iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,424 Blog Posts

“Overplay for the underlay” on semiconductors

Yesterday we looked at the pivot level the NASDAQ transportation index is trading at.  Transportation bears are being pressured today after buyers received newfound conviction from the $CSX earnings.  Now let’s turn our attention to the real driver of stock market gains—the PHLX semiconductor index.  It has the classic overplay for the underlay* set-up.

BEHOLD:

After successfully setting up the overplay for the underlay, semiconductors are catching a bid off the old triangle consolidation.  Pretty straightforward stuff here folks—if buyers defend here we are likely to see a sharp move higher.   If not, probably more chop.   My gambles and bias say we go higher.  Yours should conform to your own damn research and bias. Trade accordingly.

kiss kiss

-RAUL SANTOS, JANUARY 17th, 2019

*Writer’s note – you will not find the ‘overplay for the underlay’ trade setup in any published books on technical analysis.  It is a term taken from the streets of Detroit, for when a dude pretends he’s not interested in something, like a real thick girl, until everyone’s attention has moved away, then he sweeps in and presents himself as a beta cuddle/sex slave.

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Gap down outside range into Thursday, holding near 6666, here is the NASDAQ trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight, trading down into the Tuesday morning conviction buying zone before discovering a bid.  At 8:30am Philly Fed data came out much better than expected and intial/continuing jobless claims data came out mixed.  Advance good trades balance and retail sales data have been delayed due to the government shutdown, but upcoming earnings from Walmart [Feb 14th, BMO] will provide better insight into trade and retail data anyhow.  As we approach cash open, price is hovering below Wednesday’s low.

On the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am followed by a 10-year TIPS auction at 1pm.

Yesterday we printed a normal variation down.  The day began with a gap up, and after a brief two-way auction price drove higher.  Sellers stepped in late morning and rejected price away from the value area high of a volume profile distribution that formed back on December 13th.  The result was an excess high.  After bouncing around on the daily low for much of the session, price eventually closed near low-of-day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6666.25.  From here we continue higher, up through overnight high 6675.50.  Look for sellers up at 6672.75 and two way trade to ensues.

Hypo 2 stronger buyers trade us up to 6700 before two way trade ensues.

Hypo 3 sellers reject an attempt up through overnight high 6675.50 setting up a move down through overnight low 6612.25 to target 6600.  Look for buyers down at 6572.50 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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Trannies trying to resist the buyers

We’ve been expecting this move in the NASDAQ transportation index for two weeks, an excerpt from last Sunday’s Exodus strategy session:

Now we wait:

Am I showing you this so you can see how awesome my research is and to tell you to shell out the pittance we charge for Exodus?  No.  I am simply demonstrating, in real-time, that there is a method to what many characterize as an erratic and volatile market.  The auction is the auction is the auction.  QED.

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Strong $GS $BAC earnings introduce bid to calm AM market, here is the Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme volume on only an elevated range.  Price was balanced overnight, briefly probing beyond the Tuesday cash high in calm, two-way trade.  This morning both Bank of America and Goldman Sachs reported better-than-expected earnings, and while neither of these stocks are NASDAQ components, a bid entered the market shortly after the announcements.

Also on the economic calendar today we have crude oil inventories at 10:30am followed by Fed Beige Book at 2pm.

Yesterday we printed a double distribution trend up.  The day began with a gap up and drive higher.  The drive took out both open gaps above [from Monday and last Friday] and sustained trade above it.  This set up a move to target the psychological 6666 level.  Sellers took a shot around 2:30pm that took price right back to the daily midpoint.  Buyers defended.  We ended the day near session high.

Double distribution trend up.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 6731.50 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 6731.50 setting up a move to target the open gap up at 6772.50 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory and close the gap down to 6674.75.  Sellers continue lower, down through overnight low 6664.  Price pins at 6666 as two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Slight gap up into Tuesday, here’s the NASDAQ trading plan

NASDAQ futures are coming into Tuesday with a slight gap up after an overnight session featuring extreme range and volume.  Price worked higher overnight after an attempt early in the globex session to go lower.  Buyers rejected a move down through the Monday midpoint, setting up a steady campaign higher.  Sellers were discovered near the top of last Friday’s range and price slumped back into Monday’s range.  As we approach cash open price is hovering inside the Monday high.

There are no economic events today.  Earnings from JP Morgan came out weaker than expected pre-market.  The stock is indicating it will open down half a percent.

Yesterday the NASDAQ printed a normal variation up.  The day began with a gap down and out of Friday’s range but inside the 3 and a 1/2 day micro-balance that began forming late last Tuesday afternoon.  Buyers engaged after a long two-way open auction.  Said buyers pressed up to last Friday’s high before their attempt to reclaim last Friday’s range was rejected.  We ended the day just below session midpoint.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6546.  From here we continue lower, down through overnight low 6540.  Look for buyers just below overnight low and two way trade to ensue.

Hypo 2 stronger sellers trade us down to 6520 before two way trade ensues.

Hypo 3 buyers work up through overnight high 6606.75 setting up a move to target the open gap at 6612.50 then the open gap at 6624.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ down a quick -50 into Monday, here is the trading plan

NASDAQ futures are coming into the week with about a 50 point gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight, uni-directionally, trading down through the Friday cash low and briefly poking a few ticks below the Thursday cash low before discovering a responsive bid.  As we approach cash open, price is hovering in the lower quadrant of last Thursday’s range and the auction is in balance.

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

Last week we saw strength across the board Monday and Tuesday, followed by a marking of time through the rest of the week—with most of the major indices flagging sideways into the weekend.  Meanwhile the Russell diverged and continued higher.  This suggests risk appetite was increasing.  The last week performance of each major index is shown below:

On Friday, the NASDAQ printed a normal variation up.  The day began with a gap down and tight two-way auction.  The chop eventually gave way to a slight range extension up, however sellers kept us from filling the overnight gap.  We ended the week near Friday’s high but still inside the Thursday range and still with the overnight gap unfilled.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6594.25.  From here we continue higher, up through overnight high 6616.50 setting up a move to close the Thursday gap at 6624.25 before two way trade ensues.

Hypo 2 buyers stall out around 6581.75 and we begin working lower, down through overnight low 6525.25.  Look for buyers down at 6519.50 and two way trade to ensue.

Hypo 3 sellers gap-and-go lower, sustaining trade below 6519.50 to set up a move to target 6500.  Stretch target is 6460.

Levels:

Volume profiles, gaps, and measured moves:

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Elusive triple signal trade is break even, now we wait

Greetings lads,

The turning of the calendar to 2019 has brought new conditions for us to take advantage of.  Climate change is more apparent than ever with weather volatility climbing to levels deniers and global warming believers alike have never seen.  Progressive leaders in Europe are actively shaping their policy to reflect these facts, as are the United States.  Here in America, our authoritarian leader is desperately trying to build a wall to keep the people attempting to migrate to livable parts of the earth down in their water-less deserts.  Until he does, Americans should consider us in a crisis state.  If  you have not secured land with a fresh water source you are setting your family up to be overrun by horrendous heat and desperate humans seeking asylum from the scorching sun.

Despite this national emergency, and the government shutdown, the systems we rely on to dictate our investment decisions have remained bullish.  Starting December 10th, Exodus flagged oversold.  It was very early and wrong, but just as the signal was drawing to an end on December 24th, another oversold signal was fired out.  This meant we had to hold our bullish positions.  While that secondary signal expired on the 9th, we had a less common but more bullish OVERBOUGHT signal on the 4th.  Therefore we continued pressing our longs throughout last week.  Here is what the entire cycle has looked like so far.  Quite the draw down, but back to UNCH…behold:

Now, heading into the second full week of 2019, the above signals have the added context of an extreme Rose Colored Sunglasses e(RCS) signal from IndexModel.  This signal calls for a calm, sideways drift in the upcoming week.

With the other context we cover in the Exodus strategy session, this all fits very nicely.  Expect to see a pause in price this week.  That would do wonders for easing recent volatility, and pave the way for some individual stocks to rocket higher.  In short, a stock picker’s market.

You may not agree that the human impact on our planet is jeopardizing the ability for spaceship Earth to sustain life, but you cannot deny that taking our cues from the robots has been a better guide these last five weeks than the hair-on-fire government or media.

Choose your inputs wisely.  It’s 2019.  Trust is hard to come by.  Robots expect a continued campaign back towards the highs.

Exodus members, the 217th edition of Strategy Session is live.  Check out the very telling context we discuss in Section III and at the end of Section IV

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Gap down in range into Friday, here is the NASDAQ trading plan

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme volume on elevated range.  Price poked beyond the Thursday high briefly before settling into balance inside Thursday’s cash range.  Some AM selling came through, and as we approach cash open price is hovering above Thursday’s daily midpoint.  At 8:30am CPI data came out in-line with expectations.

Also on the economic calendar today we have a monthly budget statement at 2pm.

Yesterday we printed a normal variation up.  The day began with a gap down near the Wednesday low.  Sellers attempted to press us away from the Wednesday range early on but were met with responsive buying.  Said buyers turned initiative (initiative relative to Thursday open, responsive relative to Wednesday close) and worked the overnight gap closed.  Sellers returned price to the midpoint around lunch time, using Powell’s talk as grounds for action, but buyers became initiative during the afternoon session and we ended the day near session high.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6624.25.  From here we continue higher, up through overnight high 6641.75.  Look for sellers up at 6666 and two way trade to ensue.

Hypo 2 stronger buyers sustain trade above 6666 setting up a move to target 6695 before two way trade ensues.

Hypo 3 sellers press down through overnight low 6588.50 setting up a move to target 6557 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Little -40 point gap down in-range, here is the Thursday NASDAQ trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight, uni-directionally, and briefly probed below the Wednesday cash low before settling into balance.  At 8:30am initial/continuing jobless claims data came out better-than-expected.  As we approach cash open, price is hovering on the low-end of Wednesday’s range.

Also on the economic calendar today we have a 4-and 8-week T-bill auction at 11:30am, Fed Chairman Powell is speaking in Washington the the economic club at 12pm, and a 30-year bond auction at 1pm.

Yesterday we printed a neutral day.  The day began with a gap up and small push higher before settling into a two-way auction.  Sellers managed to press us range extension down and close the overnight gap before responsive buyers stepped in (responsive relative to Wednesday’s open, initiative relative to Tuesday’s close) and worked us up through the daily range and pushed us neutral.  We drifted along daily high for much of the session before reverting back to the mean near end-of-day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6602.75.  From here we continue higher, up through overnight high 6618.25.  Sellers are just above overnight high and two-way trade ensues.  Then look for the third reaction after Powell speaks to drive direction into the second half of the session.

Hypo 2 stronger buyers press us up to 6666 before two way trade ensues.  Then look for the third reaction after Powell speaks to drive direction into the second half of the session.

Hypo 3 sellers gap-and-go lower, trading down through overnight low 6540.50 to target 6520 before two way trade ensues.  Then look for the third reaction after Powell speaks to drive direction into the second half of the session.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ nudges above Tuesday high overnight, here is the Wednesday trading plan

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume.  Price worked higher overnight, taking out the Tuesday high around 8pm New York before discovering some responsive sellers.  The rest of globex was spent flagging and forming balance along Tuesday’s high.  As we approach cash open price is hovering just above the Tuesday range.

On the economic calendar today we have crude oil inventories at 10:30am followed by the FOMC minutes at 2pm.

Yesterday we printed a normal variation down.  The day began with a gap up and push higher to tag the naked vpoc from 12/12.  Price went a few ticks beyond it before sellers stepped in and close the overnight gap .  We then spent the rest of the day working higher, slowly reclaiming the daily midpoint and closing above it.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 6666 before two way trade ensues.  Then look for the third reaction after the FOMC minutes to dictate direction into the end of the day.

Hypo 2 seller work into the overnight inventory and close the gap down to 6554.75.  Look for buyers down at 6520 and two way trade to ensue.  Then look for the third reaction after the FOMC minutes to dictate direction into the end of the day.

Hypo 3 stronger buyers sustain trade above 6666, setting up a move to target 6693.25 before two way trade ensues.  Then look for the third reaction after the FOMC minutes to dictate direction into the end of the day.

Levels:

Volume profiles, gaps, and measured moves:

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