchase, has 100 million more active users than Twitter. Yikes.
The good news–Moments could be a hit. If it keeps having entertaining content it will catch on. ‘Flat earthers’…have you seen these bone heads? They use tidbits of science to ‘prove’ the earth is flat. On Moments today, Twitter put together a series of tweets where a rapping man from Atlanta named @Bobatl was schooled by pop scientist @neiltyson after he went on a flat earth tweet storm. Check it out here, it’s hilarious. I would have missed the exchange without Moments considering I follow neither of them. Even if I followed both their handles the scuffle would probably be washed away in my stream before I saw it.
I am an investor in Twitter but also a stakeholder. It was my coming of age news source and it has always earned my glowing endorsement. Now my revere is shifting–and I will dump the stock and cut ties entirely if need be, because a losers a loser. But for now my hope remains and I am not the only one offering up my best advice to the firm.
Yesterday, after synthesizing the transnational behavior stock indices and powering through the net message stocks were sending with Exodus analytical engines, I posited we were likely to start the week soft. Specifically, the first sentence of the Thesis for The Week stated:
Sellers work down into the relief rally that took hold last week.
Then, I built on that overarching context during this morning’s report, where we used the new information the Globex session afforded us to develop specific actionable levels. The Primary Hypothesis was bang on:
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4247. Then look for a test above last Friday’s high 4253 however sellers step in ahead of overnight high 4260 and work us back down through the range to take out overnight low 4218. This sets up a move down to 4188.25 before two way trade ensues.
I bring your attention to my work not to pat myself on the back [I did not make any money trading today, I was busy] but instead to demonstrate how methodical this market is behaving. It has been that way all year.
A methodical market can be picked apart by the astute trader who consistently does their homework and then executes said work.
I have an overarching plan for this entire week, the tail end of which leaves from for some improvisation–like Chess [no wine, beer]. It can be read inside the Exodus Strategy Session.
Most of you are just sobering up after a weekend of snow-induced debauchery, but you can still gain some insight if you gather yourself. It looks like the fun is just getting started.
Mon Jan 25, 2016 8:50am ESTComments Off on Globex Volatility Eases for First Time in 2016
NASDAQ futures are priced to start the week out gap down after an overnight session featuring elevated [but not extreme] range and volume. Price managed to briefly push above the high print from last Friday before settling into balanced trade.
The economic calendar is light today with only a 3- and 6-month T-Bill auction at 11:30am to be aware of. Remember, Wednesday afternoon we have The Fed Rate Decision which is the highest impact event for the market currently.
We came into last week on a Tuesday. Markets were closed Monday in observation of Dr. Martin Luther King day. On Tuesday price opened gap up and we spent the day working lower. Responsive buyers stepped in at the end of the session. Tuesday opened pro gap down and drove lower all morning. The action found a strong responsive bid by early afternoon and we spent the rest of the week auctioning higher.
Last Friday opened with a big gap up and price was set on a slow grind higher.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4247. Then look for a test above last Friday’s high 4253 however sellers step in ahead of overnight high 4260 and work us back down through the range to take out overnight low 4218. This sets up a move down to 4188.25 before two way trade ensues.
Hypo 2 buyers fill overnight gap up to 4247 then set their sights on overnight high 4260 which also lines up with the 4258.75 open gap from 01/14. Look for buyers to sustain trade above this level setting up a move to target 4288.50 before two way trade ensues.
Hypo 3 buyers cannot fill overnight gap. Sellers take out overnight low 4218.50 and work down to 4188.25. The initial buyers in this region are overrun and we continue lower to target 4154.25 before two way trade ensues.
The below excerpt comes from this week’s Exodus Strategy Session. After receiving a several questions both on Snapchat [VCali] and the blog, I wanted to hopefully give color on how I use the report.
The Strategy Session is a report delivered weekly to Exodus members. Every Sunday I recap the prior week’s action and establish context for the upcoming week including:
Upcoming economic events
Tracking and recap of Exodus hybrid overbought/oversold cycles
An index model using auction theory to score the S&p 500, NASDAQ 100, Russell 2000, and the Dow Jones Industrial Average
Weekly training on how to use the Exodus market intelligence platform.
Sign up for Exodus to receive the Strategy Session every Sunday around noon eastern. With Exodus you get predictive algos, a thriving community of investors and traders, and data on over 5000 stocks and ETFs.
Without further adieu, here is Section III from this week’s report in entirety. Enjoy!
The purpose of the Exodus Strategy Session. This report is designed to build a contextual framework for the upcoming week. The focus is on data and scheduled economic events. I use this logical information because it allows for an objective analysis of the trading environment.
The report seeks to answer the big three auction theory questions:
What has the market done?
What is the market trying to do?
How good of a job is it doing?
These three questions guide our attempt to answer the most important question of all, “What is the market likely to do from here?”
Section IV is devoted to answering this question and is likely to most difficult section to comprehend. It is where my model is built. The model is based on simple auction theory analysis. I score the four major indices (S&P 500, NASDAQ 100, Russell 2000, and the Dow Jones Industrial Average) based on the performance of their respective front-month futures contracts. These contracts are highly liquid and provide the most possible raw information about the indices.
Section IV also considers the information being produced by the predictive engines inside the Exodus Market Intelligence platform. All the historical data on the signals makes the overbought/oversold thresholds another useful piece of objective data we can use to answer the fourth question.
My model is a work in process, happening live. I began to notice that when my overall bias score became extremely high or extremely low, it would be proven wrong by the market. So I added another layer of objective analysis. I subtract the Exodus overall Hybrid score from my bias score. When the difference between the two numbers is greater than 0.50 the model generates a short bias (despite my raw index data presenting a long bias). When the spread goes negative the model generates a long bias, but it also expects fast, volatile-type movement.
The other data point that emerged, by about week 50, pertains directly to the S&P 500. The model is so consistently wrong at predicting the movement of the S&P 500 that it has a statistical edge to bet against it. 75% of the time we tag the opposite Average True Range (ATR) band.
ATR bands are used simply to score the model’s predictive ability. They are objective price targets, to the upside and downside. Whichever is tagged first determines whether the week was a winner or loser. Here is an image of the S&P 500 ATR bands for this week:
Note: the ATR values for each index can always be found in Section IV under the “Here are the bias trades and price levels for this week” heading.
Context is the grey matter of trading. It is important, but difficult to quantify. News, behavior, etc…we try our best to comprehend it, but ultimately each day brings new information. The Exodus Strategy Session attempts to stay relevant by consistently addressing information mathematically. However the stock market is the net sum of all participants, from institutions with sophisticated algorithms and major resources to the home gamer and everything in between. Therefore it is random, and ubiquitous major events beyond all logic are always possible.
PS – the ‘big 3’ questions is a concept developed in my favorite stock market book of all time, Mind Over Markets: Power Trading with Market Generated Informationby Dalton. If you click that link then buy the book from Amazon, I get like two dollars. Don’t buy it for more than like $30 bucks. Sometimes it sells out and people try charging criminal rates for the book.
Well well well, the holiday shortened week has come to an end. These last two days have seen the intraday tone shift dramatically. We have gone from big waves all day to long matches of local-to-local ping pong. Today ended up being a read grinder.
The bulk of the session was spent consolidating. In auction speak we call that acceptance. As in, “the market is accepting these higher price and value is migrating.” Days like this can be a real boob to day trade, given the lack of rotations.
Buyers have been slow, methodical and steady. The buyers are playing their cards properly on a gap up for this first time this year. They let the open auction out, nice and tight, then ripped through stop orders. On the check back to their morning conviction, they defended. Nothing over the top, just clean defense. Then they held their progress into the witching hour, despite an onslaught of sell programs. As we wrap up, it looks like they are sparking up the afterburners for a ramp sesh.
I am developing a solid crew over on Snapchat. We talk about trading, philosophy, equipment, and anything really. We talked about why I don’t really trade on Friday. I also shared the secret sauce for being a trader. Spoiler alert: like most businesses, it takes tons of time and work.
You know I will be around the interwebs all weekend, honing my process and preparing for the upcoming week. Come on over to my snaps if you want to ham it up a bit [VCali].
NASDAQ futures are priced to open pro gap up after a Globex session featuring extreme range and volume. After a balanced session through midnight, price trended up to make a new high on the week. Responsive sellers stepped in right at the midpoint from last Thursday.
On the economic calendar today we have Markit Manufacturing PMI at 9:45am, Existing Home Sales and Leading Indicators at 10am, and the Baker Hughes Rig Count at 1pm.
Yesterday we printed a normal variation up. Price opened gap up and we had a rejection reversal sell on the open. Responsive buyers stepped in around the 4100 century mark and made a hard push higher which transitioned into a sideways, grinder market.
Heading into today my primary expectation is for sellers to work into the overnight inventory and trade down to 4187. Look for responsive buyers here (responsive relative to the open, initiative relative to yesterday close) who reject an attempt back into Thursday’s range. Then look for a move to take out overnight high 4213. Responsive sellers show up at 4220.25 and two way trade ensues.
Hypo 2 buyers push up through 4220.25 and sustain trade above it, setting up a fast (pocket) move up to 4255.50 before two way trade ensues.
Hypo 3 sellers aggressively work into the overnight inventory, make short work of 4187 and test down to 4166. Responsive buyers show up here but are overrun and we continue lower to fill the overnight gap down to 4130.25. From here take out overnight low 4119. Look for a strong responsive bid down at 4117.25.
Thu Jan 21, 2016 4:26pm ESTComments Off on Mark An Eight Dude
Despite the high blood pressure market holding a gun to investors’ heads, we managed to close out the day plus 8 on the S&P five hundred. And while the Russell and NASDAQ could not manage to close green, bull have officially managed to complete a two day upward move. Celebration! Here’s a few other things that happened that you should be aware of.
The NASDAQ stopped rotating like a banshee and started to chop. Every day of 2016 has been big rotations all day, every day. The big waves let us know the higher time frame is active. And while the higher time frame was participating early on, today morphed into local-to-local chop. A nice game of ping pong went down. Locals were back to their antics, spoofing and pulling bids to knock plebs about.
Crazy stocks like Twitter just sort of consolidated. Not that it is good to spend lots of time on swing low, just hanging out, but individual stock volatility receded a bit. Not that it matters to much with earnings just around the bend–and fully able to blow up any hot name.
Oil held just below the $3o handle. Maybe the Arabians finally took their fleet of jumbo jets to Davos to enjoy some skiing. The commodity managed to just rip and chill.
I suppose that was the big accomplishment on the day, it went quiet. Every day this year has been anything but quiet. Perhaps, just maybe, we can have a NASDAQ Globex session with less than 60k contracts traded and/or less than a 60 point range. Then, we actually be starting to normalize.
In the meantime, all gaps, both ways are suspect to be filled in the following session. The gap trade has been very good to traders this year. The gap fill is like death and taxes, not if, but when. We are still over the line, so everybody just be cool, man.
According to data released by Certify, about 40% of all business ground transportation receipts were linked to Uber or Lyft. Nearly half. Big number. The disruption of traditional car services is being attributed to the ease of queuing up a vehicle paired the the simplicity of logging the expense.
These companies are still private, and we the normal investor class can only expect to participate in the meteoric growth of ride-share technology once it has peaked. That is when we will be able to buy shares on the stock exchange.
This is why people pay millions of dollars to live in one-bedroom apartments in San Francisco.
Thu Jan 21, 2016 9:00am ESTComments Off on The Correction Is Not Over Until Globex Calms Down
NASDAQ futures are priced for a gap up heading into Thursday after a globex session featuring extreme range and volume. Price held the upper half of yesterday’s range and managed to briefly take out the high print from yesterday. At 8:30am the Philadelphia Fed data was slightly better-than-expected and the Initial/Continuing Jobless Claims data was mixed. There was a strong buy on the news.
Also on the economic calendar today we have crude oil inventory data at 11am and a 10-year TIPS auction at 1pm.
Yesterday we printed a neutral extreme up day, the market profile day-type carrying the third highest amount of directional conviction. Price opened pro gap down and at new swing low. After responsive sellers defended an early attempt back into Wednesday’s range they became initiative and pushed price down through the lower weekly ATR band. The first responsive bid attempt was overrun and we pushed a bit lower to close the 08/24/15 gap at 3997.50. If you recall, this is the gap created when China last cut their interest rate. We rallied hard from that point, traversing the entire range and closing the overnight gap to ultimately close the session flat.
Heading into today my primary expectation is for sellers to work into the overnight inventory at close the overnight gap down to 4134. Look for responsive buyers here (responsive relative to the open, initiative relative to yesterday’s close) who work to take out overnight high 4181.50. From here look for a move to target 4195.75 with a stretch target of 4202.75.
Hypo 2 sellers work the overnight gap fill down to 4314 then continue lower to test value area low 4123. Two way trade takes hold, but struggles to trade north of 4150. The market goes range bound between 4150 and 4100.
Hypo 3 buyers hold the overnight gap, sustaining trade above 4144. Take out overnight high 4180 then target 4202.75 early. Sustain trade in this area to set up a move up to 4255.
Hypo 4 liquidation continues. Early gap fill down to 4134. Fast move to take out overnight low 4085.75. Buyers make a responsive attempt at 4069 but are eventually overrun setting up a move to target 4007.
