NASDAQ drifts back down into last Wednesday’s range // here is trading plan

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme range and volume. Price worked lower overnight via a push lower around 10pm, a pull back up near Monday’s low that sellers rejected then a second push to new Globex lows around 6am. As we approach cash open, price is hovering near last Wednesday’s low.

On the economic calendar today we have existing home sales at 10am followed by a 52-week T-bill auction at 11:30am.

Yesterday we printed neutral extreme down. The day began with a gap down in range. Buyers resolved the overnight gap after an open two way auction and continued higher, going range extension up and holding highs until about 1:30pm. Price never took out last Friday’s high though. A first test back to the daily midpoint was supported by buyers but late in the afternoon selling accelerated and we pushed neutral, eventually closing on low of day.

Neutral extreme down.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 8690.75. Buyers continue higher, tagging the VPOC at 8742.75 on their way up though overnight high 8763. Look for sellers up at 8797.25 and two way trade to ensue.

Hypo 2 sellers press down to 8567.50 before two way trade ensues.

Hypo 3 stronger sellers trade down to 8532.50 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into the first week of June options being front month down -90 after an overnight session featuring extreme range and volume. Price was balanced overnight, chopping along last Friday’s midpoint until about 6am New York when sellers poked price a bit lower. As we approach cash open, price is hovering near last Friday’s lows but has not yet exceeded them.

On the economic calendar today we have 13- and 26-week T-bill auctions at 11:30am.

Last week featured a steady campaign higher with buyers maintaining control of the auction all week across all major indices except the Russell. The Russell was bearish divergent all week. The last week performance of all four major indices is shown below:

On Friday the NASDAQ printed a normal variation down. The day began with a gap up, with price trading a levels untouched since March 5th. The high print actually took place during Globex trade late Thursday evening. It is statistically uncommon for swing high/lows to print during non-cash hours. After a brief two-way auction at the open, much of Friday was spent working lower, eventually closing the overnight gap and pushing range extension down. Eventually we tagged the Thursday midpoint which discovered a strong responsive bid. We ramped back up beyond the midpoint into the weekend.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 8808.25. From there we continue higher, up through overnight high 8837.25 setting up a move to 8883.50 before two way trade ensues.

Hypo two sellers actively defend 8742.25 early on setting up a move down through overnight low 8696.25. Look for buyers just below overnight low and two way trade to ensue.

Hypo 3 stronger sellers trad down to 8633.50 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Greetings lads. Not much to report on this fine Sunday. All routines remain in place. The key to a routine is understanding its purpose. If someone ever asked me why I spend two-to-four hours every Sunday thumbing through tons of raw stock market data and parsing it into relevant information, I have an answer more meaningful than, “because that is how I’ve always done it.” Resting on your laurels is a dangerous game. Ask me how I know.

I am not going to write out all the reasons why I do lots of research every Sunday, nor will I elaborate on the why I update the public blog with a NASDAQ trading plan most every trading day. However, it is the proverbial chopping of the wood and carrying of the water. These routines took me to a place of consistent profitability as a trader and investor, and I cannot stop doing them now that I’ve achieved that goal.

That said, I am always on the look-out for ways to simplify my approach or add a new tool (algo, model, screen, etc).

Last week was huge for me. I made back all draw down my long term accounts suffered during the Valentine’s Day COVID-19 massacre while capturing hundreds of handles in the NASDAQ 100 futures. Technically, I could not work again until August and have enough money to keep the lights on, the hooch flowing, pick up some new threads and all the gourmet groceries I can eat here at Mothership.

But many a wise gambler have encouraged me to press my edge when it goes well, therefore I shall continue to show up and trade these opening bells. Don’t expect me to hang around much later than noon though. The warmth is arriving in the murder mitten and I have food to grow. Likely to be much to the chagrin of my neighbors, I am debating tilling up the entire front yard (40′ x 70′) and installing a food garden. These bread lines at Costco have fucked with my psyche a bit, and I never want to be caught flat footed again, in terms of food. I remodeled the base cement, expanding the cellar and adding a nursery area where I have started flats of celery, beans, sweet corn and cucumbers. I have stocked up on heirloom cabbage, potato, carrot and beet seed strains known to do well in my climate zone. I dedicated another area to indoor propagation of leafy greens like bib lettuce, bok choy, kale and spinach. This area also hosts basil and cilantro plants. A variety of other herbs are already established in the back yard.

This COVID-19 has been a real eye opener, a paradigm shift for sure. I am fortunate to have so much land and square footage, much of which has spent the last eight years as an empty echo whilst I sit in my dark blue office and trade, then sashay around town eating at Detroit’s finest restaurants. Something had to change I suppose. I am embracing the hermit/quarantine life. My goal is to grow at least 50% of the food I need to maintain uber male health.

Anyways…anyways…models remain bullish heading into next week. Look for Intel earnings Thursday afternoon to tell a story for the broad markets. Until then, volatility compression and sideways drift is the forecast from your old pal Raul. A stock picker’s market.

Raul Santos, April 19th 2020

Exodus members, the 282nd edition of Strategy Session is live, go check it out!

No morning NASDAQ trading report today. I appreciate anyone who followed along this week, it was a strong performance. I want to use my blogging window this lovely Friday, with NASDAQ futures bumping up against major resistance at 9k, to discuss a most critical component for obtaining consistent profitability—faith.

Faith is what makes you take the next signal from an algorithm after it suffers a major draw down. Readers of the Exodus Strategy Session know I trade every signal generated by the Exodus mother algo. Unfortunately, the algo flagged me into a 10-day index long on February 27th. That signal ran through March 12th. Then on March 12th the algo fired again, meaning I had to hold my TQQQ position until the end of March 26th. This resulted in about a -40% loss:

A lack of faith may have resulted in my passing up the next signal, which happened in close succession. The next signal triggered on April 1st, on the Fool’s Day. A superstitious man or perhaps someone who watches cable news may have been even more spooked and less likely to take the April one signal. That trade just closed out yesterday. The result:

You see? Back in the green, baby.

From preschool to eighth grade I was educated by pastors and church moms via the Lutheran parochial school system. I am privileged in this way, having usurped public schooling until college. My high school was a college preparatory school operated by Catholics. Nuns and brothers and priests. I was inside a theological brainwashing network for quite a long time. I witnessed hypocrisy so closely, it would make even a garbage man blush. I watched a pastor having an affair with the kindergarten teacher, both of whom were bound by matrimony. Racism. Lots and lots of racism from folks who huddled onto wooden pews 3-5x per week under the premise of divine love and the holy trinity—a belief that god is in everything via the holy spirit. Hating their own god, you see?

Fortunately my best friend, who you may know as ROBETO BREGANTE, was exceptionally bright at a young age and well versed on carbon dating and dinosaurs. He knew the scientific method and loved to challenge authority. We began debating the Christians, on everything, starting in about third grade.

By fifth grade we were both moved to another Lutheran school after our parents assumed we were being unfairly punished, to the point of pleasure, by our school. Such good boys we were, certainly they could pay a different group of pastors and church moms to treat us better. The next school was no safer from our logic, our data, our scientific beliefs. We were regularly kept at opposite ends of the chapel, and on more than one occasion I was made to sit in isolation in the janitor’s closed for the entire school day, about eight hours. One of the times I fashioned a noose from some rope I found in the closet. Just to work on my knot skills but boy did that spook them.

I could not be made to have faith in their King James Bible because I need objective means of believing something. This is what makes trading a better fit for me then judeo christian pursuits . I use massive spreadsheets and mathematical models to prove beyond doubt, via a statistical significance, that something is true.

I am grateful having flown so closely to the christian sun and for having elders that encouraged me to question everything, otherwise I may not have developed the critical thinking needed to thrive in our modern world.

When it comes to long-term investing, it lean on my christian foundations to understand how irrational human beings are. Christianity is the most successful business in world history. What did it do? Simplified religion. One god, one book. A few simple rituals. Defined SIN.

Okay now what entities most resemble christianity? Tesla, Google, Amazon, Microsoft and so on. You buy these names and you never sell them. You don’t use fundamental analysis like an idiot. You use blind faith. Just like the Christians.

That’s all I have time to say for now.

Cheers to never panicking out of your faith when the going gets tough.

Raul Santos, April 17th 2020

NASDAQ futures are coming into Thursday gap up after an overnight session featuring extreme range and volume. Price was balanced overnight until about 1:30am New York when price spiked higher and took out the Wednesday high. From then-on we balanced above the Wednesday high until a slew of economic data came out at 8:30am (initial/continuing jobless claims slightly worse than expected, building permits better then expected and housing starts worse than expected) sending price spiking a bit higher, making a new high on the Globex session but stalling a few points below last Tuesday’s high. As we approach cash open, price is hovering above the Wednesday high.

On the economic calendar today we have 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a normal variation up. The day began with a gap down near the Tuesday low. If you recall, Tuesday was a trend up. We spent the day slowly working higher, but unable to fill the overnight gap. Instead the low volume node separating the two distributions that formed Tuesday acted as resistance. We ended the day tapping on the midpoint from above.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 8698.50 and continuing higher, up to 8748.25 before two way trade ensues.

Hypo 2 stronger buyers trade up to 8800 before two way trade ensues.

Hypo 3 sellers to work into the overnight inventory and close the gap down to 8591.75. Look for buyers down at 8583.75 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme range and volume. Price was balanced overnight until about 3:30am when sellers stepped in and drove price lower. That selling campaign lasted until about 5:30am and moved price down through the Tuesday midpoint. Sellers then reemerged and as we approach cash open, price is moving down near the 8500 century mark.

On the economic calendar today we have industrial/manufacturing production at 9:15am, business inventories and NAHB housing market index 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 pro gap up and drive higher. This action closed the open gap left behind on 03/06 and after a bit of flagging/consolidation along the weekly ATR band price continued higher, eventually closing the 03/05 gap and ending the day near the highs. Of note, the daily VPOC never managed to shift up into the upper distribution.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the overnight gap up to 8695 before two way trade ensues.

Hypo 2 buyers stall out around 8650 and two way trade ensues.

Hypo 3 sellers gap-and-go lower, trading down to 8428.50 before two way trade ensues.

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 drove higher unidirectional overnight, continuing a buying campaign that began about an hour before New York lunch on Monday. As we approach cash open, price is hovering inside of the 03/06 range.

On the economic calendar today we have Federal Reserve banker Bullard set to talk about COVID-19 via a Zoom meeting at 11:05am.

Yesterday we printed a neutral extreme up. We kicked off the week with a slight gap down. Buyers resolved the gap during an open two-way auction then we formed a tight chop, chopping along and eventually going range extension down in the late morning but never taking out overnight low. Instead the auction reversed, slashing through the midpoint and then using it as a support pivot to push neutral. We rallied right up to the 03/10 open gap and closed near high of day here.

Neutral extreme up.

Heading into today my primary expectation is for a gap-and-go higher. Buyers tag 8500 and two way chop ensues.

Hypo 2 stronger buyers sustain trade above 8500 setting up a run to tag 8567.75 before two way trade ensues.

Hypo 3 sellers press into the overnight inventory and tag 8400 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Monday with a slight gap down after an overnight session featuring extreme range on elevated volume. Globex kicked off with an interesting spike of sorts, higher by +100 then lower by -250 handles. The rest of the session was spent balancing along just below Friday’s low. Then around 6:30am when America woke up buyers drove price back up into the Friday range. As we approach cash open, price is hovering below Friday’s midpoint.

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

Last week kicked off with a pro gap up and trend day. That set the stage for continuation through Tuesday then a consolidation/flagging along the highs for the rest of the holiday shortened week (markets were closed Friday in observation of Good Friday).

On Thursday the NASDAQ printed a normal variation down. The day began with a gap up and push to new weekly highs before responsive sellers stepped in and close the overnight gap. Price was choppy from then on, walking over the midpoint and back below it before going range extension down late in the session. Eventually price mildly ramped back up to the midpoint and we ended the day there.

Heading into today my primary expectation is for buyers to close the overnight gap up to 8228.25. Buyers sustain trade above 8231.50 setting up a move through overnight high 8327.50. Look for sellers up at 8400 and two way trade to ensue.

Hypo 2 stronger buyers drive up to close the open gap at 8506.50 before two way trade ensues.

Hypo 3 sellers press down through overnight low 8073.25 and tag 8040.25 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

Cheers everyone. Not much to write about. OPEC countries reached a deal on production cuts but it fell short of the production cut needed to align with demand. At least that is what the popular entertainment news sources are telling me.

As an oil man I seek information for more novel places like Amazon Flex. Amazon will pay anyone in Metro Detroit $72 fiat american dollars today to spend three hours of their Easter throwing caution to the wind to go deliver packages from their personal driver.

Easter has me feeling grateful. I slept until 10am then I heated my entire house up to 81 degrees with the furnace, a fire and a space heater and did two hours of hatha-style yoga. Then a made a nice marinara sauce and brought some to my dear old parents whist waving to them through the window. I came back here, did my research work, now I am going to boil some gluten-free noodles, saute some mushrooms and have a feast.

All systems I track point to bullish behavior and a drop in volatility in the upcoming week. I could see that happening, catch everyone off guard with a drift and spend the next few weeks burning the theta out of any overzealous option bets.

As always, I will be taking it one day at a time. Writing morning trading plans that upload around 9am New York time that outline exactly how I intend to trade the few hours around opening bell. Then I will occasionally tweet updates throughout the day.

All long positions have been added to and remain in tact.

May your Obama money come soon, and may it bring joy to your family.

Happy Easter lads,

Raul Santos, April 12th, 2020

Exodus members, the 281st edition of Strategy Session is live. Go check it out!

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume. Price worked sideways overnight, briefly trading below the Tuesday low around 8pm New York before rotating back up to the Tuesday midpoint, then back down again. As we approach cash open, price is hovering a bit below Tuesday’s midpoint.

On the economic calendar today we have crude oil inventories at 10:30am, 30-year note auction at 1pm and FOMC meeting minutes at 2pm.

FOMC minutes are released on a three week lag. Investors will be keen on listening to how the Fed was thinking in early March, when covid-19 denial was still running high.

Also be aware that Fed Chairman Jerome Powell is set to speak tomorrow at 10am.

Also remember that tomorrow is the last trading day before the long weekend.

Yesterday we printed a normal variation down. The day began with a pro gap up that sellers drove down into shortly after opening bell. Buyers initially rejected a move back down into Monday’s range, spiking price higher, up through the midpoint but unable to take us range extension up. Instead price fell back down through the midpoint and made new lows twice in a choppy manner before a buying rotation worked back up to the midpoint. Then we flushed lower into the close, closing on the lows.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 8143 setting up a tag of 8200. Look for sellers up at 8222 and two way trade to ensue.

Hypo 2 stronger buyers trade up to 8300 before two way trade ensues.

Hypo 3 sellers press into the overnight inventory and close the gap down to 8013 then continue lower, down through overnight low 7953.25. Look for buyers down at 7915.25 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves: