Night Man, Your Days Are Numbered

If you managed to make it through last week’s volatility without blowing up, it’s looking like you’ll have a week of respite to decide how you want to position into the heat of summer. Everyone’s favorite Aunt, the honorable Yellen, will head over to Washington this week to field qNa from the House and Senate.

She’s particularly talented at answering yes or no questions with long tales, much to the chagrin of the panelists who each have a small window of time to probe her. It’s an art lads, I highly recommend you tune in for it.

Meanwhile, last week was hellish. If your degeneracy spiked and you opted for can upon can of ale, this week is your chance to right the ship. Switch to white wine, drink it at lunchtime only, and sleep well. America was spit upon during her birthday. Do not think that will go unpunished.

Look for a show of force from US markets this week. Where and how we push higher will tell the story. Exodus members, check out what I mean in more detail inside this week’s strategy session.

Nasdaq futures are higher again this morning, this time on news of a Greek resolution and a vigorous bounce in Chinese share prices. The overnight range is beyond second sigma on above average volume. The session managed to very briefly trade new lows at the start of globex before sharply reversing higher.

The economic calendar is interesting today. We have Wholesale Inventories at 10am and then we’ll hear from Fed Chair Yellen who is speaking in Ohio. We also have the Baker Hughes Rig Count at 1pm.

Yesterday started with a big gap up, right to the top-end of our developing value area. Buyers tested up to the key MCLVN at 4402.50 and were met by strong selling. These responsive sellers became initiative and we essentially formed a trend day down, going back and closing the entire gap and making new swing low.

Thus it likely comes as a surprise, for bears, to see price up this much into Friday. It speaks to the choppy nature of our market. However, amid the noise we have some clear price levels to build context upon. Foremost, the MCLVN at 4402.50.

Heading into today, my primary expectation is for a gap-and-go up to test the low volume area in and around 4402.50. Yesterday’s high in particular will be telling, 4407.25. If buyers can push and sustain above yesterday’s high I will look for a short squeeze to fill the gap up to 4422.50.

Hypo 2 sellers push into the overnight inventory working us back to the MCVPOC at 4390.  Look for buyers to sustain price above 4360 as we continue to trade inside balance.

Hypo 3 sellers push down through VAL 4360 and work the overnight gap fill down to 4337 to target overnight low 4331.75. Caution below 4320.

Levels:

Nasdaq futures are set to gap up this Thursday after a globex session featuring a grind up on slightly elevated volume. The action worked up into yesterday’s big gap down and we’re now lingering just above the high printed yesterday.

At 8:30am we had initial/continuing jobless claims data out but saw little reaction from it. The economic calendar is otherwise open until tomorrow.

Yesterday we printed a double distribution trend day down whose range was inside Tuesday’s. The inside day overall looked weak due to the amount of time we spent trading down near the low.

Overall the market profile structure suggests balance—albeit a big balance, nearly 50 points wide.

Heading into today’s session, my primary expectation is for sellers to push into the overnight inventory and trade lower. Look for buyers to defend the gap, showing up around 4370 and then a push to test the MCLVN at 4402.50.

Hypo 2 gap and go higher. Sustain trade above 4402.50 early and set up a leg up to close Tuesday’s gap at 4422.50.

Hypo 3 sellers push a full gap fill to 4345.75. Look for liquidation to take hold if we breach 4320.

Levels:

There is nothing redeeming about this tape. Liquidity was scarce after the FOMC minutes, and finding a floor for price was no small task.

It seems no one is eager to buy into the summer markets. I wonder why? My book ended the day aflame, down over 2.5% on the session, and I am nearly convinced to liquidate everything but my long term conviction investments.

I didn’t sign up for this—4% intraday moves from an electric utility? My NRG long trades like a biotech.  Never mind my expectations. That which is not working is subject to removal.

Despite my analysis still saying hold steady, this is your side of the table Mr. BTD Bull, down continues to be the path of least resistance. Today has the 2^nd weakest breadth readings on the year behind only June 29^th—the day that set this whole debacle into action. We’re only about 5% off the annual highs but sell in May, go away is winning so far.

When the market has looked its strongest that’s been an excellent sell signal. Conversely when it looks its weakest it’s been a buy. Eventually , when you call the market’s bluff, you get ran over, but I am sticking to the 2015 roadmap and holding the line. Bring forth the pain.

In the meantime, The benevolent Fly seeks the quell the fears of the plebian class, and has extended the opportunity for public readers to see inside the Exodus algo complex. Take advantage of this generosity—if you want to see the overbought/oversold levels for a stock (3 tickers max!) send your request to [email protected]. You may choose to see the overall market score instead. Also feel free to inquire about The Fly’s last month of buys/and sales.

For the love of redundant systems and relay checkpoints, why is the NYSE broken? Coincidently WSJ.com is down. The CME is no longer a hangout for humans, they’ve been locked out and replaced by server stacks.

The systems are failing us at a critical stress point. Fortunately for you, the walls of iBankCoin are heavily fortified. We are a beacon of stability—a lighthouse in the storm if you will.

Listen to me: this is how we shift our attention away from Greece. This is vital.

Data will guide my hand here. 4320 is my “trouble below” level on the Nasdaq. The TRANX is likely to push down soon, and if that sticks that’s reason for caution too. Finally there’s Exodus, immune to cyber instability, churning out actionable stats. Remember, tune out the noise. If you want to see if your stock is flagging oversold, email [email protected]. Let the algorithmic logic and key price levels be your guide.

FOMC minutes in 1.5 hours

The gap down followed by a powerful hour of selling keeps recurring these days. The difference today is the structure which from a market profile perspective is sound.

Internals are weak, but I expect this morning’s “excitement” to fizzle out fairly soon.

In the meantime, shoot your favorite ticker in an email to [email protected] to see if it is oversold. The Fly insists we extend this generosity to the masses in these turbulent times. You can also see Fly’s last month of buys and sells with time stamp. Don’t let emotion drive your decision process here. Put some algo oomph behind your ideas.

Nasdaq futures were on the move overnight, traversing over 70 points worth of range on the session. Volume on the action pushed beyond second sigma further emphasizing the extreme nature of the session. Price spent most of the evening pushing lower before finding buyers who held yesterday’s session low.

Coming up at 2pm we will hear minutes from the FOMC’s June 16-17 meeting. This is likely to be a high impact event. The economic calendar is otherwise quiet on the day.

Turning to the charts, the last few days have formed intermediate term balance. Price action has been overlapping since 6/29, two Monday’s back, when the market began being jittery about Greece.   A clear low volume pivot point has formed right at 4402.50. You can see it on the volume profile chart to your left:

Yesterday we printed a neutral extreme. Price worked lower and tested the low set during globex Sunday night at 4340. Just below it buyers could be seen defending.  Said buyers then worked back through the entire session range to print a close near the daily high.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and test above 4402.50. Look for them to sustain above this price and work the gap fill up to 4422.50. Look for sellers around 4439.25 and two-way trade to ensue.

Hypo 2 sellers push off the open to 4357.25, buyers defend, and two way trade ensues as we await the FOMC minutes.

Hypo 3 is a fast push lower, gap-and-go down. Sellers sustain below 4358 setting up a move below yesterday’s low 4334.50. Caution bulls especially if we trade below 4320.

Levels:

You can relax for now. Enjoy the brief respite because tomorrow’s FOMC minutes pretty much guarantee volatility tomorrow.

We are in one of those weeks that feels like it has two Tuesdays and an extra Wednesday thrown in.

If you are still recovering from the holiday weekend you may not know where the next move is most likely to occur. You really shouldn’t be shooting from the hip in this environment. Mean revision is alive and well making the chase a death wish.

You can go after falling knifes, but you better have a preconceived plan and stick to it (see DOC).

Whatever the case, if you’re considering a position or 2, shoot the ticker over to [email protected] to see if it is oversold. We’re also passing out a PDF with The Fly’s last month of buys & sells.

Check in tomorrow morning for a contextual build out of the Nasdaq heading into FOMC minutes. Be prepared for anything they say.

One of the comedic features of our current market rout is the asinine abandonment of basic materials. What, the future doesn’t need things?

Now gold, screw gold, you can trade gold. I am following Option Addict’s lead and accumulating our favorite conductor Mr. Copper. Copper is an industrial metal used by men to pipe gas and more. It’s not this nonsense gold you find dangling down a hairy Greek’s chest.

I doubled down on SCCO this morning.

Nobody wants to own commodities anymore. They don’t want equities either—you can’t blow a 4 foot hole in a humvee with a stock. The only thing worth owning during “markets in crisis” is a doomsday shelter. Also, for whatever reason, REITS, lots and lots of REITS.

If you even remotely paid attention to the Exodus algorithms these last 3 weeks, you were very diligently instructed to prepare for a rotation into REITs. It was literally the least sexy thing you could do. Let’s be honest—men are hideous mammals and our only appeal is stability. And what is stability?

Money and biceps.

Do I care if my DOC position sees a 15% capital appreciation? No, it just needs to pay me a dividend.

My book is otherwise completely ablaze, down nearly 2% despite being over 20% cash. This is the knife of owning beta. The market has unfinished business lower. It is better we take care of it sooner, rather than later. Pull the duct tape off in one rip, not a series of little peels, for fucked sake.

By the way, Fly added something a little different to this month’s site features.  You can email me [email protected] for a snapshot of your favorite stock’s overbought/oversold levels.  If you’re even considering buying today’s blood, do yourself a favor and find out if the bastard ticker is flagged by our super computers.