Volatility vanishes and summer vibes return, here is Friday NASDAQ trading plan

NASDAQ futures are coming into Friday with a slight gap down after an overnight session featuring elevated range and volume. Price was balanced overnight, balancing along and occasionally exceeding the Thursday high. As we approach cash open, price is hovering in the upper quadrant of Thursday’s range.

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

Yesterday we printed a normal variation up. The day began with a slight gap down. Buyers closed the gap during the opening swing before sellers drove down and took out the Wednesday low. That would be all the control sellers would have for the session though, by 10am sharp responsive buying had stepped in and the auction reversed higher. The rest of the session was chop along the top side of the daily midpoint before a strong ramp into the close saw price up through Wednesday’s midpoint.

Heading into today my primary expectation is for sellers to work down through overnight low 10033 setting up a tag of 10022 before two way trade ensues.

Hypo 2 stronger sellers trade down and tag 10000 on their way to 9968.50.

Hypo 3 buyers work into overnight inventory and take out overnight high 10120.50 setting up a move to 10131.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Thursday with a slight gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, briefly taking out the Wednesday low before a strong rotation higher sent price firmly back into Wednesday range and balance. The 10,000 level continues to behave like a magnet as investors digest new information. At 8:30am durable goods, gpd, and jobless claims data came out. They were mixed and invoked little in the way of a reaction. As we approach cash open, price is hovering in the lower quadrant of Wednesday’s range.

Also on the economic calendar today we have a 7-year note auction at 1pm.

Yesterday we printed a double distribution trend down. The day began with a gap down in range. Buyers resolved the overnight gap and tagged the Tuesday naked volume point of control during the open auction in range. Shortly after sellers drove lower, trading down through Tuesday low and closing the Monday gap. Selling continued through the morning, then the rest of the session was spent balancing along the lows but never making a new daily low. We ended the day in the lower quadrant of range.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 10,016.50. From here we continue higher, up through overnight high 10,048.50. This sets up a run to 10,100 before two way trade ensues.

Hypo 2 sellers press down through overnight low 9893.75, closing the open gap at 9919.50 along the way. Look for buyers down at 9900 and two way trade to ensue.

Hypo 3 stronger sellers trade down to 9874.50 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Wednesday with a slight gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, balancing along the bottom-side of Tuesday’s midpoint until about 3am, an increasingly popular hour for volatility, when sellers drove price down through the Tuesday low. Said selling briefly probed into the Monday highs before buyers rejected the attempt. Since then there has been a slow rotation higher, and as we approach cash open price is hovering around inside the bottom quadrant of Tuesday’s range.

On the economic calendar today we have crude oil inventories at 10:30am followed by 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 up up to new all-time high. After a brief open two-way auction outside range buyers stepped in and began working up into open air. Buyers led a slow campaign higher until about 2:15pm New York when responsive sellers stepped in. Said sellers arrived right near the 1.172 Fibonacci extension of the 06/10 – 6/15 sell-off. Sellers managed to knock price off the high and reclaim the daily midpoint, holding price below it into end-of-day.

Not much of a victory for bears. Merely a methodical auction making orderly rotations to-and-from logical price levels.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 10,196. From here we continue higher, up through overnight high 10,242. Look for sellers up at 10,227.25 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 10,106. Sellers fail to reclaim 10,100 and two way trade ensues.

Hypo 3 stronger sellers trade down through 10,100 and tag 10,064.25 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Price was drifting higher overnight until about 7:20pm when White House adviser Peter Navarro seemed to suggest the trade deal was over. This sent price down near Monday’s low before President Donald Trump tweeted that the agreement was “fully intact” and buyers emerged to reverse the sell spike. As we approach cash open, price is trading up at all-time highs.

On the economic calendar today we have PMI composite flash at 9:45am, new home sales at 10am and a 2-year note auction at 1pm.

Yesterday we printed a double distribution trend up. The day began with a gap up in range, with price beginning the week just below last Friday’s midpoint. After an open two-way auction buyers drove higher, taking price up through 10,000 and sustaining trade above it. We were range extension up before lunchtime, and continued to discover higher prices throughout the session. We ended the day in the upper quadrant of the June 10th (prior swing high) range.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 10,274 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 10,130.75. Look for buyers down at 10,100 and two way trade to ensue.

Hypo 3 stronger sellers trade down to 10,065 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the week up at quick +85 after an overnight session featuring extreme range and volume. Price gapped lower Sunday night, probing down into last Tuesday’s range for about 15 minutes. The rest of the Globex session was dominated by buyers who steadily campaigned price back up into last Friday’s range and eventually back up to Friday’s midpoint. As we approach cash open, price is sticking to the 10,000 level.

On the economic calendar today we have existing home sales at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week kicked off with a gap down then a trend day up, with conviction buying all session. The strength continued into Tuesday then we sort of marked time for the rest of the week, slightly drifting higher. Some sell flow showed up Friday. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend down. The day began with a gap up into the 06/10 range (swing high day). After a brief open two-way auction sellers drove price lower, closing the overnight gap and nearly taking out the Thursday low before a responsive bid returned price to the daily midpoint. Sellers defended the mid sending us down through Thursday low by a few ticks before another strong responsive bid shot price back up to the midpoint. Sellers defended the mid a second time around and ended the day down on the lows.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 9919.50. Look for buyers just below at 9911.75 and two way trade to ensue.

Hypo 2 stronger sellers tag 9874.75 before two way trade ensues.

Hypo 3 buyers gap-and-go higher, trading up through overnight high 10029. Look for sellers up at 10071.25 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

I have a reasonably healthy obsession with plants. Most of my idle time lately is spent working the land to make it produce food and beautiful privacy. For years I’ve been stunned by the blooms from the hollyhock out front of Mothership. This perennial bares blackish flowers and they show up right around the end of the second quarter. They remind me of death and in turn it makes me expect the stock market to trade lower. I have to temper these mystical fantasies with data, otherwise I run the risk of going on tilt and losing a bunch of money. Therefore, I prepared my Sunday research this morning. As I always do. Only this time I was seeking data that would fit my narrative.

Spoiler alert: the data does not line up.

The PHLX semiconductor index keeps defying resistance. It recently reclaimed an old resistance cluster left behind in February and last week it reclaims what sort of looked like an “island top” formation:

As any regular reader of the humble Raul blog [hRb] knows, semiconductors are the key driver behind our secular bull market. They are the building blocks and vital components of the AI revolution that is sweeping earth as we enter the roaring ’20s—a period of economic prosperity the likes of which no human being has ever seen. The notion of recessions at this point is moot. Perhaps humanity will falter and regress cognitively. Our numbers may be culled virally. Humans will continually be less needed professionally, but economies will continue to grow on the backs of robotics and artificial intelligence.  You can read more about this cornerstone of my investing thesis in this 2017 blog entry. As long as semiconductors are this strong, it doesn’t matter how many black flowers bloom, markets are bullish.

Exodus is bullish through Thursday. 95% of Exodus members struggle with the simple task of executing trades based off the simple signals generated by the incredible predictive engine The Fly built. Exodus remains in a bullish cycle so flowers, well their power is limited.

Last week the “right” sectors rallied. Nothing good comes from strength in the energy, utilities, staples or financial sectors. We need to see strength in tech and discretionary. All other sectors are shit. That is exactly what we saw last week, strength where it matters:

In 2020, the true leaders of the free world are the CEOs of major technology companies. If they succeed. We succeed. They are succeeding. Amazon is up 44% year to date.

Microsoft +24%

Tesla +139%

Square +56%

Progressive thinking is creating value and being rewarded. There is a clear divide between what manner of thinking will be rewarded on this planet. Nationalism, racism, xenophobia—think like this and you will be poor and isolated and nobody will work with you. You might as well go live in a cave.

As you can see, all the data is bullish. Good humans are winning. Stocks are appreciating in value. Predictive engines are bullish. There is nothing to be bearish about beyond some black flowers in Mothership’s garden.

I have about 20% of my risk capital in SQQQ. I initiated the position late Tuesday and held it into the weekend:

just initiated an SQQQ position based off these blooms

will reassess in the a.m.

likely risking until Friday close-of-business https://t.co/jS3qJLlNwV

— RAUL (@IndexModel) June 16, 2020

Now I have to manage this trade without any concrete evidence to justify it. Just some mystical voodoo. Do you see how stupid this is? This is about equally as stupid as taking advice on a trade from anyone, especially anyone who has crossed over to stock market trading because they couldn’t find any sports to gamble on.

Hopefully this example of what not to do will serve as a lesson for all of yous. Do better.

I had concrete reasons to short the market last week.

This upcoming week I do not.

Raul Santos, June 21st, 2020

Exodus members, the 291st edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Friday up a quick +98 after an overnight session featuring extreme range and volume. Price balanced for a bit overnight before driving higher. Starting around 2am and running higher until about 2:45am, price worked up beyond the open gap left behind on 06/10. As we approach cash open, price is hovering in the upper quadrant of the 06/10 range (the day that marked prior swing high).

On the economic calendar we have Powell speaking again at 1pm.

Yesterday we printed a neutral day. The day began with a modest gap down that was quickly resolved during open trade. The rest of the session was spent marking time, trading sideways along the midpoint, breaking initial balance in both directions before ending the day in the upper quadrant.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up beyond record high print 10155.50 on our way to tagging 10200.

Hypo 2 choppy between 10,100 and 10,000 into the weekend.

Hypo 3 sellers work into the overnight inventory and close the gap down to 9984.25. Sellers continue lower, down through overnight low 9977.50. Look for buyers down at 9959 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Thursday with a slight gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, first working down below Wednesday low for a bit, then rotation a bit beyond the Wednesday midpoint, then again rotating lower. At 8:30am jobless claims data was worse than expected and Philadelphia Fed data unexpectedly better.  As we approach cash open, price is hovering near the Wednesday low.

Also on the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am and a 5-year TIPS auction at 1pm.

Yesterday we printed a normal variation up. The day began with a gap up just beyond the Tuesday high. After a brief two-way auction sellers stepped in and closed the overnight gap. Before 10:30am the sellers dried up and the campaign higher resumed. Eventually we went range extension up, nearly tagging the naked VPOC left behind on 06/10 before responsive sellers worked price back down through the daily midpoint. We ended the day with a small ramp, right back to the bottom side of the mid.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 9981.50. Sellers defend just above at 10,000 and two way trade ensues.

Hypo 2 stronger buyers close overnight gap 9981.50 then continue higher, up through overnight high 10,029 setting up a 06/10 gap fill up to 10,083.50 before two way trade ensues.

Hypo 3 sellers gap-and-go lower, trading down through overnight low 9866.50 setting up a move to tag 9800 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume. Price was balanced overnight until the increasingly popular 3:30am hour when buyers emerged and campaigned price up through the Tuesday high. They worked up into last Wednesday’s range before finding sellers who defended the curious support level from that day. As we approach cash open, price is hovering just above yesterday’s high.

On the economic calendar today we have crude oil inventories at 10:30am. At noon Fed Chairman Jay Powell is set to give testimony for his second day on Capitol Hill, today he will meet with the House Financial Services Panel. Then at 1pm we have a 20-year bond auction.

Yesterday we printed a normal variation down. The day began with a pro gap up, with open print being in a gap zone left behind last week Thursday. After a tight open two way auction sellers pressed into the overnight inventory and closed the overnight gap. Just a few points below the gap fill was a strong responsive bid and we formed a sharp excess low before pressing clean up through the daily midpoint. Price never went neutral though. Instead price churned above the midpoint for a few hours. Late in the session an attempt was made by sellers to press down through the mid, but they were ultimately thwarted during the ramping hour. We ended the day in the upper quadrant of range.

Heading into today my primary expectation is for sellers to work into the overnight inventory and reclaim Tuesday’s high 10,001.75 early on, setting up a gap fill down to 9959. From here we continue lower, down through overnight low 9916.25. Look for buyers down at 9890.25 and two way trade to ensue.

Hypo 2 gap-and-go higher, trading up through overnight high 10,038.75 on our way to a gap fill up to 10,083.50 before two-way trade ensues.

Hypo 3 stronger buyers trade up through all time high 10,155.50 and explore open air.

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 worked higher overnight poking up beyond 9900 before settling into a balance along that level. Then at 8:30am retail sales data came out much stronger than expected introducing more buying. As we approach cash open, we are hovering just below 10,000, in a slippery gap area left behind last Tuesday night.

Also on the economic calendar today we have business inventories and housing market index at 10am. At the same time Fed Chairman Jay Powell begins his testimony to the Senate banking committee. We have 4- and 8-week T-bill auctions at 11am followed by a 52-week T-bill auction at 11:30am.

Yesterday we printed a trend up. The day began with a sizable gap down. After a brief open two-way auction saw price poke a few ticks below last Friday’s range, buyers stepped in and controlled the tape for the rest of the session. There was a bit of back-and-forth after closing the overnight gap before buyers resumed their campaign higher. Late in the session news came out of the Fed that they would be buying a broad portfolio of corporate bonds on the open market. This introduced a fresh leg of buying. We ended the session along the highs, but still below last Friday’s high.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 10,013 before two way trade ensues.

Hypo 2 stronger buyers trade up to close the gap at 10,083.50 before two way trade ensues.

Hypo 3 sellers press into the overnight inventory and close the gap down to 9792. From here we continue lower, down through overnight low 9774. Look for buyers right around here and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves: