NASDAQ flat into week two // here is Monday trading plan

NASDAQ futures are coming into the second week of August with a slight gap up after an overnight session featuring extreme range on elevated volume. price was balanced overnight, first falling down down through the Friday low and then working back up through it. As we approach cash open price is hovering up above the Friday midpoint.

On the economic calendar today we have JOLTS jobs openings at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week saw index prices Gap up into the week before slowly fading lower Monday. Hard selling early Tuesday discovered a strong responsive bid by late morning then we rallied into the weekend with the NASDAQ lagging a bit behind. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation down. The day began with a gap down in range. After a brief open two way auction buyers stepped in and began driving higher. Their campaign came to an end before buyers could close the gap. Instead sellers were active at the VPOC and the auction reversed lower. Sellers reclaimed the mid and then defended it to set up a move down through the Thursday low. By around 11:15am low-of-day was in. Price worked back up to the daily mid and we spent the rest of the session chopping along the bottom-side of the mid.

Heading into today my primary expectation is for sellers to push into the overnight inventory and close the gap down to 15,091.50. Look for buyers down at 15,089.50 and for two way trade to ensue.

Hypo 2 stronger sellers press down to 15,000 before two way trade ensues.

Hypo 3 buyers work up through overnight high 15,126.75 setting up a run on last Thursday’s gap 15,161 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Comments »

Lads I have been producing Sunday research for the kind folks at iBankCoin for 350 weeks. Nearly seven years. I’ve been in these hallowed halls for even longer. What keeps me here?

Well foremost dear Fly has built one of the most under appeciated analytics platform available. PPT, and then Exodus and finally Stocklabs have been vital to my trading success. I stay for the signals.

The culture is odd. Very old man yells at cloud in the whole. But I **need** to expose myself to these thought patterns otherwise I’ll be lost in the hyper-liberal echo chamber of urban progressiveness. Most culture is odd to me.

See lads, what few understand is I decommissioned from societal standards long ago. I was a blossoming young fellow, fresh out of university, on track to marry my main squeeze whilst commuting to a very normal job as a corporate accountant. By conventional standards I was a success. Bought a house in my early 20s, my ford focus was paid off, had a nice haircut and wore business casual clothes to work and around town. I was miserable. Something had to give.

I left the salary first. I figured heck, seems I’m bringing home anywhere from 30-90k fiat american ever year trading futures, why trade AND be an accountant?  Those first two years away from corporate I still woke up every morning, showered, dressed business casual and sat in front of my trading computer from 8am-to-4:30pm. It seemed like I needed to do that to be successful.

I was still unhappy. Next I broke off with my lady. That was hard. Took a few years of my self-deprecating and being a hoe to move on. I did though. It was during this time however that I learned some things about life. Chasing beautiful women had become more than a part time gig. It was consuming many resources, mostly time, something I was frittering away in front of a computer. I was a very happy dog, sashaying around town at my own whim. The world was my oyster.

I broke my work habit next. Rather, I made new habits. I looked at the data. Thousands of trades and a trend emerged. I was most profitable between 8:30am and 10am. My activity after that time lost money. The concept of work for the sake of work became visceral and I said fuck it. I’ll focus on being even better from 8:30am-11am and use the rest of my time to be a hoe.

These were very special years. I become more and more aware of what made me happy and safe and it was family. I spent more time with the elders and listened to their regrets. Seemed like they were all building ranches and cottages and whathaveyou and they all wished they had started sooner. So I began to build my compounds.

And here we are today. I wear athleisure. I am in the best shape of my life. I have detailed processes that allow me to extract enough fiat american from the global financial complex to live comfortably and more and more I pepper funds into a variety of lottery tickets, both in real life and in the burgeoning metaverse. Earlier this year doge hit. I never sold any. Whatever. I couldn’t think of anything useful to do with the proceeds.

I am losing my train of thought.

What happened next was the pandemic and shit got weird. And I was already like five years ahead of the shift away from “work” to life. So when everyone else moved work-from-home I had to go further. Now I spend lots of time kicking around on a piece of ground in a pretty seedy part of Detroit. Everyone’s real nice to me and we’re having a good time growing corn and pumpkins and drinking cheap hooch. I give fiat american to anyone who asks and it makes me happy.

I don’t know what happiness looks like for you but I suggest cutting out 10-20 minutes a week to sit completely still and watch the thoughts that manifest and vanish in your mind. That’s a good starting point.

Well this metaverse thing is nuts. The Facebook earnings call sort of made my antenna jiggle and ever since I’ve been dropping fiat on jpeg files. Maybe I just have way too much fiat. We don’t know.

What we do know is my job is to extract as many fiat american dollars as possible from the global financial system. In whatever markets I see fit.

I’ve watched trader folks unfollow me on twitter in droves since I started lightheartedly participating in doge/nft. Sometimes it makes me sad. These are good people who sort of just take themselves way too seriously. Knee jerk reaction is to call them names like cuck or boomer or Trevor Milton.

But what will that do? Not make me happy I can assure you that.

That’s about all I wanted to say for now. Thank you for being here and reading my research and odd Sunday entries all these years. I would be lost without iBankCoin. I do feel that way. It is some of the only remaining structure in my life.

Okay for now, and to 350 more, salute

Raul Santos, August 8th 2021

And now the 350th Strategy Session. Enjoy.

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Stocklabs Strategy Session: 08/09/21 – 08/13/21

I. Executive Summary

Raul’s bias score 3.63, medium bull*.  Calm drift, perhaps with a slight upward bias. Watch for earnings out of Berkshire Hathaway early Monday to provide some context for the week.

*extreme Rose Colored Sunglasses [RCS] bullish bias triggered, see Section IV

II. RECAP OF THE ACTION

Gap up into the week was slowly faded lower Monday. Hard selling early Tuesday discovered a strong responsive bid. Rally into the weekend with the NASDAQ lagging a bit.

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

Rotational Report:

Leadership in all the wrong sectors. Tech still positive.

neutral

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

Concentrated Money Flows:

Ledger skewed slightly positive again but not enough to negate the major selling seen four weeks back.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

Resetting the count

I am clearing all prior algo signals we were tracking here in the Strategy Session and starting anew once we see the 6-month go hybrid oversold.

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:

Calm drift, perhaps with a slight upward bias. Watch for earnings out of Berkshire Hathaway early Monday to provide some context for 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]:

Semiconductors say “stay bullish”

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 continue to be discovery down. The downtrend is maturing and buyers printed a conviction candle a few session back. We may see this downtrend complete this week but for now sellers remain in control.

See below:

Semiconductors made new record highs and appear to be in a fresh leg of discovery up.

See below:

V. INDEX MODEL

Bias model is extreme Rose Colored Sunglasses bullish after being Rose Colored Sunglasses bearish on the prior report after being extreme Rose Colored Sunglasses bullish two weeks back after being neutral three weeks back after being extreme rose colored sunglasses bullish for the three weeks prior to that. Bias model was neutral seven weeks back after being extreme Rose Colored Sunglasses bullish bias for the three consecutive weeks prior after being neutral for the two weeks prior to that after being e[RCS] bullish thirteen weeks ago and RCS bearish fourteen weeks ago.

We had a Bunker Buster twenty-three weeks ago.

Extreme Rose Colored Sunglasses is a bullish bias that calls for a calm drift, perhaps with a slight upward bias.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“Price is what you pay. Value is what you get.” – Warren Buffett

Trade simple, invest the gains

Comments »

Well I sat to prepare a morning report but I haven’t mustered the strength to do it. If all systems aren’t feeling-a-go I heckin’ pull the plug on high leverage futures trading for the day.

Physically I am spent. Two days riding coasters has my muscles tight. Meanwhile this market is sort of loose. Slow summer action can really jam a trader hot off of some summer thrills.

To dial in to a boring bull market while the energy of life courses through my veins seems unlikely.

Looking at the charts there is nothing to be bearish about. Nevertheless I am managing an SQQQ position I initiated down near low-of-week. It carries risk through end-of-day Friday. Which sucks. But rules are rules and dialed in or not my job is to execute the signals generated by the models.

Above average executor of algorithmic signals. That’s my claim to fame.

I will be around tomorrow morning to look at the charts again. As for dialing back in and working the opening bell…unlikely.

May take a weekend reset to put me back in the game.

ho ho ho for now

Raul Santos, August 5th 2021

Comments »

NASDAQ futures are coming into August with a gap up after an overnight session featuring extreme range on elevated volume. Price worked higher overnight, working up beyond the Friday high Sunday evening and sustaining trade above it for the duration of Globex. AS we approach cash open price is hovering along last Thursday’s midpoint.

On the economic calendar today we have ISM manufacturing and construction spending at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week featured a mellow Monday with chop and upward drift. Then a hard trend down Tuesday that found late-day buyers. Then price sort of chopped around inside that big Tuesday sell candle for the rest of the week. Russell was bullish divergent during second half of week. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal day which is anything but. The day began with a gap down below the prior two days’ ranges. Buyers drove higher off the open quickly regaining the Wednesday range but before the first hour of trade was through sellers rejected a move back into the Thursday range. This would be high-of-day. Sellers checked price back to the midpoint. Buyers defended setting up a second rotation higher. This rotation stopped one point shy of going range extension up. Price went back to the mid. Buyers defended the mid again and while we ended the session near the highs we never went range extension up (or down).

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 14,968.50. Look for buyers down at 14,900 and for two way trade to ensue.

Hypo 2 buyers gap-and-go higher, trading up through overnight high 15,056.25 early on to set up a tag of 15,100.

Hypo 3 stronger buyers tag 15,120.

Levels:

Volume profiles, gaps and measured moves:

Comments »

Hi ho lads, Raul here, you friendly derelict speculator and humble farmer. Been plugging away—toiling in the fields to produce corn and punkins all whilst hustling these opening bells on the NASDAQ. In other words, living my best life.

Most of you don’t know this but your dear pal raul is really very beautiful. I brush my long dark locks of hair ten minutes in each direction to produce a shining mane. Then I oil my knees so they also give off a nice shine. My Sephora habit is more expensive than your :::insert drug addiction here::: habit.

The only drugs I’ve been doing these days are COFFEE. HOOTCH. And diesel fumes. Few understand that a drug is not just a white powder or some pill dispensed by the HALF BLOOD POPES of the world. Drugs are all around you friend. Smog is a drug. Loud music is a drug. The key is properly defining the word “drug.”

Coffee and diesel make life feel a bit more like a campaign. When I fire that heckin’ old diesel truck up and it lurches to life, my aura is filled with a sweet fume that makes me feel like some kind of american with a mission. A soldier perhaps.

Mushrooms don’t do this. Mushrooms make me feel like a wolf who can converse with the wind. Non-duality. All One Or None, comrade.

America is a high-strung nation of psychopaths addicted to stimulants and diesel fumes and my fear is that I’m becoming more American every time I fire up that diesel. I want to grow fat in the belly region and complain about mysterious lower back pain, all while ignoring the huge sack of tissue I’ve ringed around my hips. I want to grow corn, lots of it. I want to grow the numbers on the screen associated with the value of my person to infinity.

Heading into August I have a bearish signal coming out of IndexModel. Good old Rose Colored Sunglasses. Rose Colored Sunglasses tells a story of rose index prices hiding the ugly reality of the constituents. The constituents are sick. Sick from all the diesel fumes and caffeine and belly fat. The constituents are about to make their disease felt far and wide—at least that is what IndexModel is saying heading into next week.

I have crossed signals. There appears to have been some maintenance inside Stocklabs which has resulted in new signals appearing on the mother algo. Which is fine. When signals cross we lean on that which we can control. For me, IndexModel is in my control. I am the captain.

You’d be wise to find your own machinery in this crazy world of global finance. There are too many fucking enemies lobbing attacks at your ship from 6pm Sunday to 4:30pm Friday to be merely a loyal subject to the crown. Take the reigns buck-o or be mowed down by the psychopaths at Citadel.

One last note—who the fuck would own $HOOD when you can own @Jack’s $SQ?

Who is better leader? Long-haired, weak muscled eastern european or long-goatee stoic bitcoin maxi?

Okay for now. Bullish for the next 24 hours or so, then BEARISH.

Raul Santos, August 1st 2021

One more thing. The accountant in me takes great satisfaction in a month ending and beginning so very nice and clean like this. Okay see you in the morning.

Here is 349th edition of Strategy Session. Enjoy:

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I. Executive Summary

Raul’s bias score 3.28, medium bull*.  Expect a bit of upward price action early in the week. By as early as late Monday look for the auction to reverse lower. Selling pressure persists into second half of week. Then look for non-farm payroll data Friday morning to accelerate the selling into the weekend.

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

II. RECAP OF THE ACTION

Mellow Monday with chop and upward drift. Hard trend down Tuesday that found late-day buyers. Choppy inside of Tuesday for the rest of the week. Russell bullish divergent during second half of week.

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

Rotational Report:

Key Tech and Discretionary sectors down. Materials leading.

slightly bearish

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

Concentrated Money Flows:

Ledger skewed slightly to the positive side but not enough to negate the major selling seen three weeks back.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

Algo maintenance

The mother algo inside Stocklabs appears to be under construction. There are suddenly 3-month overbought signals back on July 9^th and 10^th which effectively negate the July 21^st signal I was using to carry a half position until August 4^th.

When factors beyond my control arise there is nothing I can do but accept them. What is within my control is IndexModel and IndexModel is bearish heading into August. I will formulate a strategy for the week based on this.

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 a bit of upward price action early in the week. By as early as late Monday look for the auction to reverse lower. Selling pressure persists into second half of week. Then look for non-farm payroll data Friday morning to accelerate the selling 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]:

Continue to key off semiconductors

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 a discovery down look going on.

See below:

Semiconductors are attempting to go discovery up. This context makes it difficult to have bearish conviction on the overall market. While this week’s forecast calls for selling, we can use the PHLX to help us decide whether or not to initiate a swing short. If this index is pushing to news highs, we will back away from the shorts. However, if this breakout fails, we will gain conviction in short selling.

See below:

V. INDEX MODEL

Bias model is Rose Colored Sunglasses BEARISH after being extreme Rose Colored Sunglasses bullish last week after being neutral two weeks back after being extreme rose colored sunglasses bullish for the three weeks prior to that. Bias model was neutral six weeks back after being extreme Rose Colored Sunglasses bullish bias for the three consecutive weeks prior after being neutral for the two weeks prior to that after being e[RCS] bullish twelve weeks back and RCS bearish thirteen weeks prior.

We had a Bunker Buster twenty-two weeks ago.

Rose Colored Sunglasses is a bearish bias that calls for morning selling pressure and lower prices on the week.

Here is the current spread:

VI. Stocklabs Hybrid Oversold (12-month)

On Friday, July 16^th the 12-month algo went technical oversold. This 10-day bullish cycle which runs through Friday, July 30^th end-of-day. Here is the final performance of each major index:

VII. Stocklabs Hybrid Overbought (3-month)******

******THIS SIGNAL MAY BE A FALSE FLAG. UPDATES TO THE ALGO HAVE PRODUCED TWO OVERBOUGHT SIGNALS BACK ON JULY 9^th AND 10^th WHICH EFFECTIVELY NEGATE THE 21^st SIGNAL*****

On Wednesday, July 21 the 3-month algo went technical overbought. This 10-day bullish cycle that runs through Wednesday, August 4th end-of-day. Here is the performance of each major index so far:

VIII. QUOTE OF THE WEEK:

“You will hear thunder and remember me, and think: “she wanted storms.”” – Anna Akhmatova

Trade simple, with full sensual awareness

Comments »

NASDAQ futures are coming into the final trading day of July gap down after an overnight session featuring extreme range and volume. Most of the action came shortly after the bell thursday when Amazon earnings were great, but their outlook came in below expectations. This sent AMZN shares lower and the NASDAQ along with it. The selling continued until about 9pm New York and saw price trade down near (but not exceed) the weekly low. Since then price has balanced along the lower quadrant of Tuesday’s range and as we approach cash open price is hovering in the lower half of the Tuesday range.

On the economic calendar today we have consumer sentiment at 10am.

Yesterday we printed a neutral extreme down. It was a pretty mundane normal variation up for much of the day, starting with a gap down that was quickly resolved with an open-drive up. Buyers made an early range extension up but the auction immediately stalled and then spent the rest of the day marking time by flagging along the highs. Then during settlement price drove lower pushing us into a neutral print.

Heading into today my primary expectation is for buyers to work into the overnight inventory, effectively erasing the Amazon earnings reaction by rallying up to 15,000.

Hypo 2 sellers hold price below 14,918.50 setting up a move down through overnight low 14,811. Look for buyers down at 14,800 and for two way trade to ensue.

Hypo 3 gap-and-go lower, liquidate down to 14,716.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Comments »

NASDAQ futures are coming into the final Thursday in July gap down after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing along the Wednesday midpoint. At 8:30am jobless claims came out more than expected and GDP lower than expected. As we approach cash open price is hovering along the top-side of the Wednesday midpoint.

Also on the economic calendar today we have pending home sales at 10am, by 4- and 8-week T-bill auctions at 11:30am and a 7-year note auction at 1pm.

Yesterday we printed a normal variation up. The day began with a gap up in-range. Sellers quickly resolved the overnight gap with an open-drive-down. Sellers closed the gap with that drive before the auction sharply reversed higher. Buyers worked price up into the upper quadrant of Tuesday range and made an early range extension up before we checked back to the midpoint. There was a battle at the midpoint before sellers eventually reclaimed it for a bit. Again we saw a sharp buying response, forming an excess low. We rallied back through the mid and ended the session bouncing along the top of it.

Inside day, normal variation up.

Heading into today my primary expectation is for sellers to make a move on the open again. Pressing down through overnight low 14,944.50 and tagging 14,918.50 before two way trade ensues.

Hypo 2 buyers work into overnight inventory and close the gap up to 14,995.75 setting up a run through overnight high 15,024.75 before two way trade ensues.

Hypo 3 stronger buyers trade up to 15,077.25 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Comments »

NASDAQ futures are flat heading into the final Tuesday in July after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing inside the Monday range, sort of casually rotating down through the mid until 4am then back up through it. At 8:30am durable goods orders came in below expectations and as we approach cash open price is stable at the unchanged line.

Also on the economic calendar today we have consumer confidence at 10am followed by a 5-year note auction at 1pm.

Major NASDAQ component Tesla reported record profit in their earnings announcement Monday afternoon. Shares in Elon Musk’s electric company are up about +1% in pre-market trade.

Apple, Microsoft and Google parent Alphabet are all set to report earnings after-the-bell.

Yesterday we printed a normal variation up. The day began with a gap down in range and a fast open-test-down. Said test revealed a strong responsive buyand within six minutes or so price was on the move higher, closing the overnight gap and pushing to an early range extension up which saw price make new record highs. Then we checked back to the mid, made another new high, checked back to the mid again, and then sort of bounced around the upper quadrant for the rest of the day, eventually closing near the high.

Heading into today my primary expectation is for buyers to press up through overnight high 15,131.50 setting up a move to 15,150 before two way trade ensues.

Hypo 2 stronger buyers press a rally up to 15,200.

Hypo 3 sellers press down through overnight low 15,052 setting up a move down to 15,006.25.

Levels:

Volume profiles, gaps and measured moves:

Comments »

NASDAQ futures are coming into the final week of July with a slight gap down after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing along the upper quadrant of Friday’s range after briefly exceeding it around 8:30pm Sunday evening. As we approach cash open price is hovering in the upper quad of Friday’s range.

On the economic calendar today we have new home sales at 10am followed by 3- and 6-month T-bill auctions at 11:30am and a 2-year note auction at 1pm.

Major NASDAQ component Tesla is set to report earnings after the bell.

Last week kicked off with a pro gap down across the entire equity complex followed by a choppy weak Monday. Then buyers printed a conviction day Tuesday, effectively closing the weekend gaps and setting up a week long rally. We closed out the week on the highs. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend up. The day began with a gap up out of range. Sellers managed to resolved the overnight gap with a drive down off the open. This would be the end of the seller’s control on the day. Buyers rejected a move back into the Thursday range setting up a strong rally to new all-time highs. We ended the day flagging long the 15,100 century mark.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 15,095.50. Buyers continue higher, taking out overnight high 15,126.25 before two way trade ensues.

Hypo 2 stronger buyers tag 15,200 before two way trade ensues.

Hypo 3 sellers press down through overnight low 15,038.75 setting up a tag of 15,000 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Comments »

I did a bit of inspired writing this morning. Both on Twitter and in my private captain’s log. I raved. I gardened. Had breakfast and then updated the Sunday research. I suppose I should say thank you. The city inspires me of course. My little oasis from the mundane norms of society and I am building a farm right there in the thick of it.

What a time to be alive.

All the big hitters are due out with earnings next week. Breadth on last week’s rally was real narrow. On the wings of Big Tech just how we like it daddy and now it is time for them to show up and deliver robust 10-k forms.

Powell and the Fed team have a message due out Wednesday afternoon but this is of little importance. Jim Powell’s Fed has taken a back seat in economic policy talks ever since Janet “the queen” Yellen took the helm over at Treasury. Master of Coin.

I will wait until word comes down official word comes from the Queen and make a small note of Jim Powell’s low-impact chatter while remaining reverent to the tape.

The fun kicks of Monday afternoon with none other than the dogefather himself daddy elon love you long time yes. I like buying Tesla before and after earnings. I like it both times and then doing nothing. Maybe gardening or something, whist waiting for the Cybertrucks to deliver.

I learned something curious about trucks last week. Those ram 1500s you see folks across america driving are only rated to hold about 500lbs in the bed. WTH is 500 pounds? Nothing. I put two tonnes in the back of an eleven-year-old 250 diesel last week and the ride home had me shook.

Anyhow truck-life hoe. I am hardt on things. Not just trucks but everything. I had the whole inside of Mothership painted white. The trim. Doors. Everything. Now I am walking around, strong cocked, every last bit of 5’11” 185lbs of labor-hardened-shit-kicking-vegitarian mass, doing my best to not scuff the walls like an idiot.

Using the handles and hardware to open and close things instead of just bashing them with my hips or ripping open like bear.

Okay for now.

Raul Santos, July 25th 2021

And now the 348th edition of Strategy Session. Enjoy:

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Stocklabs Strategy Session: 07/26/21 – 07/30/21

I. Executive Summary

Raul’s bias score 3.58, medium bull*.  Major event-heavy week ahead. Expect elevated volatility as we drift sideways, perhaps with an upward bias. Watch for the markets to pivot Wednesday afternoon after the FOMC announcement. Late-week earnings from Facebook and Amazon may serve to accelerate or reverse the prevailing price action before month-end.

*extreme Rose Colored Sunglasses (e[RCS]) bullish bias triggered, see Section IV

II. RECAP OF THE ACTION

Pro gap down Monday. Choppy Monday featuring selling pressure until late in the session. Conviction buying Tuesday set up a strong rally for the rest of the week. We ended the week at record highs.

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

Rotational Report:

After two weeks of poor leadership, last week featured leadership from key Tech, Discretionary and Health sectors.

bullish

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

Concentrated Money Flows:

The heavily-skewed flows featured in the prior two-weeks of report was not negated last week. The breadth of money flows was fairly balanced. The slight edge goes to buyers on the week but until we see a major push featuring a majority of the industries with +3% gains on the week the slight edge goes to sellers.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

SETTING ANOTHER RULE

Make sure to read last week’s entry to ‘STOCKLABS ACADEMY’. In it I outlines to protocol I will follow when a 12-month oversold signal triggers while I am trading the 6-month oversold signal.

I am writing another rule today to address an important happening that sometimes happens that I want to have a rule for. It may seem like I am making these rules up on the fly. I am.

I am learning how best to utilize Stocklabs live. Just like all of yous. Which is fine.

The overbought signals have been my favorite to trade for many years because they give me the conviction to press momentum and the rules to keep me from making errors.

My favorite set-up is when we swing from oversold to overbought and I want a rule for how to proceed if this happens midway through an oversold signal so here we go —

When we go overbought mid oversold cycle I will restart the 10-day counter on HALF of my original position. Closing the other half at the completion of the 10-day oversold cycle, whichever one I am working with at the time.

Right now I am working with the 12-month oversold signal that fired on Friday, June 16^th. This signal cleanly carries risk up until the final day of July, this upcoming Friday, the 30^th.

That means I will be at my desk (or phone) Friday afternoon, closing half of my position. The other half I will risk until Wednesday, August 4^th, because the overbought signal I am working with fired on the 21^st.

Simple rules. Simple to follow no matter what external forces are assaulting my person. Simple. But not easy.

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:

Major event-heavy week ahead. Expect elevated volatility as we drift sideways, perhaps with an upward bias. Watch for the markets to pivot Wednesday afternoon after the FOMC announcement. Late-week earnings from Facebook and Amazon may serve to accelerate or reverse the prevailing price action before month-end.

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]:

Key off semiconductors

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 caught a bounce and may still be in discovery down. I drew some broad lines of where we may see a new balance form.

See below:

Semiconductors have a slightly more clear picture. We are inside the established range. There was a local failed auction but then buyers reclaimed the local Fibonacci which we can key off of with reasonably tight risk. If price pivots off the top-side of the fib we’re likely entering a fresh leg of discovery up. A push down from the fib sets up a traverse of the old range.

See below:

V. INDEX MODEL

Bias model is extreme Rose Colored Sunglasses bullish after being neutral last week after being extreme rose colored sunglasses bullish for the three weeks prior. Bias model was neutral five weeks back after being extreme Rose Colored Sunglasses bullish bias for three consecutive weeks prior after being neutral for the two weeks prior to that after being e[RCS] bullish eleven weeks back and RCS bearish twelve weeks prior.

We had a Bunker Buster twenty one weeks ago.

Here is the current spread:

VI. Stocklabs Hybrid Oversold (12-month)

On Friday, July 16^th the 12-month algo went technical oversold. This 10-day bullish cycle which runs through Friday, July 30^th end-of-day. Here is the performance of each major index so far:

Here is the performance of each index since the original 6-month oversold signal:

VII. Stocklabs Hybrid Overbought (3-month)

On Wednesday, July 21 the 3-month algo went technical overbought. This 10-day bullish cycle that runs through Wednesday, August 4th end-of-day. Here is the performance of each major index so far:

VIII. QUOTE OF THE WEEK:

“The ideal building has three elements: it is sturdy, useful, and beautiful.” – Marcus Vitruvius Pollio

Trade simple, build simple processes

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