Buyers Work Sunday Tape Higher; NASDAQ To Start Week Gap Up

NASDAQ futures are coming into Monday gap up after an overnight session featuring normal range and volume.  The globex market opened gap up and balanced trade eventually gave way to higher prices.  As we head into the open, price is probing above last Friday’s high.

There are no economic events today.

Last week the tape was flat and sideways.  Despite the odd behavior in Forex markets, our major indices remained stable, essentially marking time after starting out with a gap down.  Here is the performance of each major index last week:

On Friday the NASDAQ printed a normal variation down.  An early selling drive lower found an area of balance around Thursday’s VPOC before a second, initiative wave of selling pushed in.  This second wave found a strong responsive bid and pushed the market back to its midpoint to end the week.

Heading into today my primary expectation is for for sellers to work into the overnight inventory and close the overnight gap down to 4859.50.  Look for responsive buyers down around 4855 and two way trade to ensue.

Hypo 2 buyers gap and go, pushing price up to 4902.25 before two way trade ensues.

Hypo 3 full on trend day up, up through 4902.25, up through 4915.50.

Hypo 4 some sort of liquidation, down to test 4845.

Levels:

Volume profiles, gaps, and measured moves:

Greetings fine people of the interwebs, it is with humility and honor that I present to you the 100th Exodus Strategy Session, enjoy:

I. Executive Summary

Raul’s bias score 2.90, Neutral.  Look for markets to push higher to start the week as bulls attempt to break our current balance, up near annual highs, and continue exploring higher prices.  Keep a close watch on NASDAQ Transports. If transports sustain their breakout, it adds confirmation to our expectation for higher prices.  Otherwise be cautious to chase markets higher.

Fed Chair Janet Yellen speaks Friday at noon, and the subsequent market reaction may provide direction into the following week.

II. RECAP OF THE ACTION

A gap down Monday starts out a slow week, and afternoon sellers on Tuesday reveal a strong responsive bid.  Then, major indices went flat until we heard Non-farm payroll Friday morning.

Third reaction to the NFP at 8:30am Friday was a sell [buy, sell, sell] and led into a lunchtime push lower where both the S&P 500 and Dow Jones bullishly diverged from the Russell 2000 and NASDAQ, ultimately leading into a short squeeze back to Friday’s midpoint to close out the week.

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

Rotational Report:

Financials held the markets up last week.  Everything was lower.  Utilities continue to be rotated away from, which is a bullish indication.

However, with all sectors lower aside from Financials, we may have seen cash rotating away from equities last week.

Therefore rotations were neutral-to-slightly bullish.

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

Concentrated Money Flows:

Exodus [PPT 2.0] streamlines how we can research the individual behavior of each industry and how it pertains to overall market sentiment.

Using the Industries screen, we can filter for the Median Return [1 week] of each industry.  I have established an arbitrary -/+ 3% cutoff for qualifying industries of interest.

On an industry level we see a clear picture of money abandoning safe-haven plays like precious metals, REITS, and utilities.  Meanwhile the upside was lightly populated.

Concentrated money flows are neutral.  While money rotated away from risk averse industry groups, it was not put to work in the higher risk areas of the equity complex.

Here are this week’s results:

III. Exodus ACADEMY

Exodus Strategy Session. The report is issued every Sunday around 12 o’clock eastern.  Each report begins with an Executive Summary of the report’s findings.  This succinct statement drills down all the analysis into an easy-to-digest hypothesis for the upcoming week.

Then, we recap overall market behavior, focusing on the most objective information available—raw data from the stock market—and work from the top down to reveal a bias and key areas to monitor for confirmation.

At the heart of the report is a working auction theory model which combines Market Profile analysis with the predictive algorithms inside Exodus to generate long/short signals.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

The week ended with markets trying to locate buyers.  There was a strong bid late-Friday, but as the week closed out prices were flagging lower, indicating the market was trying to find buyers.

The markets did a good job finding buyers several times last week.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Bias Book:

The following biases were formed using basic price action and volume profile analysis. By objectively observing these actual attributes of the market we gain a sense of the overall market context. To quantify the effectiveness of this approach, each of the 4 equity indexes (/ES, /NQ, /YM, and /TF) has been assigned a fixed long/short target using a standard 14-period ATR. Each week there will be an outcome of win, loss, or timed stop on all four indexes. The first bracket level hit is deemed the winner in the event that both sides are tagged. This will be tracked and included in the Weekly Strategy Session.

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

[Note: All levels are as quoted on the front month future contract (currently December 2016) by the IQFeed Data Servers. Prices may differ slightly from your data provider. If you do not have a platform which provides real-time futures quotes, please click here for a free (but limited) alternative.]

Here are last week’s bias trade results:

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

Compression Watch: Transports Supporting The Long Bias

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

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports have broken out from several weeks of consolidation, of balance.  This type of behavior typically precludes a discovery phase.  In the case of Transports, it appears we are embarking on a discovery-mode up.  Price can become turbulent once it breaks balance, but look for Transport bulls to press higher next week:

See below:

Semiconductors continue to be one of the strongest industry groups in the market.  It is difficult to make a bearish argument about the price action from this building-block of technology.

See below:

Bias Model: Neutral

After last week’s bearish bias, the model is coming into the second week of October neutral.  No bias.

Here is the current spread:

V. QUOTE OF THE WEEK:

“To achieve great things, two things are needed; a plan, and not quite enough time.” – Leonard Bernstein

Trade simple, with a plan. Do it!

Writer’s note: On November 16th, 2014 The Fly put me in charge of the Strategy Session.  The discipline of building a week-long bias elevated my trading.  Thank you for the opportunity.

The report is clunky and esoteric, but I built it to supplement my trading style–medium frequency NASDAQ futures trading.

Also, thank you to everyone who has supported my research.  I hope it has been helpful for you and produced some ‘a-ha’ moments along the way, like it has for me.

Shout out to Trent and the whole team at IQ Feed for providing really clean, raw data from the major markets.  With any process, quality in is vital to getting quality out.

 Special thanks to FuturesTrader71 for contributing a Great Lake’s worth of trading wisdom and insight all these years, and to his brokerage Stage 5 for all the cool technology they create.

Finally, I would never be here if it wasn’t for a whole cast of people, but one person believed in me long ago.  It was RaginCajun.  I appreciate you, man.

Leaked email shows that the Clinton Foundation was in contact with comedian John Oliver

The email in question was located by the group known as DC Leaks and suggests the Clintons are in cahoots with the British television host:

The email is sent to Capricia Marshall, who worked under Hillary Clinton at the State Department.

John Oliver is the lead news anchor for HBO’s hit show Last Week Tonight.  The comedians popularity went global when he revealed that the Trump family changed their last name from “Drumpf” to a word that means the strongest playing card in euchre.

Infowars has the gritty details:

The email was sent on February 19, 2015 by Greg Propper, an advisor to The Bill, Hillary and Chelsea Clinton Foundation. Its recipients included Sarah Henning, Director of Programs at the Clinton Foundation, and Capricia Marshal, who served as served as chief of protocol from 2009 to 2013 under Secretary Clinton at the State Department.

The email, which was sent to Henning’s ‘clintonfoundation.com’ address, is entitled, “We’ve made contact with John Oliver” and the body of the email reads, “And his team is working on it. Hope to have an answer tomorrow.”

It begs the question, are the staffers contracting the world’s best comedians to develop content for the debates?  Several polls agree madam Clinton won the first debate.

Her most effective weapon during the debate were zingers with comedic value.  There was speculation Hillary would signal debate moderator Lester Holt when she was ready to deliver one of her hot lines.

Running for president has become the ultimate bout of wit and social media popularity, and comedy is often interpreted as meaning someone is trustworthy.  It makes sense for a candidate to enlist the world’s best comedy writers, especially if your entire platform is built on a drone-like regurgitation of lines.

The leaked email shows John Oliver has made contact with the Clinton Foundation since February 2015.  Whether the comedic team behind Last Week Tonight is actively writing content for Hillary to deliver during the debates is only speculation.

But look for more wit, winks, and cues from Hillary this Sunday when she teams up with Anderson Cooper and Martha Raddatz to take on the Donald.

NASDAQ futures are coming into Friday flat after an overnight session featuring normal range on elevated volume.  Price chopped around inside the week’s range, even after Non-Farm payroll, which was out at 8:30am:

USA Unemployment Rate for Sep 5.00% vs 4.90% Est; Prior 4.90% Private Payrolls for Sep 167.0K vs 170.0K Est; Prior 126.0K

Also on the economic calendar today we have the Baker Hughes rig count at 1pm and Consumer Credit at 3pm.

Yesterday we printed a neutral extreme up.  The gap down was sold into, and a sharp move lower around the lunch hour revealed a strong responsive bid which pushed the market up through its entire daily range before going into a tight holding pattern.

Heading into today my primary expectation is for buyers to work up through overnight high 4883.75 setting up a move to new swing high and targeting 4900.  Stretch targets are 4907 then 4916.

Hypo 2 sellers work down through overnight low 4852.75 and trigger a liquidation down to 4831 before two way trade ensues.

Hypo 3 tight, choppy range, from about 4885 to 4860.75.

Levels:

Volume profiles, gaps, and measured moves:

The team over at Benzinga is out with a list of every buyout rumor crossing their desk during 2016.  It’s fairly entertaining, check it out:

* January 20: Twitter spikes 14 percent on rumors of a News Corp (NASDAQ: NWSA) buyout.

* January 21: The Wall Street Journals Miriam Gottfried suggests Alphabet Inc (NASDAQ: GOOGL) as a top Twitter buyout candidate. Gottfried also mentions Time Warner Inc (NYSE: TWX) and Twenty-First Century Fox Inc (NASDAQ: FOXA) as potential buyers.

* February 1: The Information reports that Marc Andreessen and private equity group Silver Lake considered a Twitter buyout.

* March 31: Twitter shares spike on renewed rumors that Google is considering a buyout at a 100 percent premium to market price.

* June 3: The New York Post reports that Twitter and Yahoo! Inc. (NASDAQ: YHOO) discussed a potential merger.

* June 13: Recode speculates that Google and Comcast Corporation (NASDAQ: CMCSA) are top Twitter buyout candidates.

* June 17: Vanity Fairs Nick Bilton claims that Apple Inc (NASDAQ: AAPL), Google and Facebook Inc (NASDAQ: FB) are unlikely to bid for Twitter.

* June 27: TechCrunch names Google as a possible Twitter buyer, sending shares higher. The article also mentions Verizon Communications Inc. (NYSE: VZ), AT&T Inc. (NYSE: T), Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), Apple, News Corp and Facebook as potential buyers.

* August 3: Rumors circulate that Steve Ballmer and Saidi Arabian Prince Al-Waleed bin Talal are interested in acquiring Twitter for $22-26 per share.

* August 30-31: More speculation that Google may be interested in a takeover.

* September 23: CNBC’s David Faber reports Twitter is moving closer to a sale. Bidders could include Google and Salesforce (NYSE: CRM).

* September 26: Bloomberg reports Disney (NYSE: DIS) is working with an advisor on a potential bid.

* September 26: Faber reports sale could happen within 30-45 days; says Microsoft could be a potential bidder.

* September 30: Bloomberg reports Alphabet’s Google has tapped Lazard to review a potential bid.

* October 4: WSJ reports Twitter is expected to field bids this week.

* October 5: Source tells Benzinga Salesforce shareholders would not be happy with a purchase.

* October 5: Recode reports Google, Apple and Disney are no longer considering a bid.

Shares of the archaic social media platform are down more than -15% Thursday after all the rumors turned out to be bull-logna.

Writer’s note: I am long Twitter (ticker: TWTR) with a cost basis around $27.00 and still fairly optimistic about the company and the platform.

NASDAQ futures are coming into Thursday gap down after an overnight session featuring normal range and volume.  Price was balanced overall on the night session but sellers managed to push down through the Wednesday low early this morning.  At 8:30am initial/continuing jobless claims data came out better than expected:

USA Initial Jobless Claims for Sep 30 249.0K vs 257.0K consensus estimate. The prior reading was 254.0K.

USA Continuing Claims for Sep 23 2.06M vs 2.09M consensus estimate. The prior reading was 2.06M.

There are no other economic events on the calendar today.  Tomorrow morning we hear the more important Non-farm Payroll statistics.

Yesterday we printed a normal variation up.  price opened gap up and buyers slowly worked price higher.  A responsive sellers came in ahead of the lunch hour but was eventually overrun.  Buyers took out the Tuesday high by two-ticks before failing and falling back toward the daily midpoint.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 4873.  This sets up a move to take out overnight high 4881 and a probe to new swing highs, up through the current weak high.

Hypo 2 sellers gap and go lower, take overnight low 4862 and close the gap down at 4858.25 before finding a strong responsive bid and continuing to work higher.

Hypo 3 strong sellers work down through 4858 to tag the high volume node at 4854.50 before two-way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Quick note on the current swing high on the NASDAQ.  It formed on 09/22 in the shape of a weak high, meaning, we tagged the exact same price level, 4892.25, twice before moving away from the high.

These types of inflection points rarely survive.  Therefore, expectation is we take it out before exploring lower prices:

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring normal range and volume.  Price held the Tuesday range, trading balanced before giving way to buying after 7am, after the MBA Mortgage Application data came out better than last week.  At 8:15am ADP Employment data showed US Private Payrolls incresed by 154,000 in September, below economists’ expectations of 165,000 according to Bloomberg.

Also on the economic docket today we have Trade Balance at 8:30am.  Then at 10am we will hear about Non-Manufacturing Composite and Factory/Durable Goods Orders.  At 10:30am they will put out oil inventory stats.

However the biggest impact economic event is scheduled for Friday morning—Non-farm payrolls.

Yesterday we printed a double distribution trend down.  The day started with a gap up and buyers driving higher to close the 09/22 gap.  A few ticks above the gap the market found strong responsive sellers who closed the overnight gap.  Rotations were erratic, choppy, and fast in the morning before ultimately giving way to a secondary leg lower.  The NASDAQ was bullish divergent from the S&P, and when the S&P was tagging its weekly measured move target the NASDAQ was tagging last week’s MCVPOC.  This zone revealed a strong responsive bid and we closed back up near the session midpoint.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 4858.25.  Look for buyers down here who work price back up through overnight high 4870.25 and ultimately make new swing high to target the 4900 century mark.  Stretch targets are 4907 then 4916.

Hypo 2 buyers gap-and-go, take out swing high 4892.25, tag the 4900 century mark.  Look for a move up to 4916 before two way trade ensues.

Hypo 3 gap fill down to 4858.25 then a push down through overnight low 4849.25 setting up a move to target 4831 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

On Tuesday afternoon, Romanian hacker Guccifer 2.0 claimed to have successfully hacked inside into the Clinton Foundation database.

One of the most damning revelations thus far comes from a snapshot allegedly taken of the root directory which shows a folder titled “Pay to Play” a term often used to described the crony-type behavior of the State Department under the Hillary Clinton regime.

The audacity of the folder’s name is leading some to question the legitimacy of the hack.  Others are befuddled at the lack of fucks given at the Clinton Foundation, if in fact they were this blatant when naming their files.

There is much to comb through from this latest hack/leak of documents. The timing of this hack is interesting.  Early this morning WikiLeaks founder Julian Assange lead many to believe he would deliver the “October Surprise” which would be information damning enough to cause Democratic Presidential candidate Hillary Clinton to drop out of the race.

The Guccifer 2.0 will be scrutinized by an army of eager investigators.  Expect more information to come.

According to the hacker’s website, he was able to gain entry into the Clinton Foundation server and download “hundreds of thousands of docs and donors’ databases,” while inside.

Despite vehemently denying any association with Russia, mainstream media has done well to paint Guccifer 2.0 and others of his ilk as Russians.

The truth of it, as best we know, is these hackers are truth-seekers who go out of their way to provide transparency on important global matters.

Picking the USA President is viewed by many as important.  Terms like ‘leader of the free world’ and ‘holding the keys to the nukes’ are often used, despite the post becoming more ceremonial than anything.

Nevertheless, hackers are hard at work uncovering the special interests behind Democratic Presidential candidate Hillary Clinton.  Donor lists show big banks and corporations agreed to donate a certain percentage of the allocated TARP funds to the Democrats.

It is unlikely these docuemnts will sway the vote of most.  However, the good work of hackers like Guccifer 2.0 continues to raise curiousity about the financial interestes of the Democratic party, Wall Street’s party, the large global corporation’s party.

Carry on…