ISIS Wants War

The drone strikes shall continue. The ISIS ideology will be destroyed one 400 pound payload at a time.

On the home front, citizens of modern civilization need to ratchet up procreation 4-fold. We need to fight these bastards.  We need numbers.  Get busy.

Refugees are a huge problem.  I have no idea how they should be handled. My old man made it to USA because Italy was shit post WWII. I imagine normal people in ISIS-ruled lands want to get out. But I also feel like USA is the last great nation—it makes me selfish, and I want to lock her down.

Stock markets—yes, we have to talk about it. This is going to introduce volatility.   We need to remain objective and watch for extreme sentiment.  As traders it is our job to survive and, yes, profit. Be aware of your own emotions and if they are affecting your ability to execute.  You can always go to cash and regain your balance.

I am looking forward to another Investor Conference. I think Jeff’s presentations on Understand Market Dynamics and Trading Through Different Market Conditions are crucial during an international crisis.

My thoughts are with the people of France. Terrorists shot up and bombed an Eagles of Death Metal concert. I have been to several of their shows and they attract people like me—weird, fun-loving rockers.

The terrorists want to break the modern world and bring us back 500 years by restoring the Islamic Caliphate. They will lose. In 100 years ISIS won’t even occupy a half page in the history books.

“Ideals are peaceful. History is violent.” – Fury

The only index that matters, the NASDAQ, is going out on the lows. The problem is, aside from round number psychology, this thing has no support until 4475. Therefore I stopped out my TQQQ starter.

For the love of calling market direction and not participating in the carnage, biotech was bulletproof today.  This sell off did not happen.  In the microcosm of medicine and hospitals this is just another day of milking Americans via their addiction to their wares.

Why is there no money flowing into retail?  Everyone is cash poor from being fully invested in biotech.

I spent the whole morning trying to fade the tape then I was like, “this is dumb, sellers are dominating.”  So I switched to working the shorts down into the hole.

There is no support on my radar until lower.  I want to add to longs.  Seeing as today was a trend day, I am banking on further downside Monday to start anew from.  Perhaps my lack of intestinal fortitude will be punished via Chinese stimulus and v-shaped gap up Monday.  Fine.

Normally I would go drink myself blind, seeing as it is Friday.  But I am rising above today, and will trade malt liquor for lukewarm water.  My model came into the week short, I had a short bias, but I hardly participated in the drubbing.

Here is your hindsight capital analysis:  the best short opportunities were oil and retail, not biotech.  FOR NOW :::SHAKES FIST:::

Today is really messed up. I have people sending me crazy videos of European refugees herding through towns like zombies. The NASDAQ is in the toilet, swirling around the drain. American retail is losing out to fabricated Chinese spending holidays. Oil, my goodness oil, is talking the bullet train lower. We have ourselves a real shit show on our hands.

Let us recall that today is Friday the 13^th. The northern hemisphere is now in short days and long nights. The demons kept at bay all summer long are now wandering the streets with longer working hours.

The general feel is dour. Everyone I talk to is paranoid and seeking solace. I only offer old philosophic ideals of objective judgment, unselfish action, and willing acceptance of external events.

The news cycle is full on negative. All the headlines read like an obituary to the American economy. All whilst the teenagers lash out against higher education—effectively calling our entire society into question.

All this, and the god forsaken doctors in the biotech group are keeping their index together. I do say, if we see bios roll, all hell will break loose this afternoon. In the meantime I bought a starter long in TQQQ because I am being objective. GOD WILLING, it gets blown to bits. Then I can book my biotech short and add to this index long.

Price is set to open gap down on the NASDAQ this Friday after a globex session that featured normal range and volume. Price managed to press beyond the low set Thursday early yesterday evening before coming into balance. Around 6am a wave of selling pushed another small leg lower. Responsive buyers showed up right around the open gap left behind on 08/17 at 4564.75. At 8:30am Advance Retail Sales data came out weaker-than-expected and the initial reaction is buying.

The only other economic event we hear today is the Primary reading of University of Michigan Confidence at 10am. I have seen the primary read turn the market in the past, especially during elevated volatility, so be aware of this number today.

Yesterday we printed a second consecutive neutral extreme down day. It was the third gap down open on the week and buyers quickly stepped up to buy it. Price managed to close the overnight gap before sellers defended the Wednesday range and formed a sharp excess high. From here they continued working through the entire range to break IB low and push us neutral. The selling continued right up to the bell giving us a close on the low and neutral extreme classification.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the overnight gap up to 4586.25. Look for responsive sellers up at 4587.75 who work to target overnight low 4564. Look for sellers to target the Amazon, Alphabet, Microsoft (AAM) gap down at 4552 before responsive buyers come in and two way trade ensues.

Hypo 2 buyers strong. Close overnight gap up to 4586.25 then take out overnight high 4590.50. Sustain trade above this level and then another leg higher to test the 4600 century mark. After some churn, buyers continue pressing and work up the thin profile to target VAL 4623.25.

Hypo 3 thin ice breaks. Sellers gap and go, take out overnight low 4564 and close the 4552 AAM gap early. Trade sustains below this level setting up a liquidation. Stretch target is the composite high volume node at 4530.

Levels:

Nordstrom Q3 EPS came in at $0.42 Vs $0.73 last year and analysts estimated the fat consumer would propel EPS to $0.72, boy where they wrong!? Apparently the fall months have been too damn mild, and no one is dropping stacks on pea coats and other high ticket items.

I had dinner last night with a Moosejaw employee who said the same thing—they have not seen jacket sales kick in yet this season.

The hipster may also be to blame here. Their overall disinterest with physical goods paired with their overall inability to earn a solid salary means a generation less interested in shopping at Nordstrom. It is rare you will find me in a Nordstrom. If it is not sold inside a Costco, it is probably not in my closet.

Fortunately winter officially arrived today. The murder mitten is a blistering 30 some degrees and winds are howling through the nearly bare trees.

External forces are killing these retailers while Alibaba blows our Cyber Monday out in 30 minutes.  America is losing.

Bulls are losing one of the great ones today. In fact, the whole cast of F.A.N.G. was pummeled into the bell. But the notable loser is big dog Netflix whose shares ended the session down nearly 4% after rumors of a potential Time Warner deal for a Hulu stake hit the wires.

Hulu represents a bridging of the Netflix moat. With Time Warner on board, said bridge would get concrete girders and 6 foot Vikings to handle any arrows or other lobbied attacks from the Netflix castle.

This is going to be real interesting. Developing…

Bulls had a shot earlier today.  We took out near-term low and quickly responded higher.  But now, as we round the bend and head into the close, biotech is probing back into the lows.

This could accelerate ahead of Friday the 13th.  I am tracking the biotech industry via IBB and trading the comeuppance via BIS.

UPATE: Click the blue date hyperlink below and go take my twitter poll on whether we see a Texas Chainsaw style Massacre tomorrow in biotech:

Will biotech be the scene of a real horror show this Friday the 13th?

— Raul (@IndexModel) November 12, 2015

GoPro needs to find a way to convince Facebook to buy them. That appears to be their strategy with these immersive 360 degree videos they are exclusively sharing with Facebook—court the king with some jester work.

In the meantime their stock is making new all-time lows again today. This has become commonplace for the strap-on camera maker. Their shares trade like they do not even deserve a 20 handle.

If you own this stock you basically are gambling on a buyout. In theory their 360 degree cameras are a compliment to Oculus Rift. Imagine setting a place for the spherical six-camera ring at Thanksgiving dinner. Then you can pipe in relatives from anywhere via their virtual headset. As much as I try and paint this as a cool innovation—my vision just is not clear—it sounds lame and only useful for porn.

Regardless, I own this stock as part of the GARP portfolio, and I draw a thick black X on the calendar every day as I count down to the January reshuffle. Stupid gadget stock is killing my performance.

UPDATE: As of November 10th, you can buy a Samsung Oculus Rift face mask for $99 bucks: https://www.oculus.com/en-us/blog/samsung-gear-vr-now-available-for-pre-orders-at-99/

The idea behind value is a provocative one. You cannot escape its gravitational pull easily. It takes a serious force. This morning the sellers did not possess a serious force so back to value we go.

Right when the market presses to the edge of liquidation, a strong bid launches the market higher. These are difficult conditions for a short bias. The pressure moves have been to the upside for weeks.

Biotech breached its low and immediately reversed. Now I am forced to tighten my stop and potentially revisit this idea from higher prices.

You have to respect a well-defined bell curve mates:

NASDAQ futures are priced to gap down into Thursday—the third gap down on the week. The overnight session featured elevated range and volume. It started out balanced then sellers pushed in and worked price down to a new low of the week. At 8:30am Initial/Continuing Jobless claims data came out worst than expected. The initial reaction is selling.

After a rough week for oil we will hear the crude/distillate report today—a day later than usual due to Veterans Day. We also have a Monthly Budget Statement at 2pm.

Yesterday we printed a neutral extreme down. I examined it closely yesterday evening.

Heading into today my primary expectation is for sellers to work a gap-and-go down. Look for a liquidation run down to test the 4600 century mark then look for responsive buyers. Buyers attempt to work price back up into value above but struggle to regain 4624.75 which sets up a roll and continued move lower. Extended target is 4580.

Hypo 2 buyers work into the overnight inventory and work up through 4624.75. Trade is sustained above 4620.75 setting up a gap fill up to 4631.75. From there look for a rotation back up to the high volume point of control at 4638.50 before two way trade ensues.

Hypo 3 strong buyers close the gap up to 4631.75 early and work up to the top end of value around 4650. They set their sights on overnight high 4653.25 for a test above before two way trade ensues.

Levels: