I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,151 Blog Posts

Read the Strategy Session to understand if/when the correction market is worth buying

Greetings from the highlands,

The very kind and resourceful iBankCoin field team has navigated our land yacht to the snowy northwest.  As of this writing four bald eagles have been spotted and logged into the national registrar by our devoted naturalist, Doctor Roberto Bregante—a Mayan native with an occasionally violent disposition whose anscestors occupied these lands long before European settlement.

As we traverse these rich lands I’ve made contact with Mothership, which is hardwired to the interwebs at a geographical point between the trading markets in New York and Chicago.  Mothership is constantly receiving information from over 6000 remote sensors strategically placed throughout the financial complex.

These sensors collect raw information which Mothership parses and analyzes.  Said information is married to data stored inside the Exodus cloud. All these data form the bias model which forecasts direction of the next five trading days.  Sometimes the model peers further into the white fogs of the future and whispers prophetically about longer term events as objectively as possible.

Right now the model sees a correction lasting many many weeks, perhaps even months.  This is only based off two samples from the entire model history, which began in November 2014.

The model is a true testament to humans improving their lives with AI augmentation.  Something simple and pure and real.

Unlike competitive figure skating.  So much about ranking figure skaters is human and subjective and therefore flawed.  Did the boy smile enough? Was he fierce when the song was fierce? Is his country a kind one or one with authoritarian leadership?

Despite many measurable and technical score points, there is far too much human subjectivity to consider the number scores pure.

We seek purity on the RAUL blog.  Through the instagrams and snapped chats and tweets I also  seek to inspire.  For some, the theater of a brilliant ice dance invigorates the spirit and inspires.  Which is fine.

Anyhow the model lads, it is neutral heading into the upcoming week after being wildly bearish last Sunday.  On a longer horizon, 4-6 weeks perhaps longer, we expect correction behavior.

The Weekly Strategy Session inside Exodus covers these matters in detail.  And both last week and this week’s report are improtant reads if you want a clear vision about upcoming conditions and what to look for before initiating new intermediate/long-term risk.

Lucky for you, all of you, there are free trials of Exodus from now through Valentine’s day.  Therefore you can access the reports in their entirety.  I would be humbled if you took some time to check it out and tell me what you think.  Especially if you think I’m wrong and that the best move next week was to BTFD.

Meanwhile I am back in nature lads, with a team of researchers, thrill seekers, and scientists.  A trip to places many would describe as enchanted.  Follow me on Instagram username vincalim you’d like to see some of the oddities along the way.

And I couldn’t have timed this trip any better because all my robots are calling for correction.

As for the markets, we are bearish.

Stay sharp out there.

Raul Santos, February 11th, 2018

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Head for the hills! Model calls for correction

Greetings lads,

Floods coming.

And until then our job as humans is to establish a controlled grip on our facilities.  Not too firm a grip but steady and prepared for chaos.  One of our favorite tools for ensuring a prepared mind is objective observation of the financial markets.  A power shift is happening now.  Decentralization.  Less power to the government.  More to private enterprise.  The stone cold bankers at JP Morgan have formed a triumvirate with Amazon and America’s favorite privateer Warren Buffet to fix healthcare—one of societies biggest sore spots. Whether they succeed, as always, is TBD.

But we need to act now.  Not when we know if capitalism has fixed what politicians cannot.  We need to act, or not act, to extract wealth from the financial markets.  Said wealth will then be converted into real assets like land.  Northern land in mountainous territories.  High ground is insulated from the malaise of human propagation.

Because it is hard to live in those unforgiving regions.  But with the right gear they become happy oases of pure nature.

Therefore our job is to collect our thoughts and prepare for battle inside the financal complex.  We know who we are up against—the Chanoses and the burrito eaters.  The sheiks, the Chinese, and those crypto-loving Koreans.

The competition is institutionalized at a young age and trained to mathematically outperform your average football-loving American.

Oddly enough, rabidly successful teams like the Patriots have all enacted some form of moneyball analysis.  It has become abundantly clear that competing at the highest level in any game, from skis to /6e’s to chess or kung fu requires a statistical foundation.

Data does not lie.

Which is why we set out every Sunday to collect and parse out the best data available and use it to prepare for any chaos to come.  And the models lads, they are calling for conditions many perceive as chaotic.  The model is calling for a correction.

We are at a pivotal moment in history.  AI is on the Moores’s parabolic arc and climbing.  The good folks at Microsoft and Google are doing incredible work in quantum that will only serve to accelerate this truth.  Our Obama-era Fed chair is out.  Our sweet grandma from Brooklyn is being replaced by Jarome Powell, an old white man from Washington DC with an estimated net worth that ranges from $19-$112 million.

God bless America.

Chinese New Year is right around the corner and the gambling halls in Vegas favor the steady Patriots by 4.5 points.  An unexpected victory from the birds might be enough for society to finally snap and take to the streets with aluminum bats and ski masks, hellbent on altering the course of American history.

Their biggest enemy is the cold.  For 1000s of years cold weather has successfully thwarted attempts at revolution, from the fires of Byzantium to the French gallows.  Which is why it is our job to avoid all these chaotic times from the comforts of the north, letting nature insulate us from the recurrences of fanaticism.

All that being said, it is with great pleasure to announce I am headed to the mountains.  February is without question the worst month down on the Michigan flats.  It is time I seek steeper lands and deeper snow packs to hurl myself down. I am returning to the fringe life.  We have rented an RV and will be chasing powder until further notice.

During this time stock market communications will be limited.  The way I see it, we are due for a correction and the models are calling for a correction, and if we are correcting, then what purpose does it serve me to ring my hat over a violent market?  My time is better spent becoming one with winter nature.

If you would like to follow my adventure, be sure to follow me on Instagram, username vincalim.  I will be posting all sorts of content from the highlands.

Models are bearish lads.  We could establish a trading low at some point next week.  But a longer view suggests a correction is in the cards for the next several weeks.

Exodus members, the 168th edition of Strategy Session is live.  Go read more specifically what the model is calling for and see in much less colorful words what we are specifically looking for before we initiate new long.

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Most extreme overnight session since election night has NASDAQ futures gap down into Friday, here is the trading plan

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume.  Both measurements are the highest seen since election night in November 2016.  Partially driving the action was earnings from Big Tech, including Apple, Amazon, and Google.  Apple is a touch lower than its Thursday close, Google lower, and Amazon higher.  At 8:30am non-farm payroll data came out strong.

Also on the economic docket today we have factory/durable goods orders at 10am and U. of Michigan will issue their final read of January sentiment at 10am also.

Yesterday we printed a neutral extreme down.  The day began with a gap down just below the Wednesday range.  Buyers worked the gap filled but could not rally up beyond the Wednesday high before sellers stepped in and worked price back down to the lows—taking out overnight low late in the session and closing the day near session low.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6896.25.  From here we continue higher, up to 6900 before two way trade ensues.

Hypo 2 stronger buyers take us up to 6927.75 before two way trade ensues.

Hypo 3 sellers push down through overnight low 6844.50 and trade down to 6831.25 before two way trade ensues.


Volume profiles, gaps, and measured moves:

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NASDAQ bounces along lows, still in balance [barely] ahead of Big Tech earnings, here is the trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume.  Price was all over the place during extended trade.  We briefly took out the Wednesday cash low then rallied back up near the highs as investors reacted to earnings out of Facebook and Microsoft.  Then, as the evening progressed we sold off, non-stop, traversing the entire range of a large balance that has been building since January 29th.  At 8:30am Initial/Continuing jobless claims data came out mixed.

Also on the economic docket today we have ISM manufacturing/employment at 10am.

After the bell Apple, Google, and Amazon report earnings.  These are major, market moving events.

Yesterday we printed a normal variation down.  The day began gap up.  And after a “farewell Yellen” morning raly up through overnight rally we stalled.  We stalled just 1.5 points ahead of the open gap left behind on 1/29.  This was a slight hint of weakness.  From then on the market began working lower, closing the overnight gap before finding a responsive bid late in the day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and test back up into the Wednesday range 6922.  Look for buyers to succeed and continue higher, up to close the overnight gap up at 6950.75 before violent, choppy two-way trade ensues.

Hypo 2 sellers press down to 6880.75 before violent choppy two way trade ensues.

Hypo 3 stronger sellers take us down top 6850 before violent choppy two way trade ensues.


Volume profiles, gaps, and measured moves:

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NASDAQ futures gap up ahead of final Yellen Fed decision, here is the trading plan

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring elevated range and volume.  Price was balanced overnight, briefly poking above the Tuesday high during the POTUS SOTU address.  As we approach cash open price is hovering just above the Tuesday high.

Today is a transition day, economically and socially.  A sad day for many.  Fed chair Yellen, who has presided over one of the strongest market ever, will finish her final rate decision meeting today at 2pm.

Other less important economic items include pending home sales at 10am and crude oil inventory at 10:30am.

Also and remember, Microsoft and Facebook report earnings after the bell.  Alibaba reports before market open Thursday.

It is also January 31st.

Yesterday we printed a normal variation up.  The day opened pro gap down and a battle ensued off the open.  Sellers pressed down through last Tuesday’s low before finding a strong responsive bid late-morning and choppy, two-way trade ensuing.

Heading into today my primary expectation is for a gap-and-go ‘farewell J.Yell’ rally higher.  Look for buyers to reject a move back into the Tuesday range 6969.25 triggering a rally up to the gap at 6992.50 ahead of the FOMC decision.  Use 3rd reaction after the Fed decision to dictate direction into the close.

Hypo 2 sellers to work back down into the Tuesday range 6969.25 and close the overnight gap 6936 before continuing lower thorough overnight low 6935.25.  Look for buyers ahead of 6920.  Use 3rd reaction after the Fed decision to dictate direction into the close.

Hypo 3 stronger buyers rally us to 7017.50 ahead of FOMC decision.  Use 3rd reaction after the Fed decision to dictate direction into the close.


Volume profiles, gaps, and measured moves:

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Extreme overnight trade takes NASDAQ back down into last Thursday’s gap

NASDAQ futures are coming into Tuesday pro-gap down after an overnight session featuring extreme range and volume.  Price worked lower, hard and fast overnight, trading down to the open gap left behind last Friday morning.

On the economic calendar today we have consumer confidence at 10am and a 4- and 52-week T-bill auction at 11:30am.  The Presidential State of The Union Address is at 9pm.

Yesterday we printed a neutral extreme down.  The day began gap down and after a choppy opening battle we went range extension down.  By late lunch we had traversed the entire daily range and gone up through initial balance high, making us neutral.  However buyers could not close the overnight gap and we worked back down into the lower third of the range, earning the neutral extreme designation.

Heading into today my primary expectation is for a gap-and-go lower, down though overnight low 6925.75.  Look for buyers down at 6918.50 and two way trade to ensue.

Hypo 2 buyers work higher and attempt a move back into the Monday range 6980.  Sellers defend here and two way trade ensues.

Hypo 3 stronger sellers trade us down to 6880.75 before two way trade ensues.


Volume profiles, gaps, and measured moves:

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NASDAQ active overnight, here is the Monday trading plan

NASDAQ futures are coming into the week gap down after an overnight session featuring elevated range and volume. Price worked up to a new record high before fading back down to 7000.  At 8:30am personal consumption expenditure data came out in-line with expectations.

Also on the economic agenda today we have Dallas Fed manufacturing activity at 10am, then a 3- and 6-month T-bill auction at 11:30am.

Last week the broad indices were volatile Monday, trading higher, consolidated from Tuesday-to-Thursday, then rallied into the weekend. Here is the last week performance of each major index:

On Friday the NASDAQ printed a double distribution trend day.  The day began with a gap higher.  Sellers stalled during an early attempt lower and we took out Thursday high.  Then after flagging along the highs a trend took hold, higher into the weekend.

Heading into today my primary expectation is for sellers to work down to 6987.75 before two way trade ensues south of 7021.

Hypo 2 buyers work into the overnight inventory and close the gap up to 7029.75.  From here they continue higher, up through overnight high 7047.25 before two way trade ensues.

Hypo 3 stronger sellers work down to 6962.25 before two way trade ensues.


Volume profiles, gaps, and measured moves:

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Models remain bullish into month-end

January is nearly complete. And then? February.

The trading model is bullish for a fourth consecutive week.  It is safe to say, in hindsight, that the model absolutely crushed January.  Which is nice.  While more-and-more rally skeptics voiced their concern about how far and high 2018 has already gone, the robots keep us on the right side of the tape.

Overall I think it makes sense to take some profits, but only if you intend to invest them somewhere else.  Like new windows for your house.  What is nice about investments in real estate is you can enjoy it.  The most you can do with a stock is take to Twitter and be a fan-boy.  Which is kind of enjoyable, especially with Tesla, because it is such a divisive concept.

There is a fed rate decision Wednesday.  The gambling halls in Chicago currently show a 96.4% probability of the target borrowing rate remaining unchanged at 150 basis points.  In my opinion they need to start hiking rates more aggressively, and pump the proverbial brakes, but it seems like we are really enjoying all this winning.  So it is not likely.

The March rate decision is a live meeting.  There is a 76.8% probability of a 25bp hike.

Because of the odd, mid-week ending of January, we will also have non-farm payroll on Friday.

All that important economic data is on top of us heading into a heavy earnings week.  Our tech overlords at Apple, Google, Microsoft, Amazon, and Facebook—AND Alibaba all report this week.

I spoke with a Google employee last night.  She is quite optimistic about the direction of her company.  She told me keep an eye on some specific parts of the business, but we were in the basement of a parking garage, crammed in an orange room filled with loud, repeating house music and cannabis smoke.  I think I may have caught a contact high, and I do not remember those specifics.

How’s that for a useless anecdote?

Through all the commotion of the upcoming week we have our quantitative signals to guide us.  They are calling for a calm drift.  We have Wednesday afternoon to watch as a pivot point.  And as always we have auction theory for clarity.  So we will do what we always do—take it one day at a time.

Raul Santos, January 28th, 2018

Exodus members, the 167th edition of Strategy Session is live.  Go check out a few caution signs we need to monitor next week.

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Really successful week and it feels good

What feels good about this week is, well everything.

I have learned to take the good with the bad and treat them all the same.  I refined what makes me feel good.  It is not financial gain.  It is physical pain, but that is irrelevant to my professional life.  What makes me feel good professionally is doing the right work.

Research, plan, execute.

This was an important week, but I woke up late Monday.  The Sunday football had me all fired up. Bill Belichick is someone I admire, and seeing him take another set of athletes to the Superbowl gives me hope that I will have a long trading career if I do my job.

But the real fun was seeing the birds trounce those primitive norse men.

Through it all I forgot to set my alarm.

So I woke up late Monday.  Missing the opportunity to write a NASDAQ trading plan before opening bell threw me completely out of whack.  Suddenly everything else I needed to do this week started swirling around in my head.  It was overwhelming.

Just then I took a mental break.  I sat down in the office.  Turned off all the monitors.  Left the phone in the kitchen and folded a standard eight and a half by eleven piece of paper in half four times.  This yields the only size to-do list one can effectively tackle.

And I wrote down everything I need to do this week.  I took Monday off from trading.  I did not force myself to sit down and use my gut, or instinct, or whatever to go swing some trades around.

That was something I used to do.  It lost me lots of time and money.

I sat down and wrote a to-do list.  Then I starting knocking out the most enjoyable tasks.  The low-hanging fruit.

On Tuesday I traded.  I  cleaned up the overnight high before lunch and went back to work on the to-do list:

Tuesday night I had an awesome Meetup downtown and made some real connections with people who I think will become better observers and traders.

Wednesday I nailed the trade up through overnight high THEN pivoted and rode a fast rip lower and went back to work on my to-do list:

Thursday I nailed the gap trade fast and magnificently and then worked on my to-do list:

Friday, today, I pivoted to hypo 2 and slowly rode the trend higher:


And now it is time to return to my to-do list.  There are a few items left and I scratched a few new items in the corners.  I may not even complete the whole list this week.  But the process of stopping—of sitting down and writing all the seemingly overwhelming tasks on paper, with pencil, on an eight and a half by eleven piece of paper folded in half four times—saved my entire week.  And I am happy that I stuck to an old habit that helps to clarify my thoughts and take proper action.

I am grateful I took a stop.

I like to think a week like this would make coach Belichick proud.  Not that that matters.

Meanwhile my quantitative portfolios are all at record highs and outperforming the S&P 500.  These truly are good times.  So much winning is occurring.

I know the inevitable snap back is just around the corner, like a hard northern wind just after passing beyond a building.  Don’t let it blow you over.  Keep you feet on the ground and stay balanced.

Have a great weekend everyone.  I am grateful for the connections I make here.  It means a lot to me that you guys share my work, and hopefully it finds someone who needs help with their approach.  Everyone takes a different path to consistency and sometimes it helps to emulate some of the traits they see in others.  Eventually, with experience they can begin creating their own recipe.  They become less of a cook and more of a chef.  But we can always go back to being a cook again if someone is more experienced and a worthy mentor.  And I hope people read my work and realize that it takes patience.

Raul Santos, January 26th, 2018


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Friday is here, the NASDAQ is gap up, here is today’s trading plan

NASDAQ futures are coming into Friday gap up after an overnight session featuring elevated range and volume.  Price worked higher, balancing out in the upper quadrant of Thursday trade.  At 8:30am advance goods trade balance, GDP, and durable goods all came out below expectations.

There are no other economic events today.

Yesterday the NASDAQ printed a normal variation down.  The day began with a gap up that sellers quickly drove down into.  Then, after a poking through overnight low a responsive bid stepped in and two way trade ensued.  Late in the afternoon the market went range extension down.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6930.75.  From here we continue lower, down through overnight low 6925.75 before two way trade ensues.

Hypo 2 buyers defend ahead of 6945 and we go higher, up through overnight high 6972.  Look for sellers up at 6996.75 and two way trade to ensue.

Hypo 3 stronger buyers gap-and-go higher, sustain trade above 6998.75 and push us to record highs to end the week.


Volume profiles, gaps, and measured moves:

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