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I turn dials and fiddle with knobs to hone in on harmonic rotations

Gap down in range ;-) here is Monday NASDAQ trading plan

NASDAQ futures are coming into the final week of July with a slight gap down after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing along the upper quadrant of Friday’s range after briefly exceeding it around 8:30pm Sunday evening. As we approach cash open price is hovering in the upper quad of Friday’s range.

On the economic calendar today we have new home sales at 10am followed by 3- and 6-month T-bill auctions at 11:30am and a 2-year note auction at 1pm.

Major NASDAQ component Tesla is set to report earnings after the bell.

Last week kicked off with a pro gap down across the entire equity complex followed by a choppy weak Monday. Then buyers printed a conviction day Tuesday, effectively closing the weekend gaps and setting up a week long rally. We closed out the week on the highs. 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 out of range. Sellers managed to resolved the overnight gap with a drive down off the open. This would be the end of the seller’s control on the day. Buyers rejected a move back into the Thursday range setting up a strong rally to new all-time highs. We ended the day flagging long the 15,100 century mark.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 15,095.50. Buyers continue higher, taking out overnight high 15,126.25 before two way trade ensues.

Hypo 2 stronger buyers tag 15,200 before two way trade ensues.

Hypo 3 sellers press down through overnight low 15,038.75 setting up a tag of 15,000 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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Committing the process to memory

I did a bit of inspired writing this morning. Both on Twitter and in my private captain’s log. I raved. I gardened. Had breakfast and then updated the Sunday research. I suppose I should say thank you. The city inspires me of course. My little oasis from the mundane norms of society and I am building a farm right there in the thick of it.

What a time to be alive.

All the big hitters are due out with earnings next week. Breadth on last week’s rally was real narrow. On the wings of Big Tech just how we like it daddy and now it is time for them to show up and deliver robust 10-k forms.

Powell and the Fed team have a message due out Wednesday afternoon but this is of little importance. Jim Powell’s Fed has taken a back seat in economic policy talks ever since Janet “the queen” Yellen took the helm over at Treasury. Master of Coin.

I will wait until word comes down official word comes from the Queen and make a small note of Jim Powell’s low-impact chatter while remaining reverent to the tape.

The fun kicks of Monday afternoon with none other than the dogefather himself daddy elon love you long time yes. I like buying Tesla before and after earnings. I like it both times and then doing nothing. Maybe gardening or something, whist waiting for the Cybertrucks to deliver.

I learned something curious about trucks last week. Those ram 1500s you see folks across america driving are only rated to hold about 500lbs in the bed. WTH is 500 pounds? Nothing. I put two tonnes in the back of an eleven-year-old 250 diesel last week and the ride home had me shook.

Anyhow truck-life hoe. I am hardt on things. Not just trucks but everything. I had the whole inside of Mothership painted white. The trim. Doors. Everything. Now I am walking around, strong cocked, every last bit of 5’11” 185lbs of labor-hardened-shit-kicking-vegitarian mass, doing my best to not scuff the walls like an idiot.

Using the handles and hardware to open and close things instead of just bashing them with my hips or ripping open like bear.

Okay for now.

Raul Santos, July 25th 2021

And now the 348th edition of Strategy Session. Enjoy:


Stocklabs Strategy Session: 07/26/21 – 07/30/21

I. Executive Summary

Raul’s bias score 3.58, medium bull*.  Major event-heavy week ahead. Expect elevated volatility as we drift sideways, perhaps with an upward bias. Watch for the markets to pivot Wednesday afternoon after the FOMC announcement. Late-week earnings from Facebook and Amazon may serve to accelerate or reverse the prevailing price action before month-end.

*extreme Rose Colored Sunglasses (e[RCS]) bullish bias triggered, see Section IV

II. RECAP OF THE ACTION

Pro gap down Monday. Choppy Monday featuring selling pressure until late in the session. Conviction buying Tuesday set up a strong rally for the rest of the week. We ended the week at record highs.

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

Rotational Report:

After two weeks of poor leadership, last week featured leadership from key Tech, Discretionary and Health sectors.

bullish

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

Concentrated Money Flows:

The heavily-skewed flows featured in the prior two-weeks of report was not negated last week. The breadth of money flows was fairly balanced. The slight edge goes to buyers on the week but until we see a major push featuring a majority of the industries with +3% gains on the week the slight edge goes to sellers.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

SETTING ANOTHER RULE

Make sure to read last week’s entry to ‘STOCKLABS ACADEMY’. In it I outlines to protocol I will follow when a 12-month oversold signal triggers while I am trading the 6-month oversold signal.

I am writing another rule today to address an important happening that sometimes happens that I want to have a rule for. It may seem like I am making these rules up on the fly. I am.

I am learning how best to utilize Stocklabs live. Just like all of yous. Which is fine.

The overbought signals have been my favorite to trade for many years because they give me the conviction to press momentum and the rules to keep me from making errors.

My favorite set-up is when we swing from oversold to overbought and I want a rule for how to proceed if this happens midway through an oversold signal so here we go —

When we go overbought mid oversold cycle I will restart the 10-day counter on HALF of my original position. Closing the other half at the completion of the 10-day oversold cycle, whichever one I am working with at the time.

Right now I am working with the 12-month oversold signal that fired on Friday, June 16th. This signal cleanly carries risk up until the final day of July, this upcoming Friday, the 30th.

That means I will be at my desk (or phone) Friday afternoon, closing half of my position. The other half I will risk until Wednesday, August 4th, because the overbought signal I am working with fired on the 21st.

Simple rules. Simple to follow no matter what external forces are assaulting my person. Simple. But not easy.

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:

Major event-heavy week ahead. Expect elevated volatility as we drift sideways, perhaps with an upward bias. Watch for the markets to pivot Wednesday afternoon after the FOMC announcement. Late-week earnings from Facebook and Amazon may serve to accelerate or reverse the prevailing price action before month-end.

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]:

Key off semiconductors

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 caught a bounce and may still be in discovery down. I drew some broad lines of where we may see a new balance form.

See below:

Semiconductors have a slightly more clear picture. We are inside the established range. There was a local failed auction but then buyers reclaimed the local Fibonacci which we can key off of with reasonably tight risk. If price pivots off the top-side of the fib we’re likely entering a fresh leg of discovery up. A push down from the fib sets up a traverse of the old range.

See below:

V. INDEX MODEL

Bias model is extreme Rose Colored Sunglasses bullish after being neutral last week after being extreme rose colored sunglasses bullish for the three weeks prior. Bias model was neutral five 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 eleven weeks back and RCS bearish twelve weeks prior.

We had a Bunker Buster twenty one weeks ago.

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 bullish cycle which runs through Friday, July 30th end-of-day. Here is the performance of each major index so far:

Here is the performance of each index since the original 6-month oversold signal:

VII. Stocklabs Hybrid Overbought (3-month)

On Wednesday, July 21 the 3-month algo went technical overbought. This 10-day bullish cycle that runs through Wednesday, August 4th end-of-day. Here is the performance of each major index so far:

VIII. QUOTE OF THE WEEK:

“The ideal building has three elements: it is sturdy, useful, and beautiful.” – Marcus Vitruvius Pollio

Trade simple, build simple processes

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Intel -2.5% in pre // NASDAQ new record high // here is Friday trading plan

NASDAQ futures are coming into Friday gap up after an overnight session featuring elevated range and volume. Price worked higher overnight, at one point after settlement gapping through 14,950 on the way to making a new record high. As we approach cash open price has faded off the high a bit and is floating up beyond the Thursday high.

Major semiconductor player Intel reported earnings Thursday after the bell and is down -2.5% in pre-market trade.

On the economic calendar today we have PMI flash composite at 9:45am.

Yesterday we printed a normal variation up. The day began with a gap up beyond prior day’s range and open drive higher. Said drive sent price right up near last Thursday’s high before chopping a bit and then continuing to 14,900. We overshot the century mark a bit before falling back to the daily midpoint. Buyers defended the mid and we rallied into the close, spiking higher during settlement.

Heading into today my primary expectation is for sellers to reject an attempt back into Thursday high 14,952 setting up a push up through overnight high 15,015. Look for sellers up at 15,500.

Hypo 2 sellers work a gap fill down to 14,945. Look for buyers down at 14,924.

Hypo 3 stronger sellers trade down to 14,900. Look for buyers down at 14,866.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ up a touch // Intel on deck // here is Thursday trading plan

NASDAQ futures are heading into Thursday with a slight gap up after an overnight session featuring normal range and volume. Price was balanced overnight, balancing above the Wednesday range. At 8:30am jobless claims data came out worse-than-expected and as we approach cash open price is hovering a bit above the Wednesday high.

Also on the economic calendar today we have existing home sales at 10am, 4- and 8-week T-bill auctions at 11:30am and a 10-year TIPS auction at 1pm.

Yesterday we printed a double distribution trend up. The day began with a gap down in range that buyers quickly resolved with an open drive up. Said buyers continued their campaign higher, taking out the Tuesday high before New York lunch. Then price touched back to the daily mid before launching a second campaign higher that continued right up into the closing bell.

Heading into today my primary expectation is for buyers to reject any attempts back into the Wednesday high 14,835.75 setting up a run to 14,900.

Hypo 2 stronger buyers reclaim 14,900 early on and sustain trade above it setting up a move to 14,990.

Hypo 3 sellers reclaim Wednesday high 14,835.75 setting up a move down to the Wednesday VPOC 14,779.50.

Levels:

Volume profiles, gaps and measured moves:

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

NASDAQ futures are coming into Wednesday with a slight gap down after an overnight session featuring extreme volume on elevated range. Price was balanced overnight, balancing along the upper half of Tuesday’s range. As we approach cash open price is hovering above the Tuesday midpoint.

On the economic calendar today we have crude oil inventories at 10:30am followed by a 20-year bond auction at 1pm.

Yesterday we printed a double distribution trend up. The day began with a slight gap up beyond the Monday high. Sellers quickly resolved the overnight gap with a drive down off the open. Said sellers made their way down past the gap fill and tagged the Monday midpoint before the auction reversed. Responsive buyers formed a sharp excess low and after a tight battle along the daily mid buyers began a steady campaign higher that would unidirectional rotate higher until about 4pm and take price back up to last Friday’s naked volume point of control. Price was sort of choppy during settlement, and sellers faded a bit of the move into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 14,724.50. Buyers continue higher, taking out overnight high 14,765.75 and tagging 14,793.50 before two way trade ensues.

Hypo 2 stronger buyers trade up to 14,900 before two way trade ensues.

Hypo 3 sellers press down through overnight low 14,688.25 setting up a move down to 14,600.

Levels:

Volume profiles, gaps and measured moves:

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Balanced in the void // here is Tuesday NASDAQ trading plan

NASDAQ futures are coming into Tuesday up a quick +50 after an overnight session featuring extreme range and volume. Price balanced overnight, first rallying up into the weekend gap and then balancing inside of it. At 8:30am housing starts/permits data came out mixed with starts slightly stronger than forecasts and permits slightly below.  As we approach cash open price is hovering about halfway between Monday’s high and last Friday’s low.

There are no other economic events scheduled today.

Yesterday we printed a neutral day. The day began with a pro gap down and after a fast open-auction-outside range buyers made an attempt higher. Said attempt was rejected by sellers who were active ahead of the 07/08 low. Sellers quickly drove to a new daily low before price chopping along the lows for a bit, checked back to the mid, made an early range extension down which was met with sharp responsive buying. Said buyers pushed us (barely) into a neutral print before price fell back down through the daily mid. Price chopped along the bottom-side of the mid right up until settlement when buyers drove higher, back to the daily high by the close.

Heading into today my primary expectation is for sellers to push into the overnight inventory and close the gap down to 14,566 before two way trade ensues.

Hypo 2 buyers gap-and-go up to 14,682.25 before two way trade ensues.

Hypo 3 stronger sellers close the gap 14,566 then continue lower, reclaiming 14,500 and sustaining trade below it to set up a move down to 14,400.

Levels:

Volume profiles, gaps and measured moves:

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Starting week pro gap down // here is Monday NASDAQ trading plan

NASDAQ futures are coming into the second-to-last week of July down about -120 after an overnight session featuring extreme range and volume. price was balanced overnight, balancing below last Friday’s low until about 7:10am New York when sellers stepped in and drove price lower. As we approach cash open, price is hanging onto the lower quadrant of the 07/08 range.

On the economic calendar today we have housing market index at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week equity markets rallied through Wednesday morning then featured selling pressure for the rest of the week. Russell 2000 was bearish divergent all week long. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend down. The day began with a gap up in range. After a brief open-test higher, sellers stepped in and filled the gap then continued their campaign lower, taking out the Thursday low around noon. Just below Thursday low was a strong responsive bid and price rallied back to the daily mid. Sellers were a wall here, defending a setting up a fresh rotation lower which lasted right up into the closing bell. We closed on the lows.

Heading into today my primary expectation is for buyers to work into the overnight inventory and tag 14,600 before choppy two-way trade ensues.

Hypo 2 sellers gap-and-go lower, tagging 14,400. Look for buyers down at 14,334.25.

Hypo 3 stronger buyers work a full gap fill up to 14,667 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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Expecting pain, then a rally

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.

ciao ciao

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:

Rotational Report:

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.

slightly bearish

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.

bearish

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?

Weekly forecast:

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.

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]:

Mirror images

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.

See below:

Semiconductors are holding range for now but Intel earnings Thursday afternoon may push this index into a discovery phase.

See below:

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

Trade simple, with purpose

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Retail sales data beats expectations // here is Friday NASDAQ trading plan

NASDAQ futures are heading into option expiration day up about +70 after an overnight session featuring extreme range and volume. Price was balanced overnight, balancing along the lower half of Thursday’s range until about 8:30am when retail sales data came out stronger than expected and introduced buyers to the tape. Since then price has worked up through the Thursday midpoint and as we approach cash open price is hovering about +40 handles above the Thursday mid.

Also on the economic calendar today we have retail sales data at 8:30am followed by business inventories at consumer sentiment at 10am.

Yesterday we printed a double distribution trend down. The day began with a slight gap down. Sellers drove lower off the open, taking out the weekly low within the first few minutes of trade before finding a sharp responsive bid (very sharp) that quickly negated the selling. Sellers then made a second sharp move lower, pushing an early range extension lower, then we methodically rotated lower for for several hours. Around 2pm New York the auction reversed and steadily campaigned back up to the midpoint. We ended the day below the mid.

Heading into today my primary expectation is for sellers to work into the overnight inventory and trade down to 14,800 before two way trade ensues.

Hypo 2 stronger sellers work a full gap fill down to 14,771.50 then take out overnight low 14,736 setting up a move down to 14,700.

Hypo 3 buyers gap-and-go higher, trading up to 14,900.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ flat head of more Powell talk // 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, balancing inside of Wednesday’s range. Price nearly took out the Wednesday low around 7:45am New York but was bid higher before it could do so. At 8:30am jobless claims data came out slightly better than expected and we approach cash open price is hovering about 30 points above the Wednesday low.

Also on the economic calendar today we have industrial production at 9:15am followed by Fed Chairman Powell set to speak at 9:30am. Then we have 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a normal variation down. The day began with a gap up in range and after an open-two-way auction buyers stepped in and worked price up to a new all-time high. The auction failed at this point, and after chopping back to the mid a few times sellers became initiative and worked us into a range extension down. This selling was met with sharp responsive bids right around the Tuesday volume point of control. Said buyers formed a sharp, excess low and sent price back up through the mid. Sellers held mid twice though, and we ended the session chopping along the bottom-side of the mid.

Heading into today my primary expectation is for buyers to work up through overnight high 14,962.75 setting up another tag of 15,000.

Hypo 2 sellers press down through overnight low 14,864 setting up a probe below Tuesday low 14,833.50.

Hypo 3 stronger sellers tag 14,751.75.

Levels:

Volume profiles, gaps and measured moves:

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