Mon Jun 5, 2017 8:54am ESTComments Off on Calm Bull: NASDAQ Begins The Week Slowly
NASDAQ futures are coming into Monday flat after an overnight session featuring normal range and volume. Price worked sideways, holding inside the upper quadrant of last Friday’s range.
The economic calendar features several low-impact events. At 10am we have ISM Service composite and Factory/Durable goods orders. At 11:30am we have a 3-month T-bill auction then at 1pm a 6-month T-bill auction.
Last week US markets worked higher. There were a few mornings early in the week that were dominated by sellers, but both times the sellers found a strong bid and the auction continued to move up. By the end of the week the rally accelerated. The performance of each major index is shown below:
On Friday the NASDAQ printed a trend day. Price worked higher all session long, probing record highs in a continuous, upward manner.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 5886. From here price continues higher, up through overnight high 5886.75 before two way trade ensues.
Hypo 2 strong buyers bid price up to 5934 before two way trade ensues.
Hypo 3 sellers press down through overnight low 5875. Look for buyers down at 5870 and two way trade to ensue.
Hypo 4 sellers sustain trade below 5870 triggering a liquidation down to 5838.
Being bearish heading into June was the first significant misstep generated by the IndexModel in a year. All other short biases have demonstrated utility. Last Sunday’s did not.
Excellent news friends! The model is bullish again. Nothing crazy. It is simply calling for a calm, summer-breeze drift, perhaps with a slight upward bias.
There was another terrorist attack in London. The poor town is being haunted by religious fanatics of the Muslim variety. The sad events triggered the freaked-out Christians who open their social media accounts and spew hatred.
Then it was my turn to be an idiot. One of my worst vices was activated, which is a mistake always, to turn on the anti-Christian rhetoric. Sadly, it is a favorite Sunday pastime.
Dumb.
Most of you are Christians. Which is fine. So far Christianity is the leading brain-virus in the world. It outpaces Islam, liberalism, even capitalism. Do any of these intangible systems care about their host, or do they only strive to exist as long as possible?
How can you be certain Christianity is winning? Look at a calendar. Ask a Chinese person what today’s date is. How do they tell you what year it is in India? Time begins for all when the Christian god was born on earth as Jesus.
Capitalism is in second place. They sold me on capitalism. I pray to Janet Yellen at least 4x/month and have built temples upon their indulgence slips aka the US dollar.
Maybe in 3rd or 4th is Muslims. I happen to live a few minutes from the largest Muslim population in the United States. I work with them regularly and have never encountered someone unsavory. They are faithful, and kind, and damn fine merchants. They love to haggle, and so do I. We find common ground in capitalism and building palaces.
MY FRIEND, THIS IS BEST PRICE. FOR YOU ONLY.
Last week, when our authoritarian leader ditched the Paris climate accord, I was sitting at my parent’s house feeling morose. Mom took a phone call. It was her aunt who was making her first call to share the bad news. Uncle Jim was dead.
My mom dove headfirst into Christian folklore, “he’s in a better place now,” emphatically she continued, “now Jimmy is in heaven with Steve and John and…” she listed a solid eight people.
“An angel took him by the hand and they flew up into the sky.”
When I heard this I had give a side-eye over to my old man to see his reaction. Being considerate of the moment, he only gave a small chuckle while rolling his eyes.
Listen, I get it. Especially for older people, these are comforting beliefs. And I am all about having a ceremony at death to help loved ones cope with the trauma. But death has never bothered me. It is as normal as birth or breathing or leafs falling off a tree in October.
From my perch, death is the trump card Christian charlatans use to hook you into their churches and get your money. Adam Ruins Everything threw the entire death industry under the bus one time:
If you believe Christians will remain in charge, go long $SCI and never sell. You can use the gains to fund your funeral.
As for yours truly, my will is already written. It upset my parents when I had it drafted before the tender age of thirty, but I had to make sure nobody wasted money. Ideally, they would just throw by body in a dumpster, but NO! I had to settle for a natural burial.
Natural burials have the added bonus of, if I somehow come back to life, giving me a fighting chance at digging myself out of the ground.
All this being said, I do see God all the time. Just last week I saw him in the breathtaking waters of Bruce Peninsula. During the winter I usually see him way up in the Rocky Mountains. But I will never step foot in a church unless it is out of respect for some other living human.
As for the markets, they proved my quant model wrong last week, but fortunately it is not a stubborn ideology—model flipped back to bullish on Sunday. Technically, had I paid better attention to Exodus, the model flipped on the close last Thursday.
Exodus members of all faiths and political belief, the 134th Edition of Strategy Session is live. May it serve you well.
You did everything right—designed a trade in advance, executed it live just like you planned—and still ended up losing. Taking a loss in trading is as normal as breathing. No method of trading will ever work 100% of the time. But sometimes being wrong sucks more than average, not because you ignored your risk and took a devastating loss. That is an entirely different error. But let’s say, for instance, your trade resulted in missing a huge opportunity in the opposite direction, and at the same time you feel depleted from too much techno music over Memorial Weekend PLUS your great-uncle dies.
So you’re a bit rattled. Life knocked you off your feet, and it is either get back up or lie on the rocks until flies start helping nature decompose your carcass.
Traders are some of the most durable business people ever. A few were kind enough to let me share their routines.
“After a tough and rough week or when I need to fully clear my mind…I like to hit Ancient Aire, [a] Russian bathhouse kind of place. Go by myself and vibe,” the certifiable wiseguy also added, “Same with hot yoga. While I hit the gym 5-6 times a week, the hot yoga is a completely different release.”
My routine is to clean. Not a normal cleaning, but cleaning ‘like I killed a guy’ which means eliminating all traces of bad ju-ju that could be lingering. Sometimes it means empty out the kitchen cabinets and reorganize them. Other times it is the garage, or a filing cabinet. It is a deep-dive clean, opening the proverbial can-of-worms, and returning the chosen area to a more sustainable baseline. A cleaning routine may be backed by neuroscience. Part of the book UCLA neuroscience researcher Alex Korb, PhD wrote back in 2015 called The Upward Spiral is regularly published as one of these ‘4 rituals that will make you…’ type-lists on the internet. One of the rituals revolves around asking, “What am I grateful for?”
What am I grateful for?
Yeah, gratitude is awesome… but does it really affect your brain at the biological level? Yup.
You know what the antidepressant Wellbutrin does? Boosts the neurotransmitter dopamine. So does gratitude.
Via The Upward Spiral:
The benefits of gratitude start with the dopamine system, because feeling grateful activates the brain stem region that produces dopamine. Additionally, gratitude toward others increases activity in social dopamine circuits, which makes social interactions more enjoyable…
Know what Prozac does? Boosts the neurotransmitter serotonin. So does gratitude.
Via The Upward Spiral:
One powerful effect of gratitude is that it can boost serotonin. Trying to think of things you are grateful for forces you to focus on the positive aspects of your life. This simple act increases serotonin production in the anterior cingulate cortex.
I know, sometimes life lands a really mean punch in the gut and it feels like there’s nothing to be grateful for. Guess what?
Doesn’t matter. You don’t have to find anything. It’s the searching that counts.
Via The Upward Spiral:
It’s not finding gratitude that matters most; it’s remembering to look in the first place. Remembering to be grateful is a form of emotional intelligence. One study found that it actually affected neuron density in both the ventromedial and lateral prefrontal cortex. These density changes suggest that as emotional intelligence increases, the neurons in these areas become more efficient. With higher emotional intelligence, it simply takes less effort to be grateful.
Doing a deep clean forces you to take inventory of everything you have. If you only possess items you truly love, then an organization routine is likely to result in you being grateful for what you have. By the time you put everything in place, gratitude is likely.
When it was clear the NASDAQ was trending higher Friday, I was feeling morose. Not upset, not sad or annoyed. I was 100% morose. Like if the guy in front of me did not let his foot off the brakes 2 seconds after the light turned green then I was on the horn and ramming my fist into radio. When you regularly take to the pen, to write, you are driven to find specific words to describe a scene or action or feeling. It turns out clearly defining your mental state is good neuroscience!
Label Negative Feelings
You feel awful. Okay, give that awfulness a name. Sad? Anxious? Angry?
Boom. It’s that simple. Sound stupid? Your noggin disagrees.
…in one fMRI study, appropriately titled “Putting Feelings into Words” participants viewed pictures of people with emotional facial expressions. Predictably, each participant’s amygdala activated to the emotions in the picture. But when they were asked to name the emotion, the ventrolateral prefrontal cortex activated and reduced the emotional amygdala reactivity. In other words, consciously recognizing the emotions reduced their impact.
Suppressing emotions doesn’t work and can backfire on you.
Ultimately, your job is to get back to work. When you do, it might make sense to start out with a smaller position size than you would normally trade. It is sort of like putting the training wheels back on while you rebuild your emotional confidence. You need to get back up to size as soon as possible, however, else you risk falling into a lazy state of staying in one place in life.
Static, bad. Growth, GOOD!
Having a routine ready for when you face defeat can keep you from making matters worse. The more times you reinforce the habit, the more likely it will become second nature. Even if you start your routine by ‘going through the motions’ it is likely to eventually appease the mind. Less time is spent being destructive.
As important as it is to have routines in place for big setbacks, the real challenge is having a routine you follow after a major victory. For the same, ego-driven issues we might experience in loss can sabotage us in moments of victory. Sometimes even worse.
Do you have a habit or routine that has served you well? Share it in the comments below and hit the tweet button below to share this breezy Saturday content with your people!
NASDASQ futures are coming into Friday with a strong gap up, at record highs, after an overnight session featuring normal range and volume. Price worked higher, unabashed, all night and morning long as investors looked forward to industries having free reign to do what they please with the world’s resources.
The model used by the team at iBankCoin labs issued a bearish outlook on Sunday, for the holiday shortened week, and was acted upon. Tuesday the good scientists sold a long-held position in $T and went long $SQQQ as a hedge. Both actions has been deemed not only wrong, but insolent by the final arbiter—natural market forces.
It is worth noting, however, that the short bias served us well intra-day. there were sustained periods of selling pressure, and a long battle controlled by sellers at the daily mid Wednesday, that allowed us to capitalize on our bearishness.
Overall, however, the week is being dominated by bulls.
The economic calendar is light into week’s end. We had Non-farm payroll data at 8:30am and it was mixed:
USA Unemployment Rate for May 4.30% vs 4.40% Est; Prior 4.40%
USA Nonfarm Payrolls for May 138.0K vs 185.0K Est; Prior 211.0K
The Baker Hughes rig count comes out at 1pm and is likely a non-event.
Yesterday we printed a normal variation up, but it resembled a neutral extreme up. This is when you knew the short bias was in serious jeopardy. Sellers were active in the morning but vanished before the first hour of trade concluded. The rest of the day was spent pressing higher slowly, then all at once after our authoritarian leader withdrew from the Paris accord.
Heading into today my primary expectation is for sellers to press into the overnight inventory and close the gap down to 5822 then continue lower, down through overnight low 5820.50. Look for buyers down at 5818.25 and two way trade to ensue.
Hypo 2 stronger sellers press down to 5810 before two way trade ensues.
Hypo 3 buyers work up through overnight high 5844.50 and continue exploring higher prices.
I will reserve taking any action to update my swing hedge (sell or add to $SQQQ) and aside from trading my very actionable hypothesis and market profile levels, will sit put until end-of-day. If at end of day the bulls continue to dominate the tape, it will be time to eat crow and adjust my book slightly.
The only commentary worth consuming after Trump withdrew America from the Paris climate accord comes from our true leader, and (hopefully) Savior, Hosanna in the Highest, Elon Musk.
First off, he left the President’s advising council without hesitation:
Am departing presidential councils. Climate change is real. Leaving Paris is not good for America or the world.
Next, our only True Leader tweeted out China’s end of the Paris Agreement, which calls for them to produce as much clean electricity in 2030 as USA does from all sources today:
Under Paris deal, China committed to produce as much clean electricity by 2030 as the US does from all sources today https://t.co/F8Ppr2o7Rl
So when people say China had an unfair advantage over America due to the Paris Agreement, you have a proper piece of ammunition for rebuttal.
These are the only key comments on our President’s decision. Facebook is pretty lit right now, with actual scientists saying this is a bad move while suburban housewives say it is good, but they are irrelevant.
Now onto observations. The NASDAQ loved the news, ripping about 20 handles higher. This appears to be a major win for the huge technology companies that make up the NASDAQ 100.
The only other observations I can offer, things I’ve seen with my own eyes that perhaps you haven’t, are from my recent walks through nature.
The Great Smokey Mountains National Park receives the highest sulfur and nitrogen deposits of any monitored national park. It falls onto the peaks of the mountains as acid rain and most of the peaks are dead, burned up from the acid. No surprise, there’s hardly any life in these parts of the park. Therefore the national park nearest to coal country is being decimated before our very eyes.
Next, on a Memorial Weekend drive up through Windsor, Ontario to Bruce Peninsula, I saw a country blanketed in solar arrays and wind turbines. While Alberta may be home to disgusting tar fields that resemble hell on earth, our good neighbors have put in massive clean energy systems. They are way ahead of us.
This is about all I can offer.
Going forward, all commentary coming from Elon Musk (all Praise and Glory to The Leader) will be considered valid, and any message about our planet coming from the White House will be greeted with skepticism and contempt.
Thu Jun 1, 2017 8:24am ESTComments Off on NASDAQ Futures Glide Gracefully into June; Here’s Your Thursday Trading Report
NASDAQ futures are coming into Thursday, June 1st flat after an overnight session featuring normal range and volume. Price worked sideways, trading inside the Wednesday range for the entire session. At 8:15am ADP Employment change came out way stronger than expected.
USA ADP Employment Change for May 253.0K vs 185.0K Est; Prior 177.0K
The economic is running piping hot.
Also on the economic calendar today we have Initial/Continuing jobless claims at 8:30am. However, investors are more likely to be focused on Friday’s Non-farm payroll data, if they’re focused on any economic data at all.
We also have ISM Manufacturing at 10am, then crude oil inventories at 11am.
Yesterday we printed the dreaded normal day where the first hour of trade is so dynamic that we never exceed it’s range. This happens about 5% of the time. Sellers drove lower off the open, agressively, then backed off as a bid appeared. We spent the rest of the day slowly working higher. The daily midpoint was a wall for several hours—a wall that was ultimately overtaken late in the day by a gregarious buying push.
Heading into today my primary expectation is for seller to work down through overnight low 5797.75 and trade down to 5793.50 before two way trade ensues.
Hypo 2 stronger sellers press down to 5775.75 before two way trade ensues.
Hypo 3 buyers work up through overnight high 5809 and continue making record highs. Look for sellers up at 5837.25.
The attention of investors has been hijacked by our authoritarian leader and the variousconspirators who seek to relivehim of his power. Then May comes along and we have to major new products go viral—a fidget spinner for the ADHD crowd and man Rompers. During all of this, the market has rallied nearly non-stop for 6 months. This cocktail of events likely contributed to the aloof nature of twitter people.
A poll of just over 50 people shows bulls and bears tied and more people overall who couldn’t care less about which way markets will head in the best month of the year. See below:
It almost feels like a dull market Perhaps tomorrow the bull will reassert itself and the first rough open in the last several weeks. However, at this time a poll of the people is of little help.
Here’s your monthly nudge to create your own quant investment model. Below you will see the 2-month performance of a basket of stocks chosen by Exodus algorithms:
Keep in mind, the 2-month performance is irreverent because no adjustments will be made until the end of Q1, 2018. So the positions will remain intact for the next 10 months.
This basket of 15 stocks only one piece of the model I am building, and live investing in, right before your very eyes.
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.
The plan is to execute for 120 months. For most of this duration, most of you will overlook me. Pass me over as irrelevant because it doesn’t engage you emotionally. Then, when you see the ridiculous gains achieved, you’ll have no choice but to be inspired to be a better you—a cyborg—part human, part robot, lording over the general population.
I shall make boring videos along the way, perhaps with a higher resolution camera on my face, so you can all bask in its beauty. I do these things, live, so hopefully you can liberate yourself from the expensive fees levied by advisors, brokers, and ETFs.
With any luck, some of you will manage to not blow up by the time you come to the good side. Then you can enjoy the hedonistic lifestyle you deserve.
For now, let it be known that the quant model has more than doubled the gains of the pathetic S&P 500 over the last two months.
NASDAQ futures are coming into Wednesday gap up after an overnight session featuring normal range and volume. Price worked higher overnight, achieving new record gains and sustaining the advance as we approach cash open. At 7am MBA Mortgage Applications came out worse than last week.
Also on the economic calendar today we have Chicago Purchasing Manager at 9:45am, Pending Home Sales at 10am, and the Fed’s Beige Book at 2pm.
Yesterday we printed a normal variation up. After beginning the holiday shortened week gap down buyers aggressively stepped in at the open and drove price higher. A bit later in the day buyers managed to push price range extension up, by two ticks, before settling into two-way trade.
Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5792 before two way trade ensues.
Hypo 2 buyers gap-and-go, trading up to 5837.25 before two way trade ensues.
Hypo 3 strong sellers press down through overnight low 5791.25 and trade down to 5777 before two way trade ensues.
NASDAQ futures are coming into Tuesday with a slight gap down after an overnight session featuring elevated range on normal volume. Price worked higher and achieved a new record high before slipping lower. Sellers were ultimately denied a chance to break down through last Friday’s low before a bid came in.
US Markets were closed Monday in observation of Memorial Day.
Economic data out early this morning was much stronger than expected. Personal Consumption Expenditures was out at 8:30am and the Case-Shiller Composite-20 at 9am. Both solid beats. The economy is running hot and consumption is faster than the world’s best analysts expected.
Also on the economic agenda today we have Consumer Confidence at 10am. Will it affirm the pre-market data, and be used to justify 3 rate hikes in 2017? Then, stay sharp, because at 11:30am the US Treasury is having a blow-out sale of short-term debt. All the auctions are listed below:
4-week, $45B
3-month, $39B
6-month, $33B
cash management bills, $25B
Last week we rallied. The move was primaraly driven by large growth plays in the technology sector. Towards the end of the week, the Russell 2000 and Dow Jones Industrial Average began to lag. The performance last week of each major US index can be seen below:
On Friday, The NASDAQ printed a normal variation up. A bid appeared soon after the open and closed the small overnight gap. Then, after a brief range extension in the morning two-way trade ensued. Price did not take out the Thursday high, instead printing an ‘inside day’.
Heading into today my primary expectation is for sellers to gap-and-go lower. Look for price to move down through overnight low 5778.25. Look for buyers just below, down at 5777 and two way trade to ensue.
Hypo 2 stronger sellers press down to 5748.25 before two way trade ensues.
Hypo 3 buyers work into the overnight inventory and close the gap up to 5792.25 then continue higher, up through overnight high 5797.25. Look for sellers up at 5800 and two way trade to ensue.
Hypo 4 strong buyers work up through 5800 and we rally up to 5837.25 before two way trade ensues.
