Buon giorno mo fos. Research is updated heading into the week. The entire Sunday report is featured below. Cliff notes version is widespread weakness (as seen by last week’s industry performance) is likely to carry into the beginning of the week. Expecting a bit more selling early on and then bidders to rally the equity complex into the weekend.
That’s about all I have on my mind. Oh, watch earnings out of Intel Thursday and how the PHLX trades into the weekend. That heckin’ index is the key to everything and it has had an incredible run these last few years. Are we truly entering the exponential growth phase I’ve been expecting all these years? Where this thing can just ascend more-and-more steeply to new heights? Or is it high time for a correction?
We don’t know. Intel earnings may serve as a catalyst. Or they may not. Again. We don’t know.
That said I prefer to take my cues from something cold and raw and dead like Intel earnings. The numbers on the 10-k and the way price oscillates afterwards. Nothing more. Nothing less.
Okay for now. I have to boogy around town spreading cheer and good tidings.
Raul Santos, July 18th 2021
Here is 347th edition of Strategy Session for you to enjoy time today maybe we don’t know. Maybe you want to make to kill it we don’t know. First island cope when time seagulls thank you.
Stocklabs Strategy Session: 07/19/21 – 07/23/21
I. Executive Summary
Raul’s bias score 2.68, medium bear. Continued selling early in the week eventually finds a floor setting up a rally into week’s end. Earnings out of Intel Thursday afternoon may serve to accelerate or end the rally.
II. RECAP OF THE ACTION
Rallied through Wednesday morning then selling pressure for the rest of the week. Russell 2000 bearish divergent all week long.
The last week performance of each major index is shown below:
A second consecutive week of leadership from Utilities suggests investors are becoming more risk averse. Utilities were flanked by Staples which supports this idea of investors feeling risk averse.
A small bit of bullishness is gained from Tech being slightly bullish divergent, despite being lower on the week.
For the week, the performance of each sector can be seen below:
Concentrated Money Flows:
Money flows skewed strongly to the negative side of the ledger for a second week. Only Water Utilities managed to put up a strong positive return on the week. Seeing the ledger skew this heavily we tend to expect follow-through to the downside in the week ahead.
Here are this week’s results:
III. Stocklabs ACADEMY
Setting rule and sticking to them
Alright, so…a few updates were made to Stocklabs during the week resulting in the original 6-month oversold trigger vanishing. This caused a bit of confusion for me because I used the signal to initiate a position and found myself unsure whether to continue holding for the full 10 days or close out. Fortunately a fresh 6-month oversold signal triggered on Wednesday the 14th.
I am new to trading the 6-month signal so I am coming up with rules for all the potential scenarios that may arise. Historically I have only traded the 12-month algo with Stocklabs and before that, with Exodus, I only traded the 36-month algo.
I do miss the 36-month’er.
Anyhow, and this is the lesson of this week, all that matters when trading is that we create our own rules (or with the help of a community/mentor) and stick to them. Creating a rule, and sticking to it no matter what will do wonders for the psyche whether the trade is a win or loss. It builds conviction in yourself and with it comes what some traders call emotional capital. Emotional Capital takes time to build and can be wiped out by simple errors, errors as simple as setting rules and then breaking them. Because suddenly this all becomes random, chaotic gambling.
The rule I am setting today is simple and therefore simple to obey—if the 6-month algo triggers me into a trade and during the 10-day cycle we go oversold on the 12-month algo, I will restart my count from the date of the 12-month algo and hold my risk for the 10 more days.
I would not start the 10-day count over if another 6-month oversold signal triggered mid cycle. But I will if the 12-month fires.
Note: The next two sections are auction theory.
What is The Market Trying To Do?
Week ended searching for buyers
VI. THE WEEK AHEAD
What is The Market Likely To Do from Here?
Continued selling early in the week eventually finds a floor setting up a rally into week’s end. Earnings out of Intel Thursday afternoon may serve to accelerate or end the rally.
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]:
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 broke range and are in a discovery down phase. There is a Fibonacci level a bit further below.
Semiconductors are holding range for now but Intel earnings Thursday afternoon may push this index into a discovery phase.
V. INDEX MODEL
Bias model is neutral after being extreme rose colored sunglasses bullish for three weeks. Bias model was neutral four weeks back after being extreme Rose Colored Sunglasses bullish bias for three consecutive weeks prior after being neutral for the two weeks prior to that after being e[RCS] bullish ten weeks back and RCS bearish elveven weeks prior.
We had a Bunker Buster twenty weeks ago.
Neutral. No bias.
Here is the current spread:
VI. Stocklabs Hybrid Oversold (12-month)
On Friday, July 16th the 12-month algo went technical oversold. This 10-day cycle with run through Friday, July 30th end-of-day.
VII. QUOTE OF THE WEEK:
“Let each thing you would do, say, or intend, be like that of a dying person.” – Marcus Aurelius
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