iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,569 Blog Posts

TEXAS HEDGED

I made my Q1 motif allocations before quarter-end, and bought a TQQQ position end-of-day that I will hold for no less than 4 and a half trading days (X-mas eve half day).

If the same insomnia that had me awake at 5am grabs me again this evening, I’ll elaborate.

Until then, enjoy my horribly timed tweet from just before lunchtime:

Quick shout out to my trading plan for putting me on the sidelines before this $4000/contract unidirectional move in $nq_f could blow me up #grateful.

Hope you guys are doing okay out there.  Feel free to leave comments in the hotline below.  We’re all in these battle trenches together.  Even the traders on the right side of this move have much to process.

#developing

I probably look like a mad man, but I do think we could be at or quite near the bottom of the trough (hole? bottomless pit?) we’ve worked down into.

I will be cleaning Mothership for the next five hours, perhaps even tackling a major appliance scrub down.  Cleaning like I just killed someone is a drawdown habit I formed over the years, for better-or-worse.  Next comes the thickets of sage and chants.  I probably look like a mad man.

#tbd

Comments »

NASDAQ gap down into roll-foward/FOMC/pre-Christmas week, here is the Monday morning trading plan

NASDAQ futures are coming into Monday gap down after an overnight session featuring extreme range and volume.  Price was balanced for most of the globex session, chopping along the lower quadrant of Friday’s RTH range.  Around 8am price began probing lower, and as we approach cash open prices are down near last Monday’s lower quad.

On the economic calendar today we have NAHB housing market index at 10am, 3- and 6-month T-bill auctions at 11:30am, and Long-term TIC flows at 4pm.

Last week began flat across the board and with a wide open auction Monday morning.  Said auction was overrun by pressure from selling which drove price lower.  This ultimately resulted in an excess low and we rallied off of it through Wednesday morning.  Sellers came back in Wednesday afternoon and we spent the rest of the week working lower.  The low from Monday held for all but the Russell, which made new lows at the end of the week.  The last week performance of every major index is shown below:

On Friday the NASDAQ printed a trend down.  The day began with a gap down and two-way auction.  Buyers were unable to reclaim the Thursday low before initiative sellers stepped in and began driving price lower.  A steady selling campaign continued throughout the rest of the day, ultimately closing on the low.

Trend down.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6621.25.  From here we continue higher, up through overnight high 6656.  Look for sellers up at 6666 and two way trade to ensue.

Hypo 2 stronger buyers trade us up to 6698.25 before two way trade ensues.

Hypo 3 gap-and-go lower, trading down to close the gap at 6530.50, look for buyers down at 6543.75 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

Comments »

Grateful for all the bearish sentiment into year-end

The header photo for this Sunday, December 16th blog entry comes courtesy of The New York Times SundayStyles front page, which I poached from a Howard Lindzon Stocktweet.  It depicts two tiny cartoon humans moments away from being kookslammed by a giant black and white wave with a red crest.  Here is the cover again, for emphasis:

This is the type of sentiment that gives me bullish conviction.  CNN’s Fear & Greed index shows a similar sentiment and the prevailing tone amongst my carefully curated Twitter feed is that the world is fucked and so is everyone else on it.  Bitcoin wealth is all-but-gone and on paper some people look a heck-of-a-lot less wealthy then they did this time last year.

But I do not base my decisions of the capricious sentiment of the herd, or the newspapers, or even the politicians.  Or the raucous behavior of Frenchmen, or the patriarchal shake-ups in Arabia.  I base my decisions on the will of my robots.  They are my guide.  I am their steward.

What are the robots saying?  Last week they said ‘acceleration to the downside then a tradeable low’.  Last week Monday we accelerated to the downside, and except for on the Russell, this resulted in a tradeable low.  Now my IndexModel is back to neutral, while Exodus has a bullish cycle lasting until the end of the half day Christmas eve.  The robots are bullish.  Therefore I am too.

This is a good week coming up.  There is an FOMC rate decision Wednesday afternoon.  It is a live meeting.  There is a press conference scheduled afterwards and the gambling halls in Chicago are placing 76.6% odds of a 25 basis point lift in rates.  Only 76%.  They usually have more conviction one way or another.  So the hike is not guaranteed, despite being the heavily favored bet.  We like uncertainty.

We also like distractions.  Holidays are distracting.  I fielded over three hours of phone calls this weekend with relatives, some crying, some belligerent, all because of the holidays.  Bringing everyone together can be challenging.  Not being able to satisfy the desires of everyone can be discouraging.  And people are just sort of brainwashed by the consumer cycle foisted upon Americans by the forces of capitalism.  These are rife conditions for a balanced mind to capture opportunities.  This is a good week coming up.

Whether or not rates lift this Wednesday is important, but investors will also be looking closely to see if the Fed is dialing back their intentions to continue lifting rates through 2019.  The 2:30pm press conference will be scrutinized for slight changes in verbiage and tone.  Overall, Wednesday afternoon will serve as a useful guidepost on the week.  The third reaction after the decision/conference will likely dictate direction for the rest of the week.

And listen, while I do my finest work inside the NAS100 futures, I am less concerned with the intermediate-term direction of the indices and more interested to see how individual stocks that I like are behaving.  Tesla, for example.  All this fear and crash sentiment but my favorite stock (and largest position) is a few dollars away from record highs.  Twitter has been fierce. I love solar into 2019.  Sangamo. Goldman.  These are the areas that I expect to see move higher over the coming weeks and months.  That is where my concern lies.  The indices could chop and even head lower, but if individual stocks decouple, this continues to be a healthy bull market.

So there you have it.  The theme going into year-end has been persistence.  I think adding kindness to that theme has been helpful for me.  Persistence and kindness.  Especially kindness for your fellow traders.  2018 has been shaky.  By no means has it been as extreme as 2008 or even 2014 when indices didn’t bother to reflect the huge destruction of market cap happening almost everywhere outside of the FANG stocks, but 2018 has been a test of grit.  Resist the urge to pile onto someone who holds positions that oppose yours.

I am bullish heading into OPEX.  I am bullish heading into this crappy calendar-timed Christmas.  I am bullish into this extremely negative sentiment.

Hopefully I’ve made myself clear and mahalo for reading along.

– RAUL SANTOS, December 16th, 2018

Comments »

NASDAQ briefly takes out Tuesday low overnight, here is the Friday morning trading plan

*Note: this morning’s trading report references the December ’18 NAS100 futures contract (NQZ18).  I will be trading the December contract despite most action ‘rolling forward’ to the March ’19 contract.

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight starting around 8pm and continued lower until two-ticking the Tuesday cash low.  After that a responsive bid stepped in and we came into balance.  As we approach cash open price is hovering near the overnight low, inside the lower quadrant of Tuesady’s range.  At 8:30am Advance Retail Sales data came out above expectations.

Also on the economic calendar today we have Manufacturing Production at 9:15am, Manufacturing/Service PMI at 9:45am, and Business Inventories at 10am.

Yesterday we printed a normal variation down.  The day began with a gap up and two way auction.  Buyers attempted higher early on but stalled out before they could take out the Wednesday high.  Responsive sellers worked the overnight gap fill before we spent the rest of the session chopping inside of Wednesday’s range, forming a weak low along the way.

Heading into today my primary expectation is for buyers to work into the overnight inventory and attempt to reclaim Thursday’s low 6749.25.  Sellers reject a move back into Thursday low, setting up a move to take out overnight low 6650.75.  Look for buyers down at 6606 and two way trade to ensue.

Hypo 2 stronger sellers gap-and-go lower, trading down through overnight low 6650.75 early on and tagging 6600.  Trade is sustained below 6600 setting up a move to target the open gap down at 6530.50 before two way trade ensues.

Hypo 3 stronger buyers work a full gap fill up to 6748.75 then continue higher through overnight high 6760.75.  Look for sellers  up at 6800 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

Comments »

NASDAQ up 33, here is the Thursday morning trading plan

NASDAQ futures are coming into Thursday, ROLLFORWARD, with a 30 point gap up after an overnight session featuring extreme range and volume.  Price was balanced overnight, gyrating around inside the Wednesday range in a balanced manner.  As we approach cash open price is hovering at the Wednesday midpoint.  At 8:30am initial/continuing jobless claims data came out mixed.

Also on the economic calendar today we have a 4- and 8-week T-bill auction at 11:30am, a 30-year bond auction at 1pm, and a monthly budget statement at 2pm.

Yesterday we printed a neutral extreme down. The day began with a gap up just beyond the Tuesday range.  Sellers attempted to trade back down into the Tuesday range but were rejected, setting up a drive higher that briefly took out last Friday’s trend down high and sustained trade above it for several hours.  Then, late in the session responsive sellers stepped in and reversed the day’s entire range.  We ended up pushing neutral late in the session and closing on the lows—still positive on the day due to the overnight gap.

Neutral extreme down.

Heading into today my primary expectation is for a gap-and-go higher, up through overnight high 6837.75.  Look for sellers up at 6868 and two way trade to ensue.

Hypo 2 sellers work into the overnight inventory and close the gap down to 6766.25 setting up a move down through overnight low 6752.  This sets up a move to close the Tuesday gap down at 6715.75 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 6868 setting up a move to target 6900.  Stretch upside target is the composite VPOC at 6950.

Levels:

Volume profiles, gaps, and measured moves:

Comments »

NASDAQ up a quick 100, here is the Wednesday morning trading plan

NASDAQ futures are coming into Wednesday 100 points higher after an overnight session featuring extreme range and volume.  Price worked higher overnight, erasing all of the downward progress sellers made intraday Tuesday, selling progress that came after we opened nearly 100 points higher yesterday.  As we approach cash open price has probed beyond the Tuesday high and is hovering beyond it.  At 8:30am consumer price index data came out in-line to slightly-better than expected.

Also on the economic calendar today we have crude oil inventories at 10:30am, a 10-year note auction at 1pm, and a monthly budget statement at 2pm.

Yesterday we printed a normal variation down.  The day began with a gap up to near the high from last Friday’s trend down.  After a fierce battle between buyers and sellers at the open, sellers stepped in and began working price lower.  The steadily worked lower, eventually closing the 100 point gap and briefly probing below overnight low before two way trade ensued.  The day ended more-or-less flat after and afternoon responsive bid took price back to the daily midpoint.

Heading into today my primary expectation is for sellers to work into the overnight inventory and trade down to 6768.50.  Initiative buyers step in here (initiative relative to Tuesday’s close, responsive relative to today’s open) and we work up through overnight high 6824.25 setting up a move to target 6882.25 before two way trade ensues.

Hypo 2 stronger buyers gap-and-go higher, trading up to 6900 and sustaining trade above the century mark, setting up a move to target the composite VPOC at 6950.

Hypo 3 sellers work a full gap fill down to 6715.75 setting up a move down through overnight low 6671.75.  Look for buyers down at 6700 otherwise stretch side target to downside is 6600.

Levels:

Volume profiles, gaps, and measured moves:

Comments »

Big 5am push higher reclaims Friday losses, here is the Tuesday morning NASDAQ trading plan

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Price was balanced in the upper quadrant of Monday’s cash range for much of the session before a 100-point unidirectional wave higher pressed prices higher around 5am.  As we approach cash open price is hovering near globex high, which is near last Friday’s opening print.

On the economic calendar today we have a 3-year Note auction at 1pm.  There are no other events.

Yesterday we printed a neutral extreme up.  The day began with a slight gap down after a 30 point gap up was erased just before opening bell.  Price spiked higher early on but was met with equal selling force just beyond overnight high.  Sellers then began campaigning lower, taking price down through Friday’s low.  However, an excess low formed before we could resolve the open gap down at 6530.50 and from then onward we began to campaign higher, steadily, pushing neutral by mid-afternoon, and closing at session high.

Neutral extreme up.

Heading into today my primary expectation is for sellers to work into the overnight inventory and trade us down to 6722.  Buyers reject an attempt back into Monday’s high 6714.50 and we work higher, eventually taking out overnight high 6808.75.  Look for sellers up at 6832.50 and two way trade to ensue.

Hypo 2 buyers gap-and-go higher, sustaining trade above 6850 to set up a move to target 6882.25.  Stretch targets are 6900 then the composite VPOC at 6950.

Hypo 3 sellers work a full gap fill down to 6699 then continue lower, down through overnight low 6655, setting up a move to target 6600 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Comments »

Small gap up to start the week, here is the Monday NASDAQ trading plan

NASDAQ futures are coming into Monday gap up after an overnight session featuring extreme range and volume. Price worked lower overnight, taking out Friday’s low and trading down into the 11/22 range before rallying 120 points.  As we approach cash open price is hovering in the lower quadrant of Friday’s trend down.

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

Last week was unique.  It began with a pro gap up then chop.  Tuesday began with a small gap down that buyers were unable to fill.  This resulted in a trend down Tuesday.  Wednesday the markets were closed in observation of President G.H.W. Bush’s death.  Thursday markets re-open with a pro gap down that is bought up through most of the day.  Friday said buying is erased as another round of selling/liquidation blows through, closing out on low-of-week.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a trend down.  The day began with a slight gap down that buyers resolved before the selling resumed.  Selling then lasted all day, trending lower right up until closing bell, talking us into the weekend on weekly lows.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6620.50.  From here we continue lower, down through overnight low 6554 to tag the open gap down at 6530.50. Look for buyers down at 6526.75 and two way trade to ensue.

Hypo 2 stronger sellers continue the liquidation and we trade down to 6454.75 before two way trade ensues.

Hypo 3 buyers step in ahead of 6600 setting up a move to take out overnight high 6660.  Look for sellers up at 6709 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

Comments »

FINALLY: All signal aligned for a ‘fat pitch’ into year-end

As I ventured deeper into my Sunday routine of gathering and parsing out raw market data from the world’s financial complex, I found myself starting to slam the keys on my keyboard.  The outputs from IndexModel and Exodus began to make my plums tingle and the testosterone was being taken out on my computer. This is what happens when a good plan starts to come together.  This is when I start to become aggressive.  I see a fat pitch setting up into year-end; the type of buy signal you look back at in a few months with either a fully erect of wholly-limped penis.

And listen lads, research and blogging and tweeting is useful to me but make no mistake—I am far less concerned with being ‘right’ than I am with making money.  An observation I’ve made in my now 5-years as a full time traders and independent side hustler is that many of these cash ‘rich’ people are not intelligent nor are they often right.  They are barbaric and persistent.

Persistence.  That has been our theme into year-end.  The last Exodus hybrid oversold signal was a brutal tease.  At one point it saw prices on the NASDAQ higher by +7%, only to erase said gains by the time the signal completed:

Part of my Sunday research is parsing through the signals generated by Exodus, and translating them into an easy-to-consume human format for our members.  The data inside Exodus is so immense that it can seem esoteric and even downright archaic without a translator.

That is why they sent me.  I am the expert.  I only hope that history remembers me as being kind to the robots.

I SUBMIT THE CYCLE SHOWN ABOVE AS EXHIBIT ONE TO MY FAT PITCH THEORY.

EXHIBIT TWO: BUNKER BUSTER

When I first started building IndexModel, I was just logging the data and observing the outputs, waiting to see something interesting before digging in.  One of the interesting observations centered around when the spread between the average bias score of IndexModel minus the Exodus hybrid score resulted in a number that was less than zero.  This does not happen often.  The last time it happened in 2018 was on April 1st.  We can look back on that time and easily see that bears were made to be fools that week.  That signal marked the swing low for the next six months.

The other two Bunker Buster signals in 2018 were on 2/05 and 3/24.  The 3/24 signal happened the week before the 04/01 signal.  That being said, this ‘fat pitch’ may take more than one week to fully realize itself.  But overall, what the signal calls for is an acceleration to the downside that ultimately leads to a tradable low.  Long time reader and Exodus member UncleBuccs named the signal, and I’ve always felt that he named it exceptionally well.  I like to name my signals in a way that reflects the behavior historically seen and a bunker buster missile is a good mental visualization to keep in mind this week.

EXHIBIT THREE:

Massive negative skew in industry performance.  Another observation from Strategy Session.  We look at weekly industry returns with an absolute value greater than 3.  That shows us the abnormal movement.  These industries are placed onto a ledger and basically I eyeball the ledger to see when it radically skews.  This week is the biggest negative skew ever observed:

The two outsized positive returns on the left? Silver and gold.  L.O.L.  Primal fear has gripped the market and people have fled to shiny metal.  When we’ve seen big skews like this historically, it has meant continuation in the direction of the skew in the upcoming week.  In other word, industry money flows suggest more downside to come.  This fits into our downside acceleration theme.

EXHIBIT FOUR:

ROLLFORWARD.  This week, on Thursday, most active futures traders will migrate away from the December index futures contracts and start trading the March ’19 contracts.  From close-of-trade Thursday until the FOLLOWING Friday, 12/21, is a set and setting rife for chicanery and downright fuckery.  Volume statistics, cum delta, all sorts of usually useful raw data bits futures traders use to gain an edge verse the institutions, are rendered worthless by rollforward activity—the unwinding of huge positions in the December futures and rolling that money forward to the March contract.

Fuckery that is likely to accelerate us to the downside and ultimately form a tradable low…

EXHIBIT FIVE

Santa Claus

EXHIBIT SIX

“Didn’t hit nothing important.”  My only buy-and-hold add so far, during this market rout, was that nice Italian sounding biotechnology stock.  A stock that I ‘Simple Jacked’ into, thinking it was a CRISPR stock.  Turns out it is not, but as a company they do seek the same outcome as CRISPR—IMMORTALITY.  The alchemists stone.  The holy cup.  The trident of Poseidon.   Hopefully I am not jinxing this buy, buy so far my entry has been validated by the market.

EXHIBIT SEVEN

I had an exhibit seven but then my A.D.D. kicked in.

Listen lads, the bunker buster signal can be extremely difficult to trade.  The key is waiting for that capitulation low AND a strong responsive buyer to step in.  Sometimes we gap down huge into Monday and the buying begins right off the rip, marking the low right then and there.  That is when it is most tricky.  So the key here, is not BEING RIGHT.  The key is making money.  Stick to your process, I’ll stick to my process, and let’s go get that bread.

I do believe we are very near swing low for the next several months.  If we catch it right, holiday seasonality should validate our low and then carry clean through into 2019.  Fat pitch.

Exodus members, the 212th edition of Strategy Session is live.  You have to read this one, go check it out!

 

Comments »

Gap down in-range on NASDAQ ;-) here’s the morning trading plan

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight after briefly probing up beyond Thursday high.  Selling overnight was contained to the upper quadrant of Thursday’s range and as we approach cash open price is hovering up near Thursday’s high.  At 8:30am non-farm payroll data came out worse than expected.

Also on the economic calendar today we have University of Michigan’s primary December reading of sentiment at 10am followed by consumer credit at 3pm.

Yesterday we printed a neutral extreme up.  The day began with a pro gap down after the Wednesday market holiday and the Tuesday trend down.  The first hour of trade was choppy and formed a wide initial balance.  We very briefly broke the IB to the downside just before New York lunch, right as the European markets were closing, and instantly discovered a strong responsive bid.  This was a failed auction to the downside and it led to a strong rally that traversed the entire daily range to go neutral before continuing higher to close the overnight gap.  We ended near session high.

Neutral extreme.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6826.50.  From here we continue higher, up through overnight high 6856.50 setting up a move to target 6900 before two way trade ensues.

Hypo 2 sellers press down through overnight low 6764.50 setting up a move to target 6700 before two way trade ensues.

Hypo 3 stronger buyers trade us up to composite VPOC at 6950 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Comments »