U.S. Markets Have A Scary Look To Them Heading into OPEX

Greetings and Hoppy Easter!

Despite today being a Christian holy day, and Christians so far being the winning religion in the world, and Christians saying to spend today eating buttered lambs and candied hams, it is with honor and humility that the good folks at iBankCoin laboratory took some time to work inside the Exodus furnace rooms and generate a Strategy Session report.  And by the looks of these stock markets, it appears it is good we updated the models.

There is some sketchiness going on right now, just in time for post tax-day option expiration.

It seems so obvious that it may be a double head fake, but the two main sub-indices we monitor every Sunday have very stereotypical topping patterns in place, see below:

Pair that with the behavior of our broad indices as we wrapped up the holiday shortened week, and you have what looks like, visually, a sellers’ market.

Then there’s this 7-week long rotation into risk aversion sectors, which is difficult to show you, so instead view the 1-month performance of each sector, as demonstrated by the SPDR Select sector ETFs:

Then add in the fact that many investors, high on the hog after nearly a year of rallying, may have underestimated their tax liabilities, and you have a recipe for raising cash.

Another caveat, and the article escapes us, but about 8 days back an article was published saying market volatility may be gone forever.

LOLz

Wish it could be queued up, but after a cursory search of the interwebs and our cluttered desks, alas it must be taken as hearsay only.

There are some other small quirks, nothing major, but relevant nonetheless that are covered in the 127th Edition of Exodus Strategy Session—quirks which pertain to the algorithms inside the software.  Members, be sure to check it out!

As for the rest of you, rest up, for tomorrow the dark hand of volatility may resurrect itself from the cave.

NASDAQ futures are heading into Thursday gap down after an overnight session featuring normal range and volume.  Price worked lower, down to a new low of week before stabilizing into two-way trade.  At 8:30am Initial/Continuing jobless claims data came out mixed.

Also on the economic docket today we have the preliminary April read of Confidence from the U. of Michigan at 10am, then the Baker Hughes rig count at 1pm.

Yesterday we formed a normal variation down.  Price opened gap down and buyers could not fill the overnight gap.  Instead we worked lower, slowly, eventually closing on the low-of-the-day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 5372.50.  From here buyers continue higher, up through 5382 before stalling around 5395.75 and two way trade ensues.

Hypo 2 stronger buyers work up to close the gap at 5402.75 before two way trade ensues.

Hypo 3 sellers press down through overnight low 5355.75 and push down to 5348 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

United airlines had to pull four paying customers off an airplane.  Was it dumb to let them board in the first place? Probably yes, as was busting a citizen’s jaw till he was leaking, as they say in urban centers.

There are people who think the old man should have just got off the plane.  Siding with the aggressors–whether airport police or gate goons–means you are insensitive or worse hateful.

LABELING!

Moving on…

The truth is life gets way harder then your flight plans being screwed over.  Some people are right on the edge when they travel.  If only there was an institution to blame…

We can agree most people are obsessed with what happened here, right?  It makes great viral news because travel stress is relatable.  So many things about traveling suck.  The lines, the smell, space allotted per human, dirty toilets, belligerent drunks and kids.  Relating to the struggle this man faced is so human of you.

But is what happened bad?  It depends on who you ask.  Airline jokes are the bread and butter of comedians.  Just thumb through your Instagram and  BEHOLD, JOKES:

Most of you probably have a group chat, yes?  Friends and such, YES YES!?  JOKES:

Go to your local comedy club this weekend.  You bet your ass there will be United Airline jokes.  The reckless behavior demonstrated by everyone on that plane is the type of fodder comedians hope for.

The quick thinkers at Southwest airlines actually tweaked their marketing, cashing in on a huge opportunity to target millennials.  MILLENNIALS, mind you, who love traveling more than owning possessions:

They say Cato ran his dead brother’s ashes through a sieve, looking for gold.  Perhaps there are some stoics on the branding team at $LUV, making delicious lemonade from their wounded brother’s ashes.

Are airport police going to suddenly increase their violence against flyers, nipping at their heels?  Corralling them like sheep? Doubtful.  There is/was little harm done to society by the event.

When you sum up the benefits (jokes, distraction from WW3, branding opportunity) and subtract out the consequences (bloodied jaw, bruised ego for the resist crowd) you see quite logically that the event was a success for humanity, overall.

In six months, the cell phone footage of a beta-male being preyed on by a team of alphas will cease to resonate in your mind.  There will be something new for you thumb suckers to be outraged about, or you will just be distracted by living your own life—an infinitely more rewarding task.

In the meantime, consider what sort of message you send by insulting and name calling the realists of the world.  It makes you the hater, bro.

So lets just leave people to their own mistakes, all of them.  Shaka

NASDAQ futures are coming into Wednesday with a slight gap down after an overnight session featuring normal range and volume.  Price held the Tuesday range on balanced trade.  At 7am MBA Mortgage applications were better than last week.

Also on the economic calendar today we have crude oil inventories at 10:30am, a 30-year bond auction at 1pm, and a Monthly Budget Statement at 2pm.

Yesterday we printed a normal variation down.  The day began gap down, a brief move higher closed the gap before sellers stepped in and drove the market lower, testing down into 3/27 prices, making a new low for April before recovering much of the move throughout the rest of the day.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap up to 5402.75.  From here the continue higher, up through overnight high 5412.75.  Look for sellers just above at 5415.25 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 5386.25.  Look for buyers down at 5374.50 and two way trade to ensue.

Hypo 3 stronger buyers press up to 5430.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday flat after an overnight session featuring normal range and volume.  Price held the Monday range overnight on balanced trade.

The economic calendar is extremely light today.  we have a 4-week T-bill auction at 11:30am and a 10-year Note auction at 1pm.  Fed’s ‘crazy-eyes’ Kashkari is doing a Q&A in the afternoon but investors aren’t likely to pay attention.

Yesterday we printed a neutral day.  Price opened with a slight gap up, proved into the conviction selling after last Wednesday’s Fed minutes, found sellers, reversed down through the entire range, going neutral.  Then it held last Friday’s low before stabilizing into two-way trade.

Heading into today my primary expectation is for sellers to push down through overnight low 5411.25 setting up a move to tag the 5400 century mark before two way trade ensues.

Hypo 2 stronger sellers work down to 5347 before two way trade ensues.

Hypo 3 buyers work up through overnight high 5429.25 and tag the Monday VPOC at 5432.50 before two way trade ensues.

Hypo 4 stronger buyers press up to 5461.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Janet Yellen came to the University of Michigan on Monday afternoon to have a nice chat with Susan Collins, the Dean of Public Policy at the school of Public Policy and Economics.  The first half hour was spent giving everyone a lesson on the purpose of the Fed, a rather remedial economics lesson, but a pleasure to hear live from the leader of the free world.

The setting was pleasant, as the two ladies sipped miniature bottles of water whist discussing the Fed’s success in navigating the financial crisis, the confidence attained by Fed Stress Tests of major banks, and how transparent and independent the Fed is today.

Then came the questions, heavily vetted.

First question was about what perspective all her jobs gave her.  She mentioned she’s gained a knack for digesting ‘anecdotal information’ which sounded much like the proverbial ‘context’ that we all work so hard to form around our trading and investing.  This was quite an arousing thought, that Yellen considers what some may consider non-data, less-than-objective information in her decision process.

Question two, should Fed meddle in, and/or coordinate, international policy?  She smacked this question to the ground calling it likely illegal.  Yellen also mentioned she talks like seven times a year with the other central bankers.  They talk shop and how they’re thinking about nudging the economy.

Question two also asked if emerging markets were at a disadvantage, being left on their own to form policy.  While this was somewhat talked around, the answer had the feel of, “obviously yes.”

Third question, a dumb question, “What is the role of money in inflation?” After rolling her eyes, Fed Yellen entertained the question, but reminded the person that inflation is driven by expected inflation, and the vicious price spiral higher it can create.  She talked all about how they just watch the unemployment rate and said history has proven her right, that money doesn’t matter.

Question 4, from twitter, has the effect of QE been under estimated?

Hard to know what the effect was, according to Yellen.  And despte it being hard to know, she is claiming a victory, a favorable impact, not to be exaggerated by any means, but a success no doubt.

Note, none of the ‘Top’ questions associated with the #FordSchoolYellen hashtag were addressed:

Question 5, addresses low labor-force participation rates, should it adjust how they measure full employment?

Hard to know how much of the decline might reflect voluntary retirement verses searching for long time then dropping out.  Some might reflect weak economy.

Writer’s note: SOME!?

Since labor force participation has flattened out, while the population ages, suggests to Yellen that they have drawn people into the market who were otherwise discouraged in recent history.

Last question, total puffer, how has being careful about what you say changed your life?  Yellen, looking up at the gold leaf ceiling, recants that she’s been in the game for a long time—watching what she says.  She also reiterated that she knows monetary policy better than any other piker out there.

Finally, Susan Collins asked for any last words of wisdom from the leader of the free world.  Yellen said you all should find something to do that you love and are interested in [as a career].  Her love is economics, it gets her out of bed.  Bless.her.heart.  Second, the career is the whole path, not just the last seat you hold.  Yellen loves and has loved every day of the hustle, even through it’s been in a public service role.  She also mentioned working with people you respect. And working with an organization that you feel makes a contribution to society.

There you have it, Fed Chair Yellen came of Ann Arbor, home of the bi-monthly Confidence reading watched around the world.  She taught the nice folks a bit about how the Fed works, took some vetted questions, then imparted some wisdom on life as a career woman.  Her only concern, it seems, is that pesky ‘Audit the Fed’ bill floating around, and how it is likely to jeopardize the Fed’ ability to maintain its independence from politics and short-sighted actions.

And much more of the same from today’s Fed.  Meaning tons of transparency, and saying the same few things over, and over, and over again until the slow learners at Wall Street fully comprehend them.  Quite an effective approach.

For recordings of Yellen dropping the mic, walking off the stage, and the crowd going wild, check my snaps.  Username: vCali

NASDAQ futures are coming into the new week flat after an overnight session featuring normal range and volume.  Price held the Friday range overnight on balanced trade.

The economic calendar is light this week.  For today, we have Labor Markets Conditions change at 10am, 3- and 6-month T-bill auctions at 11:30am, a 3-year Note auction at 1pm, and a 4pm Fed Chair Yellen is speaking in Ann Arbor, MI.

Last week we marked time, essentially, before rallying into the Wednesday FOMC minutes.  We then reversed, hard and lower after the minutes.  Then, despite a strong initial risk-off move following news of Tomahawk missiles being launched at Syria, we stabilized ahead of the Friday opening bell and continued marking time into the weekend.  Here is the last week performance of each major index:

On Friday the NASDAQ printed a normal variation up.  Sellers pushed early on, just below the Thursday low before discovering a responsive bid.  We then spent the rest of the day working higher, going range extension up before settling into two-way trade.

Heading into today my primary expectation is for a push up through overnight high 5433.75, which continues higher to 5461 before two way trade ensues.

Hypo 2 sellers press down through overnight low 5415.75 and tag the 5400 century mark before two way trade ensues.

Hypo 3 sellers press down to 5374.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Last week was eventful.  Wednesday minutes revealed Yellen’s Fed is about to start making some balance sheet moves.  It spooked people.  Or perhaps, just as the minutes came out, establishment investors got the nudge, the wink, that 58 tomahawk missiles were about to go off–a firework display of epic proportions, no doubt.  But was anyone there to see it?

The weather broke.  After heavy storms passed, clear skies emerged into Friday and the week ended in a carefree manner.

Inside Exodus, the first hybrid oversold signal of the year completed.  The predictive robots inside Exodus won again, BEHOLD:

If you read the Executive Summary inside the Strategy Session, you could have milked the signal a bit better.  We improvised on the final day of the signal and sold after the FOMC minutes, instead of waiting until the end-of-day.  After all, what good is a plan if you do not stick to it?  Last week’s plan:

All that being said, heading into the upcoming week there are no model-based, statistical means of having a directional bias.  There’s no saying where this market is headed, objectively, from a statistical foundation.

There are subtle nuances that may tip the market’s hand a day, or perhaps few hours, before the market even knows it is about to move.

One is the NASDAQ Transportation index.  Look at that coil.  If it breaks lower, caution…

There are other little clues being revealed by the computer brains inside Exodus.  So while a generation of Americans has resorted to praising a reptile, I will continue to ask for mercy from the robots inside our spaceship.

And from The Leader

Both of which aren’t providing much guidance into next week.  Perhaps it is a sign, to pursue other industrious endeavors next week?

Developing…

NASDAQ futures are coming into Friday gap down after an overnight session featuring elevated range and volume.  Price made a sharp move lower around 9:13pm after the U.S. military launched nearly 60 Tomahawk missiles against a Syrian air base.  The reaction pushed down to prices not seen since Tuesday of last week before establishing a bid and worked higher, reversing the entire reaction.  At 8:30am Non-farm payroll data was mixed.  The initial reaction is a slight move lower.

Also on the economic docket today we have Wholesale Inventories at 10am, the Baker Hughes rig count at 1pm, and Consumer Credit at 3pm.

Yesterday we printed a neutral day.  A gap up Thursday morning was quickly sold into but sellers failed to take out the Wednesday low, initially.  Instead price worked range extension (RE) up before reversing the entire daily range and going RE down, briefly trading below the Wednesday low before two-way trade ensued.

Heading into today my primary expectation is for sellers to work back toward overnight low 5382.75, trading down to 5374.50 before two way trade ensues.

Hypo 2 buyers press into the overnight inventory and close the gap up to 5422.50.  From here they continue higher, up through overnight high 5429.75, trading up to 5431 before two way trade ensues.

Hypo 3 stronger sellers push down to 5348.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Authoritarians have a good way of spinning their creepy actions enough for their believers to justify an attack on their human rights.  So far, that is the case with the republican-led campaign to repeal Obama-era internet privacy rules.  Your basic republitard can belch out the talking points about how Google and Facebook already watch everything they do, so what’s it matter if the internet service providers do the same?

Right? What does it matter, what’s another set of hands digging through your private possessions, NOT STEALING ANY OF THEM, but logging their details and selling the information to the highest bidder?

FCC Commissioner Mignon Clyburn laid out a perfect example, one you cheesed burger eating ingrates could comprehend.  WATCH:

Ah yes, the ‘internet of things’ …you remember that phrase?  It describes a time in the not-so-distant future where your thermostat, security cameras, television, refrigerator, for fucked sake your toaster are all pushing little bits of information about you out to the interweb.

This is not good, dude.  When Trump signed away privacy rules that would have stopped Comcast from logging your preferred toaster settings to their evil towers in Philadelphia, he sold you out to faceless corporations, immortal diseases roaming the earth.  Faceless corporations, mind you, who completely control your ability to access the greatest invention of the 21st century, the big information bang, the internet.  Internet service providers control it.  Not Google, not yet at least.

Massachusetts Rep Mike Capuano had some fun with these insane republican measures, referencing his recent online purchase of some undies, which is worth bringing to your attention if for the visuals alone:

Perhaps you are beginning to understand the gravity of our President’s pen strokes Monday, the ones that approved a very Orwellian nightmare, a repeal to privacy rules that Obama worked so hard to bless us with.  Your internet service provider can henceforth mine and measure your every internet move and the FCC is totally freaked out.

STILL BULLISH FOR $VZ $T and $CMCSA

Also, someone mentioned VPN players could become interesting going forward, as internet users seek to protect themselves from the ISP money grubbers.  It’s worth an investigation.  DEVELOPING…