Fri Aug 16, 2019 9:08am ESTComments Off on NASDAQ trend up overnight, NVIDIA earnings strong, here’s the Friday trading plan
NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme range and volume. Price worked higher overnight, trending up in a steady ascent for most of the Globex session following stronger-than-expected earnings from chip-maker NVIDIA Thursday afternoon. As we approach cash open, price is hovering near Wednesday’s high, effectively erasing much of the mid-week selling pressure.
On the economic calendar today we have University of Michigan’s prmary August reading of sentiment.
Yesterday we printed a normal variation down. The day began with a slight gap up that sellers quickly resolved lower after a brief two-way auction at the open. Price chopped around the midpoint for much of the day before extending lower twice. We eventually ramped back above the midpoint and closed above it.
Heading into today my primary expectation is for sellers to press into the overnight inventory and trade down to 7545. Buyers step in here and two way trade ensues.
Hypo 2 buyers to gap-and-go higher, trading up through overnight high 7600.75 and probing to 7640.25 before two way trade ensues.
Hypo 3 stronger sellers work a full gap fill down to 7493.50. Look for buyers down at 7489.25 and two way trade to ensue.
Thu Aug 15, 2019 8:49am ESTComments Off on Walmart, Alibaba earnings bring strong bid into market, here’s the Thursday NASDAQ trading plan
NASDAQ futures are coming into Thursday with a slight gap up after an overnight session featuring extreme range and volume. Price was all over the place overnight—until about 5am New York the market chopped around the inside of Wednesday’s range before driving lower in the early A.M. hours. That selling nearly took out our recent swing low (set on 08/05) before discovering a strong responsive bid around 7am, just after Walmart and Alibaba both posted strong earnings data. The second wave after the responsive buying took price up through the Wednesday midpoint briefly before we settled into another choppy balance. At8:30am advance retail sales data from the US Government (likely less of an indication of the health of the retail market than WMT earnings) came out stronger-than-expected. As we approach cash open, price is bouncing around the lower quadrant of Wednesday’s range.
Also on the economic calendar today we have NAHB housing market index and business inventories at 10am then long-term TIC flows at 4pm.
Major chip marker NVIDIA is set to report earnings after the bell.
Yesterday we printed a double distribution trend down. The day began with a gap down to the low-end of Tuesday’s P-shaped (short-squeeze) profile. After a brief two-way auction, sellers stepped in and began to campaign price lower, breaking down through Monday’s low in a steady decent lower. Just after New York lunch, and right near the weekly ATR lower band, responsive buyers stepped in and we came into balance. Late in the session sellers took price down through low-of-day and closed the session out on the lows.
Heading into today my primary expectation is for buyers to press up through overnight high 7572.75 to set up a move to tag the 7600 century mark before two way trade ensues.
Hypo 2 stronger buyers press up to 7640.25 before two way trade ensues.
Hypo 3 sellers probe down into the Walmart/Alibaba reaction, eventually trading down through overnight low 7388.25 and closing the gap left down at 7380.75 before two way trade ensues.
NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme range and volume. Price was balanced overnight until about 5am New York when sellers stepped in and drove down into the Tuesday morning rally. As we approach cash open, price is hovering along the lower quadrant of Tuesday’s range.
On the economic calendar today we have crude oil inventories at 10:30am.
Yesterday we printed a normal variation up with a distinct short-squeeze P-shape. The day began flat and after a brief two-way auction price drove higher, up through last week’s high to close the gap left behind on August first before settling into a tight range. While the market was able to push range extension up, the shape of the profile suggests a temporary phenomenon known as a short-squeeze took place, which lacked the ability in entice initiative buyers.
Heading into today my primary expectation is for buyers to press into the overnight inventory and trade up 7700 before sellers step in and two way trade ensues.
Hypo 2 sellers gap-and-go lower, trading down through overnight low 7609.75. Look for a battle at 7600 to eventually break down, setting up a move to target 7538.75 before two way trade ensues.
Hypo 3 stronger buyers work a full gap fill up to 7749.25 then continue higher, up through overnight high 7767.50 before two way trade ensues.
I used to write real doomy and brimstoney blog entries when IndexModel would signal bearish but I cannot afford to gussy up my thoughts. Not now. Not with option expiration on the bend. Not with Berkshire, Walmart, Alibaba and Nvidia slated to report earnings.
Instead let’s just look at the facts.
IndexModel ranks five components of auction behavior across the four major indices—Dow, S&P, Russell 2000 and NASDAQ. These rankings create one number which is then compared the the overall hybrid score inside Exodus. This creates a value that oscillates through time, much like a CCI or RSI, look:
The bearish signal is called ‘Rose Colored Sunglasses’ because price action usually seems pretty calm on the surface, as if the main indices are tinting the lenses we use to see the market. As where Exodus is looking at every single stock and factoring in lots of other macro data. And perhaps seeing more under the surface of strong indices.
But heading into next week the indices do not look rock solid and strong. They are kind of whippy. The last two weeks have been choppy. Then there is the NASDAQ transportation index, which sort of looks like, at least when I draw the bottom line this way, sort of looks like price might be breaking down from a very well-established range:
Last week we saw a late-week recovery, but when you look at the sector rotations, Utilities led—hardly a vote of confidence:
Those are my bearish notes. There are bullish cross-currents.
We are in the middle of a bullish ‘hybrid oversold’ cycle inside Exodus. It lasts until the Monday after next. There are other interesting data inside Exodus that remain bullish.
So what does it all mean? I have to form a bias to trade. That does not mean you need to do so, but that’s how I trade my best. Come Monday morning, I will distance myself from the trading buttons. Once the morning action has abated, I will sit down and assess. My theory is that we see some strength early Monday. I want to see that, then I want to see sellers step in. If they do I will join them by selling short the NASDAQ 100 both with a five day position in SQQQ and via short scalps in the /nq_f. Given the recent volatility, I may try out the new micro contracts, the MNQ.
That’s about all I have to say. I will spare you a spirited prose of destructive predictions.
If, for whatever reason, I can convince myself to instead go sit on some remote beach in northern Michigan instead of engaging this tape, that would be okay too.
As always, TBD.
RAUL SANTOS, August 11th, 2019
Exodus members, the 247th edition of Strategy Session is live. I elaborate on all these observations in a bit more detail, be sure to check it out!
Fri Aug 9, 2019 8:53am ESTComments Off on Day after trend day ;-) here’s the Friday NASDAQ trading plan
NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume. Price worked lower overnight, drifting back down to the midpoint of Thursday’s range before chopping into balance. As we approach cash open, price is hovering above the Thursday mid.
There are no economic events today.
Yesterday we printed a trend up. The day began with a gap up and two-way auction. Buyers rejected a move into the Wednesday range before the trend up began and lasted all session, eventually ending the day in the upper quadrant of last Friday’s range.
Heading into today my primary expectation is for buyers to press into the overnight inventory and close the gap up to 7735.75. From here we continue higher, up through overnight high 7738.50. Look for sellers up at 7761.25 and two way trade to ensue.
Hypo 2 stronger buyers sustain trade above 7761.25 setting up a move to tag the 7800 century mark.
Hypo 3 sellers press down through overnight low 7657.25 and then begin erasing the entire trend up, working down to 7607 before two way trade ensues.
Thu Aug 8, 2019 9:13am ESTComments Off on Strong jobs data doesn’t support rate cuts, NASDAQ extends Wednesday gains, here’s the Thursday trading plan
NASDAQ futures are coming into Thursday gap up after an overnight session featuring extreme range and volume. Price progressed higher overnight, working up through Wednesday’s high and sustaining trade above it for much of the Globex session. At 8:30am initial/continuing jobless claims data came out better-than-expected. As we approach cash open, price is hovering in the air gap left behind during Monday’s gap down.
Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am and a 30-year bond auction at 1pm.
Yesterday we printed a normal variation up. The day began with a gap down near Tuesday’s low. The opening two-way auction broke lower but before sellers could close the Monday/Tuesday gap responsive buyers stepped in and a sharp excess low formed. Said buyers worked higher to fill the overnight gap before we retraced back to the daily midpoint. Buyers were initiative here (initiative relative to Wednesday open, responsive relative to Tuesday close) and defended the mid before rallying price up to a new weekly high. We ended the session near high-of-day.
Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 7667 before finding sellers who defend last Friday’s low and two way trade ensues.
Hypo 2 sellers press into the overnight inventory and close the gap down to 7550.75. Look for buyers just below at 7544 and two way trade to ensue.
Hypo 3 stronger sellers press down through overnight low 7526 setting up a move to tag the 7500 century mark before two way trade ensues.
Wed Aug 7, 2019 9:17am ESTComments Off on Trump criticizes Fed policy, wants more easing, NASDAQ down a quick -90, here’s the Wednesday trading plan
NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme range and volume. Price was balanced for most of the overnight session chopping along the Tuesday midpoint before rate cuts from other country’s central banks briefly spiked price higher–poking above the Tuesday high. The buy spike was erased through much of the early AM hours here in America before the selling accelerated around the time President Donald Trump sent out a series of tweet criticizing Federal Reserve policy:
“Three more Central Banks cut rates.” Our problem is not China – We are stronger than ever, money is pouring into the U.S. while China is losing companies by the thousands to other countries, and their currency is under siege – Our problem is a Federal Reserve that is too…..
As we approach cash open, price is hovering just below Wednesday’s low.
On the economic calendar today we have crude oil inventories at 10:30am, a 10-year note auction at 1pm and consumer credit at 3pm.
Yesterday we printed a neutral day. The day began with a gap up into the upper quadrant of Monday range. Buyers made a drive higher off the open but were unable to take out the Monday high before sellers stepped in and worked us into a range extension down. Said selling formed an excess low just before New York lunch and up above Monday’s lower quadrant. This led to a rally back up through the daily high and briefly above Monday’s high before we closed the session back near the low end of the upper quad.
Heading into today my primary expectation is for sellers to press down to the 7400 century mark before discovering responsive buyers. Said buyers work price back up to 7450 before two way trade ensues.
Hypo 2 buyers work into the overnight inventory and close the gap up to 7514.50 setting up a move to take out overnight high 7569. Look for sellers up at 7588.75 and two way trade to ensue.
Hypo 3 strong sellers press down to 7350 before two way trade ensues.
Tue Aug 6, 2019 9:29am ESTComments Off on NASDAQ up a quick +100 into Tuesday, here’s the trading plan
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Price worked higher overnight after plunging lower after closing bell Monday evening. Volatility is high, that is for sure. The selling late Monday took price to levels untouched since June 6th. As we approach cash open, price is hovering above Monday’s midpoint.
On the economic calendar today we have a 3-year note auction at 1pm.
Yesterday we printed a double distribution trend down. The day began with a pro gap down and after a brief two-way auction at the open, price began a steady campaign lower. The sell-off found buyers late in the session around 7400 but they were overrun as the session completed. We formed balance distributions along the way which is why yesterday’s action does not classify as a pure trend day.
Heading into today my primary expectation is for sellers to press into the overnight inventory and close the gap down to 7380.75. Look for buyers to defend Monday’s low 7360.75 and two way trade to ensue.
Hypo 2 stronger sellers close overnight gap 7380.75 then continue driving lower, taking out overnight low 7224.50 before two way trade ensues.
Hypo 3 buyers gap-and-go higher, up through overnight high 7493.75 and sustain trade above 7513.75 which sets up a move to tag 7555.
Mon Aug 5, 2019 9:24am ESTComments Off on Trade war stuff sends NASDAQ reeling lower, here’s the Monday trading plan
NASDAQ futures are coming into Monday pro gap down after an overnight session featuring extreme range and volume. Price drove lower overnight, trading down into levels unseen since mid-June. The move is being attributed to the Chinese Yuan weakening, which many are calling a manipulation on China’s behalf and a potential sign that trade negotiations between USA and China are worsening. As we approach cash open, price is hovering inside the 06/17 range, well below last week’s levels.
Pro gap down.
On the economic calendar today we have ISM non-manufacturing at 10am followed by 3- and 6-month T-bill auctions at 11:30am.
Last week kicked off with indices down slightly across the board then marking time as we awaited the Fed rate cut. Third reaction after the cut was a sell which was followed by a strong liquidation lower. Thursday, the first of August, saw buyers erased most of the Fed sell-off before a series of tweets from President Donald Trump regarding the trade negotiations sent prices back down to the Fed rate cut reaction lows. Friday was a gap down and move lower across the board, with markets coming into a choppy balance ahead of the weekend. The last week performance of each major index is shown below:
On Friday the NASDAQ printed a double distribution trend down. The day began with a gap down and out of Thursday’s range. Sellers rejected any notion of reclaiming the Thursday range, instead price worked lower, taking out July’s low before coming into balance inside the 06/28 range.
Heading into today my primary expectation is for buyers to work into the overnight inventory and trade up to 7600. Sellers defend the century mark and we press down through overnight low 7529.25. Look for buyers down at 7506.25 and two way trade to ensue.
Hypo 2 stronger buyers sustain trade above 7600 setting up a move to target 7667.50. Sellers here attempt to defend the Friday low 7650.25 but are overrun as buyers continue working price up to a full gap fill at 7702 then up through overnight high 7709 before two way trade ensues.
Hypo 3 gap-and-go lower, sustain trade below 7500 setting up a liquidation down to 7437 before two way trade ensues.
Sun Aug 4, 2019 12:57pm ESTComments Off on Raul says stay cool
Models are updated and back to neutral after flipping bullish last Sunday. Strong ‘Hybrid Chg %’ numbers drop off on Monday which gives bears an edge heading into the week. Trade wars are running hot, and my opinion is that they are going great but what do I know about the macroeconomic picture? Nothing and neither does anyone else. If anyone claims on the CNBC entertainment news channel to know how the global economies levers work, they are a liar.
The Federal Reserve doesn’t even know. They’re losing their might, believe it or not. The power of the hash has manifested. The whole archaic notion of money backed by nation states has been called into question. There is no backing to the money besides military might. Which I suppose is nothing to sneeze at. If the military wants to make you dead—they will.
But they cannot make to kill bitcoin. Which is nice, because maybe bitcoin will make to kill them.
Moving on from fantasies of anarchy…
Lots of my favorite twitter trader accounts seemed on tilt last week. There was a vibe of confusion—what with the rate cut introducing heavy selling, the new month flows erasing said selling, only to have a trade negotiation tweet from President Trump re-erase the erase-ment. Admittedly, it was a lot to digest. I was watching from afar, having committed to some side work instead of grinding out trades. And maybe I am sitting on a cloud thinking I am a better investor and trader than most, I don’t know maybe I am or maybe I am just a jerk—but this is my advice to anyone who felt a little rattled by last week’s action:
There is always another bus
If you start to feel off, or like your actions are based on emotion and not focused execution of your plan, the first step is to STOP.
This is often done most easily by removing your body from your desk. Outside work or home chores are helpful if you need a distraction. If you feel an itch or urge to take action because you catch a chart or news bit on your phone or some screen in the corner of your eye, put a wider space between you and the markets.
If you have a plan in place and feel calm and clear about what needs to be done, then re-engage. You likely need to reduce size given the increase in volatility. Be sure to keep track of how you feel.
The stock market was here long before us and will continue to function long after we are gone. Just like buses in the city, there is always another trade coming. Make sure your account is still liquid so you are ready when that next opportunity comes.
Anyways, it is nearly 1pm New York on this lovely Sunday and I need to go wrestle some iron up and down a few 50-60 times because if not I will want to make to kill. Why is my base instinct so violent? We don’t know. Raul says stay cool.
Raul Santos, August 4th, 2019
Exodus members, the 246th edition of Strategy Session is live, you need to see what is going on in the NASDAQ transportation index, check out Section IV!