Open gap in range ;-) here is Thursday NASDAQ trading plan

NASDAQ futures are coming into Tuesday with a slight gap down after an overnight session featuring extreme range and volume. Price was balanced overnight, slowly fading lower in a balanced way until taking out Wednesday low. At 8:30am initial/continuing jobless claims data came out worse than expected. As we approach cash open, price is hovering in the lower quadrant of Wednesday’s range.

Also on the economic calendar today we have 4- and 8-week T-bill auction at 11:30am followed by a 7-year note auction at 1pm.

Yesterday we printed a normal variation up. The day began with a gap up that sellers quickly resolved shut before buyers spiked price. Before 10am sellers were fading this buy spike and sending price to a quick new low of day. This all happened in the first 45 minutes of trade, and would mark session low for the rest of the day. WE slowly rotated back up to the midpoint, then buyers accelerated as they crossed through it, setting up a move to new high of day and pushing us range extension up. We eventually tagged the 7700 composite VPOC and held it for about 1.5 hours. Sellers drove price back down through the mid during settlement.

Heading into today my primary expectation is for buyers to fill the overnight gap up to 7463.25 then continue higher, up through overnight high 7549.5. This sets up a run to 7600 before two way trade ensues.

Hypo 2 stronger buyers trade up to 7700 before two way trade ensues.

Hypo 3 sellers press down through overnight low 7310.25 setting up a move to tag 7300. Look for buyers down at 7216.75 and two way trade to ensue.

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. The overnight was balanced until about 4am New York, balancing in the upper half of Tuesday’s range before spiking higher. The spike saw price trade to levels unseen since Friday the 13th before sellers stepped in and returned us back into balance. At 8:30am durable goods orders came out stronger than expected. At 9am house price index came out a touch below expectations. As we approach cash pen, price is hovering in the upper quad of Tuesday’s range.

Also on the economic calendar today we have crude oil inventories at 10:30am, 2-year note auction at 11:30am and a 5-year note auction at 1pm.

Yesterday we printed a neutral extreme up. The day began with a gap up into the top quad of Monday’s range. After a two way open auction buyers stepped in and worked up through the Monday high, tagging the upper weekly atr band before sellers stepped in and reversed the entire daily range, putting us neutral. Sellers stalled out just a few ticks below low of day and we ramped higher for the rest of the session, closing at high of day.

Neutral extreme.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 7700 before two way trade ensues.

Hypo 2 stronger buyers close the Friday the 13th gap up at 7901 before two way trade ensues.

Hypo 3 sellers press down through overnight low 7377 setting up a move down to 7216.75 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Tuesday up a quick +270 after an overnight session featuring extreme range and volume. Price worked higher overnight, rotating upward throughout the globex session before triggering a circuit breaker around 5:40am New York. Since then we are about -100 off the overnight high. As we approach cash open, price is trading in the upper quadrant of last Friday’s range.

On the economic calendar today we have Markit composite/manufacturing/service PMI at 9:45am, new home sales at 10am, a 52-week T-bill auction at 11:30am and a 2-year note auction at 1pm.

Yesterday we printed neutral day. The day began with a gap down after futures were limit down Sunday evening. A strong bid entered the market around 8:10am and erased the large gap before opening bell. From there sellers pressed into the opening tape, trading down near last week’s low before buyers stepped in and a two way auction formed. Around noon sellers took the market range extension down and to new swing lows before discovering a strong responsive bid. Said bidders worked to a new high of day putting us into a neutral print. From there we fell back to the midpoint and chopped along it, eventually closing above it but settled near the middle of the day’s range.

Neutral.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 7480.25 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 7495 setting up a run to 7600. Stretch target 7700 composite VPOC then 7901 open gap.

Hypo 3 sellers work into the overnight inventory and close the gap down to 7002.25. Sellers continue lower, down through overnight low 6953.50. Look for buyers down at 6900 and two way trade to ensue.

Levels:

Volume profiles, gaps and measured moves:

No trading report for Monday. NASDAQ futures are moving incredibly fast, up over 300 handles in the last ten minutes or so, then off that high by 100 handles.

I made my plan Sunday and last week and it is simple—add to my MSFT and GOOGL positions and whenever PTR reports (it’s hard to pin down these Chinese ADRs) add to PTR.

If the futures settle down a bit, I may reengage.

Expecting 7490 on the June NASDAQ to be an upside ceiling early in the week. If not, that opens the door for a run up to 8000.

Levels:

I’m sick.

So many red flags were raised before markets collapsed. Most significantly, the failed auction printed February 14th on the PHLX Semiconductor index. Legacy readers of the Humble Raul blog (HRb) will recall the promise I made to readers and myself on October 2nd, 2014, to never miss another failed auction. I didn’t so much miss our most recent failed auction, but I did not assign enough weight to this ominous print on the index that literally tracks the main industry driving out secular bull market:

I think I am sick. My mind is so constantly optimistic that I just sheltered in place and held all my positions into the downturn. And now, when a recession all but seems guaranteed, I am not even giving a single thought to selling. On the contrary, I am feeding fresh cash into my account and buying more equities.

I became an oil man last week. When has Raul ever been an oil man? I abhor the oil industry, an archaic space dominated by patriarchal fools more out of touch with reality than a hobo on PCP. This is what I am talking about, sick.

IndexModel, which is my foundation stone for decision making, signaled Bunker Buster finally. This signal calls for an acceleration to the downside eventually marked by a sharp, excess low that holds for weeks (sometimes months). It has been a challenge for me to day trade, historically, when this signal fires. Therefore I will back away from the futures despite riding some nice rips last week.

Instead I will be focusing on acquiring a few long-term stocks and/or adding to existing positions. I do not want to go too exotic with these holdings. I was talking with my China correspondent yesterday, ROBERTO BREGANTE, and he couldn’t speak highly enough about the effectiveness of Microsoft Teams for keeping their projects moving in our remote business environment. And we started reflecting on how well Google and Microsoft were prepared for us to go remote as a species. We mutually agree and realize that professionals are realizing how effective they can we without flying around and sitting in meetings. Flying in for a meeting is old school and the cognitive shift underway may render physical meetings nearly extinct. So a part of me is like, why not just add to my Microsoft and Google positions? They are not going away anytime soon and their profit margins are huche [sic].

This shift to remote work was supes overdue. Hotels and airlines suffer. Anyone empowering effective conduct of remote business wins. Robots also win. More necessary things, like doctors and cashiers need to be like car washes. the less physical human contact the better. Have you ever seen Demolition Man?

That’s it. I am all tapped out of Pacific Northwest mystic energy. I am hunkered down in Mothership and working—trading, taking lots of phone calls and emails, cooking tasty food and readying my plots for sewing. I have a variety of heirloom seeds and my only real regret is not having built the hot house yet that has been on my mind for years.

Sick I tell you. Infected with perma optimism and bullishness.

Raul Santos, March 22nd 2020

Exodus members, in Section III I discuss all the systematic signals I am leaning on in more detail. The  278th edition of Strategy Session is showing some interesting data, be sure to check it out.

NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme range and volume. Price was balanced for much of the overnight session before ramping higher around 2am New York. This buy rotation pressed up beyond the Thursday high, trading up to levels unseen since last Friday (the 13th) before coming into balance. As we approach cash open, price is hovering just below the Thursday high.

On the economic calendar today we have existing home sales at 10am.

Yesterday we printed a normal variation up. The day began with a gap down and drive lower, with sellers pressing down a bit below the Wednesday midpoint. This was an interesting price level, one that has been marked on my chart for months. Just below the Wednesday midpoint (which was also a distinct low volume node) was the old composite VPOC. Anyhow responsive buyers stepped in here and quickly resolved the overnight gap. From here we continued higher, taking out the Wednesday high and tagging the lower weekly ATR band before rotating back to the daily mid. Another rotation up made a new high of day, we chopped back to the midpoint again, then made another new high. Settlement action saw price fall back to the midpoint for a third time and close just above it.

Heading into today my primary expectation is for sellers to work into the overnight inventory to tag the Thursday VPOC 7380. From here we work higher, taking out overnight high 7629 on our way to tag 7700 composite VPOC before two way trade ensues.

Hypo 2 stronger sellers work a full gap fill down to 7256.25. This sets up a move down through overnight low 7126.25. Look for buyers just below at 7100 and two way trade to ensue.

Hypo 3 buyers gap-and-go higher, pressing up through 7700 with power, setting up a run on 8000.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Price took out Wednesday’s high and held above it until about 9pm New York when price reversed lower. Sellers worked price back down through the Wednesday midpoint and further, down near the lower quad of Wednesday’s range. Sellers were unable to take out Wednesday low before we began rotating higher. This up rotation stalled out near Wednesday high before we fell back to the Wednesday midpoint.

In short, balance.

As we approach cash open, buyers are rallying price up off the Wednesday midpoint and we are down about -60.

On the economic calendar today we have leading index at 10am, 4- and 8-week T-bill auctions at 11:30am and a 10-year TIPS auction at 1pm.

Yesterday we printed a normal variation down. The day began with a gap down near Tuesday low. Buyers drove higher off the open, working up through the Tuesday midpoint but unable to close the overnight gap before sellers stepped in. Said sellers reclaimed the midpoint and pivoted from it, making new low of day to press range extension down. Sellers continued lower, marking a new swing low. Late in the session we ramped back up through the midpoint and closed in the upper quadrant.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7205.50. From here we continue higher, up through overnight high 7424. Look for sellers up at 7432.50 and two way trade to ensue.

Hypo 2 stronger buyers sustain trade above 7432.50 setting up a move to tag 7500. From here we probe above the Tuesday high 7537, setting up a move to tag the composite VPOC at 7700.

Hypo 3 sellers press down through overnight low 6874.25 on their way down to 6800 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures locked limit down around 1:20am New York after an overnight session featuring elevated volume on extreme range. Liquidity is low in the globex markets. The overnight session was balanced for about two hours, then around 6:30pm it began to rotate lower, methodically moving down near the lower quadrant of Tuesday’s range before finding a bid. Said bidders spiked price back up to the Tuesday midpoint. Sellers were here and we spent the rest of the session moving lower until locking limit down near the high-end of Tuesday’s bottom quadrant.

On the economic calendar today we have crude oil inventories at 10:30am.

Yesterday we printed a normal variation up. The day began with a gap up and two way auction. Sellers eventually worked into the tape, closing the overnight low but unable to take out Monday’s low. Instead buyers stepped in and began working price higher, tagging the Monday naked VPOC along the way and nearly taking out the Monday high. Instead a massive amount of volume was transacted on the daily high, putting a distinct VPOC on the day’s profile before price rotated back to the midpoint. Buyers defended the midpoint and we spent the rest of the day chopping above the mid, eventually closing in the upper quad of range.

Heading into today my primary expectation is for some kind of gap down when the circuit breaker lets loose. Sellers move to take out Tuesday low 6906 but are unable to do so. Instead buyers come in and work a gap fill higher, trading up to 7383.75 then up through overnight high 7398.75. This sets up a move to 7500. Look for sellers up at 7600 and two way trade to ensue.

Hypo 2 stronger buyers trade up to the composite VPOC at 7700 before two way trade ensues.

Hypo 3 sellers press down through Tuesday low 6906 setting up a liquidation. Targets are the century marks 6800 and 6700.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Overnight trade was halted for about six hours around 10:00pm New York after the upside circuit breaker was triggered. Upon reopening price rotated back down near overnight low, but could not take it out. Instead we have been in a big chop ever since, chopping and compressing price.

On the economic calendar today we have Industrial production at 9:15am followed by business inventories at 10am.

Yesterday we printed a neutral extreme down. The day began with a gap down and drive lower, with price initially working down to levels unseen since early last June. Then buyers stepped in and began working price higher. By mid morning we were back inside last Friday’s range. Price went range extension up, tagging last Friday’s naked VPOC and exceeding it by a few ticks (a level which coincided with the circuit breaker we hit Sunday evening when futures went limit down). That was all the upside we’d see on the day. From here responsive sellers stepped in (responsive relative to Monday’s open, initiative relative to Friday’s close) and worked price back down to the daily midpoint. We chopped along the mid for a few hours before a sharp move lower near the the close which made new low of day, trading down to levels unseen since February 11th (an old open gap). We closed near session low.

Neutral extreme.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 7277.25 which sets up a move to tag 7300 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 7042. From here we continue lower down through overnight low 6964, setting up a liquidation down to 6800.

Hypo 3 stronger buyers rally to 7600 before two way trade ensues.

Levels:

Volume profiles, gaps and measured moves:

NASDAQ futures are coming into Monday down a quick -360 after an overnight session featuring normal volume (markets were halted about 20 minutes into trading) on extreme range. Sunday markets began with a gap down and push lower that was briefly reversed following an unprecedented stimulus action from the Federal Reserve, who surprise lowered interest rates to zero percent and did $700 billion worth of QE. Buying on that news was quickly reversed, and by 6:20pm New York futures hit the circuit breaker and were halted. Heading into cash open, the price was halted a bit below the Friday midpoint.

On the economic calendar today we have 13- and 26-week T-bill auctions at 11:30am followed by Long-term TIC flows at 4pm.

Last week began with futures limit down. After strong selling to begin Monday we had a responsive bid come in and work price strongly higher. This low held through Wednesday across the board before another strong limit down move happened Thursday night. Price was choppy until late Friday when we saw a surge higher into the weekend. The last week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral extreme up. The day began with a limit up gap. After a two way open sellers stepped in and nearly filled the gap but could not before buyers stepped in. We traded back up through the midpoint and chopped all around it before a late-day rally saw price return to Wednesday’s low and reclaim it. We ended near session high.

Heading into today my primary expectation is for a two-way open before buyers work into the overnight inventory work price to the composite VPOC 7700. We pause here before continuing higher, to close the overnight gap 7901. Look for sellers up at 8000 and two way trade to ensue.

Hypo 2 sellers work down through overnight low 7556 setting up a move to tag 7000 before two way trade ensues.

Hypo 3 full on liquidation, hitting circuit breakers along the way, targeting 6900.

Levels:

Volume profiles, gaps and measured moves: