Greetings lads,

Shortly after sending out last Sunday’s letter I was absolutely rocked by news a long time friend died from a ruptured aortic aneurysm. 37-years old. Took a nap and was gone.

I’ve been a mess, but also keeping it together for the sake of their family and mine. Definitly not in a mental state to trade.

Not that I have been all year…

but alas, we have our fourth Bunker Buster hot off the press heading into a strawberry super moon, 50 basis point fed hike, quad witching shit show.

I expect price to accelerate to the downside. The CPI gap down Friday morning has a penultimate step vibe to it, and it has me strongly expecting us to leap lower with lots of energy.

We all know the Pelosi clan is bid down here, but are their orders enough? Or will the market do what it does best and humble even the greatest titans of our time?

We dunno.

The gambling halls down in Chicago are giving 96.4% odds of a 50 basis point rate hike Wednesday. The remaining odds are on a 75bp hike.

People are acting very brittle and cowardly when it comes to risk assets and IndexModel is signalling Bunker Buster.

Therefore I must deploy fresh capital this week. Slowly. Gotta see buyers show up first.

Maybe they show up Monday morning and we rally all week we dunno.

Alls I know is the markets tend to give one side the feeling that ultimate success is finally within grasp only to abruptly change course and put the respective participants (in this instance, the butt-loving bears) back in check.

Ergo lower, than higher, unless it is over for real this time.

The corn is planted and the big seasonal work is about 70% complete.

*Remember – June is Raul’s month*

–Raul Santos, June 12th, 2022

And now the 390th strategy session.

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Stocklabs Strategy Session: 06/13/22 – 06/17/22

I. Executive Summary

Raul’s bias score 1.95, STRONG BEAR*. Price accelerates to the downside early in the week, perhaps pressing lower through Wednesday afternoon’s FOMC announcement. Eventually look for a sharp reversal off the lows to create a tradable low.

Major NASDAQ component Adobe is set to report earnings Thursday after market close.

*Bunker Buster signal triggered, see Section IV

II. RECAP OF THE ACTION

Choppy and mellow through Wednesday then hard selling Thursday and Friday. Sellers used Friday morning’s CPI data to press price lower.

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

Rotational Report:

Another full-on risk off rotation away from equities. Energy still showing its independence from all other sectors.

bearish

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

Concentrated Money Flows:

Three weeks back bulls regained control of money flows in a meaningful way. Last week that control was reclaimed by sellers.

bearish

Here are this week’s results:

III. Stocklabs ACADEMY

All data points lower

Sometimes these signals are all crossed up and difficult to interpret. Not this week. They all point lower.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Price accelerates to the downside early in the week, perhaps pressing lower through Wednesday afternoon’s FOMC announcement. Eventually look for a sharp reversal off the lows to create a tradable low.

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]:

Found range high, plunged lower

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports didn’t drift much higher last week. They bumped up against the prior week high and then started selling off. The gap Friday morning is something that could have trapped supply above and may set up a fresh leg lower.

See below:

Semiconductors weren’t as strong early in the week. They began selling off Monday and by Thursday they were on the move lower. Same as Transports, they gapped lower on the CPI data and now appear poised to discover lower prices.

Ether just grinding lower as if some large amount of sell flow is being steadily worked onto the tape, perhaps systematically. The lack of auction info below has be expecting a probe lower into the abyss.

V. INDEX MODEL

Bias model is Bunker Buster again. The fourth in recent history.

We were rose colored sunglasses bearish last week after being extreme Rose Colored Sunglasses neutral two weeks back after four consecutive weeks being neutral. We went Bunker Buster seven weeks back after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

We’ve had three other Bunker Busters in recent history, seven weeks ago, twenty reports back and a third twenty-eight reports back.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“It’s the end of the world as we know it and I feel fine.” – REM

Trade simple, keep moving

Comments »

Salutations from the confines of Mothership lads.

I returned last night from a mission up through the Sault. A team of outdoorsmen made it through the northern border and went to work assessing a chunk of Her Majesty The Queen’s land which my dear homie managed to secure with some tax chicanery and a crack team of lawyers. 150 acres of God’s country, well the heck up on the north shore of Lake Superior.

The vehicles could only make it so far and we had to do the remaining miles on foot, breaking trail through dense boreal forestland with drones and binoculars, hootch and fishmeat.

Quite the lot, featuring a lake about the size of four football fields that had a bull moose drinking from it when we arrived.

While the mosquitos were absolute terrorists, the serine landscape offered my mind a bit of respite from the madness of the city. Now I am back and ready to plant my sweet corn fields and excavate the rear alleyway of the urban farm compound.

It’s time to build lads. Digital warfare is me specialty but more and more lately I’ve felt like a gardener in a war more than the other way around.

Let the big dogs slug it out whist I poke on a chunk of earth. Soon the storm will pass and this little squirrl will return to the futures complex and resume extracting fiat from the global financial complex.

It takes a certain bit of humility to act right consistently in the financial markets. To accept that there are conditions that favor my strategy and ones that can destroy me. The last six months have been not my bag.

There have been glimmers of a return to my conditions. I’ve been watching the opens. The overnight gaps are shrinking. And they are being filled early on in the session. Soon I will participate in this great market pastime.

A bit more field work and then I will  return to battle.\

There is a reason June is my month. First of all it is the first real month of summer. Secondly my birthing occurred on Flag Day, compelling americans nationwide to raise a flag in my name. Thirdly, I have the most exquisite physique and it drive women and men wild, and this is good for business.

Okay for now,

Raul Santos, June 5th, 2022

And now the 389th edition of Strategy Session.

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Stocklabs Strategy Session: 06/06/22 – 06/10/22

I. Executive Summary

Raul’s bias score 3.25, medium bull*. Volatility continues to taper off. Perhaps the tape drifts lower through the week, but a major rally could be lurking on the horizon. Watch for CPI data out Friday morning to put some conviction into the tape heading into the weekend.

*Rose Colored Sunglasses bearish bias triggered, see Section V

II. RECAP OF THE ACTION

Volatility sort of decreased during the holiday-shortened week with the small cap Russell showing some divergent strength suggesting a slight increase in investors’ risk appetite.

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

Rotational Report:

Energy continues to trade independent of the overall market. Last week’s rotations not really the type to give conviction to the bulls. Market participants continue to reward more risk averse sectors like Industrial and Materials.

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

Concentrated Money Flows:

Two weeks back bulls regained control of money flows in a meaningful way. Last week’s ledger was pretty calm, slightly favoring sellers.

slightly bullish overall

Here are this week’s results:

III. Stocklabs ACADEMY

Hybrid Change still leaning bearish

This report is an attempt to square up all the algorithmic and economic context before the week begins and price starts moving. This week we have some pieces leaning bearish, others bullish. The hybrid change still favors sellers after printing that huge -27.96% back on May 18^th.

This indicator is given more weight by me on the intermediate term. Short term it is less important. But the predominant flow of the markets is still lower until we see a larger absolute value print on the Hybrid Change column.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Volatility continues to taper off. Perhaps the tape drifts lower through the week, but a major rally could be lurking on the horizon. Watch for CPI data out Friday morning to put some conviction into the tape heading into the weekend.

Bias Book:

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

Here are last week’s bias trade results:

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

Searching for range high

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports are in this descending channel which suggests discovery down intermediate term. However we have yet to really test those old support levels to see if sellers can convert them into resistance. This is why next week I expect this index to drift a bit higher.

See below:

Semiconductors have made a clearer attempt higher on their balance and seem to be settling into a balance zone.

Ether is still sort of working through the overplay for the underlay. That bearish flag descending wedge pattern thing suggests downward pressure remains. There is rumor that some legislation will be introduced in the Senate this week that may affect the price of this instrument in a big way. My primary expectation is for a flush lower before we can gain clarity on the auction.

V. INDEX MODEL

Bias model is rose colored sunglasses bearish after being extreme Rose Colored Sunglasses last week after four consecutive weeks being neutral. We went Bunker Buster six weeks back after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

We’ve had three Bunker Busters in recent history, six weeks ago, nineteen reports back and a third twenty-seven reports back.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“The more you say, the more likely you are to say something foolish.” – Robert Greene

Trade simple, focus on execution

 

Comments »

Howdy gents. Happy Memorial Day and all that jive.

I have to be brief. There are many plants needing water and boots and pants discos to enjoy before I bug out to Canada for a few days of healing.

I am continually mystified by how difficult it is to coach someone through watering plants. Something that seems so simple, mundane, mindless even. I’ve set up so heckin many irrigation pipes because folks can’t seem to take a hose and give a plant a proper water.

Anyhow.

Markets caught a decent bounce last week. Contextual charts appear to have a bit more room to the upside and IndexModel is flashing signs that it is time for equities to mellow out and mark time. And that sentiment seems to align perfectly with the calendar.

Summer is here for real for the first time in two years. We sort of 70% had summer last year but this year it is back on.

Who the hell wants to sit in front of monitors all days poking at these auctions.

Let the algos and interns and the intern algos do nothing for a bit whilst we savor these sweet 90 days.

Okay for now.

Raul Santos, May 29th 2022

And now the 388th edition of strategy session.

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Stocklabs Strategy Session: 05/31/22 – 06/03/22

I. Executive Summary

Raul’s bias score 3.73, medium bull. Expect volatility to recede a bit during the holiday-shortened week. Price stabilizes and holds last week’s gains.

U.S. markets will be closed Monday, May 30^th in observation of Memorial Day.

II. RECAP OF THE ACTION

Choppy sideways action through Wednesday then a strong rally Thursday and Friday.

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

Rotational Report:

Strong rotation into the equity complex across the board with leadership in the ‘right’ sectors.

bullish

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

Concentrated Money Flows:

Bulls took back control of money flows eleven weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then eight weeks ago sellers negated that control and maintained control. Until last week.

Last week’s ledger shows strong money flows that effectively negate the last eight weeks of seller control.

bullish

Here are this week’s results:

III. Stocklabs ACADEMY

Hybrid Change % is really intense right now

The large absolute values we are seeing printed on this portion of the algo is indicative of current market conditions, which are pretty volatile.

This indicator still suggests sellers are hitting the tape harder than the buyers, despite the strength seen late last week.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for sellers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Expect volatility to recede a bit during the holiday-shortened week. Price stabilizes and holds last week’s gains.

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]:

Bounce and push

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports caught a bit of a bounce and my primary expectation is for buyers to probe a bit higher into resistance in the coming week.

See below:

Semiconductors same thing. Looks like there’s a bit of room to the upside and an area of resistance that is likely to act like a magnet, drawing price a bit higher.

Ether futures only began trading in February of 2021 so there is no price history below about 1370. If we zoom all the way out on the price action since these futures went live we do see a very Gaussian distribution of volume.

Ether grew up and became something different once futures were made available at the cme. Now the most sophisticated participants have a means of discovering the value of this crypto currency (worldwide computer).

And it appears these participants are doing what they most effectively do—test higher, test lower, discover value and facilitate trade.

I could see us probing the abyss soon, and then we’ll see if this all is one big balance, with value somewhere around 3,000.

We don’t know.

V. INDEX MODEL

Bias model is extreme rose colored sunglasses after four consecutive weeks being neutral. We went Bunker Buster five weeks back after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

We’ve had three Bunker Busters in recent history, five weeks ago, eighteen reports back and a third twenty-six reports back. The Bunker Buster before these recent three was sixty-four weeks ago.

Here is the current spread:

VI. 12-month Technical Oversold

On Monday, May 9^th Stocklabs signaled hybrid oversold on the 12-month algo. The 10-day bullish cycle that runs through Monday, May 23^rd end-of-day. Here is the final performance of each major index over the cycle:

VII. QUOTE OF THE WEEK:

“I am a great believer in luck. The harder I work, the more of it I seem to have.” – Coleman Cox

Trade simple, do the work behind every trade

Comments »

When I hear the dang boomers say, “it’s not a profit until you book it,” a dark part of me wants to make to kill.

We really made strides these last few years towards dismantling nationalism, nation-states and the whole concept of lines on a map. Big tech was blessed with giga-valuations, and checks being mailed out to every american simply for existing called fiat into question for real.

The old tiger (U.S. dollar reserve currency) sensed its last fight and went to battle systematically dismantling all this hubris.

Most stock charts have erased any progress made during that mysterious grey time that was 2021, back when we were in lockdown but weren’t in lockdown? When two jabs gave a chap freedom to go into a small hot room with a bunch of women and mouth breathe, but it was frowned upon by the weak immune systems of the american gen pop.

The truth is, we can now see, clear as a liberty bell, that those 2021 advances were fake. Anyone who cashed out during that time can now see that they were in fact a champion.

My google pixel pops up photo memories and this time last year I was putting the finishing touches on that bastard kitchen. That project was funded by the dang speculative markets, and I hated all those trips to the tile store and ikea and Lowes because I wanted those dollars to stay in the speculative markets.

In hindsight, of course, I am grateful. Because I built that super gay kitchen to stand the test of time. I no longer have to prepare meals on a busted ass stove or plate food on green Formica or worsh ma giant stock pot in a little baby sink. Would that 40-or-so thousand fiat american dollars bought some bored apes and become 400-or-so fiat dollars? Or would it have stayed in Tesla and doge for the great dismantling?

We dunno.

The great bull run of the last five-or-ten years was my second major economic cycle, and I was operating on hard learned lessons from the prior one, that my degeneracy would always lead to me pressing risk so I’d better convert some gains into something else because too much liquidity in my purse ends up being taken away by the citadel.

I guess this entry is a gratitude post for being somewhat in the right state of mind last year. I’m grateful for a clean kitchen and a new chunk of earth to grow corn upon. I turned into a real menace towards the end of the cycle. Putting my hair in braids and accosting Goldman Sachs bankers via Twitter. And of course I regret making my already too big TWTR position even bigger towards the end of ’21. But next cycle I shall do better. I’ll probably have a complete grey beard by then but those greys are wisdom yes?

I’ve been made to be humbled once a gain by market mechanisms, and I have no choice but to dig in for another few hard years of chopping wood.

It’s feast and famine at the House of Raul [HoR] always has been. Not sure if I’d enjoy life any other way.

I was out late last night, amongst the people, listening to loud house musics and chewing mushrooms, and I couldn’t help but appreciate how pretty dang decent Detroit’s trajectory seems to be.

A storm is coming and us post industrial wasteland folk have the infrastructure to thrive during it. Ten foot fences. Steel plate shutters. Walled gardens.

So maybe we just savor the sights and sounds of boomers and their chaos. The Ray Dalio’s of the world and their chronic paranoia.

A car might be the hardest thing in the world to build.

Raul Santos, May 22nd 2022

And now the 387th edition of Strategy Session. Enjoy.

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Stocklabs Strategy Session: 05/23/22 – 05/27/22

I. Executive Summary

Raul’s bias score 2.65, medium bear. Buyers follow through on their late-Friday buying into the new week. Then watch for FOMC minutes out Wednesday afternoon to dictate direction into the second half of the week.

Major semiconductor NVIDIA is set to report earnings Wednesday after the bell.

II. RECAP OF THE ACTION

Bit of a rally through Tuesday then heavy selling came in and sent price down through last week’s lows on all indices except the Russell, which was bullish divergent. Then we had a moderately strong ramp rally into Friday close.

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

Rotational Report:

Wall Street punished share prices of several major retailers last week after they reported earnings and that is reflected in sector rotations which saw Staples and Discretionary heavily rotated away from. Meanwhile Utilities and Healthcare were positive on the week. Energy continues to trade independent of the overall market.

bearish

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

Concentrated Money Flows:

Bulls took back control of money flows ten weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then seven weeks ago sellers negated that control.

The ledger once again skewed to the negative side, but not to as extreme a degree as the prior two weeks.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

Hybrid Change %

While both IndexModel and Stocklabs oversold signals have been having a rough go at this tape recently, both being in a draw down phase of their statistics, the Hybrid Change % has been a bit more reliable.

I use this daily reading to assess who is in control of the tape intermediate term. It has flip flopped a bit these last few days, but before then if you flip through the data the biggest absolute readings have been to the downside. This data point has done a decent job of staying on the dominant side of the tape.

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:

Buyers follow through on their late-Friday buying into the new week. Then watch for FOMC minutes out Wednesday afternoon to dictate direction into the second half of the week.

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]:

Down channels and other migrations

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports accelerated to the downside last week, and the downward channel remains in place. Discovery down.

See below:

Semiconductors could be in the process of accepting a new range here, which lines up with the 2021 lows. Had to say, but maybe this index is accepting value around here, a few tiers off all-time highs but still a long way up.

Ether is quite messy. We can see a recent attempt at balance here, which sort of resembles a bear flag. These type of obvious technical patterns rarely resolve the way technical analysis books say they will. But we could see an attempt down-and-away from the flag. How that is received will tell a story.

V. INDEX MODEL

Bias model is neutral for a fourth consecutive week after going Bunker Buster four weeks back after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

We’ve had three Bunker Busters in recent history, four weeks ago, seventeen reports back and a third twenty-five reports back. The Bunker Buster before these recent three was sixty-three weeks ago.

Here is the current spread:

VI. 12-month Technical Oversold

On Monday, May 9^th Stocklabs signaled hybrid oversold on the 12-month algo. This is a 10-day bullish cycle that runs through Monday, May 23^rd end-of-day. Here is the performance of each major index so far:

VII. QUOTE OF THE WEEK:

“And why should we feel anger at the world? As if the world would notice.” – Euripides

Trade simple, willing to accept the news and noise

 

Comments »

The new information out of the equity markets last week is that prices were too high. They went lower and now we don’t know whether they’ll continue going lower but we do know they were apparently too high a few weeks back.

That’s my intellectual analysis. Real bearish mf could probably contrive something that sounds more intelligent. Some ‘why’. But that is not my game. I am a Big Tech perma bull and I am being punished for keeping false idols.

Nevertheless, it is difficult to kill me as I am already dead. This market has gutted me at least 4-5 times in my life and the good news is I’m still here and overall the numbers on the screen that say what I am worth are up up up.

They don’t want some free speaking, independent thinking vagabond roaming around america, growing tobacco and securing deeds on chunks of earth, but here we are.

I have to put 60 shiseido peppers in the ground and it’s about 86 degrees. So I must bid you adeau.

For now.

Raul Santos, May 15th 2022

And now the 386th edition of Strategy Session. Why the heck not? Enjoy

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I. Executive Summary

Raul’s bias score 2.85, neutral. Buyers actively control the tape throughout the week. Watch for volatility Tuesday with Walmart set to report earnings before the bell and Powell on deck to speak in the afternoon.

II. RECAP OF THE ACTION

Equity markets were already under heavy selling pressure by Monday morning. Price was choppy through Wednesday then started to sell of Thursday. There was a strong ramp higher late Thursday into closing bell and that carried through to the weekend, with Friday strong across the board.

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

Rotational Report:

A bit of relative strength from Staples. Otherwise continued strong selling rotations.

bearish

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

Concentrated Money Flows:

Bulls took back control of money flows nine weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then six weeks ago sellers negated that control.

Sellers dominated the money flows again last week. Ledger is skewed to the sell side.

Sell flows becoming a bit extended here, which has me on the lookout for a ‘relief’ rally.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

Nearly six months off the trading desk

One of my earliest mentors in active futures trading was an Australian chap who used to always tell me trades were like busses, that another one was always coming.

Because at the time I was hot wired to want to catch every single little oscillation in price. I would magnify the chart to a scalping time frame and sometimes execute over 50 trades in a matter of minutes.

It was a bit excessive.

The more I honed my skills, the more selective I became. I still rapid fire when I am actively trading, but most of the time I just sit and wait for an algo to tell me to go live.

Now this latest sit, me going offline in December and not trading for almost six months now. It has been a mental challenge. But I know I am not in a position to trade well right now. I have this dang year two farm project and it is demanding a lot of my brain power.

These markets were here long before me and will be around long after I am gone. I am excited to get back to work, but honestly it has been nice to be an observer during this high volatility slide lower.

I see active traders who love volatility. My approach actually does best when we’re sort of lazily drifting.

So perhaps by the time I go live those conditions will return. We don’t know.

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:

Buyers actively control the tape throughout the week. Watch for volatility Tuesday with Walmart set to report earnings before the bell and Powell on deck to speak in the afternoon.

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]:

Sellers blow out ranges

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports and pretty much everything else were sold hard last week, sending price out of range. Now it appears this chart is in a downward channel. Discovery down.

See below:

Semiconductors lost range. There may be a new range here but overall it was a discovery down move to arrive here.

Ether sort of messy. Perhaps finding a new range.

V. INDEX MODEL

Bias model is neutral for a third consecutive week after going Bunker Buster three weeks back after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

We’ve had three Bunker Busters in recent history, three weeks ago, sixteen reports back and a third twenty-four reports back. The Bunker Buster before these recent three was sixty-two weeks ago.

Here is the current spread:

VI. 12-month Technical Oversold

On Monday, May 9^th Stocklabs signaled hybrid oversold on the 12-month algo. This is a 10-day bullish cycle that runs through Monday, May 23^rd end-of-day. Here is the final performance of each major index over the cycle:

VII. QUOTE OF THE WEEK:

“He will face a battle he knows not, he will ride a road he knows not.” – Gilgamesh

Trade simple, we don’t know

Comments »

Listen chaps, we’re really into it now. The markets are dipping and dipping and have room to keep dipping. The Feds are hellbent on putting inflation in place with rate hikes. The Rooskis are settling in for a long summer battle. The conservatards are bleeding back onto Twitter. And the north is finally heating up.

We’re barrelling full speed into 90 days of intense heat, hedonistic gardening and disco raves.

My knees and ankles have gone bust Punishment for three hard years of laboring in the name of financial freedom.

Part of me wants to hang it all up and beg my old employeer to re-enstate me at 75k/annum as an excel spreadsheet jockey.

In esence, I am nearing desperation lads. These very well could be the emotions of a market nearing a local bottom.

We don’t know.

But it certainly feels that way.

At a minimum, I need to stop running around building gardens soon and instead sit in a chair and click orders in-and-out of the NASDAQ futures. This pain in my heckin’ legs is telling a story. I work too hardt.

All that said, the one duty of son Raul is to present an air of complete success and order to the women in my life on Mother’s day. Women, in general, worry too much. Let cook them some chicken meat and set their minds at ease.

Okay for now,

Raul Santos, May 8th

And now the 385th edition of strategy session.

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Stocklabs Strategy Session: 05/09/22 – 05/13/22

I. Executive Summary

Raul’s bias score 2.53, medium bear. Buyers show up early in the week and work price off of last week’s lows. Then look for third reaction to Wednesday morning’s CPI data to dictate direction into the second half of the week.

II. RECAP OF THE ACTION

Choppy week. Essentially marked time until the FOMC announcement (50bp hike) then rallied. Thursday morning the entire Fed rally was reversed and we were probing the weekly lows into the end of Friday, but overall a rough marking of time.

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

Rotational Report:

Energy sort of dwarfed the action in other sectors, but we can see Utilities and Financials showing divergent strength which speaks to the lack of conviction amongst market participants.

bearish

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

Concentrated Money Flows:

Bulls took back control of money flows eight weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then five weeks ago sellers negated that control.

Sellers majorly dominated the money flows again last week. Ledger is skewed to the sell side.

bearish

Here are this week’s results:

III. Stocklabs ACADEMY

Bleak bounce, what next?

Next week is much lighter in terms of earnings and economic events. The CPI data might put some volatility into the tape, but overall the markets will be left to their own devices for price discovery.

We have been bouncing along range low in several key areas of the market for many weeks. The longer we do so the more likely it becomes we make another leg lower.

The big spike last week post Fed was completely faded and it seems to have soured the mood of speculators quite a bit. What this all means heading into the second week of May we don’t know.

The process of finding a low has been a challenge recently. It has to be around here somewhere.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Buyers show up early in the week and work price off of last week’s lows. Then look for third reaction to Wednesday morning’s CPI data to dictate direction into the second half of the week.

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]:

Ranges are still in tact

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports printed a nice wick Friday, an excess low along range low could set the stage for a bounce next week.

See below:

Semiconductors seem to be building energy down at range low. The next explosive move could be soon. Range is still in play.

Ether looking less bullish than it had in prior weeks, but is still in range.

V. INDEX MODEL

Bias model is neutral for a second consecutive week after going Bunker Buster two weeks back after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

We’ve had three Bunker Busters in recent history, two weeks ago, fifteen reports back and a third twenty-three reports back. The Bunker Buster before these recent three was sixty one weeks ago.

Here is the current spread:

VI. 12-month Technical Oversold

On Friday, April 22^nd Stocklabs signaled hybrid oversold on the 12-month algo. This is a 10-day bullish cycle that runs through Friday, May 6^th. Here is the final performance of each major index over the cycle:

VII. QUOTE OF THE WEEK:

“What matters to an active man is to do the right thing; whether the right thing comes to pass should not bother him.” – Goethe

Comments »

I might be wrong but at least I’m honest.

And for the most part jovial. When these heckin’ bears taste some blood they really turn into some menacing fuckers.

Maybe this isn’t good enough to propel me into Miami Beach level wealth, but what I do out here works for me. I have not been trading futures this year, but I managed to scrape a few bucks off the streets just hustling. Sofa king shameless. There is nothing glamorous about what I do on a day-to-day basis.

I am oldt. The beard greys have started to creep up off my chin and into ma cheeks. Sometimes I dig holes for two days strait, just to plant a bush.

Women pay me to do all sorts of things. These sort of gigs come easy to a chap whose handsome.

And kind.

So I extracted some fiat and last week I allocated that fresh fiat to long term investments in big tech — GOOGL, FB, AMZN, MSFT TSLA and TWTR. I don’t use margin in my long term books. Using leverage is how the citadel gets you, man. Fuck that fucking order flow reading snake right in its mouth by not using margin/leverage on long term accounts.

I will get back to working futures soon. Few understand that the skill set I possess is not something they teach at the university. The daily application of auction theory to short term oscillations in the world’s most libertarian battlefield, index futures, develops a mind over the years into a certified money extractor.

One does not simply walk away from that vocation, just as one would not abandon say the cosa nostra.

I’ve been chipping away at these markets since the turn of the millennium, and I reckon I have about 30 more years before my brain goes dull, so don’t plan on being rid of me any time soon.

Nation states are biting back at Big Tech. Beware an old tiger sensing his last fight. These draconian Chinese covid restrictions are an expensive theatrical performance to keep the west bleeding. But America has reserve status and they’re fighting like hell to keep it, fed fucking the prices of big tech stocks back into place.

But all these lines on maps and ideologies will be put to the test soon. A storm is coming. And I will side with the technocrats and their new internet coins and their big ass algorithm over any three letter organization.

The battle for the hearts and mind of the west comes down to one thing. Who owns Twitter?

And who might that be?

Okay for now,

Raul Santos, May 1st, 2022

And now the 385th edition of Strategy Session

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Stocklabs Strategy Session: 05/02/22 – 05/06/22

I. Executive Summary

Raul’s bias score 2.33, medium bear. We may see some follow-through selling early next week, but watch for Berkshire Hathaway earnings out early Monday to perhaps instill some confidence in the tape. Then watch for third reaction to the Wednesday afternoon FOMC announcement to dictate direction into the second half of the week. Then non-farm payroll data early Friday could serve to accelerate the prevailing direction into the weekend.

II. RECAP OF THE ACTION

Modest gains Monday. Then hard selling Tuesday morning and through the close. Then buyers rallied the tape through Thursday afternoon only to see sellers return price back down to the lows Friday.

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

Rotational Report:

Sixth week of bearish rotations. Discretionary pummeled after Amazon earnings.

bearish

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

Concentrated Money Flows:

Bulls took back control of money flows seven weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then four weeks ago sellers negated that control.

Sellers majorly dominated the money flows again last week. Ledger is skewed to the sell side.

bearish

Here are this week’s results:

III. Stocklabs ACADEMY

The calendar, the moon, the cycles and the seasons

Bunker buster came and went. We don’t have that signal to lean on next week if sellers start accelerating this thing to the downside.

If sellers do accelerate then we may start to see panic hit the tape for the first time since this correction began.

We have Berkshire reporting early Monday. I expect that report to set the mood early on.

We are one week into a 12-month oversold cycle and (not that I will track it but) we had an uncommon ping on the 10-year oversold algo back on Tuesday. SPY is lower since both signals went live. Statistically, we are quite over due for a rally.

The FOMC meeting Wednesday afternoon is a live meeting, with CME fed fund futures pointing to a 97.1% chance of a 25 basis point hike to the benchmark borrowing rate. By late Wednesday afternoon we ought to have a clear idea of how investors feel about this.

Then Friday we have sort of a river card with non-farm payroll.

We are coming into a new calendar month. This first week means fresh capital flowing in from the contributions of millions of w-2 employees nationwide whose retirement is pegged to the outcome of the S&P 500.

We had a new moon yesterday and that rock keeps growing right up into the May 16^th Flower Moon.

Spring is here for real in the north and people are acting wild, propelled into action by their hormones and nature’s signals.

The cycles are all lined up — we’re due for a bounce but if sellers take the initiative we could see panic. I have a difficult time forming bias with this many factors in play. Just planning to take the week one day/event at a time.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

We may see some follow-through selling early next week, but watch for Berkshire Hathaway earnings out early Monday to perhaps instill some confidence in the tape. Then watch for third reaction to the Wednesday afternoon FOMC announcement to dictate direction into the second half of the week. Then non-farm payroll data early Friday could serve to accelerate the prevailing direction into the weekend.

Bias Book:

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

Here are last week’s bias trade results:

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

Really spending lots of time on the low-edge of balance

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports still appear to be in balance.

See below:

Semiconductors are sort of re-imagined this week, under the notion that we’ve been in discovery down since the start of the year and what that might mean in terms of rotations. There is still room for semiconductors to hold range and probe back higher, but the longer price lingers down here, the more likely we see another discovery down move.

Ether sellers managed to take back the 61.8% Fibonacci retracement of that leg up we’ve been monitoring. The chart is starting to look less like discovery up, more like balance.

V. INDEX MODEL

Bias model is neutral after going Bunker Buster last week after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

IndexModel has been firing off lots of signals and doing a decent job navigating this tape. This week’s data sort of rhymed with December 16^th 2018. Back then we Bunker Bustered, then popped a bit, then the bottom fell out of the market. But eventually the uptrend resumed. Not sure if that is what happens next, just an observation from the data.

We’ve had three Bunker Busters in recent history, last week’s, another one fourteen reports back. And a third twenty-two reports back. The Bunker Buster before these recent three was sixty weeks ago.

Here is the current spread:

VI. 12-month Technical Oversold

On Friday, April 22^nd Stocklabs signaled hybrid oversold on the 12-month algo. This is a 10-day bullish cycle that runs through Friday, May 5^th. Here is the performance of each major index so far:

VII. QUOTE OF THE WEEK:

“The height of cultivation runs to simplicity.” – Bruce Lee

Trade simple

Comments »

Walked around Anned Arbored yesterday wearing a Stocktwits cap and it sparked a few conversations about the markets. Interesting discord with intelligent youths curious about the state of this leaky old ship.

Ann Arbor on the first warm Saturday in April, after the Friday before featured 35 degree overcast, was a vibe.

Sometimes, when you’re so deeply emerged in a dystopian hellscape like post-industrial Detroit you forget there are people who live on nice hills nearby clean rivers they can swim in whilst academic types develop their intellect at an institution of learning that keeps the barbarians at bay.

I like both settings. I feel like a tomcat with total freedom inside Detroit. In Ann Arbor, I am a student. An observer and sponge.

The whole town is like a giant Abercrombie and Fitch commercial lolz. Homos.

Folks are freaked out. They’ve been averaging into names like Nvidia that they assumed with sound money. I’m telling you—the whole crypto/nft movement really skewed the younger generations idea on risk. They look at individual tickers like they’re t-bills. Set and forget.

Whatever and moving on.

We are bunker buster for the third time in recent history. Either the whole shit house is about to go up in flames or we’ll look back on these days come the FOURTH OF JU-LY and be like, “Look at that obvious move off the lows.”

I plan to average into the great next week. Perhaps earnings will help create better entry points. I normally buy a little before and after earnings, to average my price between the binary moment.

Thus we ought to be hella aware of the fact that some of the greatest investments in the world are set to report earnings next week.

I shall plan my buys accordingly.

Okay for now mfs. Godspeed and trade them well.

Raul Santos, April 24th, 2022

And now the 383rd edition of Strategy Session.

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Stocklabs Strategy Session: 04/25/22 – 04/29/22

I. Executive Summary

Raul’s bias score 1.90, STRONG BEAR*. Sellers continue the pressure the tape early in the week. At some point a sharp, excess low forms and the auction reverses higher.

Big Tech earnings on the docket: Microsoft and Alphabet (Google) Tuesday after the bell. Meta (Facebook) Wednesday after the bell. Apple and Amazon Thursday after the bell.

*Bunker Buster triggered, see Section V.

II. RECAP OF THE ACTION

Strength through early Thursday. Heavy selling Thursday morning through Friday to effectively erase the week’s gains.

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

Rotational Report:

Fifth week of bearish rotations. Slight bullish divergence from Staples.

bearish

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

Concentrated Money Flows:

Bulls took back control of money flows six weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then three weeks ago sellers negated that control.

Last week’s money flows were again sellers dominated, however a few interesting cyclical industries managed to populate the positive side of the ledger. Transports and Lumber.

slightly bearish

Here are this week’s results:

III. Stocklabs ACADEMY

Signals sort of lined up for a low to form

We have a bullish 12-month oversold cycle as of Friday and it will run into May.

We also have Bunker Buster. The third in recent history. Either the whole house is about to go up in flames, or this one could mark the low as we head into summer.

I have not actively traded futures this year. I have been rebuilding my emotional confidence and putting my affairs in order. Things have to be immaculate for me to make 30-40 trades in the span of a few hours.

And I just haven’t been there mentally.

Regardless, even if I were day trading, I would not be day trading the upcoming week. The Bunker Buster has been a difficult signal for me to trade historically.

Sometimes it seems like the low is in, then we keep plunging lower.

Other times the low prints Monday morning and I’m sitting there, fighting the tapes up move, shorting, until I finally hit my weekly stop.

Nope.

I have found Bunker Buster weeks are the best time to audit my long-term book and decide which companies I will still be holding stock in ten years from now. Then I add some fresh capital to those names.

Dollar cost averaging into my favorite names and waiting for prevailing conditions to return.

Sticking to the process has kept me in this game for over a decade. This research. Morning reports. Dollar cost averaging when indexmodel goes Bunker Buster.

No sense in changing things now.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Sellers continue the pressure the tape early in the week. At some point a sharp, excess low forms and the auction reverses higher.

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]:

Still on the edge

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports saw a bit of gains last week. They are still on the edge of range low, but looking a bit stronger than semiconductors. Primary expectation is for range low to hold in the upcoming week.

See below:

Semiconductors look really iffy. They are coming into the week with sellers in the driver’s seat, pressing out of range. This chart is likely to snap back up into range at some point next week. But if it doesn’t the entire secular bull market comes into question.

Ether still looks slightly healthier than the above two contextual charts. Interesting bullish divergence from an extremely volatile risk asset.

V. INDEX MODEL

Bias model is Bunker Buster after three consecutive rose colored sunglasses bearish signals after two consecutive weeks of extreme RCS bullishness.

Bunker Buster calls for an acceleration to the downside that eventually forms a sharp, excess low that holds and can be leaned upon by bulls going forward.

We were Bunker Buster thirteen reports back. This was the second Bunker Buster in recent history, with the previous one being twenty-one reports back. The Bunker Buster before these recent two was fifty-nine weeks ago.

Third time is the charm?

Here is the current spread:

VI. 12-month Technical Oversold

On Friday, April 22^nd Stocklabs signaled hybrid oversold on the 12-month algo. This is a 10-day bullish cycle that runs through Friday, May 5^th.

VII. QUOTE OF THE WEEK:

“If I am not for myself who will be for me? If I am only for myself, who am I?” – Hillel

Trade simple, don’t be selfish

Comments »

Signals are all jumbled up heading into next week. I am not feeling inclined to take on risk in either direction.

Long-term book will remain untouched. Our Dear Leader Elon will keep fighting the good fight on our behalf, for better-or-worse.

I need to turn my data back on. Story of 2022. But I’ve been taking stock of my emotional state and just haven’t felt mentally prepared to step back in the arena. I’m like Cougar or something. I’m on week six of weight training after abandoning my muscles at the start of the pandemic. Those first few weeks activating major muscle groups releases tons of hormones and turns me into an animal.

Things are starting to stabilize.

I know better than to practice my craft when my minds off. Blown up way too many accounts that way. I’m old now. Grey whiskers began to form on my left cheek this month. There is no need to accelerate that transition via shoddy impulse control in the futures arena.

Not sure why. But I cannot seem to focus. Perhaps I’ve been in the fish tank way too long and the water is so cloudy but I don’t even know it.

Charts looks bearish. Semiconductors and transports are both lingering on range low for longer than any permabull ought to feel comfortable about.

Crypto charts look somewhat more bullish.

Stocklabs is bullish.

Sometimes when the charts look their most bleak, you just have to grab your sledge hammer and mash some buy orders in. Swings often look so obvious after-the-fact.

Wish I had my heckin’ market profile charts. Fuck.

Happy Easter.

Raul Santos, April 17th 2022

And now the 382nd edition of Strategy Session.

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Stocklabs Strategy Session: 04/18/22 – 04/22/22

I. Executive Summary

Raul’s bias score 2.98, neutral*. Sellers put pressure on the tape through Wednesday. Then look for earnings out of Tesla (Wednesday, after-market-close) to either accelerate the selling or pivot price higher.

*Rose Colored Sunglasses [RCS] bearish bias triggered, see Section V.

II. RECAP OF THE ACTION

Downward pressure into Monday morning and throughout Monday. Then choppy for the rest of the week with the NASDAQ probing its lows into the end of the short week while Dow and Russell showed some divergent strength.

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

Rotational Report:

Fourth week of bearish rotations. Material and Energy positive along with Staples.

bearish

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

Concentrated Money Flows:

Bulls took back control of money flows five weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But then two weeks ago sellers negated that control.

Last week’s rotations were more balanced, but slightly skewed negatively.

slightly bearish

Here are this week’s results:

III. Stocklabs ACADEMY

Signals once again crossed

Indexmodel is bearish heading into the second-to-last week of April. Stocklabs is halfway through a bullish cycle that runs through to end-of-day Monday, April 25^th. The S&P 500 is down -3% on the month and the NASDAQ is down -6.6%, not adhering to past bullish seasonality statistics.

Do we snap back higher into month-end or does the selling continue. With the statistics all jumbled up like this, I feel no urgency to take risk in either direction.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Sellers put pressure on the tape through Wednesday. Then look for earnings out of Tesla (Wednesday, after-market-close) to either accelerate the selling or pivot price higher.

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]:

Right on the edge

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports are at risk of losing intermediate-term range. The way price is lingering on the lower bracket increases the likelihood of a probe lower.

See below:

Semiconductors same story, lingering on the low, could break down.

Ether looks less bearish than the other two charts. Had a big rotation higher and is still sort of retracing the move. Could be in discovery up or balance but certainly not discovery down. Yet.

V. INDEX MODEL

Bias model is rose colored sunglasses bearish for a third consecutive week after two consecutive weeks of extreme RCS bullishness. This is a bearish signal that expects sellers to control the tape for much of the week.

We were Bunker Buster twelve reports back. This is the second Bunker Buster in recent history, with the previous one being twenty reports back. The Bunker Buster before these recent two was fifty-eight weeks ago.

Rose Colored Sunglasses calls sellers to pressure the tape lower throughout much of the week.

Here is the current spread:

VI. 12-month Technical Oversold

On Friday, April 15^th Stocklabs signaled technical oversold on the 12-month algo. This is a 10-day bullish cycle that runs through Monday, April 25^th. Here is the performance of each major index so far:

VII. QUOTE OF THE WEEK:

“It is not enough to have great qualities; we should also have the management of them.” – La Rouchefoucauld

Trade simple, reign in your impulses

Comments »

Not sure what to say. I’ve been having a heck of a time keeping my impulses in check. There are bunnies everywhere and pregnant mommas looking all delicious. I need to focus.

Last week I flipped bullish too soon and took some heat.

Elon joining the board at Twitter is good news for humanity. The top dog at New York Times telling his wordcels to limit their Twitter use is like kicking the tide. Won’t change a thing.

The days of centralized information are iffy. As are fiat currencies. As is life, if I may be so boldt.

But there is hope. There are giant giga factories pumping out fancy cars everyone wants.

There are signs of life from the frozen soils up here in the murder mitten.

It looks like we might just make it.

But first we have to wade through bank earnings next week.

Then comes the big miracle and who knows, maybe the goblins will go back in their caves and the futurists will regain control.

It seems like we’re right on the brink of busting through the fear and uncertainty.

Don’t fight the fed. Sure. But there are fine equities out there that anyone with a decent grasp of what is to come will want to own.

GOOGLE. TESLA. TWITTER. And so on.

Bearish into Monday. Then CPI. Then we don’t know.

Okay for now,

Raul Santos, April 10th 2022

And now the 381st edition of Strategy Session. Enjoy.

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Stocklabs Strategy Session: 04/11/22 – 04/15/22

I. Executive Summary

Raul’s bias score 2.93, neutral*. Sellers continue to pressure the tape lower Monday. Then watch for CPI data out Tuesday morning to either accelerate the selling or reverse the tape higher. Thursday morning several major banks along with Taiwan semiconductors are set to report earnings and could increase volatility.

U.S. markets are closed Friday in observation of Good Friday.

*Rose Colored Sunglasses [RCS] bearish bias triggered, see Section V.

II. RECAP OF THE ACTION

Rally Monday. Erased Tuesday. Strong continuation selling Wednesday followed by chop into the weekend. Tech-heavy NASDAQ divergent weakness into the weekly close.

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

Rotational Report:

Third consecutive week of bleak rotations. Utilities and Staples strong suggests investors remain risk averse. Energy and Healthcare did okay.

After three weeks in a row of bearish rotations one begins to wonder if a strong set of rotations is lurking on the horizon.

slightly bearish

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

Concentrated Money Flows:

Bulls took back control of money flows four weeks back after sixteen weeks dominated by sellers, dating back to mid-November.

But last week sellers negated that control. Bulls need to produce something major in the holiday-shortened week, otherwise this indicator is back to being bearish.

bearish

Here are this week’s results:

III. Stocklabs ACADEMY

Pressing any bets in this market is risky

While most signals point bearish heading into next week. Bears have already covered decent ground. Markets do not seem to be rewarding pressing bets in either direction.  With lots of economic data and earnings on the slate for next week, and the upcoming holiday, while indicators are pinned bearish I am hesitant to press shorts much longer. Perhaps through Monday afternoon at most.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Sellers continue to pressure the tape lower Monday. Then watch for CPI data out Tuesday morning to either accelerate the selling or reverse the tape higher. Thursday morning several major banks along with Taiwan semiconductors are set to report earnings and could increase volatility.

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]:

Transports on the verge of breakdown

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 in balance, the more order flow energy to push the discovery phase.

Market are most often in balance.

Every week this newsletter uses auction theory to monitor three instruments, the Nasdaq Transportation Index, PHLX Semiconductor Index and ethereum. Readers are encouraged to apply these techniques to all markets.

Transports appear to be down below their well-established range. Often times just when these balances seem poised to break, price snaps back in the other direction. It is a challenging spot to have much conviction. However, the behavior of this contextual chart ought to give us some clarity on what we see next week in the major indices.

See below:

Semiconductors lost the pivot and accelerated lower, but still appear to be in balance.

Ether still appears to be in a small discovery up phase within a higher time frame balance.

V. INDEX MODEL

Bias model is rose colored sunglasses bearish for a second consecutive week after two consecutive weeks of extreme RCS bullishness. This is a bearish signal that expects sellers to control the tape for much of the week.

We were Bunker Buster eleven reports back. This is the second Bunker Buster in recent history, with the previous one being nineteen reports back. The Bunker Buster before these recent two was fifty-seven weeks ago.

Rose Colored Sunglasses calls sellers to pressure the tape lower throughout much of the week.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“You can’t really be strong until you see a funny side to things.” – Ken Kesey

Trade simple, enjoy the process

Comments »