Part of the reason I fire up the old blog-o-machine every Sunday is because I am contributing thought to an industry rife with frauds and hacks, hacks who maybe don’t realize they dish out droves of bad information on trading and frauds who would just as shamelessly convince nice old ladies to wire them money.  And I figure, well I better put out something honest and true to persist and resist.  My motivation is reverence for trading competency.  It is quite liberating, right up there with growing something out of the ground that sustains you. Which is why today I posit that active trading is an art.

No indicator guarantees success.  The last month or so, I have demonstrated my systematic approach to forming a bias, and that systematic approach has been dialed in.  It has kept me on the right side of the tape, and with that approach and the rest of my tool kit I have been extracting NASDAQs from the financial complex quite well.  Yet, at the same time, I have internet people giving me grief that my indicators don’t work.  They work just fine.  These people are not making a beautiful performance of their trading.  This is something I cannot teach.

None of us control how the market behaves.  It pops and drops and marks time.  There is no such thing as good or bad, the market simply is.  It is a numeric representation of the net interactions of hundreds-of-thousands of humans and the algorithms they have built to execute their human ideas.  The entire existence of all of this is completely intangible, a collective conscious that we do our best to measure.  How one interacts in this environment is an art.  Are they playful and light?  Or is the market rigged?  Choose your beliefs carefully.  They will tint every observation you see.

We only control our own reasoned choice.  What we choose to take in, what we ignore, and how we interpret that data is something we have power over.  Whether or not we position our capital into or out of a position is a reasoned choice.  The reasons behind our actions are art.  Are your impressions swayed by the words or actions of others.  That is hardly creative.

I blog to demonstrate a repeatable approach to trading and to offer clarity along the way.  My reasoning is simple.  I was new once and had to wade through this mess of online gurus to find real insight from real people who actually trade.  It sucked.  I paid lots-and-lots of money to phonies, money that would have been better spent on pole barns or solar panels.  To learn to trade you must trade.  And to trade well is an art.

That’s all I am in the mood to write today.

Raul Santos, October 13th, 2019

Exodus members, the 256th edition of Strategy Session is live.

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I never know if any of you are paying attention so very quickly let me update my stance on equities from a long term perspective down to intra-day oscillation.  I believe we are entering a period of economic prosperity the likes of which no living human has ever seen.  A throwback to the roaring ’20s, only this time the drivers are semiconductors and AI.  As nation-states and religions continue to lose their grip to science and the internet, I expect this expansionary period to be longer than anyone can reasonably fathom.  We will likely never see another recession in my mortal life (current age: 34).

That stated, the equity complex will succumb to intermediate term corrections.  There is only one way of forecasting these events and that is by interpreting years-and-years of raw stock market data—interactions between buyer and sellers of all rank.  This data tells a story and from it we can build probabilities.  These probabilities are our most objective method of taking action without being selfish or arrogant.

There are very few stocks worth owning, ever, even if you’re just a ‘trader’.  Stocks should only be bought with a 10-20 year intended holding period and to own a share of a corporation that long is the closest thing to faith any living human should ever subject themselves to.  Tesla is a cult.  It just so happens to have the sexiest and most confident Leader in the world and a mission that The People Who Matter believe in.  This is an important concept—The People Who Matter.  These are people who actually have money to invest into long-term strategies.  They have real wealth and can deploy it for a cause.  Think Bill and Melinda Gates.

These are people who can read reports on the climate and mortality and other things and make rational, objective decisions based off of them.  Then, armed with scientific facts, they go about using their resources to effect change.

These people, like most humans, tend to fear death the most.  Therefore they invest in ways to thwart death, both biologically (CRISPR) and species-wide (SpaceX, Tesla, and so on).  They like their rich life and aren’t ready to abandon it for the ethereal plane.  They don’t run out of money and they always need places to invest, even if (shocker) the equity markets are in a correction.

Even if the United States is losing world dominance to China and their one party political system.  Even if fiat currency, The Grande Illusion, is starting to fail.

Our job as ruthless speculators, profiteers of the highest rank, is to take advantage of any and all situations.  To seek out shipwrecks and pick up the flotsam and sell it.  To be ahead of herd migrations, to set up kiosks that sell important wares at a nice profit margin.  To borrow things, sell them, then buy them back cheaper in a few days.

The most effective way to do these activities successfully is with a set of tools that short-circuit the human ego, allowing us to consistently do our job with as little personal offense or self-aggrandizement as possible.  My set of tools is signalling bearish for the second week in row.

The other data I take into consideration every Sunday is not as clearly bearish as it was last Sunday.  Last Sunday the deck was fully stacked in the favor of the bears.  This week, not quite as much.  But two bear signals in a row, that is not common, so I got to looking back at other repeating occurrences.

My data set only has one—back on July 30th, 2017.  Dust off your charts and peer back to then, and you will see we entered a two-month-long-time-based correction.  Basically we marked time, in a tight range, across the entire equity complex.

Now a lesser interpreter of data would take this observation and run with it, decreeing from far and wide that the next correction is neigh!  But your old pal RAUL doesn’t carelessly write such predictions with a data set of one.  I need at least 50 samples before considering something to be statistically significant.

Nevertheless, the price action on the PHLX semiconductor index is troubling.  And if you recall, a few hundred words up I noted that our entire rally is predicated on semiconductors.  So this requires our attention.  IOTS screwed the pooch two weeks back, last week it was MU.  There is a downside gap that we are accelerating down into and that selling is likely to continue.

Therefore I will set out early next week to establish a short position trade against the NASDAQ via SQQQ.  I will also be only working the short side of the tape via NASDAQ futures.  That means shorting gap ups inside the prior days range, ‘going with’ crosses down through the daily mid as long as an overnight or initial balance stat is in play, and shorting the levels highlighted during the morning trading reports.

One of my key cues throughout the week, as to whether I should continue working the short side is NVDA.  I watch that ticker like a hawk.  I also bear in mind where were are trading relative to the weekly ATR band, on both the Russell and the NASDAQ.

So there you have it.  Long-term bullish on tech and bearish on nations and fiat, short term bearish on equities with a laser focus on semiconductors.

That’s all I’ve got.

Raul Santos, September 29th, 2019

Exodus members, the 254th edition of Strategy Session is live, go check it out!

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I don’t deal in geopolitical, fiscal policy or sensational narratives behind stock market moves.  I digest a bunch of raw data every Sunday in form of price and volume—and not just volume at a specific time—where it occurs and what it accomplishes.  Then I dig down into the internals, update my charts on a few key sub-indexes, review the big news from last week and how the market reacted, see which public companies rocketed or tanked on earnings or other news and then finally I add in a layer of sentiment.  Add all that up, and I am bearish heading into next week.  These are a few of the most pertinent details regarding my bearish call heading into the week.

IndexModel, my auction theory model, signaled Rose Colored Sunglasses, the only bearish signal it generates.  Other recent signals were August 11th and June 16th, and going back to 2015 the hit rate on this signal is high.  So when I write a blog title that says “high probability” it is actually backed by a data set that is measured and tracked.  Not just some careless tweet.

The PHLX semiconductor index printed a failed auction last week.  Here is a picture of what I mean:

Most of you jokers don’t pay attention to my work, but the upside down version of the failed auction above happened on the NASDAQ Transportation index at the beginning of September and was what precluded the rally.  This was my note on September 1st:

Since this week’s failed auction is on the semiconductor index, and since semiconductors are the key driver of the entire stock market rally since 2016, the situation deserves a bit more attention.

Thirdly, the current picture of the NASDAQ transportation index is rather bearish also.  Looks like an island top:

Fourthly, last week saw investors rotate into UTILITIES, the most risk-averse sector in the financial ecosystem.  The only other strength last week was seen in low quality sectors.  Meanwhile consumer discretionary was weak.  BIG RED FLAG:

If you drill down into the industry-by-industry performance from last week, the picture becomes more clear.  Key industry groups saw significant outflows last week:

The third move after the Fed rate decision was down.  That had me leaning bearish Wednesday and as you might imagine, I had to tuck and run when then powerful rally blew through late Wednesday.  I was on the road for business the rest of the week, but sure enough, sellers worked us back down to the weekly low.  I am talking NASDAQ prices.  Sellers took control of the tape.

Finally, I listen to other traders, the real OGs and otherwise, through a variety of methods—-Twitter, newsletters, internet videos, and so on.  Coming into the week I picked up on a tone of arrogance, borderline hubris.  My mentor always like to say though, which drives me nuts, “if you see it, you be it.” I know what it looks like because it is inside of me too.  And usually the market whips me back into obedience.

So there you have it, my bearish thesis over the next five days.  It’s an uncomfortable call with markets near record highs and the Fed LOWERING interest rates, which disgusts me.  Maybe some news bit or Presidential tweet will come to my bearish aide, or not, or the opposite.  I have no idea and anyone who claims to is a liar.

My plan is to establish a position short via SQQQ at some point early next week and ride the position through late Friday. I will also only be working the short-side of the NASDAQ 100 tape, intraday, fading overnight gap ups, “going with” downward crosses of the daily mid point if I have an open overnight or range extension stat, and selling into any rallies into the key price levels highlighted during the morning trading reports.

Nothing fancy.  It’s all quite simple actually, and wholly independent of any world happenings.  Do you know how satisfying it is?  To love thy discipline and let it support me?  Making my way through the world, no one’s master and no one’s slave?

Really nice.

Raul Santos, September 22nd, 2019

Exodus members, I basically outlined this Sunday’s Strategy Session above, but there are more details in the report, which is live now.  Go check it out!

 

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Volatility was tapering off these last two weeks, what with everyone busied by the transition out of summer, back to school, and then the Labored day rest Monday for all the lazy Americans.  The gambling halls over in Chicago were placing 80% odds of another 25 basis point rate cut this upcoming Wednesday and the football sport is back live.

Then late Saturday news starts to come onto Twitter that half of Saudi Arabia’s oil production was halted by a drone attack.  And now everyone is tuned in to see the way this news will hit prices, of all assets, come 6pm New York when futures open for trade.

For my part, I did the usual Sunday routine, albeit a bit later in the day due to travel.  I counted and judged price charts and volume stuff and compiled the input into IndexModel.  It spit out a bullish reading.  Now I am going to relax and prepare my yard for the large shipment of stones coming as part of Phase II of the Mothership Grass Elimination Program.  Then maybe I will do some light reading then make to go to sleep.

Then I will wake up, assess the NASDAQ 100 with a morning report, then begin trading some time around 8:30-9am-or-so.

You see none of this really matters.  Yes, everything is delicately interconnected but the market is the market and the order flow is the order flow—-everything I need to see is shown by the auction on the NASDAQ 100.  If I want to look deeper the only thing that matters are NASDAQ 100 internals.  Oil is not mattering so much.  The Fed rate cut is not mattering so much, despite being the most careless Fed policy of my lifetime.  American football does not matter, a distracting game to keep the masses sedated and punching the time clock.

All that matters is extracting fiat american dollars from the global financial complex and converting said dollars into land and machinery as far north and at as high an altitude as our constitution allows.  Said land will be fitted with as many wind turbines and solar panels as possible, all of which serve to charge the batteries of all the machines.  Any excess fiat dollars will be stored in Bitcoin for future negotiations over pirated energy from…pirates and privateers.

Nothing else matters.

Trust is at an all-time low.

Raul Santos, September 15th, 2019

Exodus members, the 252nd edition of Strategy Session is live, go check it out.

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I don’t have much time.  This week, like the past several weeks, is being truncated by weekend plans.  I am headed north a-gain, but this time by cycle.  For some disturbing reason humble Raul agreed to a 100 mile biking expedition up into the Murder Mitten.  Do not ask me why I thought this was a good idea.  I have not ridden a bike cycle in more than six years after giving up on the triathlon circuit.

You see, at some point, I forget the exact age, you enter the bracket where you are racing against something like 25-35 year olds.  In the racing community, these are not sane people.  They neglect their families, their jobs, even their health in the name of racing.  They pump themselves full of the latest stimulants and sit around all day eating boiled chickens.  They were unbeatable, and why the hell should I be doing triathlon races if I know I cannot win?

I only do things expecting to win, which is why I trade the open auction as often as possible in the NASDAQ.  Open gap in range?  Come to mamma.

MOVING ON, because time is limited….

I have kept very quiet about Tesla for most of 2019.  In April of 2018 I posted this chart:

It was based on a simple auction theory mechanism, the FAILED AUCTION.  It is the same theory that caused me to become bullish on the NASDAQ transportation index two weekends ago, this note is from the September 1st Exodus Strategy Session:

While most of you run around, hounding online gurus for their opinion on the state of the markets or whether to sell some stupid stock you opted to buy, I am over here, exercising contempt for all things NOISE (cough, cough, Trump tweets) and keeping my attention on the auction.  The result?  I’m regularly ‘proven right’ by the stock market.

Wild, I know.

BUT RETURNING TO TESLA.  For the love of all things DADDY, if you cannot see that Tesla is the top investable company publicly traded, I am not sure what more I can tell you.  Investing is not about fucking price/sales ratios or cash flows—it isn’t.  Think more along the lines of mega churches.  Investing is about FAITH.  Anyone who says otherwise is a liar.  Nobody, I repeat NOBODY knows what the world will look like in three years.  It takes faith.  I choose to have faith in a company that believes in a better Earth, and a leader who is pragmatic enough to realize humans as a collective are trash and unlikely to change their ways—a leader who is laying the groundwork for our children to evacuate Spaceship Earth once it is totally destroyed by wanton meat factories and gasoline combustion.

Let’s just say, for the sake of argument, that their is no human effect on climate change, that all the science being proven and repeated all around the world that shows humans having a major effect on climate change is all bullshit propaganda.  Would it be so terrible to live a life that improved the ecology of earth for all its inhabitants?

The answer is a clear no.  And in living a more compassionate lifestyle while investing in solar panels and electric cars and not consuming animal flesh not only will you save the planet, but you will also virtue signal.  This will make you rise above your peers in the competition for breeding with the finest genetic mates.

This should make it very clear to you, the reader, why Tesla could be the largest investment holding you own.  And don’t give me that passive index investing bull shit.  Americans in general are over diversified.  They can all expect to produce mundane returns and live mundane lives.  Fine.  I am from the school of thought that life is about being sexy and doing cool stuff.

If you are a risk averse person who simply wants a home, two cars and 2.5 children, by all means, index your little heart away.  I am out for much, much, more and I’ll fight like hell to get it.

Tesla and Twitter are my largest concentrated investments by quite a bit.  Neither shall be sold or even considered for sale until TSLA is a 1,000 print and MAYBE TWTR back at all-time-highs.  Maybe.

There you have it.  This blog has not wavered on its conviction in Tesla.  This long-term investment is akin to Christians believing that Jesus Christ was the son of God, and that he will sheppard his people into heaven.  Elon is my Daddy.  The Leader Is Good, The Leader Is Great!

Raul Santos, September 11th, 2019

 

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Greetings and good morning to the Humble Raul Blog readership!

I was on the road until late Sunday night, traversing from top-left to bottom right of the murder mitten, and I was unable to muster the strength to prepare an Exodus Strategy Session last night.  Therefore I adjusted my normal casual 8:15 or so wake up time to a more draconian 7am and powered through the weekend research.  It sometimes takes me four hours to prepare the weekend research, but after a long rest and before being bogged down since everyone already used up all the good thoughts of the day I was able to produce the report in record time.  I also had some real clarity the whole way through.

Anyhow I feel ready for the week.  Now I need to feel ready for Monday so I am hopping into a morning trading report.

Hope everyone is adjusting to the transition into autumn well.  Let’s have a strong-beard week.

Raul Santos, September 9th 2019

Exodus members, the 251st edition of Strategy Session is live.  Those NASDAQ Transportation Index moves were THE TELL last week, and it looks like they may be again this week, be sure to check out section IV.  And don’t forget that this Thursday/Friday is an index rollforward—a time rife with fuckery.  Stay sharp into the second half of the week.

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Well I’m back from the north shore of Lake Superior—a land so majestic and free, it makes a man feel whole a-gain.  No bears or moose or Canadians made to kill me, in fact Mother Nature was quite kind to this perfectly-formed flesh sack I inhabit.  The days were warm and sunny, the evenings a breezy 10 degree Celsius, and the mosquitoes were mild, all things considered…

And it looks like I picked a nice week to be in the solitude of nature, algorithms were really hewing it up all week, chopping along in an ultra-violent manner, essentially marking time.  Then late Friday we had some trade wars panic action that I couldn’t care less about because I already know how the Great Trade Wars of the ’20s plays out:

The USA government is compromised by corporations whose interests do not align with the people.  Putting a deranged businessman at the top of the military’s chain of command has revealed that America is, in essence, a weakening illusion—sort of like when David Copperfield made the Statue of Liberty disappear—you can only run effective propaganda when you control all the viewing screens/angles, and since we’re allowed to have Twitter, there is no way in hell the USA government can maintain their status as Number One Charlatan.

China can.  They fuck their citizens’ heads ten ways to Sunday.  Their manner of structuring society is an odd variation of a termite mound.  The mound itself is more intelligent than the individuals, and they are fed a series of inputs to keep them obedient to the Greater Cause, and to hell with human dignity.  They are playing the long game—America is still babying the babied boomers.

So after China wins, and America assumes a beta role in the global economy, we will be exactly where we are today, or at least where we can be today if we choose to—completely fine and doing whatever the heck we want.

There is a funny sort of dream that if we obtain some number in a bank account or some quantity of green papers wrapped in a burlap sack that we can then stop worrying about money.  That’s bullshit.  Being miserable in advance is a character trait carried by many a folk, especially people in the odd world of finance.  I think we were all drawn to this industry for one reason or another, but greed and fear are high on the list.  Fear of not being secure enough for some looming bad news or something that might happen soon.

This is silliness.  There is no point worrying about every possible outcome.  At best, you are wasting time and mental energy.  At worst, you could be putting your heath at risk and compromising your ability to take advantage of opportunities.  A person of action has not a need to worry about money, we’re too busy doing!

There’s an old stoic exercise that some of you probably think is too extreme, but I find it helps re-align the soul.  Spend a few days being homeless.  Sit outside of a gas station and ask everyone for money.  Collect aluminum cans or scrap metal out of the garbage.  Sleep in a ditch.  You come to realize it is not as scary as you might imagine.  It may knock your ego down a peg-or-two while you’re at it—for the better.

Me, I don’t worry about much but I have been blessed from birth.  There are two ways of winning the lottery at birth, either born to rich parents or with genetic advantages.  I was born really, extremely good looking.  Life is much easier for me because everywhere I go people are so happy to see something so beautiful.  It makes their day better, sort of like a golden retriever.  Of course I leverage this strength, and that is fine.  Most finance people are not beautiful, I understand that.  Most of my readers are hermits, unkempt and of weak physiological shape.  We cannot all outshine the Statue of David, but we can recognize where we do have an advantage over others and press that edge.

Like this guy I bought a used washing machine from last week.  He only has one leg, the other one is some robotic spring appliance.  Lost his leg in a motorcycle accident.  Now he hustles used appliances.  The dude is part man, part machine, and mechanics run through his blood.  He makes deals with the Lowe’s and Home Depot delivery guys.  They drop off old machines to his shop for pennies on the dollar and he rebuilds them and sells them at good prices.  This is good business!  He keeps machines that would otherwise end up in our landfills operational, and offers quality machines at a third of their new issuance cost.  I love a this country!  You find advantage, you press advantage, then you make your way through the world, no ones master no ones slave.

When I say I love this country I do not mean I love the set of documents and the lines on maps that say THIS IS AMERICA.  What I love is free market capitalism.  What these corporations are doing, with policy and lobby effect to create protectionism makes me sick, but I do not worry about this.  Like Chinese leaders, these corporations are easy to thwart.  Their size creates all sorts of blind spots.  Those blind spots are where ruthless profiteers like your old pal RAUL resides, gathering fiat american dollars.

Said fiat American is regularly converted into real assets like tractors and other machinery.  Land as far north as my constitution allows, away from the masses and their psychosis.  Said fiat is also converted into electronic money backed by proof of work, not by silly american Federal Reserve.  These archaic banking institutions are petering out of existence, likely in my mortal lifetime.  Google is immortal and omnipotent, the closest thing to what Christians call The Father.  Banks are more like the squid—it will always exist but mostly out of sight, deep beneath the surface, only occasionally washing ashore, dead.

There’s a reason the Tech sector (as measured by $XLY) is up more than +25% year-to-date while the Financials ($XLF) are only up +10%.  It’s because the power is clearly shifting away from nation states, and their banker friends, to immortal technology firms.  Believers in the technological revolution will be positioned nicely heading into the roaring ’20s, insulated from the chaos and carnage that comes with america losing their status as number one.  Because while China will be made to think they are Number One, real hitters will know it is Facebook, Google, Amazon, Tesla, and so on who rule the world and beyond.

So why you worry so much?  Try worry less, you live longer ^-^

Raul Santos, August 25th, 2019

Exodus members, if there is one thing we should be concerned with, it is making money over the next five trading days.  I made sure to highlight all the key factors to be aware of heading into month-end in the 249th edition of Strategy Session, which is live now inside Exodus.  Be sure to check it out!  Remember!  Nobody pays me to do this work, it is simply the work I need to do to make fiat american dollars.  Enjoy.

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Three people asked me last week if we were headed into a recession.  Two of them are degenerate real estate speculators who are leveraged to the neck, so I understand why they spook easily.

But the third is a man of industry, a business owner and hipster-whisperer.  It makes no sense for him to even spend one minute of his day fretting over something as abstract as a recession, and if you are intelligent enough to read the RAUL blog then the same likely goes for you.

I think this has something to do with most of us living through the Great Recession.  That was a pretty gnarly time.  People were actually pushed out of their homes and there were no jobs.  It was messy.  It is quite unlikely to happen again in my lifetime (age 34) unless it happens near the tail-end, say around 90 years old or so.  That was a major disaster and there were plenty of warnings before it happened—most notably was the spinner rims.  So many people who identify themselves by their mortal possessions were so flush with cash, due to wanton home lending practices, that you couldn’t drive anywhere without seeing a car on 5k worth of tires and rims.  That shit was hilarious.

The housing sector is running too hot, IMO, but the Fed doesn’t have the huevos to raise interest rates.  Cowards.

But the housing sector can run hot for much longer than any reasonable person expects.  The smartest thing one can do is buy the smallest house in the nicest area and just sit put.  Don’t move, don’t refinance unless it is money put right back into the property. Then if/when a recession comes, you will be insulated by the fact that you don’t live in a trashy new-build subdivision, surrounded by miserable fucks leveraged to the tits, teetering on the verge of adultery, divorce, and losing their homes.

Old money doesn’t feel recessions.  Own real estate amongst the old money tribes.

If you really want insight into the overall health of the housing sector, pay close attention to earnings this week out of Lowes and Home Depot, maybe even listen to the conference calls.  Much like Walmart earnings are far more insightful into the health of the U.S.A. economy than any statistic produced by the Federal Government, so too these home improvement stores provide a better glimpse of the mind of the home owner/builder than the nearly useless garbage data being produced by our dumpster fire of a government.

As for the self-employed business owners—it is always feast and famine.  Live the same way through both and to hell with the general economy.

Regarding stock market investments.  All of my investments are doing fine.  Walmart, Costco and Amazon are the only retail exposure one needs, and they are all recession proof.  Tesla is healing the world, this is a recession-proof mission.  Twitter is the greatest social media platform of all time and where all the world’s vital information is disseminated, it will be fine.  Match Group is in the love business—and that is not going away any time soon.

Anyone working on quantum needs to be invested in.  The mysteries of the entire universe (and the biology of everything nano and beyond) will be solved instantly by whomever solves quantum computing.  Microsoft, IBM and Google are must own stocks, period.

Most Americans are over-diversified.  You will never make a meaningful impact on your personal finances via quarterly allotments to a set of index ETFs.  Take concentrated bets and live with the consequences.

And for the love of anarchy buy some bitcoin.  Fiat currencies have done a hell of a job surviving, they are proven to be more durable than money backed by gold, but they are predicated on the silly notion of nations.  Nations are nothing more than an illusion, lines on a map.  If you cannot see how fickle this entire notion is, then I cannot help you realize why bitcoin matters.

As for me, I am appalled by the mania being pushed out of the entertainment news channels that we are entering a recession.  The long-held belief of this humble RAUL blog is that we are entering a period of economic prosperity the likes of which no living human has ever seen.  A rehashing of the roaring ’20s, complete with all the trimmings of real decadence.  My only question to you, is are you driven enough to wake up and take what is yours?  The moneys out there, in all forms.

Either you take it or someone else will.  Let the simple-minded among us waste their energy worrying about something as abstract as a recession.  It’s like worrying about winter.

It’s coming, and I welcome it.  I thrive in conditions others perceive as challenging.  You can too.

Raul Santos, August 18th, 2019

Programming note: I have been swimming in the fish tank for far too long, since like February.  The water is cloudy, there are cob webs on the hood above me, I cannot hardly see.  I am heading up into the land you call Canada for the week, up past the north shore of Lake Superior, to eat cans of fish and explore remote places as far from humans as possible.

Exodus members, the 248th edition of Strategy Session is live. Keep an eye on the NASDAQ transportation index, it is telling a story we cannot ignore.

 

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I used to write real doomy and brimstoney blog entries when IndexModel would signal bearish but I cannot afford to gussy up my thoughts.  Not now.  Not with option expiration on the bend.  Not with Berkshire, Walmart, Alibaba and Nvidia slated to report earnings.

Instead let’s just look at the facts.

IndexModel ranks five components of auction behavior across the four major indices—Dow, S&P, Russell 2000 and NASDAQ.  These rankings create one number which is then compared the the overall hybrid score inside Exodus.  This creates a value that oscillates through time, much like a CCI or RSI, look:

The bearish signal is called ‘Rose Colored Sunglasses’ because price action usually seems pretty calm on the surface, as if the main indices are tinting the lenses we use to see the market.  As where Exodus is looking at every single stock and factoring in lots of other macro data. And perhaps seeing more under the surface of strong indices.

But heading into next week the indices do not look rock solid and strong.  They are kind of whippy.  The last two weeks have been choppy.  Then there is the NASDAQ transportation index, which sort of looks like, at least when I draw the bottom line this way, sort of looks like price might be breaking down from a very well-established range:

Last week we saw a late-week recovery, but when you look at the sector rotations, Utilities led—hardly a vote of confidence:

Those are my bearish notes.  There are bullish cross-currents.

We are in the middle of a bullish ‘hybrid oversold’ cycle inside Exodus.  It lasts until the Monday after next.  There are other interesting data inside Exodus that remain bullish.

So what does it all mean? I have to form a bias to trade.  That does not mean you need to do so, but that’s how I trade my best.  Come Monday morning, I will distance myself from the trading buttons.  Once the morning action has abated, I will sit down and assess.  My theory is that we see some strength early Monday.  I want to see that, then I want to see sellers step in.  If they do I will join them by selling short the NASDAQ 100 both with a five day position in SQQQ and via short scalps in the /nq_f.  Given the recent volatility, I may try out the new micro contracts, the MNQ.

That’s about all I have to say.  I will spare you a spirited prose of destructive predictions.

If, for whatever reason, I can convince myself to instead go sit on some remote beach in northern Michigan instead of engaging this tape, that would be okay too.

As always, TBD.

RAUL SANTOS, August 11th, 2019

Exodus members, the 247th edition of Strategy Session is live.  I elaborate on all these observations in a bit more detail, be sure to check it out!

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Models are updated and back to neutral after flipping bullish last Sunday.  Strong ‘Hybrid Chg %’ numbers drop off on Monday which gives bears an edge heading into the week.  Trade wars are running hot, and my opinion is that they are going great but what do I know about the macroeconomic picture? Nothing and neither does anyone else.  If anyone claims on the CNBC entertainment news channel to know how the global economies levers work, they are a liar.

The Federal Reserve doesn’t even know.  They’re losing their might, believe it or not.  The power of the hash has manifested.  The whole archaic notion of money backed by nation states has been called into question.  There is no backing to the money besides military might.  Which I suppose is nothing to sneeze at.  If the military wants to make you dead—they will.

But they cannot make to kill bitcoin.  Which is nice, because maybe bitcoin will make to kill them.

Moving on from fantasies of anarchy…

Lots of my favorite twitter trader accounts seemed on tilt last week.  There was a vibe of confusion—what with the rate cut introducing heavy selling, the new month flows erasing said selling, only to have a trade negotiation tweet from President Trump re-erase the erase-ment.  Admittedly, it was a lot to digest.  I was watching from afar, having committed to some side work instead of grinding out trades.  And maybe I am sitting on a cloud thinking I am a better investor and trader than most, I don’t know maybe I am or maybe I am just a jerk—but this is my advice to anyone who felt a little rattled by last week’s action:

There is always another bus

If you start to feel off, or like your actions are based on emotion and not focused execution of your plan, the first step is to STOP.

This is often done most easily by removing your body from your desk.  Outside work or home chores are helpful if you need a distraction.  If you feel an itch or urge to take action because you catch a chart or news bit on your phone or some screen in the corner of your eye, put a wider space between you and the markets.

If you have a plan in place and feel calm and clear about what needs to be done, then re-engage.  You likely need to reduce size given the increase in volatility.  Be sure to keep track of how you feel.

The stock market was here long before us and will continue to function long after we are gone.  Just like buses in the city, there is always another trade coming.  Make sure your account is still liquid so you are ready when that next opportunity comes.

Anyways, it is nearly 1pm New York on this lovely Sunday and I need to go wrestle some iron up and down a few 50-60 times because if not I will want to make to kill.  Why is my base instinct so violent?   We don’t know.  Raul says stay cool.

Raul Santos, August 4th, 2019

Exodus members, the 246th edition of Strategy Session is live, you need to see what is going on in the NASDAQ transportation index, check out Section IV!

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