SHAKE’N BAKE

The culmination of two powerful schools of thought is leading to a most profound realization—there is an edge here in these conditions.

Over the weekend, the RCS signal triggered again. This signal tends to preclude lower prices. Not always, but often.

The sooner we tend to the preclusion, the better, IMO. Over the weekend I made another call, the check back to the Thursday/Friday gap was my dream trade of the week.

Well there it and was, and there it went.

If today’s low holds we’re headed to blue skies. If not, gird your loins for a real liquidation. It’s that simple. Now I’m off to see about a hoagie.

Nasdaq futures are stable and traded a normal range and volume overnight despite the earnings reaction in Apple shares, the riots in Baltimore, and the continued uncertainty in Greece. As important as those events are, participants may already have their attention on Wednesday when we will hear the GDP stats in the morning and FOMC rate decision in the afternoon.

Yesterday we started strong but soon reversed and spent most of the session trading lower.

Heading into today, my primary expectation is for buyers to push into the overnight inventory and target the overnight high 4533. Look for sellers to show up near 4539 and two way trade to ensue.

Hypo 2 we stall out around 4530 and churn sideways between there and 4515.

Hypo 3 sellers work back in to target overnight low 4514.25 then 4509 to open up a gap trade down to 4482.50.

Levels:

Today bulls were invited to enter the parlor doors. They were greeted with flowered neck dresses and the smell of barbecued pork. Accompanying the aromatic bouquet was friendly music and dancing women.

It was a wonderful setting and in the bulls came, and took their seats, ready to feast. It was a trap though mates, they looked down at their plates and no sooner they turned to bees, millions of bees!

The bears had set a trap, and a good one at that.

But these in-fights have no meaning. This week’s battle will be settled by Apple, The Fed, and Elon Musk. So bee [sic] patient.

Nasdaq futures are higher overnight on a session featuring normal volume and range. Sellers had something going in the early AM hours but by 5am they waffled their opportunity and higher the prices continued.

The economic calendar is quiet this morning. We have Markit Composite/Service PMI at 9:45am. Several sources expressed concern over the lack of participation by semiconductors during last week’s tech rally, and news from AMAT already has the industry in focus again, to start the week. However the most notable external event will likely be Apple earnings, scheduled for release after market close.

Last week we traded higher throughout the week, quickly, leaving three open gaps in our trail. This suggests aggressive other time frame activity occurred during the week. The week was capped off Friday with a big gap up and a double distribution trend day.

Let’s be clear about where the Nasdaq currently stands. Yes, we did manage to mark a new all-time closing high last week. However, the real all-time high, the glory shot, is still about 37 Nasdaqs higher. You can see it below on the following weekly composite chart:

Heading into today, my primary expectation is for seller to push into the overnight inventory and trade down to 4532.75 before two-way trade ensues, leaving another open gap behind.

Hypo 2 is buyers continue exploring higher, right from the open, and we trend higher to 4575.25 before finding responsive selling.

Hypo 3 sellers push a full gap fill down to 4529 before two-way trade ensues.

Levels are highlighted below:

Every week is important, sure, just like every day. But the way everything is set up heading into month-end, we need to see bulls pull the proverbial rabbit out the hat.

There comes a time when technical analysis tells a vivid story but the underlying fundamentals may be whispering subtle truths. This is one of those occasions, and it has me feeling cautious heading into the week.

This week will likely be decided by the king of corporations, Apple, and the puppet masters at The Fed.

Elon Musk has decided to make a splash this week too, come Thursday.

I sense we’ll remember this week for the rest of the year.

Weekly Strategy Session subs, this week’s report should be hitting your inboxes shortly. Let’s be ready for anything.

Some of you might think this entire live exhibition is a charade—a flippant trek across the marketscape certain to end in destruction and homelessness. Devious troglodytes, freighted and confused by our world, hunch their heads and stare at these words from just below their eyebrows. And while they ferment with anger, their emotions only poison themselves, and in their destitute caves they remain.

We were given logic, gentlemen, and to embrace it is to be virtuous and universally aligned. You come here, we all come here, with the explicit intent of banking coin. Nobody cares how you’re so god damned driven, you are. And nobody cares how you go about banking said coin—only that your explicit intent is to do so.

There are tools. They were created to make us better, not to rabble on academically. There are brilliant minds, all coagulated by the forces of logos and steel.

All these qualities and MOAR are why iBankCoin will retain internet supremacy for no less than 10,000 years, a foundation stone carried across the galaxy to build new worlds.

Nasdaq futures are up overnight on an abnormal range and volume over second sigma. Fueling the action overnight in part were earnings from major tech corporations Google, Microsoft, and Amazon. This morning we heard from a few big biotech names including Biogen and AstraZeneca who are both trading lower. This may trigger a rotation away from the hot space and into tech.

At 8:30am Durable Goods Orders came in with a big beat on the headline number. We also have the Baker Hughes US Rig Count at 1pm.

Yesterday we printed a normal variation day up with a distinct amount of afternoon imitative buying. The action set us up to fill the open gap left behind March second and had enough fuel in the tank to push us to new contract highs.

Market profile loses a bit of its might when we trade up in open air. Whenever we break a significant level it’s a good idea to take a high level snapshot of the action and see where we are. As you can see on the following weekly Nasdaq composite chart, were are almost to all time high on the index:

We can still do measured moves to put some working levels on the chart, as you will see on the white volume profile chart below.

Heading into today, my primary expectation is for sellers to push into the overnight inventory and work down to 4506 before finding buyers and a Friday, two-way grind ensues.

Hypo 2 is buyers drive off the open and make a move up to 4518.25 before finding responsive sellers and two way trade ensues.

Hypo 3 is a strong, gap and go drive to target 4527 with a stretch target of 4538.50.

Hypo 4 is a drive down, gap fill to 4482.50 with a continuation move down to 4450.75.

Levels:

To be short is to be brave, but will the market attest to your bravery? No, for the market hast no concern for the virtues of man. It is merely a mechanism for organizing people to exchange goods.

People want stocks. They want banks, websites, clothiers, scientists, and much more. They want investments again. Not for today, but tomorrow when their hands can no longer work.

The market is doing its best to fulfill these wants needs. It’s a need because it’s an adult responsibility.

Before today happened I was expecting sellers to show up and round robin us back through the wretched chop. Perhaps everything being shown to you and me right now is a lie—a convincing lullaby to heavy our eyelids. It was always a popular play, but here we are.

Here we are at contract highs on the Nasdaq, and bulls came with heavy artillery. At one point around 1052 to 1231 (depending on your source) NYSE stocks simultaneously ticked higher since March 18^th. If you recall, March 18^th was a Fed day. Today was different, no news, just an exuberant release from compression, a consumption jubilee.

Now gather a bowl of kale chips (or genetically modified popped corn) for our leaders are set to speak. Bezos, Schmidt, and Nadella. Our life is in their hands, dude.

The Nasdaq globex session was one again busy and once again the scene of aggressive selling until early this morning when buyers stepped in and stabilized the action just ahead of yesterday’s session lows.

The economic calendar is seemingly busy today but mostly with low/medium impact events including the initial/continuing jobless claims (came in lower than expected) at 8:30am (muted reaction), Markit Manufacturing PMI at 9:45am, New Home Sales at 10am, Natural Gas storage stats at 10:30am, and Kansas City Fed at 11am.

The Nasdaq’s behavior is likely to take its cues today from the behavior the FB shares after they reported yesterday evening. Its shares have been active overnight as well. Also, after market close we will here from tech juggernauts Google, Microsoft, and Amazon.

Yesterday we printed a normal variation up marking the third up day (2.5 up day perhaps, given Tuesday’s normal print) in a row. Sellers were active at the open but the auction reversed during the initial balance and worked higher. Sellers pushed in near the close.

Heading into today, my primary expectation is for buyers to push into the overnight inventory to close the overnight gap up to 4446. I will look for them to overshoot this area before finding sellers up near 4453.75 who work us back down to 4429 and two way trade ensues.

Hypo 2 is sellers push off the open to take out overnight low 4418. Look for responsive buyers near 4415 and two way trade ensues with sellers sustaining price below 4441.

Hypo 3 is a drive up through yesterday’s high 4457.50 and a push to target the open gap left behind on March 2^nd up at 4478.75.

Hypo 4 is drive down through 4414.75. If seller can take trade down through 4400 a liquidation may take hold and push us down to 4355.

Levels:

Keep in mind, you will be told, leading into, during, and after May that you’re supposed to sell in May. You will be presented with charts and infographs and sharp-dressed pundits directing your attention to this devious month.

Here we are lads, back on the top-end of our range. To think we will break out of it would be to ignore our near term past. Who can convince me this time plays out differently than the last two rounds?

Bull or bear, given the amount of land we’ve covered since Monday, it feels like this week had two Tuesdays and an extended Wednesday. I suppose the trajectory of our current gains says something. Despite being long several stocks, the market still needs to convince me it’s fixing to go higher. It would be fair to call me a skeptic.

We are seeing these super active globex sessions which is a staple of lower prices, but the sellers vanish during US RTH. Again, odd stuff.

I suppose individual stocks can continue to work in this tape. Momentum tends to run the best near peak and trough, upward and downward respectively.

The cross currents continue. Per the Weekly Strategy Session, the leading Russell was reason to stay confidently long, and the flagging Nasdaq transports a reason to be cautious. Well, the transports jammed higher Monday-Tuesday and the Russell has been lagging all week, so SMH.

What I am saying is let the winners run while hopefully booking some gains into this strength, because something tells me sellers might show up to paddle come tomorrow, given our location on their side of the ping-pong table.