NASDAQ extends losses into Friday morning, here is trading plan

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume. Price was choppy overnight, first working to erase the Thursday afternoon ramp then continuing a bit lower. From then on it was a chop, chopping along the lower quadrant of Thursday’s range. At 8:30am Nonfarm payroll data came out stronger than expected. As we approach cash open, price is hovering along the Thursday low.

There are no other important economic events today.

Yesterday we printed a trend down. The day began with a gap down near the Wednesday low but still in range. After an open two-way auction sellers began to rotate price lower, taking out the Thursday low in a choppy battle with buyers before accelerating the selling down through the open gap left behind on 08/31 (month end)., Sellers drove lower until about 11:30am when some responsive buyers were found ahead of the 08/26 gap. After an hour long battle, sellers resumed their campaign, stalling out just above the 08/26 naked vpoc. There was a slight ramp near the end of the day.

Heading into today my primary expectation is for sellers to gap-and-go lower, tagging 11,500 before two way trade ensues.

Hypo 2 stronger sellers tag 11,383 before two way trade ensues.

Hypo 3 is for buyers to work into the overnight inventory and close the gap up to 11,797.50. Look for sellers up at 11,808.50 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Volatility picked up over the last 24 hours. The overnight session was balanced, chopping up near the Wednesday high until about 5am New York when sellers stepped in and drove price lower. At 8:30am jobless claims data came out stronger than expected. As we approach cash open price is down in the lower quadrant of Wednesday’s range.

Also on the economic calendar today we have ISM services index at 10am, crude oil inventories at 10:30am and then 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a neutral extreme up. As noted above, volatility picked up yesterday morning. The day began with a gap up to new all-time highs. Sellers drove lower into the open, closing the entier gap and continuing down into the upper quadrant of Tuesday’s range before catching a bid. Buyers worked price back up to the daily midpoint. Sellers defended the mid and pressed to a new session low, briefly trading below the Tuesday midpoint before responsive buyers formed a sharp excess low. From then on the rest of the session was an auction higher, crossing up through the mid around 12:45pm and slowly regaining the upper quadrant. After flagging for about an hour buyers made one final push into the close and managed to press the market neutral right near the end of the day and close out the session near the highs.

Neutral extreme up.

Heading into today my primary expectation is for buyers to press into the overnight inventory and tag the Wednesday VPOC at 12,291.25 before two way trade ensues.

Hypo 2 stronger buyers work a full gap fill up to 12,411.50 setting up a move up through overnight high 12,438.75. Look for sellers up at 12,443.50 and two way trade to ensue.

Hypo 3 full on liquidation down to 12,107.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the second day of September pro gap up after an overnight session featuring extreme range and volume. Price worked higher overnight, making a steady ascent higher via two rotations higher. At 8:15am the ADP employment report showed job growth, with private job growth at a steady 428,000 which many commentators are downplaying as not enough gains. As we approach cash open, price is hovering near 12,420.

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

Yesterday we printed a normal variation up. The day began with a gap up beyond the Monday range. Sellers had a go at closing the gap during the opening swing but stalled after tagging Monday’s naked VPOC. Responsive buyers (responsive relative to Tuesday open, initiative relative to Monday close) stepped in and formed a sharp excess low then rallied price right up until 10:30am. Then we flagged in the upper quadrant for several hours, not making any range extension. Range extension up came around 1:45pm setting up another flag for about the rest of the session before we ramped into the bell and closed on the highs.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 12,465.25 on their way to tagging 12,500.

Hypo 2 sellers work a half gap down to 12,410 before two way trade ensues.

Hypo 3 stronger sellers work a full gap fill down to 12,313. Look for buyers down at 12,300 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Tuesday pro gap up after an overnight session featuring extreme range and volume. Price steadily rotated higher overnight, taking out the Monday high print around 10pm New York and continuing to probe higher until about 7am. Responsive sellers showed up around 12,250 and as we approach cash open, price is hovering around 12,000.

On the economic calendar today we have ISM Manufacturing index and construction spending at 10am.

Yesterday we printed a double distribution trend up. The day began with a gap up right around the Friday high. Sellers nearly closed the gap during an open two-way auction but did not entirely close it before buyers stepped in and began campaigning for higher prices. By 10:30am we were already range extension up. Sellers made a sharp move back to the daily midpoint shortly after range extension. Buyers defended the mid setting up another steady rotation higher for the rest of the session. During the closing trade sellers pressed price back down to the midpoint but the daily VPOC stayed up near the highs.

Heading into today my primary expectation is for a sell move down to 12,147.50. Buyers step in here and take out overnight high 12,248.75. Look for sellers ahead of 12,300 and two way trade to ensue.

Hypo 2 stronger sellers work a full gap fill down to 12,112.25 before two way trade ensues.

Hypo 3 buyers gap-and-go higher, sustaining trade above 12,300 to set up a run for 12,350.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Monday with a slight gap up after an overnight session featuring elevated range and volume. Price was working higher for the first several hours of Globex, making a new record high around 8pm and continuing higher until finding sellers around 2am. Said responsive sellers stepped in ahead of 12,100, and since then we’ve fallen back into last Friday’s range. As we approach cash open, price is hovering up near Friday’s high.

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

Last week equity markets were mostly strong. All major indices spent the majority of the last full week of August rallying, especially from Tuesday-to-Wednesday. The Russell 2000 lagged a bit and is pinned right along its composite volume point of control; flagging, coiling, building energy for the next move. 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 up inside Thursday’s range. The opening auction was tight but sellers managed to close the overnight gap within the first half hour. The rest of the morning was spent churning along the midpoint before sellers stepped in after lunch and pressed us range extension down. Sellers hardly probed into the lower half of Thursday’s range before discovering a bid. We then spent the rest of the day slowly rotating higher, first up through the midpoint and eventually closing above it.

Heading into today my primary expectation is for buyers to press away from the Friday high 12,018.25 setting up a run through overnight high 12,091.75. Look for sellers just above at 12,100 and for two way trade to ensue.

Hypo 2 stronger buyers trade up to 12,167.50 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory and close the gap down to 11,988. Sellers continue lower, down through overnight low 11,980 targeting the micro-composite POC at 11,964.25.

Levels:

Volume profiles, gaps and measured moves:

Not much in the way of new developments. I put my head down last week and worked. I worked so hard Thursday that by the time I was done working I was so sore and whisky drunk that I poisoned myself with a large serving of tofu pad Thai—extra spicy with extra peanuts. Reading the next day that Black Panther actor and all around solid human Chadwick Boseman died of colon cancer at age 43 downright shook me. Especially since I was writhing in gastrointestinal pain from all the flaming hot peanuts I had consumed.

Your humble pen pal Raul is 35 years old and has done anything but be kind to his gut. Well, that is not entirely true. What initially had me exploring vegetarianism four years ago was the promethease database telling me I was most likely to die of colon cancer. I figured, well shoot I’d better stop filling my body with rotting flesh. So I started by doing a vegetarian breakfast for about a year. Then I spent a few days fasting high up in the Canadian mountains,meditating and snowboarding and hiking, and experienced a deep interconnectedness with all things living and swore off flesh consumption for good. So I have done that for my gut.

I regularly keep my pipes clean with high proof alcohol and a hot sauce addiction. But who knows—tomorrow isn’t promised and the DNA I was dealt is predisposed to perish from colon cancer.

For now, while I remain in the land of the living, a very strong and beautiful man who can command his cock to harden even in arctic winds, my job is simple—to extract as many fiat american dollars as possible from the global financial ecosystem. Said fiat will then be converted into real assets like cement and greenhouses and sweat lodges, built as far north and at as high an altitude as my constitution allows. I took my eye off the prize last week, instead toiling in the woods with Elder Raul, but I can assure you I remain steadfast in my mission to be the greatest investor and trader of all time.

Models are bullish into month-end. I shall press all longs, especially the airlines, at least until Thursday.

As always, we shall take it one day at a time. Be sure to drop in around 9am New York to check out the day’s key NASDAQ levels and what the plan is for the morning trade. We can drive all the way across the country at night only seeing the road our headlights illuminate. We use that same approach to investing.

Anyone claiming to have a firm grasp of the future direction of the stock market more than about six minutes into the futures is a charlatan, a damned liar and a cheat who is likely seeking to scam you. Be sure to avoid these people and cast doubt upon them in public forum.

That’s it. Cheers to your Sunday.

Raul Santos, August 30th, 2020

Exodus members, we are loving the NASDAQ Transportation Index right now. I just published the 301st edition of Strategy Session. Go read why we love it.

NASDAQ futures are coming into Wednesday up at a new record high after an overnight session featuring elevated range and volume. Price worked higher overnight, nearly tagging 11,800 before settling into balance. As we approach cash open, price is hovering above the Tuesday high.

On the economic calendar today we have durable goods orders at 8:30am, crude oil inventories at 10:30am, a 2-year FRN note auction at 11:30am and a 5-year note auction at 1pm.

Yesterday we printed a normal variation up. The day began with a gap down in range. After an open two-way auction probed a bit lower, buyers stepped in and resolved the open gap. Said buyers continued higher, going range extension up by mid-morning. A check back to the daily midpoint just after New York lunch time was defended before buyers resumed their campaign. Buyers ended the day with price at all-time highs.

Heading into today my primary expectation is for buyers to run the gap up up to 11,800 before two way trade ensues.

Hypo 2 stronger buyers trade up to 11,850 before two way trade ensues.

Hypo 3 sellers press into the overnight inventory and close the gap down to 11,727. Look for buyers down at 11,720.25 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Tuesday with a slight gap down after an overnight session featuring elevated range on elevated volume. Price was balanced overnight, bobbing along the top-side of Monday’s midpoint. As we approach cash open, price is hovering just a few ticks below the Monday midpoint.

On the economic calendar today we have consumer confidence and new home sales at 10am followed by a 2-year note auction at 1pm.

Yesterday we printed a normal variation down. The day began with a gap up to new record highs. There was a pretty wide open-two way auction that pressed a few points higher before responsive sellers stepped in. Said sellers spent the morning closing the overnight gap but struggled to reclaim the Friday range. Instead buyers pressed back to the daily midpoint. Sellers defended the mid twice before attempting another rotation lower. This rotation stalled out before a new daily low could be made and we ramped back up through the midpoint near the end of the session.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 11,636. From here buyers continue higher, taking out overnight high 11,690. Look for sellers just above at 11,700 and two way trade to ensue.

Hypo 2 stronger buyers trade up to 11,733.75 before two way trade ensues.

Hypo 3 sellers press down through overnight low 11,607.75 setting up a move down to 11,574 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the final week of August pro gap up after an overnight session featuring extreme range and volume. Price worked higher overnight, steadily campaigning higher for the entire globex session. As we approach cash open, price is hovering near 11,700.

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

Last week the NASDAQ was strong, the Russell was divergent weak and the other two indices traded sideways. 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 slight gap down and after a brief open two-way auction buyers stepped in and drove price to a new all time high. A check back to the midpoint was defended by buyers and we ended the day trading near the highs.

Heading into today my primary expectation is for sellers to work into the overnight inventory and work down to 11,650 before two way trade ensues.

Hypo 2 buyers go higher and tag 11,733.75 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 11,733.75 setting up a run to 11,800.

Levels:

Volume profiles, gaps and measured moves:

Not much to discuss. I used up most my good thoughts already today via a conference call. But before the conference call I attended a group yoga class for the first time since like January and it was good to see all the good freaks still at it, contorting their beautiful bodies every which way in a path to a balanced mind.

The models remain bullish. Tech is strong, semiconductors are strong, the transportation index is lined up and building energy. Really the only people losing money and/or wasting their time in the financial markets are the davy day trade lemmings and the ferreting stock picking addicts. Us regular folks who buy the absolute best companies in the word and HOLD…are making a mint.

Futures trading is going okay. There were a couple big lay up trades last week. Here’s to seeing a few more set up in the weeks to come.

Jay Powell is scheduled to speak Thursday morning. Otherwise all the important earnings announcements are out of the way and we can just cruise into month-end on the wings of our benevolent tech leaders.

Really nice.

Apparently President Donald Trump is going to give some announcement about a COVID therapy at 6pm tonight. I can assure you I won’t be watching his announcement or the price of futures. There are enough regular trading hours for me to earn my nut. Life is to precious to spend summer Sundays in front of computer and teevee screens. And I have fountains to build.

Adios muchachos,

Raul Santos, Auguts 23rd 2020

Exodus members, the 300th edition of Strategy Session is live, go check it out.