Pro gap down into final week of February // here is Monday trading plan

NASDAQ futures are coming into Monday pro gap down after an overnight session featuring extreme range and volume. Price was balanced overnight until about 1am New York. Price was marking time inside the lower half of last Friday’s range before sellers stepped in and drove lower, driving down near but not exceeding the February 2nd low. Since then price has chopped in a little 60 point range along these lows. As we approach cash open, price is hovering inside the February 4th conviction buying range.

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.

Last week markets were closed Monday for President’s Day. The holiday shortened week kicked off Tuesday morning with a gap up to new highs. Sellers pressed into and erased the gap then continued lower through Wednesday morning. There was big chop for the rest of the week with sellers pressuring the tape into Friday’s close.

The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend down. The day began a gap up right to the Wednesday close. Sellers drove into the opening bell and made short work of filling the overnight gap. Buyers then mounted a slow rally, back up through the daily mid and nearly up through the morning high. But instead the auction stalled and then made a fast move lower. The selling sent price down below the Thursday midpoint and we spent the rest of the session chopping along the daily low and into the weekend.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 13,569 before two way trade ensues.

Hypo 2 stronger buyers tag 13,600 before two way trade ensues.

Hypo 3 gap-and-go lower, down to 13,327.25 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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Started my research late. Then went for a winter walk. Then ate good soup. Came back and finished the Weekly Strategy Session.

Now I am tiredt. I shall light a fire and brood next to it until morning time.

Know this — the fate of the entire market lies in NVIDIA’s hands.

Raul Santos, February 21st, 2021

Here is strategy session I make for to enjoy and trade well maybe you love it.

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Stocklabs Strategy Session: 02/22/21 – 02/26/21

I. Executive Summary

Raul’s bias score 3.33, medium bull. Rally through end of Monday then choppy. Then look for third reaction to NVIDIA earnings Wednesday after the bell to dictate direction into the second half of the week.

II. RECAP OF THE ACTION

Markets closed Monday for President’s Day. Holiday shortened week kicked off with a gap up to new highs. Sellers pressed into and erased the gap then continued lower through Wednesday morning. Big chop for the rest of the week with sellers pressuring the tape into Friday’s close.

The last week performance of each major index is shown below:

Rotational Report:

Rotations a bit mixed but key sectors like Tech and Discretionary were lower.

slightly bearish

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Industry flows show a balanced ledger last week. Median return reflects this, just slightly negative on the week. Quality industry groups on the positive side the ledger. The median 30-day volume delta remains negative suggesting a subtle outflow of capital from the equity complex.

neutral

Here are this week’s results:

III. Stocklabs ACADEMY

Holidays don’t count

When working through an overbought or oversold 10-day cycle it is important to remember market holidays do not count. This can throw off when we think a cycle is ending. The current overbought cycle triggered on the 12-month algo has been incorrectly noted these last two weeks to end last Friday, the 19^th when actually it ends tomorrow, Monday the 22^nd at end-of-day.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for buyers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Rally through end of Monday then choppy. Then look for third reaction to NVIDIA earnings Wednesday after the bell to dictate direction into the second half of the week.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

Contextual sub-indices remain discovery up

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Same as last week — transports continued their discovery up phase.

bullish

See below:

Semiconductors continue to discover higher prices. NVIDIA earning out Wednesday after the bell could serve to pivot this entire index.

bullish

See below:

V. INDEX MODEL

Bias model is neutral for a thirteenth consecutive week. No bias.

VI. Stocklabs Hybrid Overbought.

On Friday, February 5^th Exodus flagged hybrid (and technical) overbought on the 12-month algo. This is a bullish cycle that runs through Friday, February 19^th end-of-day. Here is the performance thus far:

VII. QUOTE OF THE WEEK:

“The confidence of people is worth more than money.” – Carter G. Woodson

Trade simple, guard your emotional capital

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NASDAQ futures are coming into option expiration day up a quick +80 after an overnight session featuring extreme range and volume. Price first drove lower overnight, rotating downward until about midnight New York when a bid stepped in right near the Thursday midpoint. Price has been unidrectional up since then, effectively driving up through the Wednesday and Thursday highs. As we approach cash open, price is hovering inside the lower quadrant of Tuesday’s range.

On the economic calendar today we have PMI composite flash at 9:45am followed by existing home sales at 10am.

Yesterday we printed a double distribution trend up. The day began with a gap down into the lower quadrant of Wednesday’s range. After an open two-way auction sellers stepped in and drove price down to 13,500. Price overshot the century mark by about 30 points before a responsive bid stepped in. Said buyers reclaimed the midpoint and rallied about 30 points above it before one last check back to the mid. This check-back overshot the mid to the downside before buyers ultimately held the mid going into New York lunch. The rest of the session was spent rallying, with value shifting higher along the way. Buyers eventually tagged the Wednesday naked VPOC before we sort of chopped along the upper quad to end the day.

Heading into today my primary expectation is for buyers gap-and-go higher, trading up and closing the gap up at 13,749 before two way trade ensues.

Hypo 2 sellers to reject a move back into the Tuesday range, holding price below 13,730 before working into the overnight inventory and closing the gap down to 13,638.50. Look for buyers down at 13,600 and for two way trade to ensue.

Hypo 3 stronger buyers trade up to 13,792 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Price steadily declined overnight, slowly rotating down through the entire Wednesday range at 8:30am a slew of economic data came out. Housing starts in line with expectations, jobless claims higher than expected, Philadelphia Fed stronger than expected as were import export prices. As we approach cash open price is hovering just above the Wednesday low.

Major U.S. emoloyer Wal-Mart is -5% in premarket trade after reporting earnings.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am, a 30-year TIPS auction at 1pm and Treasury Secretary Yellen is set to speak on CNBC’s ‘Closing Bell’ show.

Yesterday we printed a neutral extreme up. The day began with a gap down below the Tuesday range. After an open two-way auction buyers made an attempt higher however the auction stalled well before returning to the Tuesday range. Sellers then worked price into a range extension down, trading down near last week’s low but not exceeding it. Instead we saw a strong ramp higher into the close, a ramp that effectively traversed the entire daily range and pushed neutral during settlement and closed on the high.

Neutral extreme up.

Heading into today my primary expectation is for sellers to gap-and-go lower, trading down to 13,500 before two way trade ensues.

Hypo 2 stronger sellers trade down to 13,400 before two way trade ensues.

Hypo 3 buyers work into the overnight inventory and close the gap up to 13,695.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, balancing along the lower half of Tuesday’s range until 8:30am New York. At 8:30am retail sales data came out much stronger than expected and the producer price index came out higher than expectations. The data was met with selling, selling that knocked the overnight session out of balance. As we approach cash open price is hovering down near last Friday’s low.

Busy day on the economic calendar. Today we also have business inventories and housing market index at 10am, a 20-year bond auction at 1pm and FOMC minutes at 2pm.

Major U.S. employer and retail giant Wal-Mart is set to report earnings tomorrow morning before the bell.

Yesterday we printed a double distribution trend down. The day began with a gap up beyond all prior highs. There was a sell spike on the open that successfully closed the overnight gap before buyers stepped in and formed an excess low. The first hour of trade was big and choppy, eventually leading to a brief range extension up. The auction reversed shortly after, quickly falling down through the daily mid adn then pressing neutral. The sellers tagged the naked VPOC from last Friday and exceeded it a bit before responsive buyers stepped in. Said buyers worked price back to the midpoint. Sellers defended. Twice. Eventually leading to a sell rotation into the closing bell. We closed off the lows but in the lower quadrant.

Neutral extreme down.

Heading into today my primary expectation is for buyers to press into the overnight inventory and attempt to regain Monday’s low 13,716. Sellers reject a move back into Monday range setting up a move down through overnight low 13,627.75. Look for buyers down at 13,600 and for two way trade to ensue.

Hypo 2 gap-and-go lower, down to 13,571.50 before two way trade ensues.

Hypo 3 buyers work a full gap fill up to 13,749. Eventually working up to 13,800.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into the second day of the third week of Black History Month (option expiration week) gap up after an overnight session featuring elevated range on extreme volume. Price drove higher Monday night until about 2am New York when sellers showed up right along the 13,900 century mark. Since then the auction has been balanced, balancing in the middle of the overnight range. As we approach cash open, price is hovering up beyond all prior highs.

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am.

Last week featured a gap up then a slow rally through Tuesday. Fast selling Wednesday morning was ultimately erased by early Thursday buyers. Price chopped along the highs until a late Friday ramp higher put us back on the highs. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend up. The day began with a gap down in range and after a mini drive down on the open a sharp excess low formed before sellers could take out the Thursday low. Price chopped along the open print for an hour before going range extension up and closing the overnight gap. Price continued higher, taking out the Thursday high by a few point before flagging along the highs for several hours. A late-day ramp say price rally hard into the close and ultimately close on the highs.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 13,900 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 13,814.75. Look for buyers down at 13,776 and for two way trade to ensue.

Hypo 3 stronger sellers trade down to the Friday naked VPOC 13,738.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

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I come from a long line of angry men. It is no excuse. I can do better. So many of the ways I usually channel all this physical rage vibrating in my body are gone from my life. The weights. The pools. The all-night raves. The 120 degree yoga rooms. Digging holes.

I’ve been on the computer since 8am after I triggered on some nice feller from Ohio after he dunked on me over on the Twitter. I felt like a real dumbass after that.

Anyhow I did all the weekend research. I am pretty spent, intellectually. I wish I could go empty my physical tank in the same manner.

Exercising at home is not the same. The great outdoors of Detroit are flat and bleak. Maybe I’ve just rip the damn cabinets off the walls.

It took five months to get everything I need for a new kitchen. It’s all sitting in the garage of Mothership. Should be pretty bitchin’ when it’s done.

Anyhow. Yeah. I need brainless work.

We slayed the NASDAQ last week. It took way too long maybe that has me ornery also. I sort of chopped wood Wednesday through early Friday. Then had to stick around all heckin’ day Friday to finally capture the move up to 13,800. I know, first world problems.

I’m telling you—I need to be hooked to a plow and made to work the land. Otherwise I end up a dull boy.

Happy Valentine’s Day.

Raul Santos, February 14th, 2021

And now the 325th edition of Strategy Session. Enjoy:

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Stocklabs Strategy Session: 02/15/21 – 02/19/21

I. Executive Summary

Raul’s bias score 3.58, medium bull. Prices work higher Tuesday and through to Wednesday afternoon. Then look for the third reaction to Wednesday afternoon’s FOMC minutes to dictate direction into the second half of the week.

Wal-Mart reports earnings Thursday before-market-open. This major retailer/employer’s earnings could turn the whole market.

U.S. markets will be close Monday in observation of President’s Day.

II. RECAP OF THE ACTION

Gap up and slow rally through Tuesday. Fast selling Wednesday morning ultimately erased by early Thursday. Choppy along the highs until a late Friday ramp higher.

The last week performance of each major index is shown below:

Rotational Report:

Mixed rotations, predominantly higher. Tech strong but discretionary soft. Risk tolerance remains elevated.

slightly bullish

For the week, the performance of each sector can be seen below:

Concentrated Money Flows:

Industry flows not quite as heavily skewed as last week’s report, but still skewed bullish. Median return up over +2% after being greater than +4% the week prior. Key semiconductor industry groups populating the positive side of the ledger. No industry has a median return below -3%.

bullish

Here are this week’s results:

III. Stocklabs ACADEMY

No news is good news

The News tool inside Stocklabs can be especially powerful when a position I own makes an abnormal move. One of my favorite themes of this decade is the movement away from consuming animal flesh. Beyond the obvious technology plays like $BYND is mushrooms.

One of my long term holdings, Farmmi INC (ticker FAMI) saw its price move +40% last week. I like to know if a re-pricing of this scale is due to new information becoming public or a simple supply/demand based discovery process because it tells me how to treat the behavior.

A news driven move I will be skeptical of. I need to dig into any releases and check sources, and determine whether there is merit to the move. Then, my most likely expectation is for price to “return to the scene of the crime” meaning check back to the prices before the move happened.

I am quickly able to determine no news is associated with the movement by screening the News feed inside Stocklabs for “Farmmi”. Notice: If I attempt to screen using the ticker symbol a ton of useless noise feeds in because the software cannot differentiate between FAMI and “family”.

Knowing how to query large data sets is one of the skills most millennials take for granted. However, done correctly, on Google or in Stocklabs or elsewhere, and the world is your oyster.

There is no news behind the big move in Farmmi, therefore I shall continue to maintain my holding and perhaps add to it.

Due diligence complete in two minutes using the Stocklabs News tool.

Note: The next two sections are auction theory.

What is The Market Trying To Do?

Week ended searching for sellers.

IV. THE WEEK AHEAD

What is The Market Likely To Do from Here?

Weekly forecast:

Prices work higher Tuesday and through to Wednesday afternoon. Then look for the third reaction to Wednesday afternoon’s FOMC minutes to dictate direction into the second half of the week.

Wal-Mart reports earnings Thursday before-market-open. This major retailer/employer’s earnings could turn the whole market.

U.S. markets will be close Monday in observation of President’s Day.

Bias Book:

Here are the bias trades and price levels for this week:

Here are last week’s bias trade results:

Bias Book Performance [11/17/2014-Present]:

All systems are up

Markets fluctuate between two states—balance and discovery.  Discovery is an explosive directional move and can last for months.  In theory, the longer the compression leading up to a break, the more order flow energy to push the discovery phase.

We are monitoring two instruments, the Nasdaq Transportation Index and the PHLX Semiconductor Index.

Transports continued their discovery up phase.

bullish

See below:

Semiconductors broke higher out of a mini balance on news of a chip shortage. Discovery up.

bullish

See below:

V. INDEX MODEL

Bias model is neutral for an twelfth consecutive week. No bias.

VI. Stocklabs Hybrid Overbought.

On Friday, February 5^th Exodus flagged hybrid (and technical) overbought on the 12-month algo. This is a bullish cycle that runs through Friday, February 19^th end-of-day. Here is the performance thus far:

VII. QUOTE OF THE WEEK:

“If there is no struggle, there is no progress.” – Frederick Douglass

Trade simple, challenge your research

 

Comments »

NASDAQ futures are coming into the fifth day of the second week of Black History Month down about -40 after an overnight session featuring normal range and volume. Price was balanced overnight, balancing along the upper half of Thursday’s range, and as we approach cash open price is right along the Thursday midpoint.

On the economic calendar today we have consumer sentiment at 10am.

Yesterday we printed a neutral day. The day began with a gap up in range and after a choppy open where sellers were unable to close the overnight gap we began a slow campaign higher. The buying stalled shortly after going range extension up. Then a hard sell hit the tape during New York lunch, around 12:30pm, pressing the overnight gap fill and beyond, probing a bit below the Wednesday midpoint and tagging the naked VPOC. At this point we were in a neutral print and and excess low formed. Buyers then worked price back up to near where the open print was. Sellers attempted a secondary rotation lower but could not make a new low of day. This set up a ramp back to the upper quadrant of the daily range into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 13,721.50. From here we continue higher, taking out overnight high 13,742 on the way to tagging 13,800.

Hypo 2 stronger buyers sustain trade above 13,807 early on, setting up a run to 13,882.50.

Hypo 3 sellers press down through overnight low 13,663.25 setting up a run down to 13,600. Look for buyers down at 13,571.50 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

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NASDAQ futures are coming into the fourth day of the second week of Black History Month gap up after an overnight session featuring normal volume on extreme range. Price was balanced overnight until about 3am New York when buyers stepped in and drove the bid 50 points higher. At 8:30am jobless claims data came out slightly worse than expected and as we approach cash open price is hovering in the upper quadrant of Wednesday’s range.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am followed by a 30-year note auction at 1pm.

Yesterday we printed a normal variation down. The day began with an open auction inside range, right along the Tuesday high. Price spiked a bit higher during the opening swings before tightly chopping for about 45 minutes. Then sellers stepped in and drove back into the Tuesday range, effectively closing the overnight gap then continuing to drive down through the Tuesday low. There was a brief rotation higher before a secondary rotation of sellers saw price down a few point below last Friday’s low. That would mark the end of the selling campaign. From there onward the auction was upward. Sellers defended the midpoint the first time it was tested but buyers reclaimed it late in the session. We ended the day a few points above the mid.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through the Wednesday high 13,762 to set up a tag of 13,800 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 13,807 early on, setting up a run to 13,882.50.

Hypo 3 sellers work into the overnight inventory and close the gap down to 13,667.25. From there we continue down through overnight low 13,612.50. Look for buyers down at 13,600 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

Comments »

NASDAQ futures are coming into the third day of the second week of Black History Month up a quick +60 after an overnight session featuring elevated volume on extreme range. Price campaigned higher overnight, rallying up beyond the Tuesday high until about 5:30am New York when sellers were able to briefly work price back down into the Tuesday range. At 8:30am CPI data came out below expectations:

The prices are lovely, soft, and weak
And miles to go before overheat. pic.twitter.com/s9Na9cbubU

— George "Grants To State & Local Gov NOW" Pearkes (@pearkes) February 10, 2021

As we approach cash open price is back above the Tuesday high.

Also on the economic calendar today we have crude oil inventories at 10:30am, a 10-year note auction at 1pm, then both a speaking engagement from Fed Chairman Powell and a Treasury Statement from Secretary Yellen.

Yesterday we printed a normal variation up. The day began with a gap down in range, with price beginning the day right in the middle of Monday’s range. Buyers drove higher off the open, closing the overnight gap and continuing beyond the Monday high to tag the first of our Fibonacci extensions. Upward price discovery stalled out shortly after going range extension up and we spent the rest of the session chopping along the midpoint, eventually closing right along it.

Heading into today my primary expectation is for buyers to drive away from the Tuesday high 13,735.25 by working up through overnight high 13,769.25 to set up a tag of 13,800. Then look for the third reaction to all the 2pm economic information to dictate direction into the second half of the day.

Hypo 2 stronger buyers sustain trade above 13,807 setting up a run to 13,882.50. Then look for the third reaction to all the 2pm economic information to dictate direction into the second half of the day.

Hypo 3 sellers work into the overnight inventory, reclaiming the Tuesday range 13,735.25 early on and sustaining trade below it to set up a gap fill down to 13,690.25. Sellers continue lower, taking out overnight low 13,664.25. Then look for the third reaction to all the 2pm economic information to dictate direction into the second half of the day.

Levels:

Volume profiles, gaps and measured moves:

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