iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,916 Blog Posts

Jobless claims strong // NASDAQ weak // Here is Thursday trading plan

NASDAQ futures are coming into Thursday with a slight gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, chopping along the lower half of Wedneday’s range. At 8:30am jobless claims data came out better-than-expected, and as we approach cash open price is hovering in the lower quadrant of Wednesday range.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a double distribution trend down. The third in a row. Yesterday began with a slight gap up in range and after a brief two-way auction sellers stepped in and resolved the gap. Then we pushed up through the mid and for most of the morning it looked like buyers may have kept us above the mid but then sellers re-emerged in the afternoon, reclaiming the mid and pushing us into a late range extension down. We ended near the lows of the day but well off the lows of the week.

Heading into today my primary expectation is for sellers to work down through overnight low 13,451 setting up a move down through Tuesday low 13,380.75. Look for buyers down at 13,337 and for two way trade to ensue.

Hypo 2 buyers press up through overnight high 13,570.50 on their way to tagging 13,600.

Hypo 3 stronger sellers tag 13,300. Look for buyers ahead of 13,273.50.

Levels:

Volume profiles, gaps and measured moves:

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Gap up in range ;-) here is Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range on elevated volume. Price steadily ascended higher overnight, trading back to nearly where prices were Tuesday morning. At 8:15am ADP employment data came out slightly below expectations, and as we approach cash open price is hovering in the upper quadrant of Tuesday’s range.

Also on the economic calendar today we have ISM services at 10am followed by crude oil inventories at 10:30am.

Yesterday we printed a double distribution trend down. The day began with a pro gap down and then an open-test-drive down. Sellers drove lower until about noon. Then the rest of the session was spent steadily retracing higher. We eventually closed at the daily midpoint. Of note—the VPOC never shifted up off the lowest distribution.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 13,519.50. Look for buyers just below at 13,500 and for two way trade to ensue.

Hypo 2 stronger sellers take out Tuesday low 13,380.75 setting up a move to 13,337.

Hypo 3 buyers push through overnight high 13,653.25 and tag 13,700.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ a quick -100 into Tuesday // here is trading plan

NASDAQ futures are coming into the first Tuesday in May pro gap down after an overnight session featuring extreme range on elevated volume. Price was balancing overnight, balancing below the Monday low for much of the globex session until sellers hit the tape around 7:40am New York. Said sellers sent price about -75 handles lower in about two minutes. Since then we’ve come into a mini balance, and as we approach cash open price is hovering at levels unseen since April 9th.

On the economic calendar today we have factory orders at 10am.

Yesterday we printed a double distribution trend down. THe dawy began with a gap up in range that sellers quickly drove into off the open, filling the gap before a responsive bid stepped in and chopped price higher. This chop up was complete before the first hour of cash markets was complete, and was followed by a second wave of selling that pushed to an early range extension down while taking out last week’s lows. The rest of the session was spent chopping along these lows, ultimately shifting the daily VPOC down near the lows.

Heading into today my primary expectation is for a small sell down to close the April 7th gap down at 13,618.75 before two way trade ensues.

Hypo 2 gap-and-go lower, liquidation down to 13,558.50 before two way trade ensues.

Hypo 3 buyers work into the overnight inventory and attempt to  reclaim Monday low 13,772 but fail and two way chop ensues along the Monday low.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ up a quick +60 into May // here is Monday trading plan

NASDAQ futures are coming into the first trading day of May gap up after an overnight session featuring elevated range on normal volume. Price was balanced overnight, balancing along the mid-point of last Friday’s range. As we approach cash open price is hovering about +15 above the Friday mid.

On the economic calendar today we have ISM manufacturing and construction spending at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week we essentially marked time. There was a small rally in the beginning of the week, a sell-off mid week, and then a small fade upward to end the week. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral day. The session began with a gap down in range that was quickly resolved via an open-drive-up. Buyers made an early range extension up just a few points beyond the gap fill before price abruptly fell back to the midpoint. There was a battle along the mid for several hours before a mid-afternoon push to a new low of day and into the neutral print. Said sellers were unable to take out the Thursday low. Instead price chopped along the lower quadrant of range into the weekend close.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 13,867.25. From there sellers continue lower, down through overnight low 13,844.50. Look for buyers at 13,800 and for two way trade to ensue.

Hypo 2 stronger sellers trade down to close the 04/22 gap down at 13,756 before two way trade ensues.

Hypo 3 gap-and-go higher, trading up to 14,000 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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Flipping bearish, so bearish, into first week of May

This might end up hurting. It certainly feels like I will be fighting the tape and the Fed and Google, but when IndexModel signals Rose Colored Sunglasses I have no choice but to execute my plan.

What is Rose Colored Sunglasses?

Life, especially in the murder mitten, well it can be quite bleak at times. Right now it is not. Right now the spring bloom fills our outsides with wonder and hope. There are about eight other months where a giant lake forms overhead rendering most of life into a grey scale.

If, during the grey days you put on a pair of rose tinted lenses, suddenly everything is a little better. Quite a bit more lovely, actually.

So I named the bearish signal generated by IndexModel Rose Colored Sunglasses because it helps my brain to visualize just exactly what this model is seeing — the four major indices are painting a rosy picture — they’re strong (QQQ was +7% in April, huge) yet when you peel back the layers you start to see some decay and even a bit of rot.

I use Stocklabs to peer inside the complications of the equity system. By joining the scores generated by Stocklabs with those of IndexModel I build an oscillator of sorts, much like a curious technical analyst might see if they ever add an RSI or CCI to their charts. Here is my oscillator. I build it on an excel spreadsheet:

The pink threshold line can be a bit misleading. If the score is extra high (like it was the prior three weeks) that is actually a bullish signal. It calls for a drift. A marking of time, perhaps with a slight upward bias. Does that sound familiar? Look at the daily price action of the S&P 500 over the last three weeks:

The words drift and slight upward bias come to mind, yes?

Anyhow, the only reason I am writing what now is taking the form of a self-congratulating shit post is to clarify why I build this model and what I intend to do in the week ahead.

I build this model in a manner that is simple and manual. I think there is a tendency to throw a lot of computing power at market analysis for the sake of sophistication when in reality the best advancements in performance come from putting lots of honest work in before taking a trade.

There are usually about three hours of Sunday research followed by 20 minutes of planning each morning before I take a single trade that may only last a few minutes.

The harder I work, the luckier I be. It has kept me on a path of consistent profitability. Chop wood. Carry water. That means I cannot just stop doing what put me here. The work never ends.

What I intend to do in the week ahead is find a spot early Monday to initiate a position in SQQQ. That position will have no price-based stop loss, only a time-based stop that triggers Friday. Also I will be working only the short side of the NASDAQ 100 futures. I will be looking for days that open gap up inside the prior day’s range and I will be aggressively working those gap fills. I will be pressing positions to take out overnight low and/or range extension down.

That is what I will be doing next week.

What won’t I be doing?

I will not be raising cash. I will not exit Tesla or Twitter or Del Taco or any other investments. Those are for the kids, man. Investments are just going to ride out whatever happens next week, like a sea lab deep below the waves.

I should mention—this does not feel good. It feels like I am fighting a strong market. It is the start of the month and while I am bullish in general, I tend to be extra bullish when new months begin. Carrying a bearish bias into the week may result in my missing out on some upside action.

But the system is the system is the system and the plan is the plan and I work too hardt to sabotage my own success by getting in the way of systems that have been my rock over the years.

The Raul blog is BEARISH until noted otherwise.

Raul Santos, May 2nd 2021

And now the entire 336th edition of Strategy Session. Enjoy:

Stocklabs Strategy Session: 05/03/21 – 05/07/21

I. Executive Summary

Raul’s bias score 3.08, neutral*.  Strength early Monday is met with aggressive selling, setting up a week of downward price action. Then look for non-farm payroll data due out Friday morning to dictate direction into the weekend.

*IndexModel flagged Rose Colored Sunglasses bearish bias, see Section IV.

II. RECAP OF THE ACTION

Marked time. Sideways consolidation.

The last week performance of each major index is shown below:

Rotational Report:

Rotation away from key Tech sector. Discretionary resilient. Energy moving independently.

neutral

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Money flows skewed positive but look at the negative side of the ledger — several semiconductor industry groups.

Volume delta -30% and median return about 75 basis points.

Money flows are slightly bearish

Here are this week’s results:

III. STOCKLABS ACADEMY

What next?

Last week was jam packed with earnings and Fed announcement and presidential addresses. And it was month end. So how did we do? The markets seemed to digest all the information in a healthy manner, consolidating sideways through all of the good, bad and neutral.

We have the first Rose Colored Sunglasses bearish signal of the year as we head into May. The beginning of the month can feature some big swings, and to initiate shorts this week in some ways feels like I could be fighting the tape.

Underlying metric and the context of this week’s report slightly confirm a bearish bias, but not by much.

I will be initiating a short position (likely SQQQ) At some point Monday and will be working the short side of the tape, intra-day, via NASDAQ 100 futures.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Strength early Monday is met with aggressive selling, setting up a week of downward price action. Then look for non-farm payroll data due out Friday morning to dictate direction into the weekend.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

Semiconductors choppy, Transports continue to rally

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports are holding the highs and the price action indicates there is still a discovery up phase underway.

See below:

Semiconductors are sort of forming a range up here. There is some room to the downside before we could consider the action to be discovery down. It certainly is not discovery up. Balance for now.

See below:

V. Stocklabs Hybrid Oversold

On Tuesday, April 20th Stocklabs flagged oversold on the 6 month algorithm. This bullish cycle runs through end-of-day May 4th. Here is the performance of each major index so far:

VI. INDEX MODEL

Bias model is flagging Rose Colored Sunglasses bearish bias after being extreme Rose Colored Sunglasses for three consecutive weeks.

We had a Bunker Buster nine weeks ago.

Rose Colored Sunglasses calls sellers to control the tape, pressing prices lower.

Here is the current spread:

VII. QUOTE OF THE WEEK:

“Humanity must seek what is not simple and obvious using the simple and obvious.” Gaius Musonous Rufus

Trade simple, execute the plan

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Microsoft lower, Google higher, Apple and Facebook on deck, but first The Fed (then later Jim Biden), here is Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday with a gap down after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing along the lower half of Tuesday’s range. Price briefly probed below the Wednesday range around 3:30am but as we approach cash open price is hovering in the lower quadrant of Tuesday’s range.

Tech ‘juggernauts’ Microsoft and Alphabet (Google) reported earnings after the bell Tuesday. Shares are -2.5% and +5% respectively in pre-market trade.

On the economic calendar today we have crude oil inventories at 10:30am followed by and FOMC announcement/press conference from 2-2:30pm. CME Fed Fund futures indicated a 0% probability of the Fed adjusting their benchmark borrowing rate.

Tech giants Apple and Facebook are set to report earnings after the bell, and later this evening President Joe Biden will be giving his first speech to Congress.

Yesterday we printed a normal variation down. The day began with a slight gap up in range. After a brief open two way auction in range sellers stepped in and worked a gap fill then continued lower, trading down into the lower quadrant of Monday’s range but never exceeding the low. Instead buyers worked price back to the daily midpoint, sellers defended the mid, and we ended the session chopping along the bottom-side of the mid.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 13,946.25. Buyers continue higher, up through overnight high 13,979.25. Then look for third reaction to the FOMC announcement to dictate direction into the afternoon.

Hypo 2 sellers gap-and-go down, taking out overnight low 13,904.75 and tagging 13,900. Then look for third reaction to the FOMC announcement to dictate direction into the afternoon.

Hypo 3 stronger sellers press a liquidation down to 13,800. Then look for third reaction to the FOMC announcement to dictate direction into the afternoon.

Levels:

Volume profiles, gaps and measured moves:

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Juggernauts Microsoft and Alphabet set to report after bell, Tesla lower in pre, here is Tuesday NASDAQ trading plan

NASDAQ futures are coming into the last Tuesday of April with a slight gap up after an overnight session featuring **normal** range and volume. Price worked sideways overnight, balancing along the Monday high. As we approach cash open, price is hovering along the Monday high and about 40 points below record highs.

Shares of AI and robotics company Tesla are -2% in premarket trade after reporting earnings Monday afternoon.

On the economic calendar today we have consumer confidence at 10am followed by a 2-year note auction at 11:30am then a 7-year note auction at 1pm.

Major NASDAQ components Microsoft and Alphabet (Google) are set to report earnings after the bell.

Yesterday we printed a normal variation up. The structure of the price action nearly resembles a double distribution trend up, but a closer look at the volume profile reveals only a single Gaussian structure. The day began with a slight gap up in range and after an open two-way auction in range buyer stepped in and began campaigning price higher. Price exceeded last Friday’s high early on, around 11am New York before flagging along these highs through lunch. After lunch buyers continued their campaign higher, eventually tagging 14,000 and going on to close the 04/16 open gap. The day ended chopping along the highs.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 14,050 on the way to probing beyond record high 14,059.75.

Hypo 2 stronger buyers trade up to 14,100 before two way trade ensues.

Hypo 3 sellers press down through overnight low 13,999 before two way trade ensues.

Basically, a pause as the market awaits new information.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ flat into final week of April // here is Monday trading plan

NASDAQ futures are floating around the unchanged line heading into Monday after an overnight session featuring extreme range on elevated volume. Price worked lower overnight, trading down near last Friday’s midpoint before discovering a responsive bid around 8am New York.  At 8:30am durable goods orders came out in-line ex-transportation but well below expectations if we include transports. Since then price has worked about 50 handles up, and as we approach cash open price is hovering in the upper quadrant of last Friday’s range.

Also on the economic calendar today we have a 6-month bill and 2-year note auctions at 11:30am followed by 3-month bill and 5-year note auctions at 1pm.

Last week had some big choppy price action. There was weakness early in the week and eventually strength into the weekend. Russell was bullish divergent throughout the week, suggesting risk tolerance remains elevated.

The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend up. The day began with a gap up in range and then an open drive higher. Early buyers steadily campaigned price higher, effectively making short work of returning price “to the scene of the crime” where the initial reaction to new of a capital gains tax increase hit the wires. Price shot clean through beyond that level and eventually took out Thursday high before flagging along the highs for a few hours. Price then dropped a bit during settlement period.

Heading into today my primary expectation is for sellers to press into the overnight inventory and trade down to 13,845 before two way trade ensues.

Hypo 2 buyers press up through overnight high 13,944.25 setting up a move up through last Friday high 13,981 on the way to tagging 14,000.

Hypo 3 stronger sellers trade down through 13,845 early on and sustain trade below it seeting up a move to 13,800.

Levels:

Volume profiles, gaps and measured moves:

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My job

Next week is big. Possibly one of the top three-or-four most important weeks of the year. Everything is happening all at once. All the Big Tech outlets report earnings next week, starting with Tesla after the bell Monday and ending with Amazon Thursday. Wednesday afternoon there is an FOMC announcement and press conference. Friday is month-end. Geopolitical risk is elevated also—less from pandemic headlines, more from tax headlines.

What is my job heading into a big week like this?

It is not to be a tax expert, whipping up some hot takes to tweet out.

It is not to hold hands with strangers on the internet as they wager their fortunes of their own.

My job, quite simply, is to extract as much fiat american dollar as possible from the global financial complex. That’s it. My job is to focus on the auction. My job is to make a plan and then execute that plan. My job is to obey the risk protocols I put in place before the action heats up. My job is to nurture my mind and body and make time to look inward, to maintain unbiased thoughts. To only allow the lens of the auction to tint my perspective.

Said fiat is eventually to be converted into real assets—concrete and steel and energy generation. Stuff to augment my mortal existence as my ability and willingness toil whither away. Robots. Absurdly German kitchens. Giant shrubs to keep the noise of reality away from my person.

Why though? Why build a giant playground? To benefit as many people as possible. To create places where people feel safe taking drugs and exploring their psyche. To heal the soil and feed as many people as I can nutritious organic, safe, sustainable food. To love thyself. Pleasure.

That’s it. Let’s set aside the fun tokens and crypto toys for now. The big guns are set to report. Let the shitcoins simmer. Certainly don’t sell anything. But focus on our True Leaders. Big Tech.

Maybe give the Fed, that archaic institution that loses its relevance daily, a bit of attention also.

Raul Santos, April 25th, 2021

Here is the 335th edition of Strategy Session. Enjoy:

Stocklabs Strategy Session: 04/26/21 – 04/30/21

I. Executive Summary

Raul’s bias score 3.53, medium bull*.  Expect higher prices but allow earnings out of Big Tech to dictate direction as the week progresses.

Tesla reports Monday after-market-close (AMC). Microsoft and Alphabet (Google) Tuesday AMC. Apple and Facebook Wednesday AMC, Amazon Thursday AMC.

FOMC announcement and press conference Wednesday afternoon.

*IndexModel flagged extreme Rose Colored Sunglasses bullish bias, see Section IV.

II. RECAP OF THE ACTION

Big chop. Weakness early in the week, strength into the weekend. Russell bullish divergent.

The last week performance of each major index is shown below:

Rotational Report:

Sort of a mishmash of negative returns.

neutral.

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Money flows just barely skewed positive. Fairly subdued.

I am beginning to question the volume delta data because it is pinned down around -40% these last few weeks. Median return was about +40 basis points.

Money flows are neutral.

Here are this week’s results:

III. STOCKLABS ACADEMY

Huge week ahead

Month-end. All Big Tech outlets reporting. Geopolitical risk remains elevated with the pandemic and tax talk out of the White House. Plus the FOMC announcement Wednesday.

There is nothing wrong with standing aside and letting all this information price out. That said, if we can stay in the rhythm of the action, the upcoming week presents elevated opportunity.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for sellers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Expect higher prices but allow earnings out of Big Tech to dictate direction as the week progresses.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

Semiconductors holdings highs, Transports continue to rally

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports are nearly making a new high. Discovery up continues. Bullish.

See below:

Semiconductors can fall a bit more and still have a discovery up set-up. For now, this looks like discovery up.

See below:

V. Stocklabs Hybrid Oversold

On Tuesday, April 20th Stocklabs flagged oversold on the 6 month algorithim. This bullish cycle runs through end-of-day May 4th. Here is the performance of each major index so far:

VI. INDEX MODEL

Bias model is flagging extreme rose colored sunglasses for a third consecutive week after being neutral three weeks back and having flagged extreme Rose Colored Sunglasses four weeks back after being neutral four weeks before that after signaling Bunker Buster eight weeks ago after being neutral for the thirteen weeks prior to that.

Extreme Rose Colored Sunglasses calls for a calm sideways drift, perhaps with a slight upward bias. With a bias spread over +1 we expect buyers to pressure the tape higher late into the week.

Here is the current spread:

VII. QUOTE OF THE WEEK:

“I succeed because I have a long attention span.” Charlie Munger

Trade simple, step back if you lose focus

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Here is Friday NASDAQ trading plan

NASDAQ futures are coming into Friday with a slight gap up after an overnight session featuring elevated range on normal volume. Price was balanced overnight, balancing along the lower quadrant of Thursday’s range. As we approach cash open, price is hovering in the lower quad of Thursday range.

On the economic calendar today we have PMI composite flash at 9:45am followed by new home sales at 10am.

Yesterday we printed a neutral extreme down. The day began basically flat and then a open drive down. Buyers defended the Wednesday VPOC and worked price higher, making an early range extension up while taking out Wednesday high. A check back to the midpoint was defended by buyers but before a new high could be made the tax news hit the tape and sent price lower. We quickly entered a neutral print and eventually probed below the Wednesday low before coming into a choppy balance along the low for the remainder of the session.

Heading into today my primary expectation is for sellers to press down through overnight low 13,737 on their way to taking out the Thursday low 13701.75. Look for buyers just below at 13,687 and for two way trade to ensue.

Hypo 2 buyers drive higher on the open, reclaiming 13,800 early on and sustaining trade above it, setting up a “return to the scene of the crime” up at the Thursday VPOC 13,925.50.

Hypo 3 stronger buyers trade up to 14,000 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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