Thu Jan 3, 2019 8:45am ESTComments Off on Apple data suggests China slowdown, sending NASDAQ -150 but strong ADP data brings in buyers, -100 heading into Thursday open, here’s the trading plan
NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Price worked sharply lower shortly after Wednesday settlement on news that Apple was cutting their sales guidance. Per the Associated Press:
Cook said Apple’s revenue for the October-December quarter — including the crucial holiday shopping season — will fall well below the company’s earlier projections and those of analysts, whose estimates sway the stock market.
Apple now expects revenue of $84 billion for the period. Analysts polled by FactSet had expected Apple’s revenue to be about 9 percent higher — $91.3 billion. The official results are scheduled to be released Jan. 29.
By 10pm New York, NASDAQ futures were probing below the Wednesday cash low. However by 7am responsive buyers had worked price back into the Monday range. At 8:15am ADP employment change data came out much stronger than expected:
ADP Employment Change For Dec. 271K vs 179K Economist Estimate ?
The ADP data brought additional buying into the morning pre-market, reducing the overnight losses to -100. The Labor department remains funded despite the U.S. government shutdown, however the Commerce department is closed and no construction spending or unit vehicle sales will be released today. At 8:30am initial/continuing jobless claims data from the Labor department was worse than expected.
Also on the economic agenda today we have ISM manufacturing/employment at 10am followed by a 4- and 8-week T-bill auction at 11:30am.
Yesterday we printed a double distribution trend up. The first day of the 2019 trading year began with a pro gap down that started prices out in the middle of a conviction buying zone established on Thursday, December 27th. Buyers were active on the open and drove price higher, filling the pro-gap by New York lunchtime. Buyers managed to extend their gains in the afternoon, but the auction stalled out just after probing above last week’s high. Mini failed auction. The day ended with price in the upper quadrant of the session.
Heading into today my primary expectation is for buyers to work into the overnight inventory, trading up to the 6300 century market. A two-way battle ensues here before buyers ultimately continue working higher to close the overnight gap at 6370 before two way trade ensues.
Hypo 2 buyers press down through 6220 on the open, setting up a move down through overnight low 6188.25. This sets up a move to tag the naked VPOC at 6151.75 that we left behind on 12/27.
Hypo 3 stronger buyers work up through overnight high 6361 setting up a move to target 6406.75 before two way trade ensues.
Wed Jan 2, 2019 9:18am ESTComments Off on First quarter re-balance of quantitative system set to execute on market open
The iBC top-down sector analysis Q4 quantitative account which is chosen by Exodus and executed through Motif is set to rebalance on market open. The Motif platform will automatically execute 30 trades that result in the account being equally weighted into the following stocks:
Here is the performance of the account over the last 12-months verses the S&P 500 and verses a hypothetical scenario where it was holding the above stocks instead of its actual holdings:
NASDAQ futures are coming into 2019 with a pro-gap down after an overnight session featuring extreme range and volume. Price worked up through the Monday high briefly before beginning a sustained, unidirectional move that descended 230 points lower. As we approach cash open price is finding balance inside last Thursday’s range, in an area we saw conviction buying last week.
The U.S. government remains shutdown. This appears to be affecting an 8-week T-bill settlement auction that was scheduled for today. The only other economic event today is PMI manufacturing index at 9:45am.
On Monday the NASDAQ printed a normal variation down. The day began with a gap up and after a brief two-way auction at the open price worked lower to close the overnight gap and go range extension down. Then responsive buyers stepped in and we chopped into the close. It was an inside day, with the entire daily range being contained in last Friday’s range.
On Tuesday U.S. markets were closed in observation of New Year’s Day.
Heading into today my primary expectation is for buyers to work into the overnight inventory and work a half gap up to 6275. Sellers step in here and two way trade ensues.
Hypo 2 sellers gap-and-go lower, taking out overnight low 6154 and trading down to 6100 before two way trade ensues.
Hypo 3 stronger buyers trade up to 6300 before two way trade ensues.
My bullishness these last 5-or-6 weeks looks foolish in hindsight. I realize that as well as you do. There is not much I could have done to avoid this drawdown. I could have given the failed auction at the beginning of October more weight. There’s that. At the risk of looking like a broken clock [not caring so much what I look like] I am once again writing a bullish Sunday blog entry. I am bullish heading into 2019.
I do not acknowledge that we are in a bear market. The way people numerically assign this market as being a bear or some other market as being a bull is just another social construct that only exists inside the human brain. Quite frankly, I think humans are the most out of touch mammals on the planet. They do not spend enough intimate time with plants or mushrooms. If they lived in closer proximity to both, and stopped being flesh-eating maniacs, then maybe I would assign more value to their collective thoughts.
We have a long way to go. The NASDAQ is about 18% lower than its October 1st close. One of the positions I initiated at the beginning of October [$ALGN] is about -50% over the last three months. It’s as much a loss of time as it is U.S. fiat dollars on a computer screen. Other names have been resilient, real resilient.
Like Tesla, all these flat earthers have been mother fucking wrong about that one, ammirite? I’m sorry for swearing. Listen, Larry Ellison joined the Tesla board or directors last week. Larry, the evil billionaire from Oracle. If you work in the finance department of any major company, you know what Oracle is like—you cannot escape Oracle. Oracle makes it all work and you pay your tithing to Larry Ellison whether or not you want to. The fate of all corporate souls lies in the hands of Larry muh fuckin’ Ellison. That sort of genius is now a personal guide to Tesla. I’d imagine they are no longer paying tithing to Oracle either. Have fun betting against that.
It’s not too late. To buy Tesla or solar or CRISPR or whatever public stock has a mission you believe in down to your plums. Truthfully, a lack of faith in your investments will result in you losing lots-and-lots of money. Will Google’s ideals persevere over the next ten years? Will Fords? Two totally different scenarios. Each able to invoke an emotional response. Avoid that. Emotions and investing don’t mix.
There’s still bitcoin. I had far less bitcoin conversations this holiday, but the few I did have were significantly more meaningful than hearing the regurgitated media talking points 100 times last year. I still like bitcoin, and since I have no idea what all this forking business is about, I like having some exposure to the other bitcoins too, CASH, GOLD, and SV.
To me, I see little difference between the current market structure and the structure we’ve seen at the beginning of any other ‘v-shape’ recovery since this bull market began got its legs back in ’16. Fractals of fractals, magnitudes are different, measurements are different, shapes are the same.
There is a key piece of context I will be watching into 2019, it’s the PHLX semiconductor index. Semiconductors have been the primary driver of our recent growth. If you recall, our big theme heading into 2018 was Moore’s Law, exponential growth, the rise of AI, and the ushering in of the roaring ’20s, a period of economic prosperity the likes of which no living human has ever seen. After seeing the behavior of our new Federal Reserve Chairman, Jay Powell, I will only add that this exponential growth theory that economic prosperity will be concentrated among less people than I initially realized. The wealth gap will widen, super wealth will be enjoyed by a select few.
If you have any ideas for pushing yourself over to the right side of the wealth gap before hyper-growth really takes hold, I suggest you put your head down and execute those ideas with an intense urgency. Otherwise prepare to be left in a massive pool of poverty while others are gilding their staircases with gold and lining their purses with blocked-chain.
You can lose your temper because forces beyond your control are affecting reality in a way you don’t like, or you can remove yourself from the observation, open you third eye, and take a bite out of the pie for yourself and your people before it’s too late.
Ideals are fine unless they hinder your ability to create and execute a solid plan.
Finally, you have no idea how much it means to me that you invest your time into reading my blog, that you invest your time and money into my research, and how must all your interactions my content help me. I am so grateful for the community of investors and traders I have to opportunity to interact with both locally in Detroit and online. I truly believe we can rise up together. There is plenty of opportunity and no reason for us to wish ill upon each other. I am not always the best at communicating how you guys help me become a better trader, investor, business man, and human, but you do! Thank you for all you do.
Here’s to another year of approaching the markets with a steady hand and calm mind, explicitly for the reason of extracting U.S. dollars from the global financial complex.
RAUL SANTOS, December 30th, 2018
Exodus members, I know the fourth quarter has been a grind. The 215th edition of Strategy Session is live, check out exactly what I am looking at on the PHLX semiconductor index, and be sure to read through all of Section III and let me know if you have any questions, thank you!
While reviewing last week’s action to prepare the Sunday Strategy session, I kept catching myself feeling negative emotions towards the stock market. Then venomous thoughts and more anger. I had to step back and read some Marcus Aurelius for a minute and ended up using a line from the OG emperor as quote of the week:
“You have power over your mind—not outside events. Realize this, and you will find strength.”
I built my trading career on closing the overnight gap. I trade it extremely well. I am the one out of ten trader of fintwit lore, who quietly did one trade well. Over the years I began adding new trades to my arsenal, notably to Exodus Strategy Session readers I added Rose Colored Sunglasses, Extreme Rose Colored Sunglasses, and Bunker Buster. These ‘biases’ were used as part of a trade I’ve been taking for the last two years or so where I target either a break of the overnight range or the initial balance range. If bias is Rose Color Sunglasses, I target overnight low/initial balance low, e(RCS) overnight high/IB high, and Bunker Buster begins the week targeting lows, then forces me to pivot at some point, mid-week, and start targeting the highs.
Straight up—Bunker Buster is too fucking confusing to trade in the heat of battle. I will keep tracking it, but using it to trade futures is off the table. Power over the mind :::breathes in, breathes out:: power over the mind.
For next week, I am sitting the action out. Come January I will start rebuilding my emotional confidence by only trading overnight gaps in range, with a little 2-lot, and assess my fortitude on a week-to-week basis. I will likely be in the mountains for the entirety of February, chasing powdery mountains, then in March I will consider adding back the RCS and e(RCS) trades.
This isn’t my first significant drawdown. I have been made a poor man many times by the oscillations of stock market price. I have also managed to extract great sums and put said funds into other investments, like farmland. Financial markets taught me years ago that they are nothing more than an intangible representation of millions of humans interacting, and that the ‘wealth’ they represent [on paper only] is merely a social construct—much like nations or ‘borders’. These things are not real to me. A farm is real. Farm equipment is real. Livestock is real. You cannot take away my work ethic and ability to sustain my people with the fruits of our mother earth.
I love pulling money out of the financial complex and earmarking it for my farm complex. I will continue to do so for as long as my mental abilities allow it. While I am a very poor man in stock market and bitcoin terms, I am very wealthy in time, health, workable land, and working capital. So while all of my timing algorithms have failed me, one after another, big time! –since the failed auction at the beginning of October–I will only be making minor tweaks to them. I still consider them to be of better guidance than any banker or activist fund (lumps of coal for Andrew Left) or media sound biter.
I also still consider TSLA to be the greatest investment of all time. It is incredible that Elon and his crack team of scientists and engineers are actually solving modern societies greatest problem (commuting). TSLA will eventually be the largest company in the world, and when it is we can start to worry about the dumb dumbs in congress jamming the company up.
Investors with long term horizons can seem arrogant during bear markets. I hope I do not come off that way. Only time will tell if buy-and-hold and dollar-cost-average will be proven right again. My money says it will. Good thing I never plan on retiring.
Merry Christmas everyone. Here’s to another year down in the trading trenches with you. Saluti
Exodus members, the 214th edition of Strategy Session is live, we gone make through this bear market, and be better for it!
Fri Dec 21, 2018 8:37am ESTComments Off on NASDAQ erases gap down after GDP/durable goods data misses, here is the morning trading plan
NASDAQ futures are coming into Friday with a slight gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, chopping along the Thursday midpoint for most of the Globex session. As we approach cash open price is hovering just above the mid. At 8:30am both GDP and durable goods orders data came out below expectations.
Also on the economic agenda today we have PCE core at 10am.
Yesterday we printed a normal variation down. The day began with a slight gap down which buyers quickly resolved. Said buyers were hesitant to initiate risk up into the Wednesday liquidation however. As a result, responsive sellers stepped in before we completed the initial balance and began working price lower. We made a new swing low by late morning and continued to probe lower into the afternoon. We traded to levels unseen since February 9th before a responsive bid stepped in. Buyers managed to ramp price higher into closing bell, positioning price above the daily midpoint into the close.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6326.50. From here we continue higher, up through overnight high 6333.50 setting up a move to target 6400 before two way trade ensues.
Hypo 2 stronger buyers trade us up to 6476.75 before two way trade ensues.
Hypo 3 sellers trade down through overnight low 6265.05 setting up a move back down to swing low 6180 and a test down below it. Look for buyers down at 6100 and two way trade to ensue.
Thu Dec 20, 2018 9:00am ESTComments Off on NASDAQ nearly back to unchanged year-to-date, here is the Thursday trading plan
NASDAQ futures are coming into Thursday flat after an overnight session featuring extreme range and volume. Price briefly took out the Wednesday low overnight before rotating higher. As we approach cash open price is hovering in the lower quad of Wednesday’s range. At 8:30am initial/continuing jobless claims data came out mixed.
Also on the economic calendar today we have 4- and 8-week T-bills up for auction at 11:30am followed by a 5-year TIPS auction at 1pm.
Yesterday we printed a neutral extreme down. The day began with a gap up and drive higher. Price was chopping along the Tuesday high, briefly probing above it twice. Then after the FOMC rate hike sellers stepped in, there was a battle at the weekly lows which ultimately resulted in sellers overpowering the buying response and sending us down through the lows. A responsive bid stepped in late in the session that managed to stabilize the selling right near the year-to-date unchanged mark.
Heading into today my primary expectation is for sellers to press down through overnight low 6287 setting up a move to target 6241.50 before two way trade ensues.
Hypo 2 buyers sustain trade above 6326.50 setting up a move up through overnight high 6391. Look for selelrs up at 6477.25 and two way trade to ensue.
Hypo 3 stronger sellers sustain trade below 6250 setting up another leg of liquidation.
Wed Dec 19, 2018 8:40am ESTComments Off on Live Fed meeting at 2pm: here is the Wednesday morning NASDAQ trading plan
NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume. Price worked higher overnight, slowly working its way back up to the Tuesday midpoint. As we approach cash open, price is hovering just above the Tuesday mid.
On the economic calendar today we have existing home sales at 10am, crude oil inventories at 10:30am, an FOMC rate decision at 2pm, and a Jerome Powell press conference at 2:30pm.
Investors are currently pricing a 71.5% probability of a 25 basis point lift in the Federal Reserve’s benchmark borrowing rate. Investors will also be pouring over the statement’s verbiage and the tone of the press conference afterwards for indication of whether or not the Fed will continue their plan of lifting rates through 2019, or if they intend to slow the pace of rate hikes.
Yesterday we printed a neutral extreme down. The day began with a gap up and tight two-way auction. The market went range extension down before lunch, then price shot higher to go neutral. This neutral rally was sold into, with selling accelerating into the afternoon and close. We closed near session low.
Neutral extreme down.
Heading into today my primary expectation is for a gap-and-go higher. Look for price to take out overnight high 6549, setting up a move to target 6586.50 before two way trade ensues. Then look for the third reaction after the FOMC rate decision/press conference to drive direction into the close.
Hypo 2 sellers work into the overnight inventory and close the gap down to 6479.50 setting up a move down through overnight low 6458.50. Look for buyers down at 6413 and two way trade to ensue. Then look for the third reaction after the FOMC rate decision/press conference to drive direction into the close.
Hypo 3 stronger buyers trade us up to 6654.75 before the FOMC decision, then look for the third reaction after the FOMC rate decision/press conference to drive direction into the close.
Tue Dec 18, 2018 9:09am ESTComments Off on Small gap up on the NASDAQ, here is the Tuesday trading plan
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Price was balanced overnight, chopping sideways beneath the Monday midpoint. As we approach cash open, price is hovering below the Monday 6536.25 midpoint. At 8:30am housing starts/building permits data came out better than expected.
There are no other economic events today.
Yesterday we printed a neutral extreme down/double distribution trend down. The day began with a gap down and drive lower which managed to find a strong responsive bid at the 11/23 open gap at 6350.50. Responsive buyers reversed the drive down, closed the overnight gap and pressed us range extension up right into the lunch hour. Then sellers came in and reversed all the intra-day gains. Then they pushed the market range extension down, putting us into a neutral print. Selling accelerated at this point, taking us down to the weekly ATR band at 6454.50. Near the end-of-session a slight responsive bid stepped in.
Neutral extreme due to double range extension and closing in lower quadrant, double distribution trend down because the daily VPOC kept shifting lower. These labels are broad brush strokes as every day is unique.
Heading into today my primary expectation is fro sellers to work into the overnight inventory and close the gap down to 6488.50. Sellers continue lower, down to 6413 before two way trade ensues.
Hypo 2 buyers take out overnight high early on 6548, setting up a move to target 6567 before two way trade ensues.
Hypo 3 stronger buyers trade us up to 6600 before two way trade ensues.