iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,662 Blog Posts

Net buyer this week

No trading report for Monday. NASDAQ futures are moving incredibly fast, up over 300 handles in the last ten minutes or so, then off that high by 100 handles.

I made my plan Sunday and last week and it is simple—add to my MSFT and GOOGL positions and whenever PTR reports (it’s hard to pin down these Chinese ADRs) add to PTR.

If the futures settle down a bit, I may reengage.

Expecting 7490 on the June NASDAQ to be an upside ceiling early in the week. If not, that opens the door for a run up to 8000.

Levels:

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Sickness at the House of Raul

I’m sick.

So many red flags were raised before markets collapsed. Most significantly, the failed auction printed February 14th on the PHLX Semiconductor index. Legacy readers of the Humble Raul blog (HRb) will recall the promise I made to readers and myself on October 2nd, 2014, to never miss another failed auction. I didn’t so much miss our most recent failed auction, but I did not assign enough weight to this ominous print on the index that literally tracks the main industry driving out secular bull market:

I think I am sick. My mind is so constantly optimistic that I just sheltered in place and held all my positions into the downturn. And now, when a recession all but seems guaranteed, I am not even giving a single thought to selling. On the contrary, I am feeding fresh cash into my account and buying more equities.

I became an oil man last week. When has Raul ever been an oil man? I abhor the oil industry, an archaic space dominated by patriarchal fools more out of touch with reality than a hobo on PCP. This is what I am talking about, sick.

IndexModel, which is my foundation stone for decision making, signaled Bunker Buster finally. This signal calls for an acceleration to the downside eventually marked by a sharp, excess low that holds for weeks (sometimes months). It has been a challenge for me to day trade, historically, when this signal fires. Therefore I will back away from the futures despite riding some nice rips last week.

Instead I will be focusing on acquiring a few long-term stocks and/or adding to existing positions. I do not want to go too exotic with these holdings. I was talking with my China correspondent yesterday, ROBERTO BREGANTE, and he couldn’t speak highly enough about the effectiveness of Microsoft Teams for keeping their projects moving in our remote business environment. And we started reflecting on how well Google and Microsoft were prepared for us to go remote as a species. We mutually agree and realize that professionals are realizing how effective they can we without flying around and sitting in meetings. Flying in for a meeting is old school and the cognitive shift underway may render physical meetings nearly extinct. So a part of me is like, why not just add to my Microsoft and Google positions? They are not going away anytime soon and their profit margins are huche [sic].

This shift to remote work was supes overdue. Hotels and airlines suffer. Anyone empowering effective conduct of remote business wins. Robots also win. More necessary things, like doctors and cashiers need to be like car washes. the less physical human contact the better. Have you ever seen Demolition Man?

That’s it. I am all tapped out of Pacific Northwest mystic energy. I am hunkered down in Mothership and working—trading, taking lots of phone calls and emails, cooking tasty food and readying my plots for sewing. I have a variety of heirloom seeds and my only real regret is not having built the hot house yet that has been on my mind for years.

Sick I tell you. Infected with perma optimism and bullishness.

Raul Santos, March 22nd 2020

Exodus members, in Section III I discuss all the systematic signals I am leaning on in more detail. The  278th edition of Strategy Session is showing some interesting data, be sure to check it out.

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NASDAQ holds Thursday gains overnight, here is Friday trading plan

NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme range and volume. Price was balanced for much of the overnight session before ramping higher around 2am New York. This buy rotation pressed up beyond the Thursday high, trading up to levels unseen since last Friday (the 13th) before coming into balance. As we approach cash open, price is hovering just below the Thursday high.

On the economic calendar today we have existing home sales at 10am.

Yesterday we printed a normal variation up. The day began with a gap down and drive lower, with sellers pressing down a bit below the Wednesday midpoint. This was an interesting price level, one that has been marked on my chart for months. Just below the Wednesday midpoint (which was also a distinct low volume node) was the old composite VPOC. Anyhow responsive buyers stepped in here and quickly resolved the overnight gap. From here we continued higher, taking out the Wednesday high and tagging the lower weekly ATR band before rotating back to the daily mid. Another rotation up made a new high of day, we chopped back to the midpoint again, then made another new high. Settlement action saw price fall back to the midpoint for a third time and close just above it.

Heading into today my primary expectation is for sellers to work into the overnight inventory to tag the Thursday VPOC 7380. From here we work higher, taking out overnight high 7629 on our way to tag 7700 composite VPOC before two way trade ensues.

Hypo 2 stronger sellers work a full gap fill down to 7256.25. This sets up a move down through overnight low 7126.25. Look for buyers just below at 7100 and two way trade to ensue.

Hypo 3 buyers gap-and-go higher, pressing up through 7700 with power, setting up a run on 8000.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ wanders in balance overnight, here is Thursday trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Price took out Wednesday’s high and held above it until about 9pm New York when price reversed lower. Sellers worked price back down through the Wednesday midpoint and further, down near the lower quad of Wednesday’s range. Sellers were unable to take out Wednesday low before we began rotating higher. This up rotation stalled out near Wednesday high before we fell back to the Wednesday midpoint.

In short, balance.

As we approach cash open, buyers are rallying price up off the Wednesday midpoint and we are down about -60.

On the economic calendar today we have leading index at 10am, 4- and 8-week T-bill auctions at 11:30am and a 10-year TIPS auction at 1pm.

Yesterday we printed a normal variation down. The day began with a gap down near Tuesday low. Buyers drove higher off the open, working up through the Tuesday midpoint but unable to close the overnight gap before sellers stepped in. Said sellers reclaimed the midpoint and pivoted from it, making new low of day to press range extension down. Sellers continued lower, marking a new swing low. Late in the session we ramped back up through the midpoint and closed in the upper quadrant.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7205.50. From here we continue higher, up through overnight high 7424. Look for sellers up at 7432.50 and two way trade to ensue.

Hypo 2 stronger buyers sustain trade above 7432.50 setting up a move to tag 7500. From here we probe above the Tuesday high 7537, setting up a move to tag the composite VPOC at 7700.

Hypo 3 sellers press down through overnight low 6874.25 on their way down to 6800 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures locked limit down, FOMC meeting canceled, here is Wednesday trading plan

NASDAQ futures locked limit down around 1:20am New York after an overnight session featuring elevated volume on extreme range. Liquidity is low in the globex markets. The overnight session was balanced for about two hours, then around 6:30pm it began to rotate lower, methodically moving down near the lower quadrant of Tuesday’s range before finding a bid. Said bidders spiked price back up to the Tuesday midpoint. Sellers were here and we spent the rest of the session moving lower until locking limit down near the high-end of Tuesday’s bottom quadrant.

On the economic calendar today we have crude oil inventories at 10:30am.

Yesterday we printed a normal variation up. The day began with a gap up and two way auction. Sellers eventually worked into the tape, closing the overnight low but unable to take out Monday’s low. Instead buyers stepped in and began working price higher, tagging the Monday naked VPOC along the way and nearly taking out the Monday high. Instead a massive amount of volume was transacted on the daily high, putting a distinct VPOC on the day’s profile before price rotated back to the midpoint. Buyers defended the midpoint and we spent the rest of the day chopping above the mid, eventually closing in the upper quad of range.

Heading into today my primary expectation is for some kind of gap down when the circuit breaker lets loose. Sellers move to take out Tuesday low 6906 but are unable to do so. Instead buyers come in and work a gap fill higher, trading up to 7383.75 then up through overnight high 7398.75. This sets up a move to 7500. Look for sellers up at 7600 and two way trade to ensue.

Hypo 2 stronger buyers trade up to the composite VPOC at 7700 before two way trade ensues.

Hypo 3 sellers press down through Tuesday low 6906 setting up a liquidation. Targets are the century marks 6800 and 6700.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ up a quick +120, here is Tuesday trading plan

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Overnight trade was halted for about six hours around 10:00pm New York after the upside circuit breaker was triggered. Upon reopening price rotated back down near overnight low, but could not take it out. Instead we have been in a big chop ever since, chopping and compressing price.

On the economic calendar today we have Industrial production at 9:15am followed by business inventories at 10am.

Yesterday we printed a neutral extreme down. The day began with a gap down and drive lower, with price initially working down to levels unseen since early last June. Then buyers stepped in and began working price higher. By mid morning we were back inside last Friday’s range. Price went range extension up, tagging last Friday’s naked VPOC and exceeding it by a few ticks (a level which coincided with the circuit breaker we hit Sunday evening when futures went limit down). That was all the upside we’d see on the day. From here responsive sellers stepped in (responsive relative to Monday’s open, initiative relative to Friday’s close) and worked price back down to the daily midpoint. We chopped along the mid for a few hours before a sharp move lower near the the close which made new low of day, trading down to levels unseen since February 11th (an old open gap). We closed near session low.

Neutral extreme.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 7277.25 which sets up a move to tag 7300 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 7042. From here we continue lower down through overnight low 6964, setting up a liquidation down to 6800.

Hypo 3 stronger buyers rally to 7600 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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Another halted Monday, here is NASDAQ trading plan

NASDAQ futures are coming into Monday down a quick -360 after an overnight session featuring normal volume (markets were halted about 20 minutes into trading) on extreme range. Sunday markets began with a gap down and push lower that was briefly reversed following an unprecedented stimulus action from the Federal Reserve, who surprise lowered interest rates to zero percent and did $700 billion worth of QE. Buying on that news was quickly reversed, and by 6:20pm New York futures hit the circuit breaker and were halted. Heading into cash open, the price was halted a bit below the Friday midpoint.

On the economic calendar today we have 13- and 26-week T-bill auctions at 11:30am followed by Long-term TIC flows at 4pm.

Last week began with futures limit down. After strong selling to begin Monday we had a responsive bid come in and work price strongly higher. This low held through Wednesday across the board before another strong limit down move happened Thursday night. Price was choppy until late Friday when we saw a surge higher into the weekend. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral extreme up. The day began with a limit up gap. After a two way open sellers stepped in and nearly filled the gap but could not before buyers stepped in. We traded back up through the midpoint and chopped all around it before a late-day rally saw price return to Wednesday’s low and reclaim it. We ended near session high.

Heading into today my primary expectation is for a two-way open before buyers work into the overnight inventory work price to the composite VPOC 7700. We pause here before continuing higher, to close the overnight gap 7901. Look for sellers up at 8000 and two way trade to ensue.

Hypo 2 sellers work down through overnight low 7556 setting up a move to tag 7000 before two way trade ensues.

Hypo 3 full on liquidation, hitting circuit breakers along the way, targeting 6900.

Levels:

Volume profiles, gaps and measured moves:

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A picture beginning to emerge but the water is still muddy

I stepped aside last week because my signals were crossed. IndexModel, which is built on auction theory, was flagging bearish while Exodus was bullish. The signals generated by these two systems are the rocks I stand on when trading NASDAQ futures, which involves so much leverage it is the financial equivalent of cliff diving in shallow waters. If my footing is off, then I refuse to jump. No one can make me. I can think and fast and wait.

Those are times when I like to stand on my head and stare a the world from that uncommon perspective. Anyhow, the signals cleared up over the weekend. I’ve regained my systematic footing and spent all morning fortifying my logical constitution with three hours of sunrise research. Here are my findings.

Thank you for your time.

There is uncertainty down at the gambling halls in Chicago.

It may seem like I joke around too much, Elder Raul often scoffs that I am, “Always joking around,” when the going gets tough. But the Chicago Mercantile Exchange is a giant gambling hall and you cannot convince me otherwise. Just like Las Vegas makes a book around sporting events, so too are odds placed on FOMC meeting outcomes, via the CME’s Fed Funds futures (say that five times fast). Trading can be gambling, if you go about it like some barstooled jackal. Trading can also be a business, like buying a rail car full of mangoes on Sunday and selling them all by Friday. Anyhow, I watch Fed funds futures closely, have for years, and this week the bookies at the CME are having a hard time making a book on the FOMC rate decision. The CME even felt the need to add a little yellow warning to the data, here is a screenshot:

Say what you will about Janet Yellen (QUEEN), when she was sitting at the helm of the Fed, telling long wandering grandma stories and handing out Werther’s Candies, investors had zero uncertainty with the Fed. The bankers were transparent and calm and non-reactive. Now they are led by Jay Powell, who is like a puppet on arm strings held by the President and his CEO friends and foot strings manned by all the private equity goons he is in cahoots with. With Pinocchio in charge, the Wednesday afternoon rate decision is as hot of a scheduled economic event as we’ve likely ever had. I will be watching the third reaction closely, and “going with it” into the second half of the week.

NEXT

Gold is not a safe haven.

Some would say I am a fox, sure, but I am not here to trick you into burying your gold in the field of miracles. I don’t want your gold and you shouldn’t either. It has no purpose and its value is relegated mainly to fashion. If I want to invest in fashion I buy Gucci.

Keep an open mind.

I have never liked the oil and gas sector. Their actions have destroyed much of the planet, and I’d like to see them all put out of business by Our Dear Leader Elon. And they likely will be, but it will take time, more time than I have been allotted as a mortal. My job, as a speculator, is to extract as many fiat american dollars as possible from the global financial complex and convert said fiat into real assets—land as far north and at as high an altitude as my constitution allows. Said land will be earmarked for development, using steel and concrete and brawn, to create a compound of sorts, for hoarding actual important things like heirloom seeds, quality hooch and firewood.

I think we are seeing a generational buying opportunity in energy and I may take to the equity markets this week and secure a position. I spent some time researching the area this morning and came up with two names, one domestic and one in the emerging markets. The greatest emerging market, of course, is China. PetroChina reports earnings Thursday. I am waiting to hear back from my China correspondent ROBERTO BREGANTE before taking action, but the plan I am setting up is to buy half my position before earnings, and half after.

Domestically I like WES, but for fucked sake, they’re operating in my beloved Rocky Mountains. I’d like to see them become a going concern and then a nonexistent concern. But I may buy some of their stock in the meantime.

Recent comments

Guys (ladies?) you showed up in the comments of my last two posts on dealing with huge losses and wins. I am humbled by your feedback and grateful for the opportunity I have here, standing on my humble little soapbox and talking greasy about making money. Becoming a proficient speculator is an ongoing process. I intend to be the finest speculator this world has ever seen. That said, those posts were an exercise in consistency. In eastern philosophy they have a saying about chopping wood and carrying water. You still have to do the things you did to be successful (enlightened) even after success (failure?) happens.

phoenix your comment resonated with me the most. Excellent observations about the physiological changes that take place after a huge win. I experience many of the same, and they tell me something very important. That if I were to draw a line with “overcautious” on one end and “overconfidence” on the other, with calm and nonreactive in the middle, I am dangerously skewed towards the overconfidence end. Historically, this is when I’ve made the most expensive mistakes in my career. So what do I do after a huge win? Chop wood and carry water. Stay off the phone, take no business meetings and definitely stay away from anything that can execute a trade.

That’s all for now. I am bullish into quad witching OPEX, but will move slowly while the ape men bash each other about with bones and stones.

I am the crocodile.

Raul Santos, March 15th, 2020

Exodus members, the 277th edition of Strategy Session is live. Check out the NASDAQ transportation index. It will tell a story this week.

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Dealing with a huge loss

Now I will follow-up my entry on dealing with a huge win with the tactics for dealing with the opposite extreme outcome, a huge loss. Huge losses ought not come from one trade, that is just senseless. However, sometimes the whole shit house goes up in flames and despite all your planning you lose big time. Here is how I deal with a huge loss.

Clean something. Cleaning can be a mindless task, yet some find meditation in dish washing. What I find in cleaning is the ability to flow between deep contemplation, where I am completing my cleaning task despite my mind being hard at work sorting through some mental gymnastics or psychological sore spot, to back meditative, where I am simply doing my task and thinking of nothing else.  Contemplative to meditative, and back again, over and over. Sorting an old junk drawer and throwing most of it away can be quite refreshing and mindful.

Sharpen the axes. There is always work on the farm. By farm I mean where ever you conduct your trade or business. I need things that take me away from the desire to trade for a few days. Nothing satisfies my intellectual mind like updating my statistical studies, which is something I do quarterly and even sometimes less often. I resharpen my algorithmic trade entry systems by refreshing all the data. I also sharpen actual cutting axes. And the knives in the kitchen. Now I am ready again for fast work.

Do something left-handed. This could be anything. If you are cleaning like some impulsive freak, you can switch to waxing the bleach onto your surfaces with the left, or vacuuming with the left. This helps keep your muscles and bones in balance so you don’t end up looking like Quasimodo in your fifties. I like skateboarding goofy. Nothing crazy. Just go out onto the nature walk and do some long, controlled, kick pushes. It does wonders for the mind.

Pull weeds.

Call an old relative or homie. Nothing provides perspective like talking to an old person, especially a foreigner. They’ll remind you what truly matters.

These are my methods of handling a huge loss. They have been developed over the years. A much younger and more eager Raul would sit and stare at the computer screens, worrying. Do you know what all that worrying added up to? Nothing but a few more greys in my beard.

What is your favorite method for dealing with a huge loss?

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Dealing with a huge win

I will not be trading the futures today, therefore I will pen an entry I’ve meant to log for some time. Here is how I deal with a huge win.

Stay calm. There is no need to react. Before any trade or investment is made a plan ought to have been formulated, where you pull up a price chart and mark where your trade is right or wrong and where or when you will close the position. Take my massive win in Tesla. I have stated numerous times that not a single share will be sold until the 1000 handle. Has TSLA printed 1000 yet? No. Therefore no action is required. Maybe I accumulate more shares soon.

Clean something. Whenever there is a big change to the numbers on the screen showing how much I am worth to bankers, I start cleaning. Not tidying. Full on cleaning. Pull the oven out and clean up all the crumbs behind it. Scrub the floors and walls like you committed a crime. Use caustic sodas and acids (not at the same time!) to break all the built up residue off the range. Take the baking pans in the back yard and hose them down real nice, then throw at least one pan into the trash—the one you cannot admit to loving or one you blew out attempting some Martha Steward recipe. Purging low use or thrashed kitchenware is good for the soul.

Read a book. Preferably fiction. Most of my business oriented homies pigeonhole themselves into the self help and non fiction case study genre of reading. This is not good for the mind. Explore the works of a famous writer, like Kurt Vonnegut or Herman Hesse. Read the whole bloated Douglas Adams series if you can suffer through that much rambling British humor.

Dig hole. As mentioned before, there is no sense taking action simply for the sake of action when it comes to investing and trading. Your job is to formulate a plan and stick to it. Instead of digging a proverbial hole in your finances, dig a real hole in the ground. This will serve to ground you, and also you can do something cool once you have a kick ass hole, like bury a 5-gallon bucket full of newspaper scraps.

Pull weeds. It is nearly that time in the north where every orifice of dirt will spring to life with unwanted plant life. Work these weeds out of your life, and feel the same unwanted thoughts pulling free from your mind.

These are my methods of handling a huge win. They have been developed over the years. A much younger and more eager Raul would sit and stare at the computer screens, worrying. Do you know what all that worrying added up to? Nothing but a few more greys in my beard.

What is your favorite method for dealing with a huge win?

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