Winter is back to ravaging the arctic northern plains.  Ambitious insects and birds, leaving the safety of their nests too soon, have seen their hearts ripped out by arctic spears to the center mass.  The human spirit is ebbing after an unexpected warm reprieve blew away.  Bulls have had a big drink from the sweet chalice of victory, enough to make casual onlookers begin to ask questions.  All these reasons, and the ones outlined below, are why iBankCoin Laboratory is issuing its first bearish bias of 2017.

The Snapchat IPO and Trump’s unifying speech to congress were enough to gain the attention of the people who are typically aloof when it comes to Wall Street.  Some are beginning to suspect “dumb money” is filtering back into the exchange.

Next week is roll forward, meaning on Thursday active traders will stop trading March index futures, and begin trading the June contract.  That means compiling accurate volume data from Thursday to next Friday is cumbersome without powerful resources–the type of resources often found on institutional desks.  It is a time ripe for shenanigans and loose movement, to catch the smaller traders flat footed.

Resident investigative journalist and internet digger ZeroPointNow discovered some Kek-like occurrences happening on the 4chan boards that foretell of market turmoil to come.

The NASDAQ Transportation index may have printed a failed auction last week.  It confirmed slightly, but another hard move lower would affirm the picture more, see below:

Most importantly, the IndexModel, a love child of auction theory and Exodus algorithms is signalling Rose Colored Sunglasses (RCS), a condition so diabolical, so intoxicating, that it often blinds the majority of investors from the erosion occurring under the surface of strong indices.

For all these reasons, for the blind loyalty to US markets, for the insolent desire for global warming, and the despicable migration of humans across the world, iBankCoin labs is issuing a short bias ahead of roll forward, ahead of the Ides of March, and with a bit of luck, ahead of the next negative news cycle.

Exodus members, inside the 121st Edition of Strategy Session, which is live now, we look closely at the decay and rot happening in the stock market, and also discuss what to look for in the upcoming week to add conviction to the short bias.

Go check it out!

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Tesla CEO and all around proper supreme leader Elon Musk (all Praise and Glory to The Leader) issued a statement via the municipal website Twitter Thursday evening explaining why he will remain on the President of the United States of America’s advisory board:

Unlike Uber CEO Travis Kalanick (whose last name sounds like a colon irrigation) our chief of both Tesla and SpaceX has a REAL stated purpose on this planet and intends to achieve his goals of advancing humanity regardless of who is in charge of the best country on Spaceship Earth.

For when you purpose is clear, that which is out of your control does not matter.  What matters is pursuing your goals as effectively as possible.  Being an advisor to President Trump is surly a way to remove roadblocks from your projects.

But Travis just made an app for hailing rides.  Literally a non-event.  Literally being copied and reproduced easily by several other companies.  Travis “colon irrigation” Kalanick is not an inspiring creator.  Seeing him quick to cave and mistakenly leave the useful post of Trump advisory like a fool is hardly surprising.

Travis is replaceable.

Conversely, Elon Musk (all Praise and Glory to The Leader) is not replaceable.  If he does not save us from the greedy oil grabbers and provide us transport off earth once our national parks are converted into fracking centers, the jig is up for humanity.  It will take more than a petty list from a no-neck Twitter choad to deter him from his quest to usher in a future where humans inhabit multiple planets.

This is bullish for Tesla, and investors will reward the share price of $TSLA upon realizing they have the finest steward of their money waking up every day and going to work to win instead of getting caught up in political guff.

Seek more leaders like Elon (all Praise) and invest in them aggressively.

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Every Sunday I interpret the algorithms inside Exodus and update several data into my working index model.  The output from these operations allows me to form an objective thesis for the upcoming week.  It’s called the Executive Summary, and it is featured at the top of every week’s report for quick access–by you executive types.

It has changed my ability to make money dramatically.  Hopefully it helps you too.  This week’s thesis has been bang on so far:

Now I may just be a simple country man, but I know when we’re finger licked.  I’m not some American magician whose mystic powers allow for clairvoyance, nor do I parade myself around in an eagle mask making bold calls.

However, these actionable predictions are based on 100s of samples—samples taken live and walked forward—all with the expressed intent of banking coin better than most, at a steady and industrious clip.

After all, this is a marathon and I’m just getting started.  And boy am I patient. Like a crocodile.

If you’re a member of Exodus and not reading the Executive Summary inside Strategy Session every Sunday, you’re doing yourself a disservice.

The good folks at iBankCoin labs are all over this week’s action and expect higher prices into week’s end.

BRILLIANT.

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A full month of bullishness is set to reach a crescendo of sorts, come Wednesday, when we embark on the second month of trade under our new political regime.

It also comes with a Fed rate decision.  Consensus down at the Chicago Mercantile Exchange is for no change in rates (96% probability).  However, and with the stroke of her pen, the venerable Janet Yellen, backroom leader of the free world, could send a chill down the collective spine of investors by unexpectedly raising rates.

This would be bad because, for more than a year now the Fed has been boringly predictable.  That’s a good thing, in case you’re wondering.  It would be a shame to destroy all the goodwill they have built.  According to the “Dot Plot” chart, we only need to nudge a touch higher from our current benchmark rate to be in the happy blue zone:

The NASDAQ, according to ticker symbol $QQQ is up about 6% in the month of January.  How does that compare to other January performances?  Best since 2012.

Remember 2012?  2012 was really bullish, man.

So let the common man scuffle in the streets, complaining about this or that, wasting their time in a feeble attempt to share their two-cents on the current state of affairs.  Your time and money can be better used foxing around, capitalizing on all the otherwise neglected opportunity.

This week’s model scores support remaining in the bullish labor camp.  Laboring away, with dollars allocated to three and four letter acronyms.

Exodus members: the 116th Edition of Strategy Session is live.  Go check it out for more details on what we expect from the upcoming week.

 

 

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Since we are running free trials this weekend of Exodus, the entire 115th Edition of Strategy Session is publicly presented below.  This report is designed to build context and bias for 5 trading days—nothing more.  It gets through the week.

It has become an indispensable part of my own trading, and I’m grateful to share it with you guys.  It can come off as esoteric, but I have eliminated as much chaff as possible to focus only on what has shown value in predicting 5 trading days.  Regardless, if you have any questions, ask away.

Also, if you want to dig into the retail space (like I did below in Sections II and III) you can take a free trial of the software until midnight by clicking here.

Heading into Chinese New Year, this is my forecast:

I. Executive Summary

Raul’s bias score 3.20, Neutral*. Expect the low-volatility environment to continue this upcoming week, with index prices drifting along, perhaps with a slight upward bias.

Focus on retail and whether we rotate into the industry-group as investors transition away from Healthcare and Financials.

*Extreme Rose Colored Sunglasses e(RCS) bullish bias triggered, see Section IV.

II. RECAP OF THE ACTION

Week three of 2017, NASDAQ drifts higher, the Russell lower, Dow and S&P mark time.

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

Rotational Report:

Rotations start to trend toward more cautious sectors.  The Financials take a hit after many weeks of outperformance following the November election results.  Healthcare hit hard.

Slightly Bearish

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

Concentrated Money Flows:

Exodus [PPT 2.0] streamlines how we can research the individual behavior of each industry and how it pertains to overall market sentiment.

Using the Industries screen, we can filter for the Median Return [1 week] of each industry.  I have established an arbitrary -/+ 3% cutoff for qualifying industries of interest.

Buying one or two retail stocks was on the agenda last week.  I chose Dick’s Sporting goods [TICKER: $DKS].  This was based off a study shared by Jeff Macke on Twitter.

Other names of interest in retail are: TJX, CVS, ROST, GNC, SHW, and COST

Concentrated money flows were slightly bearish.  More industries populated the negative side of the ledger than the positive.

Slightly bearish

Here are this week’s results:

III. Exodus ACADEMY

Fundamentals to back up a long term position.  When looking for long-term holdings, I want to see a track record of excellence.  This means consistent growth of both the top (revenues) and bottom line (earnings).

When I scoured the retail landscape, only a few (of the 100s) of companies were doing a good job of growing their business.  Dicks was one of the best, see below:

Compare those two charts to some of the other names out there, like Target (flat, stagnated growth) or Bed Bath and Beyond (top line growth, earnings trending lower), or Abercrombie and Fitch (fucked all around).

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?

Bias Book:

The following biases were formed using basic price action and volume profile analysis. By objectively observing these actual attributes of the market we gain a sense of the overall market context. To quantify the effectiveness of this approach, each of the 4 equity indexes (/ES, /NQ, /YM, and /TF) has been assigned a fixed long/short target using a standard 14-period ATR. Each week there will be an outcome of win, loss, or timed stop on all four indexes. The first bracket level hit is deemed the winner in the event that both sides are tagged. This will be tracked and included in the Exodus Strategy Session.

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

[Note: All levels are as quoted on the front month future contract (currently March 2017) by the IQFeed Data Servers. Prices may differ slightly from your data provider. If you do not have a platform which provides real-time futures quotes, please click here for a free (but limited) alternative.]

Here are last week’s bias trade results:

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

Compression Watch: Transports continue discovery up, Semiconductors too

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 made a big gap up off of the former resistance level we have been monitoring, leading me to wonder if the discovery mode up will continue.

See below:

Semiconductors just keep chugging higher.  The chart is ugly, and stretched, but still in an upward ascent.

See below:

Bias Model: Extreme Rose Colored Sunglasses

Third consecutive week of extreme RCS, meaning, expectation for a calm drift with slight upward bias.  But, it is barely e(RCS), a few basis points lower and we would have a bearish signal.

The signal keeps me cautiously expecting upward drift, but it would not surprise me if volatility creeps in next week.

Here is the current spread:

V. QUOTE OF THE WEEK:

“At a certain point, if you chase two rabbits, you lose them both.” – Taylor Swift

Trade simple, one trade at a time, the one in front of you now

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Greetings and warm welcome lads!  I am reporting to you from the bathhouse adjacent to iBankCoin laboratories where an old Russian man is beating me with oak branches.  After a long morning toiling away inside the furnace room, it’s a welcome relaxation. It appears short sellers are in hot water heading into the holiday-shortened week, doesn’t it?

The pesky NASDAQ keeps rising, slowly, keeping dip buyers sidelined and shorts from leaving.  All very kind and clean.

The others majors, simply marking time.  Perhaps they begin to drift higher Tuesday?  This is what the IndexModel suggests heading into next week.

Ice bucket to the head, my best guess is we drift through next week then blast higher Friday morning during the inauguration—leaving anyone who is waiting until after the seismic geopolitical shift sidelined.

This hypothesis was derived from the objective findings inside the 114th Edition of Exodus Strategy Session, which is now live.

There is another key seasonality opportunity setting up that we need to act quick if we intend to capture it.  Check out Section II for more info.

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Welcome to Trend Day.  The first and second rule of Trend Day are you do not talk about Trend Day:

The first rule of days like this on the NQ is soooooo hard to follow ?

— RAUL (@IndexModel) January 6, 2017

Third rule of Trend Day: engage every pullback.  Fourth rule: always keep a runner.  Fifth rule: one trade at a time, fellas.  Sixth rule: trades are intra-day only.  No overnight shit.  Seventh rule: trends will go on as long as they have to.  And the eight and final rule: if this is your first Trend Day, you have to trade.

Ladies and gentlemen, just two days after Exodus algorithms ended the Krampus Alert, and on the final day of trade in this first magnificent week of 2017, the NASDAQ goes out and prints a delicious and powerful trend day.

I am so fortunate to understand auction theory—the cornerstone of my trading approach—and how to supercharge it with “The Fly’s” fucking time machine.  What for most was just another data point in a sea of information was for yours truly a nudge to flip my bias:

Trend days are the most powerful day type in auction theory.  They tell us something going forward.  They also offer tons of reward to their riders.  In short, I did my job, and now I want to go back on vacation.

GOD BLESS AMERICA

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While tomorrow shows a slight statistical edge for a range extension down (per an outdated 3 consecutive unidirectional days study) and while the Russell futures are attempting to turn lower at a curious level (from Exodus Strategy Session) the KRAMPUS ALERT issued before Christmas has been lifted.

I scratching my $QID position in a non-event of a round-trip, but the alert still proved indispensable.  Over the course of our Krampus conditions, the /NQ_F went range extension down 8 out of 12 days.

Two of the days when the NASDAQ didn’t go range extension down it offered huge morning rallies that faded.

Thus for ten days, or 83% of the time, it made sense to have a short bias, intraday.  Some of you may not grasp how valuable that edge can be.  For a small group who cares to study auction theory, good times.

It appears investors who held through the alert, long stocks, were good little boys and girls this Christmas—for they managed to escape the wrath of Krampus instead being showered with massive gains and winship on a national level.

iBC Labs threat level has been reduced to to Blue.

BULLISH

Exodus members, stay abreast with the Exodus Strategy Session. With a naked eye, it appears we are still near RCS conditions.  The next report will be out Sunday around noon.

However, also take a look inside the community notes regarding some observations of the system-wide algos.

Noobs, if you have any questions about my esoteric readings of the algorithms, auction theory, or plain old trading 101, fire away.  I’m grateful to understand many of these concepts and to be among others who are curious.

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Season’s greetings lads, and lassies.  There has been much to-do over the prevalence of try-too-hard ugly sweaters, SANTACON, and the gluttonous consumers who fiendishly file into the shopping centers nationwide to feed from the cinnabon trough.

And while your Christmas proclivities merit appreciation for keeping this dream we call capitalism alive, it comes with a risk.  The risk is too much of a good thing.

Markets are behaving the same way.  Higher. More, give me the gains.

Inside iBankCoin labs we have precision instruments to measure human behavior and objectively assess whether trouble is afoot.  Below are the findings from our Sunday review.  Collectively they provide conviction to short the market early and often next week.

The Feds raised interest rates last week.  After the announcement, third reaction analysis yielded the sell:

Markets were choppy for the rest of the week.  A slow boil perhaps.

Before all of this happened, back on Monday, Exodus registered a significant Hybrid Change % on the system-wide algorithm:

*Note the 7 basis point size vs December 5th

Last week’s sector rotations had a bearish tone, an undercurrent if I may be so bold:

The S&P 500 triggered a short bias.  The model has 109 samples and currently boasts a 65.1% win rate.  It says we see /ES_F 2238 before 2272.50 next week.  Bearish.

Rose Colored Sunglasses [RCS] short bias triggered on the auction theory model.  The name of the signal came from the behavioral condition it highlights.  It’s a toast to the overall index painting a rosy image of the markets despite the decay being detected by Exodus.  It’s sort of like wearing rose colored sunglasses which have been shown to enhance ones mood when worn.

Life’s always better with rose colored sunglasses.  But the lenses hinder our ability to form objective judgement, which we need now at this very moment.  Bearish

This is the first RCS short signal since 7/31/16.  STAMINA.

The PHLX semiconductors index printed an ominous Red Dawn candle Friday which suggests more selling pressure could come in next week:

These are the key findings after completing the 110th consecutive Exodus Strategy Session.  Collectively they form the conviction to hopefully initiate a NASDAQ position short via QID into some early week strength and to press intra-day shorts in the /NQ_F and be extremely cautious with /NQ_F longs.

There is only one data point missing—an extreme NYSE TICK.  We haven’t had one since November 7th.

There you have it.  iBankCoin labs is issuing a Krampus alert this week.  Be on the lookout for large, hairy man-beasts with long tongues.  They seek to plunder from your purse and snatch away Christmas cheer.

Areas of elevated Krampus risk include YHOO, TWTR, and FB.

If you spot Krampus, be sure to report the time and location to the good folks at iBankCoin laboratory so we may issue a PSA.  Good luck and godspeed.

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The results are in.  After tabulating the data from last week’s rally and inputting forecasting metrics for next week, the IndexModel is issuing a winter rally warning.

The model registered some of the highest scores ever, bested only by the extreme bullishness seen in early April.

Fed fund futures over at the CME show a 94.9% probability of a rate hike Wednesday from the FOMC.  Thus far, despite the high probability of an event historically seen as bearish for equities, markets are careening higher.

This may be due to investor perception on the economy being robust enough to sustain a rate hike, and that being bullish.  Or, this could be the bow on a legacy stock market for President Obama, who gave us the finest stock market of our lifetimes.

At iBC labs we don’t particularly care to dwell on the ‘whys’ of the world, instead focusing on expectations and how we intend to extract currency from the market regardless of its behavior.

Heading into next week, the plan will be to find ways to go long before the Fed meeting, then to use the post-meeting reaction to dictate our bias into the second half of the week.  Simple.

The world is aglow, tinted rose by the stock market gods.  The best of times, enjoy!

Exodus members, the 109th Exodus Strategy Session has been published.  Go check it out!

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