Tuesday, May 31, 2016
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
2,424 Blog Posts

May Consumer Confidence Readings Are Weak


Soon after the 10am Consumer Confidence read came through sellers entered the market and took out overnight low.  The May reading of Consumer Confidence was well below expectations:

May US consumer confidence 92.6 vs 96.3 expected

The data should come as little surprise after reports earlier this month of U.S. households using less debt and becoming more thrifty.

See also – America Is Rich Again; Credit Card Utilization Drops To Record Low

NASDAQ futures are holding the upper bounds of lower value heading into the afternoon.  However the longer we trade inside the value area, the more likely we explore the lower bounds.

Overall markets are moving slow and orderly heading into month-end.




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NASDAQ Trading Notes Heading into Month End


NASDAQ futures are set to come into the holiday-shortened week gap up after an overnight session featuring normal range and volume.  Price managed to extend on last week’s rally before finding sellers at the value area low from the mid-April balance [see volume profile chart].  Price lingered on the high for several hours resulting in a weak high print on the market profile chart.  At 8:30am Personal Consumption data came out as follows:

The U.S. Bureau of Economic Analysis reported that personal income rose 0.4 percent in April the same as March 
and spending rose 1 percent versus a 0.1 percent rise in March.

Also on the economic calendar today we have Consumer Confidence at 10am and 3- & 6-month T-Bill auctions at 11:30am.

Last week the market trended higher.  The upward move continued into the weekend when we printed a neutral extreme up on Friday.

Heading into today my primary expectation is for buyers to push up and take out overnight high 4528.25.  Look for price to stall out just above, around 4530 and two way trade to ensue.

Hypo 2 sellers work into overnight inventory and close the gap down to 4511.50, taking out overnight low 4512.25 along the way.  Look for responsive buyers down at 4511.75 and two way trade to ensue.

Hypo 3 strong buyers push up through overnight high 4528.25 and sustain trade above it setting up a move to target the MCVPOC at 4546.50 before two way trade ensues.

Hypo 4 strong selling takes out overnight low 4512.25, closes overnight gap 4511.50 then sustains trade below 4511 setting up a move to target 4504 before two way trade ensues.



Volume profiles, gaps, and measured moves:



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The Robots Are Targeting Higher Prices


Since the cat is out of the bag, our software gave a bullish signal last week.  It’s good for at least 5 days.  Tuesday will be day 4.  There is a 94% probability Tuesday’s close will be higher than last Tuesday’s close aka the trend day heard around the world.  Furthermore, there is an 84% probability of us closing higher than the Tuesday, May 24th close on Wednesday June 8th.

Do you know how much money you can make between now and June 8th? Even if the market just stays flat?

Perhaps you don’t.  Maybe you skipped last week’s iBankCoin Boot Camp which equipped attendees with the right skills to lay waste to the stocked market in these conditions.

I am still playing things slow.  I am eagerly awaiting ‘The Fly’s’ adjustments to the GARP portfolio so I can re-balance my Motif.  Meanwhile my low risk longs have been participating earnestly with the market while paying dividends.  Let’s not even talk about which ones, I cannot risk the robots triangulating on my boat and sending torpedoes into the hull.

Also, in case you were unaware, I time stamp all the algo driven trades I take inside Exodus.  Nothing fancy, just a note to the community:


My model, the one I produce every single Sunday 80 weeks running, is also generating bullish readings.  They are unique bullish readings, territories we do not often explore so the data set is limited.  Nevertheless, I adhere to my working model as it has been an excellent guide for me.

Enjoy your Monday holiday, Americans, then come Tuesday be ready to make some moneys before June.

Sell in May?  I think I will see the first week of June, the turn and the river card.


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NASDAQ on Auto Pilot Heading into Holiday Weekend


NASDAQ futures are coming into Friday flat after an overnight session featuring abnormally low range on normal volume.  Price extended up the gains made Thursday overnight before coming into balance.  At 8:30am annualized GDP came in below expectations, at 0.80% vs 0.90% estimate.  The initial reaction is some selling.

Also on the economic docket today we have final May reading of U. of Michigan Confidence at 10am, Fed Chair Yellen talking at the Harvard Radcliffe Day at 10:3am, then Baker Hughs Rig count at 1pm.

Yesterday we printed a normal variation up.  The session was balanced until late in the afternoon when buyers stepped in and pushed the market higher, ending the day at session high.

Heading into today my primary expectation is for chop.  Look for buyers to continue working higher, with 4524.75 putting a cap on upward action.

Hypo 2 sellers come in and book some gains ahead of the holiday weekend/month end.  Look for a move down to 4485 before two way trade ensues.

Hypo 3 Yellen says something that triggers a bit more liquidation.  We reenter the lower value and explore it, with sellers targeting 4470.50 before we come into two way trade.



Volume profiles, gaps, and measured moves:


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Bulls Pushing The Envelope, Extending Their Gains


NASDAQ futures came into the morning slight gap up after an overnight session featuring normal range and volume.  Price was contained inside Wednesday’s range overnight with the action contained to the upper half of the prior day’s regular cash trading session.  At 8:30am Initial/Continuing Jobless claims came in soft and Durable Goods Orders spiked way up, well above expectations.

At 10am Pending Home Sales came in well-above expectations.

See Also: Pending Home Sales Explode in April, Heavily Skewed Towards The South and West Coast

Yesterday we printed a normal variation up.  After opening gap up, sellers made a push into overnight inventory that stalled out right around 4443, which was a price level we gapped up through that was left behind on a gap down back on 04/26 [confused yet? 🙂 just ask].  From there buyers drove higher before coming into balance up near 04/26 highs.  This level, 4484.25 is important, because we briefly traded above it and has stalled below it since.  It is a significant swing high that if buyers cannot recapture, and soon, could trigger a failed auction.

This morning we opened gap up, sellers worked into the overnight inventory and closed the gap.  A strong responsive bid came in and worked up through the entire morning range to push us RE up.  Since then price has fallen back to the current daily mid and balanced out heading into lunch.

Heading into the afternoon and close my primary expectation is for price to continue working higher, with buyers targeting 4493 before two-way trade ensues.

Hypo 2 buyers push a bit further, up through 44893 and 4497.50 to tag the 4500 century mark before two way trade.

Hypo 3 sellers push back down through the range and take the market neutral.  Buyers defend around 4458 and two way trade ensues, closing flat.



Volume profiles, gaps, and measured moves (zoomed out)



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Twitter Stops Funding Another Failed Business Idea


The Wall Street Journal is following up on yesterday’s BuzzFeed report [BuzzFeed Link – Click Here]  about Twitter’s confirmed plan to cease funding their stupid ‘Buy’ button program.  The ads were intended to turn Twitter into a virtual mall or something.

Wait.  Isn’t that Amazon?

I imagine you can walk into Twitter HQ any given day, up in the extremely expensive hills of San Fransisco, and find no less than 5 bearded children sitting around a glass conference table scheming up dumb business ideas.

And since none of them get any traction, someone there has the job of putting said bearded heads on a chopping block every quarter.  It’s all very bleak.

Anyhow, here is the entire WSJ article, courtesy of Googling the headline to shimmy around the paywall:

Twitter Inc. on Wednesday confirmed it is curtailing an advertisement effort that encouraged people to purchase products from merchants without leaving the social-media service.

In September 2014, Twitter began testing ads with a button that select U.S. merchants sell their wares directly on Twitter. The hope was these ads could transform Twitter into something of a virtual shopping mall and drive new advertising revenue. They opened up the ad to U.S. merchants of all sizes the following year.

A Twitter spokesman said the company will no longer devote resources to supporting the development of the ads for the foreseeable future. Instead, the company has reallocated resources in favor of a different kind of retail-related ad product that it said has gained more traction with its retail partners.

BuzzFeed News earlier reported that Twitter would end product development on the “buy button” ads and shift its commerce team into other divisions within the company.

The Twitter spokesman said the commerce team will shift its efforts to focus on customer service and commerce-related ads, which have shown greater success for retailers. These ads, called dynamic product ads, show users images of products that they had previously viewed on the advertiser’s website but for whatever reason had decided not to purchase. If a user clicks on the ad, it takes them back to the specific product page on the retailer’s site.


Twitter Tweaks Will Make 140-Character Limit Roomier (May 24) [RAUL NOTE: THEY ALSO ANNOUNCE NEW FEATURES THEN DON’T ACTIVATE THEM]
Twitter Looks to Video to Increase Advertising Sales (May 1)
Twitter Posts Disappointing Revenue and Forecast (Apr. 26)
Social commerce burst onto the scene in recent years as platforms such as Twitter, Facebook Inc. and Pinterest Inc. all started testing “buy buttons” on their respective services. But it appears consumers aren’t yet ready to open their wallets while checking their social feeds.

Facebook, which has tested buy buttons, has in recent years poured greater resources into dynamic product ads instead. Chief Operating Officer Sheryl Sandberg noted in an earnings call with analysts last July that the company’s e-commerce objective is to connect its users with marketers rather than selling retailers’ wares directly on the service.
News of Twitter’s commerce-ad shift came on the same day that CEO Jack Dorsey sought to reassure frustrated shareholders that the social media service is headed in the right direction.

Mr. Dorsey, speaking along with other executives at the company’s annual shareholder meeting in San Francisco, answered investor queries that ranged from his plans to revive the company’s stalled user growth to what all those high-paid engineers are actually doing.

In introductory remarks, Mr. Dorsey emphasized the company’s top priorities and its progress over the past year. He pointed to the announcement on Tuesday that Twitter was tweaking its format to not count media attachments and usernames sent in reply tweets against its signature 140-character limit in an attempt to make the product easier to use.

The 40 some shareholders who showed up at the Yerba Buena Center for the Arts in downtown San Francisco were polite during the question-and-answer session with executives. But some shareholders, such as one who identified himself as Keith Miller from North Carolina, shared what the view looked like from the investor seats: “The stock price is stuck in the mud,“ he said. ”…Within the company the ’geekdom’ is very happy and is very positive, but out here in the marketplace everybody else is saying it’s too hard to use.”

Mr. Miller described the company’s sluggish user growth and advertising revenue per use as both “not very impressive.”

Mr. Dorsey acknowledged the product’s weaknesses and asked Mr. Miller for more time. “We know that there are areas of the product that people don’t understand,” he said. ”They don’t understand how it works and it’s inhibiting a lot of usage. We’re focused on the one thing that we can control, which is building an experience that people want to use and experience every single day. It’s going to take time.”

During the meeting, the shareholders officially approved the appointment of PepsiCo Vice Chairman and CFO Hugh Johnston, and also re-elected Mr. Dorsey, to the board. The shareholders also approved Mr. Dorsey’s plan to donate about 6.8 million of his Twitter shares, representing about one third of his total Twitter shares, to the employee equity pool.

Twitter shares [ticker – TWTR] are hovering near all-time lows:


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Program Announcemet


I have to take a few meetings downtown this morning so there will not be a morning NASDAQ futures report.  Look for one to be out around lunchtime, to guide the afternoon trade.

And have a strong beard trading session lads.

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Day After A Trend Day on The NASDAQ Exchange

Traders call out trades on the floor of the Chicago Mercantile Exchange, April 25, 2007, after the Dow Jones industrial average cracked the 13,000 mark for the first time. The Dow leapt to an intraday record of 13,036.99 within minutes of the market's open, with investors also buoyed by data that showed orders for durable goods -- costly and long-lasting manufactured items -- rose more than expected in March.  REUTERS/John Gress (UNITED STATES) - RTR1P16Q

NASDAQ futures are priced to gap up into Wednesday after an overnight session featuring elevated range on normal volume.  Price continued working higher during Globex after a trend up took hold all day yesterday.  The market continued higher, up to the 04/26 range before coming into balance.

The economic calendar is spattered with medium impact events today.  At 9:45 we hear Market Service PMI, at 10:30am crude oil inventories, at 11:30am there is a 2-year Floating Rate note auction, and at 1pm they’re auctioning off 5-year notes.

Yesterday we printed a trend up, conviction day.  The session started with a gap up to the top of Monday’s range that was quickly followed by an opening drive.  Buyers were initiative well-beyond the first hour of trade, pushing range extension up just after 10:30am and continuing to slow grind higher for the remainder of the session.  We did start to see value for near the end of the day, giving the profile a slight P-shape.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4445.75.  From here the continue lower to take out overnight low 4443.  Look for responsive buyers at the low volume node print at 4440 before two way trade ensues.

Hypo 2 sellers cannot fill overnight gap.  Instead responsive buyers (responsive relative to the open, initiative relative to yesterday’s close) step in and work price higher.  They take out overnight high 4472.75 and continue working higher to target 4492.50 before two way trade ensues.  Stretch target is 4500.

Hypo 3 strong sellers take price down, close overnight gap 4445.75 and take out overnight low 4443 early.  Then they sustain trade below 4443 setting up a move to 4418 before two way trade ensues.



Volume profiles, gaps, and measured moves:


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Reviewing The NYSE $TICK Internals That Preceded Swing Low and Yesterday’s Rally


Every serious trader mixes their own special ‘contextual’ sauce to guide their trading.  And while most people monitor the NYSE TICK, they use it about the same–looking at how the TICK trends intra-day and roughly eyeballing where extreme readings occur.  The simpletons like to perk up when the +/-1000 line is crossed because their minds are filled with lust for round numbers.

Also, most TICK observers use a calculation slightly different than mine.  In fact, so many users of my premium data feed wanted to be like everyone else that the company catered to them.  Per IQ Feed:

Available by customer request, we’ve added a new NYSE ONLY NET TICK: symbol JTYT.Z to DTN.IQ/IQFEED.

This new symbol:

Only includes NYSE Exchange trades (excludes regional exchange trades)
Trends the same as our NYSE NET TICK indicator
Shows higher highs and lower lows
Crosses +1000 or -1000 more often

You have to imagine how happy this made me, to know people wanted a more crude, less encompassing TICK.  Yes, please leave the quality TICK just for me!

Anyhow, I take 5 years of TICK data and run a 3rd sigma study on it.  This tells me the specific levels that are truly extreme events, TICKs bigger than 99.7% of all other ticks.  When one of these rare events hits, I have a rather jolting audio alert that resonates throughout my entire office.

Leading into the rally, in the final throws of balance, we had two extreme low ticks.  The second one marked the low nearly to the minute. BEHOLD:


Take a look at where those TICK BOMBS hit on the NASDAQ futures:


Doing your own research, with quality raw data, is how you build an edge in the market.  This is how I go about creating a new trade for my repertoire.

Pretty cool stuff right?  Perhaps you’re starting to understand the process of becoming an objective trader yes yes?  I hope so.

Good luck out there lads.


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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.



Volume profiles, gaps, and measured moves:


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