iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,083 Blog Posts

Reasonable Gap Up To Sell into Heading into Tuesday

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume.  Price worked higher a touch, well into the selling rotation we saw late Monday morning.

The economic calendar is light today.  Only a 4-week T-bill auction at 11:30am to concern yourself with.

Yesterday we printed a normal variation down.  The week began gap up and after a brief morning push higher, responsive sellers stepped in and worked up range extension down, filled the overnight gap, and ultimately tagged the naked VPOC below before two way trade ensued.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5979.75.  From here we continue lower, down through overnight low 5978.75.  Look for buyers down at 5974.25 and two way trade to ensue.

Hypo 2 stronger sellers force a liquidation down through Monday low 5958.50.  Look for buyers down at 5945.50 and two way trade to ensue.

Hypo 3 buyers press up through overnight high 5995.50 negating the expectation for selling.  Look for a move up to 6003 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ Drifts A Touch Higher Heading into October

NASDAQ futures are coming into October with a slight gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, breaching last Friday’s high before coming into balance.

The economic calendar starts off slowly this week.  At 10am we have ISM employment/manufacturing data.  Also we have a 3- and 6-month T-bill auction at 11:30am.

Last week we had weakness on Monday.  The selling discovered a strong responsive bid and we spent the rest of the week rallying.  The Russell was particularly strong.  The performance of each major index last week is shown below:

Last Friday the NASDAQ printed a double distribution trend up.  The gap up was sold into, closing the overnight gap before discovering a strong responsive bid and rallying to a new high for the week.  Price balanced out after closing the gap left behind on 9/20.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 5977.75.  From here we continue lower, down to 5973.50 before two way trade ensues.

Hypo 2 stronger sellers press us down to 5945.50 before two way trade ensues.

Hypo 3 buyers work up through overnight high 5999.50 and continue higher, up to 6006.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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The Complete 150th Strategy Session Free of Charge

Greetings everyone!

Sunday mornings are usually a time of focus for the kind and patient scientists at iBankCoin laboratory.  Today the mind is adrift.  Perhaps the seasons change has affected our focus as it becomes increasingly evident that soon our inventories will be put to the test as the vicious sting of winter bears down on our homes and person.  It is also October, our absolute favorite month—a time when society more generally accepts the dark arts and embraces ‘spirituality’.  As scientists we find the superstitions that affect the common mind wholly absurd, but it is amusing nonetheless.

It could be the passing of another meaningless milestone that is causing distraction.  For 150 consecutive weeks I have taken to the robots and prepared a research report for the good folks inside Exodus.  Many parts are repetitive by design.  They serve to remind me ad nauseam about core principles of trading.  They are also there for any new comer to read.  But in general, these repetitious portions of the report can be glanced over without expending much time.  Other parts of the report are dynamic as events unfold.

One of the most important components of the Strategy Session is the ‘Index Model’ which is a quantitative model built using auction theory and the predictive algorithms inside Exodus.  The two schools of thought are combined to form a 5-day directional bias.  This helps press winning trades further during the week.  It also helps frame another important component of the Strategy Session which is the ‘Executive Summary’.  The Executive Summary attempts to use as few words as possible to describe the type of price action we expect in the upcoming week.

By forcing the mind to be extremely selective with each word, it makes the statement actionable, at least for our team’s head trader, who lives somewhere inside the primal core of my brain, whose name is RAUL.  RAUL uses the work done by our team of scientists, who live and work somewhere on the right side of my brain.  The update posted every Sunday to the public iBankCoin blog is of course written by our chief scientists who humbly occupies a small space on the left side of my brain.

One of the most interesting components of the Index Model is its historic ability to predict the initial direction of movement in the S&P 500.  Using a simple ATR(14) band as an objective means of testing the predictions, the bias generated by the model has predicted with a 66.4% probability which band will be tagged first.  For example, the upcoming week has a high band at 2526.25 and a low at 2507.25.  The S&P 500 has a ‘strong bull’ bias heading into next week.  That means there is a 66.4% probability we go lower first and tag 2507.25 before 2526.25.

Pair the above statistic with the model generating an extreme Rose Colored Sunglasses bullish bias, which simply expects a calm, sideways drift, and you have logical reason to buy into weakness early next week—should we see it.

Anyways, we are all feeling rather generous on this cool, first day of October.  Therefore the entire 150th Strategy Session is reproduced below, in completion.

Before you have a read of it, a quick reminder that this Tuesday, October 3rd from 5:30-7pm there will be a free investors conference in Detroit hosted by RAUL, the team of scientists, and the head scientist.  One of us will also be on iBankCoin YouTube live around 5:45pm doing a 30-minute live presentation where the 3rd installment of our top-down portfolio will be built.  If you live near Detroit, click here to RSVP and come to the event.  Otherwise, subscribe to our YouTube channel to be updated when I go live.  Or, just keep an eye on this blog for a replay of the event.  Full disclosure, our YouTube channel does post political content.  So if you are not trying to see political videos, then just keep an eye on this blog and I will post a link to just the demonstration video.

Without further adieu, here is the 150th Strategy Session, enjoy!


I. Executive Summary

Raul’s bias score 3.83, Medium Bull*.  Look for a sideways drift into the new month, perhaps slightly working to the upside.  The third reaction to Friday’s non-farm payroll data may dictate direction into the weekend.

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

II. RECAP OF THE ACTION

Monday the equity markets were for sale, working lower and ultimately discovering a strong responsive bid.  Then we spent the rest of the week working higher.  The Russell was especially strong, suggesting risk appetite is strong.

The performance of each index can be see below:

Rotational Report:

Energy and financials lead the way while tech is a nearby flank.  Utilities weak.

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.

Money flows skewed heavy to the buy side.  Only gold on the sell.

Bullish

Here are this week’s results:

III. Exodus ACADEMY

Q3 top-down systematic portfolio build

The 9-month return column available on the screener is a useful tool for evaluating performance over the last three quarters.  It is a key component of building the Q3 top-down basket.

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?

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 Exodus 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 2017) 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: Semiconductors succeed in discovery, transports not far behind

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 still appear to be attempting discovery higher.  There is not much resistance left to keep the market in balance.

See below:

Semiconductors are discovering higher.  The powerful, year-long rally continues.

See below:

V. INDEX MODEL

Bias Model: extreme Rose Colored Sunglasses

Model is showing extreme rose colored sunglasses into next week.  This signal expects a calm, sideways drift perhaps with a slight upward bias.

Here is the current spread:

VI. QUOTE OF THE WEEK:

“I saw an angel in the block of marble and I just chiseled until I set him free.”  – Michelangelo

Trade simple, refine your process only as needed

 

 

 

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How an Old Italian Mathematician Helped Me Buy More Bitcoin in Q3

For a few years I blogged in full anonymity.  This afforded me very little feedback.  As I began to introduce my work to more real-life people who were less intimidated to pipe up, a frequent comment went something like, “well you sound smart, but I have no idea what you are talking about tbh.”

So I have been doing my best to make what I know more consumable to people who aren’t hardcore traders and wall street junkies.

Case in point: I pinned this tweet to my profile so people know exactly where two of my biggest investment beliefs stand:

In case that tweet is still confusing, here is some clarification.  An ‘RIA’ is a registered investment advisor.  I do not envy them.  Their job seems pretty boring.  $TSLA means Tesla stock.  We use ‘$’ which is called a cash tag because it then puts the tweet into a conversation with anyone else talking about Tesla.  Some of my tweets go into Stocktwits and come through to Twitter.  The cash tag is used much more on Stocktwits and puts you into a conversation with many more people actually interested in the stock market.  ‘$BTC.X’ is Bitcoin.  ‘every quarter’ means every three months.

Moving on.  I cannot, cannot, and will not broadcast my specific entries and exits in public forum.  Despite a measurable reduction in my paranoia, it still irks me to put specifics out there.  What if some well-shoed villain decides she want to make to kill me?  Perhaps they could.  But I do my best to inform the people who I truly care about, the hardcore traders, of my intentions.  Hence this tweet:

61.8%  is Leonardo Fibonacci’s ‘golden ratio’.  It explains a whole bunch of seemingly random stuff in nature.  For the purpose of trading, it is a great way to manage risk.  Listen, I want to trade alongside whichever party is punching harder.  That means I want to trade in the direction of the biggest ‘rotations’ or what others call ‘uni-directional moves’.  Basically vigirous thrusts in one direction without pause or hesitation.  Like the strike of a crocodile.

When I see a big rotation, I draw a Fibonacci retracement onto it.  Sometimes the golden ratio (61.8%) just happens to line up well with some other logical level.

Logical level?

Yes, please try to keep up.  The best forms of ‘support’ are old areas of resistance.  The best forms of ‘resistance’ are old areas of support.  It comes down to auction theory, dammit.  Imagine being some big dicked owner of bitcoins, and deciding you want to sell some at $3,000 fiat dollars (USA dollars).  So you do.  You sell 300 a whole bunch and your sell orders overwhelm demand and price begins to go lower because the selling is more aggressive than the buying.  Then, little fucking sharks, short-term speculators catch wind of you and they too begin selling, but they are doing it ‘naked’.  They are short selling.  They are selling bitcoins they do not even own with the expectation that they can buy them back in the future for a lower price.  Real greasy sons-of-bitches.

So they are proven wrong by the market before they have time to cover and make a profit.  Listen, now they are under water.  If/when price finally returns to the area they were short selling, they will be motivated to buy back their coins to break even on the whole mess and walk away with their testicles still in one piece.  They create natural demand.  That old resistance now has a natural demand baked into it.  This is a logical level of support.

When a logical level of support lines up with a nice Italian’s golden ratio, a magical number that explains nature, NATURE, that is a good place to participate in the market. LOOK:

This is about as simple as I can explain how I used an Italian mathematician’s findings and auction theory to pick up some bitcoins nearly $1000 USA fiat dollars ago.

I hope this explanation was helpful.  If it was, I insist you share this post with your children and your neighbor’s children and perhaps also with your wife.  If you have an intelligent dog, give the dog a little scratch on the head and let them know they’re a good pup.

I use simple tools to trade.  I hack away at the nonsense as much as possible because when markets are moving fast I need to know how, when, where, and why to act.  For something to become a foundation stone of my trading, it must withstand the tests of stoic philosophy.  Does it stand up to, and support the ability to adhere to Marcus Aurelius’s three core principles?

objective judgement, now at this very moment

unselfish actions, now at this very moment

willing acceptance, of all external events, now at this very moment

If it does not, then cast it aside because it is a DISTRACTION.

ciao

Still here?  Great, you must be some kind of masochist.  Good people.  Why don’t you come to my investor conference next Tuesday?  It is free and I am close to landing a very underground chef to cater the entire event.  All vegetarian.  No fucking around.

here is a link with details to the event

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Quarter-end Update: Quant Portfolios Performing ‘just okay’

A few years back I gave up stock picking.  The days of the gun slinging stock picker are numbered.  All the fund money is being poured into agriculture hedge funds and quant portfolios.  If an advisor has a role in the grande scheme of finance, it is simply a third party to hold people accountable for their retirements.

Like someone that encourages you to be responsible, and when you instead blow all your money on avocado toast and burning man, they aren’t mad–just a little disappointed.  But they empathize and understand and hopefully keep you on track with your retirement goals, whatever that means.

I have zero intention of retiring.  Every business/process I design can be operated automatically or by an 85-year-old decrepit.  You will never pry my salty, crocodile ass away from work.  My bones are made of steel,my blood a high viscosity lithium, and my brain a low-voltage computer fortified by philosophy.

Anyhow, my lazy man’s approach to portfolio building is doing an okay job.  When you net together the performance of the first two installments of the quarterly portfolio, it is not outperforming the S&P 500. I know, very sad.

This is mostly due to the lousy performance of the 6-month look back portfolio which was built at the end of June.  It has sucked wind.  Below are the performance of the 3-month and 6-month look back portfolios:

Over the weekend I will build the third portfolio which will look back over the last 9-months and use the information to select 10-18 stocks.

Recap: At the end of every quarter, a quick, top-down style analysis is performed using Exodus.  We start at the sector level—seeing which performed the best—then drill down to specific stocks within the best performing sectors that we will then hold for a 12 month period.

While I will build the 3rd installment Sunday and purchase it Monday, I will hold off on making a Youtube live video of the process until Tuesday afternoon.  That is because I will be doing the portfolio building demonstration live with the Detroit StockTwits investor conference this time, and I figure we will kill two proverbial birds with one stone.  Here are links to the first two quant building videos:

end of Q1

end of Q2

I will not abandon this process just because it saw some under performance last quarter.  Instead I will press onward, for at least three years, at which time I will have a more interesting data set from which to draw conclusions.

Unlike most of the gurus and pickers and tipsters floating around the internet talking stocks, I intend to be in this game for an extremely long time.  Like 70 more years, realistically.  There are advancements in biotechnology and DNA editing and neuroscience that make it reasonable to expect high human function well beyond 100 years.

And unlike most of these tip tweeting, pump fiends, I will not tell you the stock market is a get rich quick scheme.  It is a grind, a hustle, just like anything else.  You can work hard at it and see zero results.  You can be on cruise control and suddenly see a massive improvement in your bottom line, and vice versa.  The key is consistency.

Most matters of life, and economics, and business are cyclical.  Feast and famine.  This is why I adhere to the school of thought that says diversify your income streams.  That way, when one is in famine, another is in feast mode.  Of course, it all looks good on paper until a perfect storm of famine hits.  And it will.  This is when you will be thankful you keep a low burn-rate.

When you keep life expenses low you can be patient.  You can fast.  You can let opportunity reemerge.  The crocodile is the longest living species on earth.  Study its actions.  The way it saves energy.  The speed and ferocity it attacks with, but only when the best opportunities emerge.

Such is the life of an opportunist.  And all of these traits bode well with speculation and business risk.

These automated portfolios are doing an okay job of storing value without taxing my precious brain resources.  This allows me to commit more emotional capital to trading NASDAQ futures are other industrious pursuits.  It is my belief that we are entering a period of economic prosperity the likes of which no living human has ever seen.

The roaring ’20s of the new millennium will put the last century’s era to shame.  The mental and physical work we do today will pay massive dividends over the next 3 years.  As long as you are ready to fast.  And wait.  Then attack quickly.  All at once.

 

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NASDAQ Up a Few Points Headed into Friday

NASDAQ futures are coming into Friday higher after an overnight session featuring normal range and volume.  Price worked higher, slowly overnight exceeding the Thursday high as we head into cash open. At 8:30am Personal Consumption data came out below expectations.

There are no other economic events today.

Yesterday we printed a normal variation up.  The day began with a gap down inside range with support below.  After a brief two-way open we worked higher to close the overnight gap before settling into a dull two-way range.

Heading into today my primary expectation is for buyers to gap-and-go up, targeting a move to 5961.25 before two way trade ensues.

Hypo 2 stronger buyers press to 5979.50 before two way trade ensues.

Hypo 3 sellers work into overnight inventory and close the gap down to 5938.75 then down through overnight low 5933.75.   Look for buyers down at 5922.50 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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Range Gap With Support Below: Here Is The Thursday NASDAQ Trading Plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring normal range and volume.  Price worked lower overnight but held inside the Wednesday range.  At 8:30am several economic data were released including GDP, advance goods trade balance, and initial/continuing jobless claims.  All were better than expected save for initial/continuing claims data which were mixed.

The only other economic event is a 7-year note auction at 1pm.

Yesterday we printed a neutral extreme up.  The day began with a gap up and drive higher, up into resistance noted in hypo 2 from the Wednesday morning report.  Then sellers began working lower, eventually going range extension lower late in the morning.  However, buyers defended an attempt back into the Tuesday range and this triggered a rally back up through the days range to press up into neutral territory and eventually to a close in the upper quad of the day’s range earning the neutral ‘extreme’ designation.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 5941.  From here we continue higher, up through overnight high 5948.25 which sets up a move to 5961.25 before two way trade ensues.

Hypo 2 stronger buyers press to close the gap at 5978.25 before two way trade.

Hypo 3 sellers press down through overnight low 5916.75 and find buyers down at 5914.50 before two way trade ensues.

Hypo 4 stronger sellers press down to close the gap at 5892 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Back on Tuesday High // Buyers Engage The NASDAQ Overnight

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, briefly poking above the Tuesday high before balancing out.  At 8:30am durable goods orders was a solid beat, well above analyst expectations.

Also on the economic calendar today we have pending home sales at 10am, crude oil inventory at 10:30am, a 2-year floating rate auction at 11:30am, and a 5-year note auction at 1pm.

Yesterday we printed a normal variation down.  The day began with a gap up and open auction.  Then sellers stepped in and worked the gap fill.  Sellers continued a touch lower to tag the naked VPOC from Monday before a responsive bid stepped in and two-way trade ensued.

Heading into today my primary expectation is for buyers to gap-and-go up.  Look for a move to 5923.25 before two-way trade ensues.

Hypo 2 stronger buyers drive up to close the open gap at 5934.75 then continue to 5937 before two way trade ensues.

Hypo 3 sellers press into the overnight inventory and close the gap down to 5892.  Sellers continue lower, down through overnight low 5886.50.  Look for buyers ahead of 5883 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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ANNOUNCEMENT: RAUL to host 2nd Detroit Investor Conference next Tuesday

Tuesday, October 3rd at 5:30pm Detroit a gathering of minds will occur high above iconic Woodward avenue in Detroit.  This will be our second meet-up and investor conference.

The first conference had an excellent turnout.  Look at all of us, discussing stuff and things:

The second Detroit Investor Conference will be a bit more interactive.  I am going to build the third installment of my systematic investment portfolio live.  Then we will do some q-and-a and chat about trading and investing.

There will be free beer.  There will be free food.  I am debating what food, but if all else fails we shall again do pizza.  My aging organs cannot handle pizza and the wretched swill they call ‘craft beer’ well.  There will also be coffee.

WeWork Merchants Row also has a filtered tap from which to draw water.  Hopefully the filtration is of a small enough micron to separate out the micro plastics that pollute 94% of tap water in the USA.  You may want to purchase water drawn from the aquifers of Fiji ahead of the conference if you are concerned about the filtration abilities of the venue.

Quick recap: StockTwits put me in charge of organizing the Detroit Meet-up group.  Since I am a bit extra, and since Detroit does everything a bit grimier and more aggressively than other city centres, it has evolved into a more hands on conference.

I will do my best to broadcast a portion of the conference live on iBankCoin YouTube.  It is my hope that we can expand the live cameras to include one that displays my entire body, which is filled with youth and vigor.  But all technology will be attempted Johnny on-the-spot, and to be frank, none of us are live media experts.  So bear with us as we work out the kinks.

If you are within Tesla driving range of Detroit, like perhaps as far as Toronto, then it would behoove you to attend this conference.  You can RSVP on the Meetup page.  Here is a link to the Meetup page:

a link to the Meetup page

Last meeting drew a variety of investors and traders from different backgrounds and there we insights to be gained by all.  We already have 15 people signed up for next week’s event, and I also have some private investors who will be in attendance but prefer to remain anonymous.  If you have an elevator pitch for a business you have been developing, it makes sense to polish it up and bring it.  There will be some money goons lurking around, sharking for deals.

But do not let that intimidate you.  All are welcome.  Any experience level.

We are going to discuss systematically building a portfolio in this second conference because most people need to save up capital before they can even consider a more active form of trading.  I will present the methods I use to build a trading nut.

In the future, we will dive into shorter term trading.  But first, we must build that nut.

So we can talk about side hustles too.  The city is bustling with hustlers of all make and model.  For most people, it takes more than a steady salary gig to build up the cash flow and capital to take on active trading.

Come on down to Merchants Row next week and lets talk about dominating the financial markets and business.

here is the link again to RSVP

ciao

 

 

 

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Strong Overnight Session Sees NASDAQ Back Near Monday High

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring elevated range and volume.  Price worked higher overnight, balanced at times and then rallying early this morning.  Overall the action was contained inside of the Monday range and as we approach cash open we are hovering near the Monday high.

The economic calendar features consumer confidence at 10am, a 4-week T-bill auction at 11:30am, and a 2-year Note auction at 1pm.

Yesterday we printed a double distribution trend down.  The day/week began with gap down and drive lower.  An initial responsive bid was overrun by more selling, pressing what looked like a morning liquidation.  We probed new monthly lows, testing prices unseen since August 29th.  Then, near the end of the session we ramped higher, back to the day’s midpoint.

Heading into today my primay expectation is for sellers to press into the overnight inventory and close the gap down to 5877.50.  From here we continue lower, down through overnight low 5862.75 before two way trade ensues.

Hypo 2 buyers defend around 5883.25 and we press up through overnight high 5904.25.  Look for sellers up at 5912.25 and two way trade to ensue.

Hypo 3 buyers gap-and-go higher, up through 5912.50 to target 5922 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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