Gap down in range ;-) here is Friday trading plan

NASDAQ futures are coming into the final day of the first full week of December gap down after an overnight session featuring extreme range on elevated volume. Price worked lower overnight, unidrectionally rotating lower until catching a bid around 6:30am New York. As we approach cash open price is hovering just below the Thursday midpoint.

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

Yesterday we printed a normal variation up. The day began with a gap down outside of Wednesday’s range. After an open two-way auction sellers made a sharp move lower, briefly trading down into the December 1st range before a sharp excess low formed. From then until about 11:40am price rallied hard, trading back up into the Wednesday range a checking back to the fast liquidation zone. Sellers defended their recently claimed territory, and we spent the rest of the session chopping along the upper quadrant of range.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 12,384.75. From there buyers continue a bit higher, tagging 12,400 before two way trade ensues.

Hypo 2 stronger buyers tag 12,425 before two way trade ensues.

Hypo 3 continuation selling. Sellers take out overnight low 12,263.25 setting up a move down to 12,200. Stretch targets if we begin to liquidate are 12,100 then 12,016.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Wednesday with a slight gap down after an overnight session featuring normal range and volume. Price was balanced overnight, balancing along the Tuesday high after exceeding it for a few hours. As we approach cash open, price is hovering in the upper quadrant of Tuesday range.

On the economic calendar today we have JOLTS jobs openings at 10am, crude oil inventories at 10:30am and a 10-year note auction at 1pm.

We also have major tech component ADBE reporting earnings after the bell.

Yesterday we printed double distribution trend up. The day began with a slight gap down and after a brief open spike higher sellers stepped in and drove price lower, trading down through the Monday low before forming a sharp excess low. The rest of the session was spent auctioning higher, making new record highs and shifting value up near the high.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 12,641. From here buyers continue higher, trading up through overnight high (all-time high) 12,675. Look for sellers up at 12,700 and for two way trade to ensue.

Hypo 2 stronger buyers sustain trade above 12,700 setting up a run to 12,750.

Hypo 3 sellers press down through overnight low 12,615.50 and tag 12,592.25 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring normal range and volume. Price was balanced overnight, balancing along the lower half of Monday’s range. As we approach cash open, price is hovering about 10 points below the Monday mid.

On the economic calendar today we have a 3-year note auction at 1pm.

Yesterday we printed a normal variation up. The day began with a slight gap up and open drive higher. Buyers drove to a record high, flagged for a bit, then pressed to range extension up, pressing about 12 points beyond the 12,600 century mark before discovering a responsive offer. Said sellers rotated price back down to the midpoint and briefly down through it. Sellers could not however defend the mid and we ended the day with a little ramp up off the mid and back into the upper quadrant to end the session.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 12,593. From there buyers continue higher, up beyond overnight high 12,602.75 before two way trade ensues.

Hypo 2 stronger buyers trade up to 12,656.75 before two way trade ensues.

Hypo 3 sellers press a gap-and-go lower, trading down through overnight low 12,527.50. Look for buyers down at 12,509.50 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the first full week of December with a slight gap up after an overnight session featuring elevated range and volume. Price was balanced overnight. First-off it ran up to a new record high print, then after about 20 minutes of being open price fell back into the Friday range. That sell rotation carried clean through to 3:45am New York, when buyers stepped in near Friday’s midpoint. Since then we’ve slowly drifted higher and as we approach cash open price is hovering near the Friday high.

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

Last week kicked off with some strong selling early Monday that discovered a strong responsive bid. The rest of the week is spent rallying then holding along the highs. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation down. The day began with a slight gap down and after an open two-way auction buyers stepped in. Resolved the gap and continued higher, trudging along at the highs for several hours before checking back to the midpoint around 2:45pm. Sellers couldn’t quite tag the mid before buyers defended and eventually rallied back to the daily high.

Heading into today my primary expectation is for buyers to work up through 12,541.50 early on and sustain trade above it, setting up a run up through overnight high 12,572.50 before two way trade ensues.

Hypo 2 stronger buyers tag 12,600 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory and close the gap down to 12.507.75 then continue lower, down through overnight low 12,474.75. Look for buyers down at 12,450 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

I have to make this brief and then commute over to my exercise room for the zoom yoga meeting (FML). Boy do I miss going over to the hot house on the uppity side of town and packing shoulder to shoulder with all the nearly naked mamacitas in their state-of-the-art sports bras and panties.

Research is bullish going into the first full week of December. You know the drill. That means I will be actively working open gaps in range (as always). I shall press the bets if we’re dealing with a gap down in prior day’s range because of the bullish convictions of my research. We’ll be gunning for range extension up and overnight highs like a bunch of amphetamine junkies climbing a mountain.

MORE

That’s about all I have time to say. The murder mitten has taken on its grey hue, a bland blob of scenery where different days are only discernible by the long stretches of darkness between the brief periods of grey glow. This is the antithesis of a psychedelic experience. Where one features kaleidoscopic trips through the entire visual color spectrum, the other is simply fifty shades of gay grey.

In these conditions it is best to stick of coffee. Legal speed. Until about 11am. Then switch to malt liquor, nourishing the body with a couple of 40 ounce bottles of foamy soda. Then, if night comes and a fire and some good fiction don’t put you under, then a big of tequila to turn out the lights.

Enough of that. Farewell lads.

Raul Santos, December 4th 2020

And now, the Stocklabs Strategy session. Enjoy.

Stocklabs Strategy Session: 12/07/20 – 12/11/20

I. Executive Summary

Raul’s bias score 3.78, medium bull. Expect a bit of weakness Monday, with sellers claiming a minor victory early in the week. Then look for a responsive bid to step in as early as Tuesday morning and for price to steadily rally through to Friday.

II. RECAP OF THE ACTION

Similar story to the prior week—strong selling early Monday discovers a strong responsive bid. The rest of the week is spent rallying then holding along the highs.

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

Rotational Report:

Energy continues trade independent the market, this week way out in front. However the key driver Tech put in a strong showing and was flanked by Healthcare and Financials. Utilities were weak. Everything else muted.

slightly bullish

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

Concentrated Money Flows:

Industry flows skewed majorly bullish for a second week. Raises expectations for a continuation higher.

bullish

Here are this week’s results:

III. Stocklabs ACADEMY

Fresh signal

The Stocklabs overbought signal we were working ended last Monday. Then, into the close Friday a new overbought signal fired. That means we have ten more trading session’s worth of bullish bias, clean through to the 18^th.

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:

Expect a bit of weakness Monday, with sellers claiming a minor victory early in the week. Then look for a responsive bid to step in as early as Tuesday morning and for price to steadily rally through to Friday.

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]:

Semiconductors go parabolic, Transports not acting like a failed auction

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 had the look of a failed auction heading into last week after quickly reversing off the highs after making a new swing high. However, price managed to linger and even claw back some losses last week and now it is looking less and less like a failed auction. Sellers need to make a decisive move, and soon, otherwise the prevailing up trend is likely to carry prices into the open air above.

See below:

Semiconductors might be at the beginning of something big to the upside after blasting up and away from the wedge formation we’ve been monitoring for the last few weeks. Or, this could be the final throws of a rally—a euphoric blow off.

We don’t know.

Either way, as of now the index remains in discovery up.

See below:

V. INDEX MODEL

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

VI. Stocklabs HYBRID OVERBOUGHT

On Friday, December 4th Stocklabs signaled hybrid overbought. This is a bullish cycle that runs through Friday December 18th, end-of-day.

VII. QUOTE OF THE WEEK:

“Man, when you lose your laugh you lose your footing.” – Ken Kesey

Trade simple, have fun

Not even the jobs numbers could put a wiggle in the futures and when we’re up at record highs there isn’t much I can do to extract fiat using my approach. Instead I will pen this brief blog entry, interact with Stocklabs for a bit then sequester myself to the laboring fields.

When busy pruning trees or cooking or exercising or whatever, it is much more difficult to do something low value like force a trade on for the sake of keeping busy. Idle hands are soon occupied by rabid jackin’ off or taking big lugs of hooch, or trading YOLO calls. Anything for a kick in this otherwise dull pandemic existence.

Three hours is about the max amount of time I can sit, disciplined, at the turrets of Mothership, which are always greased and loaded and ready to fire seventy thousand shots at the Chicago Mercantile Exchange.

Then my mind wanders. To hoagies. Fast women. Building water features. You know, stuff like that.

And I sense my mind is already someplace adrift. Therefore, before I do anything I’d later come to regret, like my ongoing twitter rants against the lock down, I’ll just excuse myself and wish you all adieu.

Cheers lads. Stay woke. People creepin’. Back Sunday with an in depth weekly research report.

Raul Santos, December 4th, 2020

NASDAQ futures are coming into Thursday with a slight gap up after an overnight session featuring normal range and volume. Price was balanced overnight, balancing along the high print of Wednesday trade. Jobless claims data came out better than expected at 8:30am, and as we approach cash open price is hovering at the Wednesday high.

Also on the economic calendar today we have ISM services index at 10am followed by 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a double distribution trend up. The day began with a gap down and open drive lower. The drive down probed briefly below the Tuesday low but was unable to resolve the gap left behind early Tuesday morning (December 1st). Instead responsive buyers were on the scene within the first 15 minutes of action and turned the auction around. The rest of the session was spent campaigning higher, eventually closing the overnight gap and ending on the high of the day, up inside the upper quadrant of Tuesday’s range.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 12,469.75. From here sellers continue lower, tagging 12,407.75 before two way trade ensues.

Hypo 2 buyers reject a move back into Wednesday high 12,472 setting up a probe beyond all-time high 12,512.25. Look for sellers around 12,550 and for two way trade to ensue.

Hypo 3 stronger buyers probe up into open air and rally up to 12,600.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the second day of December gap down after an overnight session featuring elevated range and volume. Price was balanced overnight, chopping along the middle of Monday’s range. At 9:15am ADP employment data came out worse than expected and as we approach cash open price is hovering below the Monday midpoint.

Also on the economic calendar today we have Fed Chairman Powell speaking at 10am, crude oil inventories at 10:30am and the Fed beige book at 2pm.

Yesterday we printed a double distribution trend up. The day began with a breakaway gap. Buyers drove higher after an open two-way auction probing up near all-time high before falling back to the midpoint by mid morning. Buyers defended the mid setting up a rally that pressed higher through 2:30pm, making a new all-time high and setting the VPOC up near the highs before falling back to the midpoint late in the session. Buyers defended the mid again and we ended the day in the upper quadrant of range.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 12,464.25. From here buyers continue higher, trading up through overnight high 12,473.50. Look for sellers up at 12,497.25 and for two way trade to ensue.

Hypo 2 stronger buyers probe up through all-time high 12,512.25, tagging 12,550 before two way trade ensues.

Hypo 3 sellers press don to 12,351.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the final month of 2020 up a quick +100 after an overnight session featuring elevated volume and extreme range. Price drove higher overnight, rallying steadily until about midnight. Then, about 50 points below record high sellers stepped in. Since then we have been in a tight flag along the highs and as we approach cash open, price is hovering up near the all-time high print.

On the economic calendar today we have lots to digest at 10am—ISM manufacturing, construction spending plus some talk out of Fed Chairman Powell. There is a 52-week T-bill auction at 11:30am.

Yesterday we printed a neutral extreme up. The day began about flat and after a choppy open two-way auction sellers stepped in and drove price lower, printing a sharp unidirectional sell-off down into last Wednesday’s range. Buyers stepped in near the lower quadrant of Wednesday’s range and began working price higher. Sellers defended the daily midpoint the first time around, but a second thrust pressed through it. The rest of the session was spent rallying, reversing the early selling and eventually pressing into a neutral print right at settlement. Closing on the high.

Neutral extreme up.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 12,401.75 and closing the open gap at 12,411.50 before two way trade ensues.

Hypo 2 stronger buyers take out all-time high 12,436. Look for sellers up at 12,448 and for two way trade to ensue.

Hypo 3 sellers work into the overnight inventory and close the gap down to 12,296.75 then continue lower, down through overnight low 12,292.25. Look for buyers down at 12,223.50 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the final trading session of November with a slight gap up after an overnight session featuring extreme range and volume. Price was choppy overnight, first taking out last week’s high, then steadily rotating lower until taking out Friday’s low before eventually working back to the middle of Friday’s range. As we approach cash open, price is hovering at Thursday’s midpoint.

On the economic calendar today we have Chicago PMI at 9:45am, pending home sales at 10am and 3- and 6-month T-bill auctions at 11:30am.

Last week featured sellers early Monday discover a strong responsive bid. The rest of the holiday week was spent rallying. 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 up beyond the prior day’s range and after a brief two-way auction buyers ramped price higher. The auction continued higher for a bit more than an hour, going range extension up and trading into levels unseen since September 2nd before falling back to the mid. The truncated session wrapped up around 1:15pm with price just above the  mid.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 12,272.25. Then we press up through overnight high 12,337.25 before two way trade ensues.

Hypo 2 gap-and-go higher, working up to 12,400 before two way trade ensues.

Hypo 3 stronger sellers close overnight gap 12.272.25 then continue lower, down through overnight low 12,193.50. Look for buyers down at 12,178 and for two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves: