The Two Contract Tango

Nasdaq futures traded an elevated range overnight but price managed to stick inside Thursday’s high and low throughout the session. Volume metrics will be screwy for the next 5 trading sessions because some volume stays behind and trades the September contract while the majority rolls on to trading the December contract. The overall structure of the globex session is balanced with a slight downward skew.

We have a few medium impact economic events today. At 10am we shall hear the primary September Confidence read from University of Michigan. At 1pm the Baker Hughes rig count is out. At 2pm the Monthly Budget Statement will be released.

Yesterday we printed a normal variation up. Price opened just below Wednesday’s low and buyers quickly stepped in to fill the overnight gap. Hypo 3 yesterday called for strong buyers to push well up into Wednesday’s range and that was what transpired. Sellers responded to the higher prices and knocked us back down to the session mid before we ended the day.

Heading into today, my primary expectation is for price to try and work lower. Look for sellers to struggle taking out overnight low 4249 setting up 2-way trade that works closed the overnight gap up to 4284.25.

Hypo 2 look for sellers to target the overnight low 4249 setting up a move for the ledge at 4226. This is a key test zone and if we go below it look for price to spill over and trade down to 4208.

Hypo 3 buyers firm up and work higher to target overnight high 4305.75 and test up above yesterday’s high 4318.50.

Levels:

Let’s be clear about something—we are in the midst of ruthless, spine tingling volatility right now, ok? I want to tell you something—right now isn’t the time to build up a book of stocks and go sit in the sun, alright? Now is about being tactical and playing both sides, like Catherine Zeta Jones.

You may think you are Sean Connery smooth, but unless you are prepared to slap this market down when it goes hysterical you will always be a victim of its fits.

I took a front seat to the ultimate comeuppance, the final Entrapment of biotech bulls, via BIS.

Here’s some non-biotech chart fodder to support my bear trade:

Nasdaq futures are lower as we head into Thursday after printing an extreme range during globex. It started with several hours of trade below the low we printed yesterday afternoon. This formed a clear ledge just above 4230. Then a bounce took hold pressing up above yesterday’s MID before rolling over and trending lower all morning. At 8:30am Initial/Continuing Jobless Claims data introduced more selling to the market and pressed us down below the ledge formed last night.

Also on the economic agenda today is Wholesale Inventories at 10am. Today is also roll forward. US Equities officially roll to the December 2015 contract at 9:30am ET. Some trades stick behind and trade the September contract until more volume shows on the December contract, but I will be using the December contract to determine levels after this morning’s report. The roll forward day usually has fast moves.

Yesterday price started the day with a large gap up and from the open we saw strong selling. Sellers abated slightly ahead of the Apple event but once it was completed they emerged again and pressed into the tape. Sellers managed to traverse all of Tuesday’s range closing price down near weekly lows.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and attempt to close the gap up to 4256.50. Look for them to struggle and price to roll over and continue lower to target 4210.50 with a stretch target of 4200.

Hypo 2 sellers keep pushing into the open and we test down to 4210.50 where responsive buyers show and work on a gap fill up to 4256.50. Look however for buyers to stall and roll over around the 4240 level and two way trade to ensue.

Hypo 3 buyers close overnight gap up to 4256.50 early and set up a secondary leg up to 4290.

Levels:

After 10 consecutive neutral days, bears have struck the ending blow in grand fashion. The always dangerous gap into the week is now in jeopardy as bears throw down a big trend day. The move came on the heels of a second big gap up and price is closing this extra gay Wednesday on the low of this erectile dysfunctioned holiday week.

These are drastic conditions and a reminder that we are still deep in the woods.

The selling has been nonstop, all session, and at every turn. It only paused briefly as we awaited any sign of hope from our overlords at Apple. They gave us nothing but modifications of things already done [most of which I think will be quite useful, but useful never got anyone on the moon].

Prepare to traverse our massive range and probe the other side, long-dicked style.

I finally see a spot I am willing to add to my Twitter investment.  This is a long term hold, and I am willing to endure much more pain.  But many have asked to know when I add to the bird.  I have planted my flag on the $27 handle, for the win.

Nasdaq futures are pro gap up for the second consecutive day of our holiday shortened week. Price trended higher overnight, pushing into the bottom quad of the 8/20 range before finding any sellers. Range is extreme but volume is only elevated—which is typically the behavior we see on the way up.

The only economic event was MBA Mortgage Applications at 7am. There is also an Apple event scheduled for today which tends to whip the overall market around a bit.

Yesterday, and I can’t make this up, we printed the 10^th consecutive neutral day. It was a big one too. Actually, it was a neutral extreme day because we closed near session high. This meant bulls had strong directional conviction to hold overnight.

Heading into today, my primary expectation is for bulls to probe up above overnight high 4369.50 and see what sort of order flow they find. If sellers no show then it’s pretty thin up to 4436 (crazy, I know). Look for a move up the thin print then responsive sellers around 4436.

Hypo 2 sellers work into the overnight inventory and test down to 4318.50 where responsive buyers defend and two way trade ensues.

Hypo 3 sellers step in heavy, close the overnight gap down to 4298.75 and start us on our path back through the near term range.

Levels:

Nasdaq futures are priced to gap up into the holiday shortened week. The globex session went live at 6pm yesterday and from the onset price worked higher. Around 2:15am the rally accelerated and about 2 hours later price was around 60 points higher. Both range and volume and extreme 3^rd sigma.

The economic calendar is quiet this week. Today we have Labor Market Conditions at 10am and Consumer Credit at 3pm. Both are relatively low impact events.

Friday we printed a big gap down neutral day. It was the 9^th consecutive neutral day. Price worked lower off the gap down to close the open gap left behind on 9/1. From there buyers responded and by the end of the session price was trading near the high.

Heading into today my primary expectation is for sellers to work into the overnight inventory and test down to 4233.25. From there look for responsive buyers to step in and work at targeting overnight high 4279.

Hypo 2 buyers gap and go but stall out at 4290 before rolling over and two way trade ensues north of 4155.

Hypo 3 aggressive gap and go trade higher, take out 4290 early and continue higher to target 4318.50.

Levels:

There is a ton of data to digest over the weekend.  While one could focus their attention on the negative news cycle [we have entered super negative cycle mode] I prefer to fire up my analytical engines and be sure I have all the data segmented and accounted for.

I do this inside the Exodus Strategy Session.  You may think I produce this report as a service for our member class, and there is some truth to that.  But the essence of the research is preparing me to step onto the field and face off against the most sophisticated and resourceful competition the world has to offer.  If you ever intend to take the trading profession seriously, I recommend doing your own research, at least for a while.  Once you know exactly what data is valuable and actionable, it makes sense to automate and/or allocate.  This is any business pursuit, really.

Anyhow, let’s not get too stuffy ova’here. Happy Labor Day weekend, I hope you are enjoying yours.  I will work tomorrow.  There will be a few idiots on Twitter ‘wishing’ the market was open because they are deranged lunatics.  I on the other hand will catch up on all the menial paper work and whathaveyous.  A market holiday Monday is like a free ticket to catch up on 3 months of work.  I can’t wait.

Exodus members, the latest strategy session is published.  If you’re interested in cycle analysis, pay particularly close attention to sections V – VII.

This movie resonated with me big time growing up.  As a kid in Michigan I was surrounded by lakes but always wanted to see the ocean.  This movie appealed to me because of the surfing and exotic California landscape.  But the surfing and skydiving are merely the scene where the classic story of ‘undercover cop getting emotionally attached to the criminal’ plays out.

This template story is so good that Fast and Furious is literally the exact same movie as Point Break, just with cars.  Let’s not even talk about 2015 hipster Point Break, it looks stupid.  I will still see it.

Anyhow with a cast including Gary Busey and Pat Swayze you know it is going to be good.  Add in babes, spirituality, and lots of action and you have the makings of a must watch movie.  The  underlying desires of Bohdi will likely resonate with any trader who values a life free from corporate oppression.

Here’s a great scene where douchy Johnny Utah gets his ass handed to him until super ninja Pat Swayse comes to the rescue:

There was no way bears were going to drag the market into the weekend like a wounded gazelle.  Just when it looked like bulls lost their fight they came ripping back to undo the afternoon bullshit.  This is prime time neutral markets.  We know they will break soon, swift, and decisively.  The only unknown is direction.

I say up.  I see rocket-like gains coming next week with streams of investors left dusted as we propel into the stratosphere.

It has been a pleasure headlining iBankCoin today.  Taking the reigns of the finest financial ship sailing the interwebs is special.  You guys should consider coming out this October’s Investor Conference.  Even though I am not slated to present, I will have lots of my classified documents including my current trading plan with me and I love a good conversation on doing this job full time.

Worst case, I drink myself blind at the VIP party and make an ass out of myself.  I do this better than most.

Think about it, and have a great Labor Day weekend.

PS – I still have some coupons available for the conference.  Email me at [email protected] if you want one.