Respect the Tone

Friday summer grind is not conducive to pressing shorts. Yesterday and today exemplify the conditions you want to avoid shoring like the plague. Just.chill. Literally, your money is better risked at the horse track. Better yet, buy yourself a nice pair of sneakers—they’ll give you more mileage.

By 11am I was off the grind and pursuing other economic endeavors. Overall my book is cashed up. I have long term faith in Elon and the team over at Tesla. Gas is back over $3 bucks here in the D. That didn’t take long. It should serve as a reminder to all SUV buyers that their freedom is always at risk and electric cars charged by the power plant in the sky free you from the caprices of refineries.

Aside from TSLA, I am bidding my time in SCCO and TWTR fully aware that either could make a move against me any minute. Also, I need solar exposure. I sold SUNE at thirty deus man! I need to space alien back into the space, but how?

Slowly, and with the help of Exodus of course.

Going into the weekend I feel neutral. We worked the short side for two productive weeks, that’s enough for me. However, if come Sunday the models insist I continue twisting my knife into this market, I shall.

They’re talking 90+ degree weather this weekend in Detroit. Straight Out of Compton is playing in the movie theaters, and massive block parties are set to take over the industrial centers of our cities. What do you know about that? Conditions are ripe for debauchery, crime, and rambunctiousness. You have to keep your wits about you in these conditions. Stay sharp.

Nasdaq futures are down slightly as we head into cash open. The session was mostly balanced until at attempt higher was made early this morning. Said attempt stalled before the midpoint from Thursday and rolled hard. Price spent the next hour pushing lower by about 25 points. Thursday session low was breached in the process and now price is grinded along below yesterday’s range.

Today is the busiest economic event day after a quiet week. We have Industrial/Manufacturing Production data at 9:15am followed by the preliminary August confidence read from University of Michigan. Then at 1:00pm the Baker Hughes rig count.

Yesterday was a grind of a session. Sellers made an early attempt down into Wednesday’s neutral extreme print but were contained to the upper quadrant of the session. From there buyers began methodically grinding price higher for nearly the entire session, slowly. In the final hour of trade liquidity was low and a seller managed to push price back down near session low.

Heading into today, my primary expectation is for early excitement to give way to slow, summer Friday grind trading. Look for sellers to take out overnight low 4501.25 and test to 4491 before buyers step in and two way trade ensues.

Hypo 2 buyers work into the overnight inventory and close the gap up to 4517. They target overnight high 4528.50 and continue pushing up to 4540.75 before 2 way trade ensues.

Hypo 3 sellers push a bit more aggressive at target 4460.

Levels:

This is the absolute worst tape to be shorting. It is slow, everyone else is out enjoying the sunny day, and you sit and watch paint dry. To say I am furious would be an exaggeration but I do feel flummoxed because I did not adhere to my plan.

You see, unlike all these other ham eating ASSHOLES, I pen my thoughts very directly each and every week. I want to be sure you know where I stand and exactly how I intend to behave over the next 5 days. Five days, that is all I offer. Here was Sunday’s thesis inside the Exodus Strategy Session, #nofilter:

Raul’s bias score 2.35, Medium Bear. The upcoming economic calendar is quiet and investors are starting the second week of August battered. Look for a fast move lower early—a liquidation type move that introduces real fear into the tape. The bias model is signaling the likelihood we flush lower then form a tradable low into the weekend. Wait for an event-like occurrence before legging back into longs.

By golly, if that exact scenario didn’t play out. Event and all! But here I sat, drunk on greed and pomp, and pressed into the hole.

Let’s be clear about something. It is hard for me to be bearish. I am a hard-wired optimist so the way of the bearshitter is strange. One more thing—yesterday, WAS AN EVENT. MAN! You can have this whole game figured out but if you don’t execute you lose. I am off to panhandle while playing with my iPhone, hipster style.

Nasdaq futures are coming into the session up after a slightly abnormal session. Price managed to push well above yesterday’s high and deep into the upper quadrant of Tuesday’s range before finding responsive selling. The session started out a bit soft but by the evening price was grinding higher.

At 8:30am Advance Retail Sales data printed in line with expectations. Initial and Continuing jobless claims data was out at the same time and slightly worse than expected. Also on the agenda today we have Business Inventories at 10am and Natural Gas storage stats at 10:30am.

Yesterday we started out with a big gap down and the day became even bigger. After some fast selling to start the day, selling that pushed down below bracket low, price reversed. By the early afternoon we were neutral and by session end we closed the overnight gap and then some to print a neutral extreme day. This day-type carries the 3^rd most directional conviction behind trend day and double distribution trend day. It also left behind a big excess low—event like—something I was looking for this week.

Heading into today my primary hypothesis to see sellers push into the overnight inventory to close the gap down to 4533.25. From there I will look for them to target overnight low 4516 and push to test the 4500 century mark. Look for responsive buyers at 4494.25.

Hypo 2 sellers struggle and fail to close the overnight gap 4533.25 and we continue exploring higher prices. There’s an open gap up at 4565.75 from Tuesday which is likely to attract price. If that closes, look for a continued move up and responsive sellers around 4571.50.

Hypo 3 is blastoff. Take out the Tuesday gap early 4565.75. Press and test above Tuesday’s high 4580, and make haste to 4600.

Levels:

Having come into the week with a bearish bias, the Monday gap up was a gift I fully embraced and used to initiate fresh shorts via QID and BIS. Yesterday went swell—shorting NAS rips along the way, collecting my stipend.

You can imagine my elation when I woke to a bloodied mess of index bits and bearish jubilee. It was magical. I had my regular summer breakfast of boiling hot water and lemon juice. Then I prepared a detailed report while channeling the morning clairvoyance.

Then brunch came, I ate a heaping 4 whole eggs, a pot of steamed broccoli, and took to twitter to talk general smack and book. NAS TRIN right away called the weakness into question, but I held my shorts anyway. Crystal clear hindsight shows I should have booked a piece of my short down at ATR bracket low. This will need to be a hard written rule going forward. Instead today it sits like a pox on my name.

We range extended lower, barely, and only on the Nasdaq. This was classic smoke screen action. I fought the tape a few times but went to the sidelines in the futures when sellers gave up 4462.25. Since then I have added to my QID position but also increased the size of my Tesla long.

There is lots of day left, and bulls are still in the hole. It will take more than this show of force to knock me off my bias. Therefore I shall press like my life and yours depend on it.

ADDENDUM: Here’s me talking to myself, but not listening:

NAS $TRIN calling the morning softness into question

— Raul (@IndexModel) August 12, 2015

spooz trying to turn right where they need to, decent looking low

— Raul (@IndexModel) August 12, 2015

This is my spot, otherwise flip to neutral bias intraday

— Raul (@IndexModel) August 12, 2015

Keep an open mind here, it's a decent looking low.

— Raul (@IndexModel) August 12, 2015

Bulls need semi's to get turnt up. They have a shot $SOX.X …basically the opposite of what happened Mon/Tues in $GPRO

— Raul (@IndexModel) August 12, 2015

Breakout, fake out, break down, go long #fungula

— Raul (@IndexModel) August 12, 2015

Action in the globex session picked up, and for the first time since the weakness began we are seeing abnormal (2^nd sigma) range and volume.  Price pushed higher initially overnight but stalled at yesterday’s mid.  From there we saw a 43.25 point rotation lower then a continued grind lower.  Price pushed the ATR low and found buyers just ahead of the major composite VPOC.

The economic calendar is features the crude oil/distillate inventory data at 10:30am followed by a monthly budget statement at 2pm.

Yesterday we printed a double distribution trend day down.  Sellers managed to close the weekend gap down to 4520 affirming the idea that weekend gaps are contrarian events this year.  From there sellers continued pushing into last Friday’s range.  The tape was slow and methodical.  We closed out the session with a bit of a ramp.

Heading into today, my primary hypothesis is for sellers to gap-and-go lower.  Look for them to target the 7/10 range gap at 4426.50.  If they can breach this level then look for a continued move to fully close the gap down to 4409.  Use the 4400 century mark as a stretch target.

Hypo 2 buyers push into the overnight inventory but fail to reclaim yesterday’s range low 4485.50.  Price rolls over and works lower to take out overnight low 4454.25 and kiss the CVPOC at 4450 before 2 way trade ensues.

Hypo 3 buyers reclaim Tuesday low 4485.50 and close the overnight gap up to 4511.  Look for a continued move to target overnight high 4525.25.

Levels:

Bulls made a valiant attempt at propping the markets up this morning but logic prevailed. Something is afoot—the Chinese are so new money, every attempt they make at being American is a fucking embarrassment.

This uncertainly can put a bid in gold. The alternative, reams of international paper, is a bit troubling. How about some crypocurrency? Sure. Spend your life worrying about Igor in Romania who sees zero sunlight and hacks mainframes with his fat, cheese doodled fingers.

I have no desire to be long this tape. My only contemplation is whether I will short more into the closing bell. That my dear Watson depends on where we close this bish out.

Developing…

Nasdaq futures are pricing a gap down heading into cash open Tuesday. The globex session started out strong after news that Google will restructure their organization sent share prices soaring. After briefly taking out Monday’s session high, Nasdaq price rolled over and traversed the entire range. We are near session lows on slightly elevated range and volume.

The economic calendar is quiet today. At 10:00am we will hear Wholesale Inventories.

We started the week with a sizable gap up. Buyers showed up at the open and drove price higher but even before lunchtime we could see active responsive selling on the tape. Bulls briefly managed to turn initiative and extend price higher, right up into the weekly ATR bracket before sellers again faded prices.

The S&P 500 led the way Monday and overall breadth was decent. If the S&P continues to show relative strength it would be an overall positive for the market.

Heading into today, my primary expectation is for sellers to push lower from the gap down. Look for a move to close the weekend gap at 4520. This area will be pivotal, but I expect sellers to continue pushing below it and work down to target the 4500 century mark. Look for responsive buyers from 4496 – 4484.75.

Hypo 2 buyers push into the overnight inventory and work the overnight gap fill up to 4565.75. There is a strong VPOC here that quite easily could behave as a magnet. Look for sellers to defend at 4572 and price to roll back over.

Hypo 3 buyers push up through 4572 and work toward hitting the 4600 century mark.

Hypo 4, full on liquidation. Sellers push down through 4500 early setting up a test of last Friday’s low. Target 4468 with a stretch target of 4462.25.

Levels:

There is no reasoning behind my blog headline. I am putting on no such thing, the Ritz. This market is dying but we can’t tell because everyone is on vacay. When the shoe drops it will be a swift and decisive boot to the neck. Fear will thicken the air. Unless you’ve enjoyed a balmy August day in the Murder Mitten you’ve never truly felt thick air. It makes breathing hard and your clothes stick and smell.

I don’t like the rhythm of this tape. What I mean is I feel in tune with it, but it can’t make me dance. Instead am I posted up against the wall clutching a heater, ready to pop off and ruin everyone’s good time.

NUGT is up. People typically short the initial bounce too soon, but I can’t say with any certainty how this one will play out. I should probably default my decision over to @autumnalcity87. Perhaps I will. TWTR is up nearly a 10 bag. It will pull in again. Don’t worry. Copper is working and today I initiated new positions in QID and BIS.

To sound fancy, let’s call my current approach macro global. To be truthful I am shorting into the hole like a lunatic with a death wish. Someone has to do it.

PS – If you want a fighting chance at trading options, you best get inside this week’s clinic courtesy of the addict himself.

Nasdaq futures printed a slightly abnormal range overnight while steadily pushing higher. Volume metrics are running normally while price is set to open in a slippery zone. As we approach cash open, the market is continuing to explore higher in search of sellers.

The economic calendar is quiet for most of the week. Today we shall hear from Fed’s Lockart who is talking both at 9am and 12:25pm—though it may not show much impact on the tape. We also have the Labor Market Conditions Index Change at 10am.

After Wednesday, we spent most of last week pushing lower. Buyers stepped in shortly after we closed the open gap from 7/13 affirming this market’s “no gap left behind” policy. In accordance with this policy, it is my duty to report that two gaps are open below and one above.

Price ramped higher Friday afternoon after spending most of the morning working lower. The afternoon rally was impressive, nearly 40 Nasdaq points, and material enough to switch the short-term intention of the marketplace.

Heading into today, my primary expectation is for sellers to push down into the overnight inventory. The open location is a fast zone, inside single prints left behind last Thursday so I expect there will be big rotations to wrangle with early on. Look for sellers to check down to 4534.75. If they can take this levels then continue lower to target overnight low 4512.75 then a test of Friday’s low 4480.50. Stretch target is 4468.50.

Hypo 2 buyers gap-and-go up, climbing the pole. Look for sellers to defend from 4587.50 to 4593 and price to roll over and head lower.

Hypo 3 buyers sustain price up near 4590 setting up a move to the 4600 century mark.

Levels: