iBankCoin
I turn dials and fiddle with knobs to hone in on harmonic rotations
Joined Oct 26, 2011
3,620 Blog Posts

NASDAQ settles into balance overnight, here is the Thursday trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring elevated range and volume.  Price worked higher overnight, briefly probing into the 5/14 range before settling into balance.  At 8:30am initial/continuing jobless claims data came out mixed.

Also on the economic calendar today we have existing home sales at 10am and a 7-year note auction at 1pm.

Yesterday we printed a double distribution trend up.  The day began with a gap down-and-out of the large value area that began forming May 15th.  Buyers drove higher off the open and after some two-way trade along the Tuesday low buyers became initiative and the market went trend up into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6957.  From here we continue higher, up through overnight high 6975 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 6963 setting up a move to target 6989.50 before two way trade ensues.

Hypo 3 sellers press down through overnight low 6925.25 setting up a move to target 6900 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Longs liquidated overnight, most dense economic day of May, here is the Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight, driving fast at times, discovering lower prices.  As we approach cash open the auction profile resembles a lowercase letter-b which suggests a long liquidation occurred—a temporary market phenomenon like a short squeeze but in the other direction. Price is hovering on the topside of a multi-day value area formed in early May and showing short-term balance.

The economic calendar is loaded today.  At 9:45am we have Markit manufacturing/service/composite PMI.  New home sales data comes out at 10am, crude oil inventories at 10:30am.  At 11:30am the US Treasury will auction off $26 billion in 52-week bills and $16 billion in floating rate 2-year notes.  Then at 1pm they will auction off another $36 billion in 5-year notes.

Then, at 2pm the Federal Reserve will release the minutes from their May 2nd meeting.

Yesterday the NASDAQ printed a normal variation down.  The day began gap up and after a brief 2-way auction sellers stepped in and closed the gap.  We spent most the rest of the day chopping sideways until some late afternoon selling made new daily lows.

Heading into today my primary expectation is for buyers to push off the open.  Look for sellers to reject a move back into the 5/18 low, likely defending at the open gap left behind at 6874.25.  Then look for 3rd reaction after the FOMC minutes to dictate direction into end-of-day.

Hypo 2 gap-and-go lower, press through overnight low 6829.75 setting up a move to target 6801.25 before two way trade ensues.  Then look for 3rd reaction after the FOMC minutes to dictate direction into end-of-day.

Hypo 3 stronger buyers work a full gap fill up to 6909.25 then continue higher, up through overnight high 6913.25.  Look for sellers up at 6925.25 and two way trade to ensue.  Then look for 3rd reaction after the FOMC minutes to dictate direction into end-of-day.

Levels:

Volume profiles, gaps, and measured moves:

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NASDAQ drifts higher overnight, here is the Tuesday trading plan

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range and volume.  Price drifted higher overnight, slowly and methodically, and as we approach cash open prices are hovering in the upper quadrant of Monday’s range.

The only economic events today are a 4-week T-bill auction at 11:30am and a 2-year note auction at 1pm.

Yesterday we printed a normal variation down.  The day began with a gap up and driver higher.  Buyers stalled ahead of last Thursday’s high and price made a sharp move back down into last Friday’s range. Sellers were unable to close the overnight gap.  We worked back to the daily mid then another sell rotation came through, again unable to close the overnight gap.  Responsive buyers (responsive relative to the Monday open, initiative relative to the Friday close) stepped in at the end of the day and ramped us back to the daily mid.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6915.25.  From here we continue lower, down through overnight low 6908.75.  Look for buyers ahead of 6890 and two way trade to ensue.

Hypo 2 buyers gap-and-go higher, up through overnight high 6947.50 setting up a test of the Monday high 6957.  Look for sellers up at 6963 and two way trade to ensue.

Hypo 3 stronger buyers close the gap up at 6973.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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Cash session was a draw, Monday NASDAQ recap with RAUL

This is what I was talking about Sunday when I said ‘where the rubber meets the road’.  Unless you held a position in the futures over the weekend, that 50 point gap up on Sunday evening was useless to you.  And if you appreciate your sanity then you probably don’t want to hold futures into the weekend.  For most of you the weekend is the only time you live your best life before returning to the servitude of your employer.

Being bearish into the week has had its perks thus far.  If you were trading Sunday evening the best rotation was down.

When cash session rolled around 9:30am New York bulls drove higher.  It was an impressive showing right off the rip and was cause to stand aside until we saw sellers of a comparable size and resource step in:

It was sort of looking like a more aggressively bullish version of hypo 2.  Here is the text form this morning’s report:

Hypo 2 buyers defend ahead of overnight low 6898.75 setting up a move to take out overnight high 6947.75.  Look for sellers up at 6963 and two way trade to ensue.

We never made it to 6963 and by 11am were off the high and forming a mini-balance, which eventually broke lower and created the biggest rotation of the day.  Resourced sellers rejected a move out of a huge balance that has been building since last Tuesday.  Sellers then defended the daily midpoint setting up another hard rotation lower.

I did not trade the ‘throwback to the mid’ which I normally do, but I held a runner in hopes we would make a new daily low.  This was ultimately closed out right here at the close for a much smaller win.  Holding that intra-day runner is me being more aggressive.  This is what I was talking about Sunday, about pressing my bias.

Today my aggression did not pay.  Bulls pinged a few of the big names right at the bell and we spiked.  Look at 5 minute bars in names like Apple, Amazon, and to a lesser extent NVIDIA.

I was sending cryptic messages through StockTwits and Twitter, hoping to stoke some social tracking algo in my favor.  Aggressive desperation.  It should be noted I ate a small amount of pork yesterday. Sister RAUL prepared a shredded loaf of pig flesh and I had to try it.  I may have absorbed some of the rage and desperation the animal felt before its murder when I consumed its flesh.

Anyhow cash session was a draw.  If the recent history of bulls dominating GLOBEX continues, it is likely we drift higher overnight.  The picture over on the S&P is anything but bearish.  Bulls held their breakout:

But no matter how you observe it, the cash session was a draw.

Tomorrow’s cash session is, as always, TBD.  And you know which side I will be working at some point tomorrow morning.

It really feels to me that we are entering a holding patter ahead of Wednesday afternoon’s FOMC minutes and Friday’s Fed chaiman talk from Jerome Powell.

The excitement over ‘trade wars’ ending is a loose footing for making an argument, either way.  It is a mound of sand in comparison to the rock that is the Federal Reserve.

Look at the current /NQ profile.  You see what I’m seeing?

KEEP TRADING SIMPLE.  DISCOVER VALUE.  SELL ABOVE IT, BUY BELOW.

Selling is being absorbed and so far the buying is too.

trade accordingly

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NASDAQ gap up to start the week, here is the Monday trading plan

NASDAQ futures are coming into Monday gap up after an overnight session featuring elevated range on normal volume.  Futures opened gap up, with the behavior being attributed to news that ‘trade wars’ were on hold.  We then spent most of the evening working sideways before sellers stepped in.  Their attempt back into the Friday range was rejected by buyers.  As we approach cash open prices are holding about 20 points above the Friday high.

The economic calendar is light to start the week.  At 11:30am we have a 3- and 6-month T-bill auction.  There are no other economic events.

Last week was the third choppy week in a row.  Strong Monday, gap down Tuesday, then consolidation.  Meanwhile the Russell demonstrated divergent strength.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral extreme down.  The day began gap down in range.  The morning was spent attempting lower but with sellers being absorbed on the bid.  Then we went up and closed the overnight gap before drifting into the lower quadrant by the end of the day.

Neutral extreme.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6874.25 before two way trade ensues.

Hypo 2 buyers defend ahead of overnight low 6898.75 setting up a move to take out overnight high 6947.75.  Look for sellers up at 6963 and two way trade to ensue.

Hypo 3 stronger sellers trade us down to 6832.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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The model is bearish again, an explanation of how I will trade it into month-end

For the second time in four weeks the IndexModel, which is prepared every Sunday as part of the Exodus Strategy Session, is signalling bearish.  Before we go into how I will trade the signal, lets discuss the purpose of the Exodus Strategy Session.

Financial markets never truly sleep.  In our quasi-free-market society money is always moving around the world, 24/7.  This is facilitated in a number of ways from credit cards, to wire transfer or ACH, and even via the exchange of physical currency (which drives governments mad).  But the USA public stock markets do ‘close’ briefly, from Friday afternoon until Sunday evening.  This short pause is somewhat arbitrary, and as we become more immersed in a world augmented by artificial intelligence, the way the stock market closes for 49 hour and 45 minutes every American weekend is becoming increasingly archaic.

But it does close.  Therefore it makes sense to use the brief pause to strategize and plan our next actions.  Hence the Sunday strategy session.  It used to be written by a person I’ve never met in real life called Chessandwine [chess and wine].  As a young man I found him to be an admirable character who demonstrated a level of stock market understanding I had not yet achieved.  In fact, that was the case with many of the contributors to iBankCoin back in the early days.  One day Chessandwine defected from iBankCoin, completely abandoning his post as the creator of the Sunday strategy session.  I had been reading the report for years.  And I imagined many others did too.  And it seemed like many people would be put out by this abandonment, which sucked.

I was just blogging in public forum back then, posting my research and trade ideas and doing my best to ‘put myself out there’ in hopes of learning how to be a competent trader.  It was working.  I found my niche trading NASDAQ futures, which I heavily supplemented with algorithmic signals.  You can click here to see how my mind approaches deep understanding.  Here’s a brief snippet for anyone too lazy to click:

Nothing builds confidence in an idea like statistics and probabilities.  Therefore as an addendum to the weekly course, I have built out the relevant IB statistics for my product, the Nasdaq E-mini future contract.  I used five years of pure IQ Feed data to compile the following stats.  Some highlights:

  • We break initial balance 94.75% of the time
    • By 11:30 – 73.03% of the time
    • By 12:00 – 81.13% of the time
  • Normal IB range (69.87% frequency) is 11 – 24 points
  • Normal IB volume (66% frequency) is 40k – 75k contracts

Anyhow, The Fly tapped me to take over the Sunday Strategy Session.  The problem was, I had no desire to do the report.  Back then it was tailored, by Chessandwine, to be a tool for people who traded individual stocks.  I rarely trade those instruments.  But I tend to find ways to say yes to people, so I took over the report.

For a few months it brought me great anxiety.  My research was going to be broadcast out to 100s of paying iBankCoin investors and traders.  It wasn’t going out to some dorks reading marketwatch or whatever, it was going to hard core, punch your fucking jaw off, iBankCoin traders.  For those of you who weren’t around in 2007, this was a violent website solely dedicated to making money.  Nothing else mattered.  Eat what you kill and if you’re a distraction then face humiliation until you were banned and shamed out of existence.

It was truly a wonderful place for a rabid dog like me.

Anyhow, I would go to bed early Friday so I could prepare the report Saturday.  It would take me 7-10 hours and I could not enjoy the weekend until it was done.  The final product was my absolute best attempt at preparing a report for stock traders.  Hopefully they found it useful.

It was useless to me.

At some point I snapped and made the report exclusively for me, and also for any younger humans similar to me who were in their 18th-to-22nd year of existence.  What did I need to know going into the trading week?

For starters, I trade equity index futures.  Not stocks.  And for the last four years only one instrument, front-month NASDAQ futures.  The 100 largest non-financial stocks trading on the NASDAQ are market cap weighted into an index.  A contract called a future is a derivative of that index that you can trade.  These futures trade on the Chicago Mercantile Exchange.  The NASDAQ is in New York City but in reality it exists only on the internet and in our minds.  There is no physical exchange.

The first thing I need to know is what the stock market has done since my last report.  Aka, the first of ‘the big three’ questions…what has the market done?  Section II covers this as objectively as possible.  We go top-down, starting with the 1-week performance of the four largest USA indices, then working down into sector performance then finally the industry level.  I used to factor oil into the equation but found its behavior irrelevant to my needs.  This section of the report helps identify what happened and also what the risk appetite was last week.  I need to know this.  It also helps to answer another big question…what is the market attempting to do?

If you are wondering where these questions come from, they come from one of the [very] few useful books on active trading called Mind Over Markets.  You can find it on Amazon and one of the writers recently started a twitter account and is practicing the methods presented in the book live.  You could go follow him right now but please come back and keep reading the RAUL blog:

After we answer those questions we ask the most important question of all…what is the market likely to do from here?  This is where the rubber meets the road.  The right edge of the chart.  Everyone’s so damn good at pointing to old charts and confidently explaining what happened and why.  Eventually, if you trade long enough, you’ll start to realize charts are okay, they present information well.  But it can be difficult to consistently act based off of them.

The only people I see consistently acting from charts are options traders who studied under The Option Addict.  They tend to buy directional bets on charts that are consolidating into tight wedges.  These guys are only right like 15-20% of the time but when they are, huge huge gains.

I find statistics to be a better forecasting tool.  That is what Section IV and V of the strategy session are all about.  We rank things like 2-3 day trend, volume, and more, and track the outcomes when abnormal readings occur.  This allows us to consistently forecast a directional bias over the next five trading days.

And that is what I need to know.

One of the signals, the bearish signal that triggered today, is called Rose Colored Sunglasses or RCS for short.  It is called that because it is describing the current situation as best as I can with words.  The indices paint a rosy picture, lulling everyone into complacency.  Meanwhile, below the surface, Exodus sees things differently.  It’s micro interpretation of over 4000 stocks and a handful of other macro components are telling a different story of bearish undertones.

If you have never worn rose colored sunglasses, just know that everythings better with rose colored sunglasses.

A directional bias means I will favor one side ‘of the tape’ while I trade the NASDAQ 100.  Going into next week the model is bearish, therefore I will be aggressively shorting the NASDAQ 100 intraday.  I will also put on a position trade early in the week using the SQQQ ETF and hold it until we tag ATR bracket low or the week ends.  This serves as a placeholder for my bias and reminds me that I have a bias.

Want to know what trade setup will have me most aggressive and most excited?  An overnight gap up, inside the prior day’s range. I will be shorting that open very aggressively until I am proven wrong or we fill the overnight gap.  This is my bread and butter trade, the overnight gap in range, further stacked in my favor by the Strategy Session.

So that’s it.  That’s how the Exodus Strategy Session came to be what it is today.  And that is how I will trade the signal.

Sometimes after I prepare the report inside Exodus, I come out here, in public forum and discuss my directional bias in a colorful way.  It’s really just an attempt to engage the reader.  I think most people prefer to be entertained more than they prefer learning how I do business.  But for those who do care to learn, there is the Exodus Strategy Session and the morning trading reports.

Only like 40 people read both.

Which is fine.  The way my brain is required to think in order to produce the Strategy Session, and the resulting bias creation has taken me out of trading plateau I had been on for a long time.  The elevation in my performance is significant.  Having a bias made me a way better trader.  So to me, it doesn’t matter if anyone finds it valuable.  I find it valuable, and I eat what I kill.

The Strategy Session makes me a better trader.  So do the levels presented on the morning report.  And so does all the hard work that goes down behind the scenes.

I prefer being in my quiet little corner of the internet, misunderstood by most and left alone to make money.  It took me many years to realize attention has the dangerous ability to cut right to my ego, which time-and-again is my arch enemy in trading.  And in business.  And in life.

The models are bearish into the last full week of May.  Therefore I will be selling IN MAY.

So it is written, so it shall be.

RAUL SANTOS, May 20th, 2018

Exodus members, the 183rd edition of Strategy Session is live, go check it out!

 

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NASDAQ futures slide lower in late-morning trade, here is the Friday trading plan

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range on elevated volume. Price was balanced for most of the overnight session before a wave of selling hit around 8:15am New York.  As we approach cash open prices are hovering along the Thursday low.

There are no important economic events today.  It is front-month option expiration day.

Yesterday we printed a neutral day.  Started out gap down in range, buyers close gap, push RE up, briefly take out Wednesday high, sellers at our hypo 3 price level, then traverse the entire range and go RE down, putting us neutral, excess low formed, back to the mean by close.

Neutral.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6905.50.  Look for buyers to target 6913.50 MCVPOC before two way trade ensues.

Hypo 2 sellers reject us down and out of Thursday low 6875 setting up a move to target the open gap at 6843 then then 6832.75 before two way trade ensues.

Hypo 3 stronger sellers press down to the 6800 century mark before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

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The drift into summer continues, here is the Thursday NASDAQ trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring normal range and volume.  Price worked lower overnight, and as we approach cash open we are hovering along the Wednesday lows.  At 8:30am initial/continuing jobless claims data came out mixed.

Also on the economic calendar today we have leading index at 10am and a 10-year TIPS auction at 1pm.

Yesterday we printed a normal variation up.  The day began gap up and with sellers unable to quite fill the small gap.  Instead buyers stepped in and drove higher a few times, stalling ahead of the Monday high and settling into two-way trade.

Heading into today my primary expectation is for sellers to test down through overnight low 6898 and close that gap down at 6890.50 then continue lower, down to 6871 before two way trade ensues.

Hypo 2 stronger sellers trade us down to 6843 before two way trade ensues.

Hypo 3 buyers work into the overnight inventory and close the gap up to 6937.50 setting up a move to take out overnight high 6944.50.  Look for sellers up at 6959 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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Flat into Wedneday, here is the NASDAQ trading plan

NASDAQ futures are coming into Wednesday flat after an overnight session featuring normal range on elevated volume.  Price worked sideways overnight in a balanced manner.  At 8:30am housing starts and building permits data came out below and above expectations, respectively.

Also on the economic calendar today we have industrial/manufacturing production data at 9:15am and crude oil inventories at 10:30am.

Yesterday we printed a normal variation down.  The day began gap down below the Thursday-Friday-Monday range.  Sellers drove lower off the open to prices unseen since last Wednesday before a sideways chop took hold.  Said chop went range extension down briefly before reverting back to the daily mean.

Heading into today my primary expectation is for sellers to press down through overnight low 6875.50 setting up a move to target the open gap at 6843.  Look for buyers at 6841 and two way trade ensuing, perhaps marking the low-of-the-week.

Hypo 2 buyers work up through overnight high 6907 setting up a test above Tuesday high 6817.25 before two way trade ensues.

Hypo 3 stronger buyers drive up to 6958.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

 

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NASDAQ with a slight gap up into what’s setting like a calm week, Bullard talking crypto in NYC? Here is the Monday trading plan

NASDAQ future are coming into the week gap up after an overnight session featuring elevated range and normal volume.  Price worked up beyond the Friday high overnight before settling into balance right along the Friday range high.

The economic calendar is light this week.  Today we have only to be aware that the US Treasury is auctioning off $48Bln in 3-month and $42Bln in 6-month T-bills.

Crypto currency traders will likely be paying close attention to New York city this morning.  At 9:40am Federal Reserve banker Bullard is speaking at a crypto conference in the city.  Central banking meets ‘decentralized’ money supply.

Last week kicked off with a rally.  Buyers extended beyond the trend day printed two Friday’s back then the week became quite choppy.  Wednesday afternoon buyers reasserted themselves then we went gap up into Thursday.   After rallying through Thursday morning we chopped our way into the weekend.  The 1-week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral day.  The day began gap down, in-range, and after a choppy open buyers stepped in and closed the overnight gap then briefly made new highs before discovering a responsive seller.  Then we went range extension down, putting us neutral, before ultimately rallying back to the mean late in the session.

Neutral day.

Heading into today my primary expectation is fro sellers to work into the overnight inventory and close the gap down to 6960.25.  From here we continue lower, down through overnight low 6953.  Look for buyers down at 6948 and two way trade to ensue.

Hypo 2 stronger sellers take us down to 6918 before two way trade ensues.

Hypo 3 buyers work up through overnight high 6994.25 setting up a move to close the open gap up at 6999.25.  Look for sellers around 7000 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

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