Wed Jan 10, 2018 9:17am ESTComments Off on Futures lower overnight in active trade, here is the Wednesday NASDAQ trading plan
NASDAQ futures are coming into Wednesday gap down after an overnight session featuring elevated range and volume. Price worked lower overnight before eventually finding balance halfway down into last Friday’s double distribution trend. At 7am MBA mortgage applications came out much stronger than last week.
Also on the economic calendar today we have crude oil inventories at 10:30am and a 10-year note auction at 1pm.
Yesterday we printed a normal variation up. The day began with a gap up which sellers drove down into at the open. Responsive buyers stepped in around the Monday midpoint and we spent the rest of the morning and lunch hour working higher, eventually taking out IB high briefly before drifting back down to the midpoint to end the day.
Heading into today my primary expectation is for buyers to work into the overnight inventory and test re-entry into the Tuesday range 6667.25. Sellers defend here and we go down to take out overnight low 6640.50. From here we continue lower, down to 6622.75 before two way trade ensues.
Hypo 2 buyers reclaim 6667.25 and work up to 6675.50 before two way trade ensues.
Hypo 3 stronger buyers sustain trade above 6675.50 and go up to take out overnight high 6692. Look for sellers at 6694 and two way trade to ensue.
Tue Jan 9, 2018 9:17am ESTComments Off on Record NASDAQ highs, here’s how to trade them
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume. Price worked higher overnight after spending most of the evening balanced. As we approach cash open price is up above the Monday high.
On the economic calendar today we have JOLTS job openings at 10am, a 4-week T-bill auction at 11:30am, and a 3-year Note auction at 1pm.
Yesterday we printed a double distribution trend up. Similar to last Friday. But with less upside velocity. The day began with a gap down that buyers quickly resolved. Then after some two way action price took out overnight high. WE spent the rest of the day consolidating near the highs.
Heading into today my primary expectation is for buyers to gap-and-go higher, tradign up to 6725.25 before two way trade enuses.
Hypo 2 sellers attempt a move back down into the MOnday range 6690.75. Buyers defend the attempt and we begin working higher. Upside target is 6725.25.
Hypo 3 sellers regain Monday range and trade us down to 6655 before two way trade ensues.
Hypo 4 buyers sustain trade above 6725.25 setting up a trend day.
Coming into the week with a bullish bias played a big part in Monday trade. Monday started out with a small gap down. 7 NASDAQS available. Inside Friday range. Inside upper quadrant from Friday’s double distribution trend up. The overnight high was another 13 points up. Looking for 20, risking 10. Drop dead stop at the overnight low.
Risking 1 to make 2. All day. Hell I’d risk 1 to make 1.25 with a directional bias and layer-upon-layer of auction theory support. I will wait weeks for these conditions. Fasting and waiting. Polishing the robots and reading old books.
Then all at once. Plugging gaps and sending runners for the highs. Or the lows. No allegiance to the bulls. Only the robots. I am their executor.
Anyhow, bitcoin futures are different natural market.
I have no statistics. I lack the reams of raw CME data needed to parse and model upon. I have no internals like TICK or NET ISSUES.
All we have is auction theory. So here it goes:
2-3 day trend: 3
2-3 week trend: 2
strongest volume: 2
nearby magnets: 3
Excess hi/low: 3.5
Score: 3 neutral
No short term directional bias.
What has happened so far?
Bitcoin futures were higher during the holiday shortened first week of 2018. After consolidating for most of the week, bitcoin came into Friday with a gap up and trend higher. The market continued to test higher into the weekend.
Monday it opened gap down, down below the prior consolidation area, potentially trapping supply above. The day began with a drive lower which revealed a strong responsive bid which resulted in a sharp excess low being formed. Price has traded in the first hour’s range since.
What is likely to happen next?
Primary hypothesis is for sellers to defend an attempt back into the prior consolidation area ~14,895 setting up a move lower.
Look:
And with all that in mind, I do not carry enough conviction to participate in the short term auctions for bitcoin. More information is needed. I will, however, continue to wait before adding to my long-term BTC reserve. I want to see how this overplay for the underlay resolves which is, as always, TBD.
Bias elevated my game. It would behoove you to develop a habit of forming your own bias. Maybe you pluck a few arrows from my quiver. Hopefully you craft some of your own. Then you will better understand the nuance of it all. The in-between. The raw materials. Pure, unadulterated data.
Mon Jan 8, 2018 9:19am ESTComments Off on (Updated) NASDAQ trading levels and Monday plan
NASDAQ futures are coming into Monday gap down after an overnight session featuring normal range and volume. Price held inside the upper quadrant of the Friday range.
The economic calendar is light this week. Today we have a 3- and 6-month T-bill auction at 11:30am then Consumer Credit at 3pm.
Last week was a holiday shortened week. The markets were closed Monday in observation of New Year’s day. The rest of the week was spent trend up, with the NASDAQ leading the way. The last week performance of each major US index is shown below:
On Friday the NASDAQ printed a double distribution trend up. The day began with a small gap up. Sellers were unable to regain the Thursday range and we spent the rest of the morning slowly trending higher. Then, after a sideways lull through most of the afternoon, initiative buyers stepped in and rallied the market into the weekend.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6668.25. From here we continue higher, up through overnight high 6681.25. Open air. Look for sellers ahead of 6725.25 and two way trade to ensue.
Hypo 2 sellers press of the open, trade us down through overnight low 6653.25. Look for buyers down at 6622.75 and two way trade to ensue.
Hypo 3 stronger sellers trade us down to the open gap at 6604 before two way trade ensues.
I am refreshed. From what I hear, last week was hectic. Some big memes came out. Politics were distracting, and the east coast was pounded with snow and ice and everything nice. Week 1 is often lively. Plans are put into action. The schemers go live with their latest creation. Volumes of new information come rushing into the world. It can blow you right off your feet.
That is why I took to the mountains. I drove to the nearest national park and spent all week observing the effect cold is having on the various inhabitants of the Great Smoky Mountains.
In chess the first few moves are called opening play. I absorbed the opening play of my competition from high ground. From this alpha position everything seemed far less serious. Then my attention turned to the rare ice formations along the waterfalls and rivers. Fascinating. Off in the distance, the sound of a woodpecker plugging away on some tree. It brought my attention entirely to listening. To tracking.
Then, I returned to Mothership and began twisting dials and calibrating the sensors. The system is humming along smooth. Some big changes are being detected. Using only this data, along with a clean mental slate, I am fully equipped to declare my stock market bias for the upcoming week:
Really.freaking.bullish.
The robots think we head higher. And the robots think we keep going higher for two weeks.
Observation is important. It is what we do as humans to survive. Aristotelian observation nvolves labeling. It has limits, but if regularly audit your labeling mechanism to clear our any emotional bias, it is a useful way of accelerating your brains ability to parse through new information.
Perception is a lens. We use two lenses to observe the market—auction theory and statistical analysis. Both are far less likely to distort reality than media dependency or even technical analysis. Both lenses can react to news, surprises, human mania, or any other external influence. They are the foundation stones that we continue to build upon.
Look, this tweet was designed to help clarify the difference between observation and perception:
Observation vs. perception feat. frozen waterfall:
This place looks frozen. What a lovely place to be.
The water is crystal clear and cold. It is safe to drink and delicious.
My goal in 2018, with all my content, is to make it meaningful. I do not want to waste your time. If I can inspire you to have a thought that progresses how you approach your trading, then well…then what I am doing is working.
Trading is constantly evolving and if you are a business owner, then you know that every industry behaves this way. And change will continue to be a powerful force. Especially as more and more AI is used to augment our realities. This is one of my core investment themes of 2018. You can read more about it by clicking here. These developments will only accelerate the rate of change. We need to stay sharp, as humans, if we are to continue existing.
Teamwork is our dominant skill against other apex predators. Without it we would still be relegated to somewhere in the middle of the food chain. How we choose to augment our existence with AI will be the sapiens next leap ahead in domination, for better or worse.
Models are bullish lads. Therefore we will press hard into this extended market, milking this stretched out rally for everything it has and MOAR.
Exodus members, the 164th edition of Strategy Session is live. Go see exactly what has us so bullish heading into the upcoming week, and the key context to watch for confirmation.
One of the big projects of 2017 was designing a quantitative method of using our analytics software, Exodus Market Intelligence, to beat the stock market. It began in March and by October 1st three of the legs of the portfolio were built and invested into use Motif Investing (no affiliation). Here are the returns of each leg so far verse the S&P 500:
At market open tomorrow, I will build the final leg of this quant portfolio and buy the following stocks. They will be held for 12 months:
These stocks were chosen during a YouTube live broadcast on the iBankCoin YouTube account. I am like a real life YouTuber. Here is the recording:
STILL HERE? Good stuff. You may be a bit of a masochist. Totally fine. Here is a bit more information on the process, which I am copy/pasting from an earlier post:
This is a very lazy approach. There’s little need to babysit these books. An hour is spent at the end of each quarter, parsing data, running the Exodus system, then making a few clicks in Motif.
Here’s how it all works. At end of Q1, a 3-month top-down sector analysis is performed. At the end of Q2, a 6-month. Q3, a 9-month. And you guessed it, at the end of Q4 a 12 month look back.
Each book is a 12-month hold. Each book can hold a position held in another of the books, meaning certain stocks can have out sized positions. This means greater micro risk—but also potential reward.
If the systems keep flagging a stock, like they are IMAX (which is getting slaughtered), then it will be bought quarterly and without second thought.
It is nice to not think about investing. Humans tend to get in the way. Robots are much better investors, advisors, and friends.
Loyal
This quarterly process jives well with my inner accountant. Every quarter I make a contribution to my investments, and while doing so I re-balance one of my books. This saves on overall expenses and lets me do some simple financial planning.
Do you love this approach? Let me know in the comments below. If you have any questions, you can hit me up on Twitter @IndexModel or leave them in the comments below. If you think someone else could benefit from this type of investment approach, it would be really cool of you to share this post!
We are taking a quantitative approach to stock picking. This effectively removes the emotion and allows us to focus our energy and time on other industrial pursuits. Whether it actually works out is, as always, TBD.
A lapse in consistency last week. I failed to update the bias model and produce an Exodus Strategy Session. It was the first Sunday in 160 weeks that was missed. But it is important to nip this error in the bud and not become lazy with my analysis. Consistency was key to the success experienced this year, and I expect it to be how I continue to develop as a trader in 2018. The model flagged bearish last Sunday, 12/24.
I could have been in a solid position to extract several NASDAQ points off the exchange. I cannot stand missed opportunity, when I had an edge against the competition.
Tech took a hit last week. There is a significant nuance in place right now in the tech sector. Apple recently printed a failed auction. Despite being wholly distracted by the holidays, I made note of this event on my Twitter account:
Here is the failed auction I am referring to. This is a bearish occurrence. The signal is in place until Apple goes up and takes out prior highs:
Primary expectation is for Apple to trade down to about $165 then find support at this prior area of resistance. This is likely to continue to pressure the entire tech sector, and therefore the NASDAQ.
You think these failed auctions are just technical analysis guff that does not matter? You think that pal? Do you? Look at what Tesla investors have been dealing with since the September failed auction we noted.
I float around my house all day in a heavy robe, burning thickets of sage, laughing as these brilliant internet people come up with 10,000 reasons why Tesla stock is not going up.
Imagine if more people could observe assets through the lens of an auction instead of their own biases…what a world that might be.
Moving on.
The best performing sector last week was Utilities which hints at risk aversion ticking higher.
The model flagged neutral heading into the upcoming week, heading into the first trading week of 2018. A four business day week. We are taking Monday off to observe New Year’s day. However, come Tuesday, droves of new year new you people will be back to work, all extra on their latest money making scheme. Which is fine. Hopefully it works out well for them and they find satisfaction in 2018. I am only noting that the first week of the year often presents more opportunities to trade.
The model does not give us an edge, therefore the plan is to scalp in either direction. No runner positions will be held in anticipation of the higher time frame stepping in and pushing.
These little nuances, and a few others are presented in the 163rd Strategy Session, which is now live inside Exodus. Be sure to check it out.
In summary, the failed auction in Apple and last week’s sector rotations are slight reasons to be bearish heading into the first week of 2018. But the model offers no directional guidance. Therefore we will focus on trading our price levels and taking profits when they become available. Aka business as usual at the House of Raul.
It has been one hell of a year. 12 out of 12 months saw the benchmark S&P 500 index higher. That has never happened before. Ever. 12 wins for America.
Tesla performed exceptional in 2017, returning about 46% on the year. The company is pressing hard into the third ring of production hell and amassing more haters than ever. Despite leading a car revolution, they are criticized for their cash flows. It is like people expect it to be a quick accomplishment, pressing into an industry heavily insulated against new competitors or change.
The company, which is mankind’s last hope at reversing the destructive path humans have taken, is expected to announce its fourth-quarter delivery and production figures next week. Right at the beginning of 2018. We are likely to see another miss for the Model 3. Which is fine. Investors will grant them immunity for these next few quarters. What other choice do they have? Invest in some other world changing ideology?
The options are scarce.
There is bitcoin. If you do not hold all the bitcoins (core, cash, gold) some etherium and litecoin, then you are not participating in the liberation of society from the caprices of our central banking cartel. Unlike fiat currency, these crypto dollars cannot simply be printed on a whim to pay off any old fiat debts. Bitcoin is a libertarian dream. As such, you need to come correct. And if bandits steal your coin stash, well bitch, you have no government regulator to go running to, crying poo poo. You are a free man now. For better or worse.
Which touches upon my final topic–freedom. What I fight for on this blog and in the real world is “liberte de l’homme”. There are so many forces conspiring against a free mind. Societal pressures against free will. For years I operated from complete anonymity online. Not because I had to to avoid the SEC or some other regulator, but because back in 2006 when I started, it seemed like we were operating on meritocracy. It did not matter what family you came from or who educated you. If you were right, and kind, then good on you.
It has limits. Scaling the reach of your voice without showing your face is cumbersome, especially if you are not talking politics. In 2017 I stepped out of the shadows. I hope to do more of this in 2018. And I will continue to discuss the tactics and practices that have allowed me to escape a life of corporate fiefdom.
I have been watching the way bitcoin is auctioning on the CME, and I am starting to see something. It is behaving like an auction. Sometimes it is a maniacal auction, but it is an auction nonetheless. I may take up active trade of the instrument next year. This is, like most of my pursuits, #developing.
There will also be much travel. The more time I spend in the mountains, the more I realize I am better suited for nature. I am strong and love the cold. Out in the wild, my mind and body are much more synchronized. It is a much more pure existence.
What I need to figure out is how to extract more passive income. This means delving into more quantitative strategies. I still love the competition of active futures trading. It is another pure place for me. But the call of the wild has been increasing. I will never give up NASDAQ futures trading, especially given I have the best trading levels in the game.
I would like to wish you all a happy and prosperous 2018. I hope you achieve whatever it is you set out to do next year, and I hope you have your health and happiness and a sense of free spiritedness and an ease of being.
“The rare sight of sharks and crocodiles feasting on a huge humpback whale carcass has been recorded off Australia’s Kimberley coast. The spectacularly gruesome footage was recorded after a tourist cruise boat spotted a massive object floating in the sea north of the remote Montgomery Reef.”
ABC News, November 28th, 2017
NOTICE: There will be no discussion today on the RAUL blog regarding crypto currency. You are on your own. There is something much bigger and primal to discuss. And if you pay attention, it may just improve the way you attack the bitcoin market, or whatever.
You need think about how your brain thinks. This is important. One of our firmly held investment beliefs is that we are at the beginning of an era of economic prosperity the likes of which nearly every living human has never seen.
A revisiting of the roaring ’20s, but this time the driver is automation. Soon our daily lives will be augmented in a big way by AI. Listen, we are a point where computer power goes parabolic according to the rules established by Moore’s law.
While computers can handle massive feats of calculus like we see in the bitcoin-blockchain-mines, they still lack a human touch. As primitive as the biological bodies are that we inhabit here on earth, these decaying meat sacks are still impossible for us to build.
But my favorite theme going into 2018 is humanizing AI. When I was out in California I had a conversation with a girl who reached out to Match.com and demanded all the information they had gathered on her through her use of Tinder.
They sent her over 500 pages, many of which were downright humiliating. Think about what is going on when a person uses Tinder. You are seeking companionship, maybe even love. At a minimum you are curing boredom through snap judgement of other people.
In any case seeking companionship is a time of human vulnerability. Desperation even. There are all these societal pressures as you grow older, especially around the holidays. To pair off and procreate. It can drive weaker minds into a panic.
Humans fear being left behind. Abandoned. Excommunicated.
There are a few conversations every year that I walk away from firmly believing an opportunity exists. I have not had one since the CRISPR situation back in Q1.
Match Group is the next big one, ticker symbol MTCH aka Lil’ Mitch.
Investing and trading are one in the same for me. There are long periods of nothing. If you become bored you run the risk of finding ways to justify taking action. Action for the sake of activity.
This used to be a big problem for me. Then I started to study to crocodile. Why the crocodile? Because the species has been roaming the earth for hundreds of millions of years, unchanged by evolution, because it was properly equipped to survive on planet earth before any trace of humans even existed.
How does a crocodile behave? It waits. It uses very little energy, loafing around in a puddle of mud, not moving for days-weeks-YEARS. Then, all at once, with absolute tenacity and certainty it strikes.
And feasts.
A crocodile can go up to three years without eating. It can fast. It can wait.
So when Tinder parent Match.com hit my radar in late-November I pulled up a chart, much like I always do, and I decided where I am going to sit, like a floating log, waiting for my opportunity to strike. I decided to wait at $26, look:
But life does not always work out perfectly, and sometimes you have to inch a bit further ahead, especially when you have contextual reason to believe your meal may not fall right into your mouth. In the instance of MTCH, we had repeat bullish signals coming out of the Sunday quant. I knew I needed more exposure to stocks before the rising tide began lifting all boats.
So as I barrelled down the interstate, traversing from Jackson Hole-to-Detroit, I was having a running dialogue with my OG homie:
I am sharing all this behind the scenes information for the simple fact that I want you to see my thought process and how I act when it comes to investing. I do not seek your admiration. These are the ramblings of a salty old reptile. But if it helps a 21 year old version of me to be more PATIENT, then there is a better chance they will survive their learning years and become a successful steward of their own investment decisions.
That is all I really fight for out here on the blog, to liberate the small-to-medium sized investor from the fees and charlatans that exist in the world of finance.
It really is not that sexy. Being a crocodile is boring most of the time. But once you have sunk your teeth into a trade properly a few times, and you develop a taste for blood, it is hard to go back to living a normal life.
We are at the precipice of something huge here. Feeding massive data sets of raw, vulnerable interactions into a learning computer might be a way to make humans more comfortable inviting a servant robot into their home. Match group is sitting on an extremely valuable data set. They are also growing their revenues and earnings:
It would not surprise me to find out Google or Facebook or Amazon has Match Group on their radar. That Google executives are waiting in the fringes like crocodiles, wondering when they can sink their teeth into the glorious data set hiding behind these corporate walls.
Now that my feeler position is up +10% I have to grow some huevoes and average up.
Listen to me, I do not have enough time to formally address you, the finest people of the interwebs, about an important social development. However, it is vital that it be noted. Therefore I am panic typing this brief message to you before I return to my laboring.
My services are in extremely high demand this time of year and I have been pulled into a courting dance set to take place at an ungodly hour Thursday morning, and I have to be on my best behavior.
I may even shave this disgusting beard. Probably not though, it contains all my strength. These are old white men I must address through, and they often say my black beard makes me look like a terrorist.
Maybe that is a good thing, to scare them a little. I cannot call it.
MOVING ON>>>>
Are you freaking kidding me!? Nobody is talking about the 10 bagger Twitter shares threw down yesterday. Our new authoritarian regime took control of the free world by enraging the domestic herd. This vile movement, with all the trimmings of hate and fear, happened almost entirely on Twitter.
The world was taken over using Twitter, you do realize that yes?
Say what you will about @Jack or @Dick, these guys are in charge of the most important platform of words, which are like bullets in a machine gun, on the internet. And therefore @Jack and @Dick are in charge of the most important platform in the world. Because the internet is the most important thing in the world. A thought can reach billions and billions (extra Trump) of people in hours. The internet is like a printing press powered by nuclear bombs infused with alien blood.
So when this dog of a stock finally exits a looooong period of discouragement without the sounding of trumpets, fucking five alarms go off in my demented head.
Everyone is enamored with crypto investing. Their obsession with instant gratification has blinded them to the slower, more satisfying pleasure of long-term success. Deep, and slow, like Barry White.
As you probably do not recall, which is fine, I added to my Twitter investment a few weeks back when my mind was unhealthy and full of disgust for mankind:
Listen, I added to my Tesla investment yesterday. I started to write a piece about why I bought more Tesla, but the words that came out read like something from 4chan. I realized a disease state had taken hold inside my body, some kind of dark aberration. I had to draft the piece and go sit silently on a rug for two hours.
Then I came back to my computer and added to my Twitter investment also.
I spent the rest of the day reading old philosophy books and working in the gardens. Then I stayed up late to watch the Tesla semi event and crypto-fork.
I do apologize for becoming so vile in November. I had been in my fish tank too long and had no idea how murky the water was that I was swimming inside of.
But alas, when I added to my position it reduced my cost basis from 27 to 25, and do you know what that means?
By golly a Christmas Miracle. For the first time in a year and a half my massiveTwitter position is in the green.
And that is not important. What is important is that NOBODY IS TALKING ABOUT THE TWITTER RALLY.
