Month-end, NASDAQ down a quick -30, here is Friday trading plan

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume. Price worked lower overnight, trading down near the per-Amazon earnings spike before coming into balance. At 8:30am PCE core data came out in-line with expectations. As we approach cash open, price is hovering below 9200, about -50 points off the overnight high.

On the economic calendar today we have Chicago purchasing manager at 9:45am followed by the final January reading of sentiment from the University of Michigan.

Yesterday we printed a neutral extreme up. The day began with a gap down that buyers quickly resolved with an open drive up. After closing the gap and trading a few points beyond 9100,responsive sellers stepped in and reversed the morning gains and more, going range extension down and pressing deep into Tuesday’s conviction buy range. Then as the late afternoon progressed, bidders stepped back in, reclaiming the midpoint then defending it around 3pm before rallying price to a new high of day, pushing us neutral. Amazon earnings then propelled a sharp move higher, trading up beyond last Friday’s midpoint during before the settlement period ended. We closed near the high.

Neutral extreme up.

Heading into today my primary expectation is for sellers to be actively defending 9200, taking out overnight low 9138 to set up a move down to 9100. Look for buyers down at 9086 and two way trade to ensue.

Hypo 2 buyers work into the overnight inventory and trade up through overnight high 9248.75. Look for sellers up at 9257.25 and two way trade to ensue.

Hypo 3 stronger buyers trade up to 9280.25 before two way trade ensues.

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 worked lower overnight, trading down near the Tuesday low before discovering a responsive bid. Then price worked back up near the Wednesday low but could not reclaim it. Sellers rejected a move back into Wednesday’s range, and we have been in a choppy balance below the Wednesday low since. At 8:30am GDP came out inline with expectations and initial/continuing jobless claims data came out mixed-to-slightly-worse than expected. As we approach cash open, price is hovering about -12 point below the Wednesday low.

Microsoft, Facebook and Tesla reported earnings after hours Wednesday. MSFT is higher by +3.70% after beating analyst expectations,  FB is down -7% lower after signaling a slowdown and announcing a share buyback and TSLA is up +8.95% after the company reported surprisingly strong numbers for the second straight quarter.

On the economic calendar today we have no major events. Amazon reports earnings after the bell and will likely move the entire index.

Yesterday we printed a normal day, which is anything but normal. They happen less than 20% of the time. The day began with a gap up into last Friday’s range. Sellers quickly drove price lower during the first 45 minutes of trade, working down into an interesting low volume pocket left behind Tuesday. Strong responsive sellers were on the scene here and nearly worked price to a new high of day, attempting to propel higher after the FOMC rate decision. However they were stopped a few ticks short, forming a weak high before slipping back down through the daily mid by late afternoon. The first 45 minutes of trade were so dynamic that higher time frame participants never managed to press a range extension. We ended the day in the lower quadrant.

Normal day.

Heading into today my primary expectation is for buyers to reclaim the Wednesday low 9072.25 and sustain trade above 9085, setting up a run up through overnight high 9137 and a continuation up through the Wednesday weak high 9185.75. This sets up a run at 9100. Look for sellers up at 9113 and two way trade to ensue.

Hypo 2 sellers defend 9085 and push us down from it, working down through overnight low 9003.50.  Look for buyers down at 9000 and two way trade to ensue.

Hypo 3 stronger sellers work a Monday gap fill down to 8954 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 worked higher overnight, in part due to strong earnings from Apple after the close Tuesday.

Apple Q1 EPS $4.99 Vs $4.18 Last Year

Shares of the most valuable public company in the world are up just shy of +2% in pre-market trade.

As we approach cash open, the NASDAQ is currently trading up beyond Tuesday’s range, inside the lower quadrant of last Friday’s trend down.

On the economic calendar toady we have pending home sales at 10am, crude oil inventories at 10:30am and then an FOMC rate decision at 2pm. The consensus is for no change to the Fed’s benchmark borrowing rate, however investors will be keen on any word use and tone from the Fed Chairman when he delivers a press conference at 2:30pm.

Also be aware that the second and fifth largest companies report earnings after the bell today, Microsoft and Facebook. Both are potential index movers. Tesla also reports after the bell.

Yesterday we printed a double distribution trend up. The day began with a gap up near the Monday high, and after a two-way auction buyers stepped in and drove price higher. Price went slowly trend up all day before coming into a tight balance near the end of the session, just below last Friday’s range.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 9103.75. Then we continue lower, down through overnight low 9091.75. Look for buyers down at 9089.25 then chop. Then look for the third reaction after the Fed presser to provide direction into the close.

Hypo 2 stronger sellers trade down to 9040. Then look for the third reaction after the Fed presser to provide direction into the close.

Hypo 3 buyers gap and go higher, trading up through overnight high 9157 setting up a move to target 9192 before two way trade ensues. Then look for the third reaction after the Fed presser to provide direction into the close.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme volume and range. Price worked higher overnight, trading up into a three-day micro balance spanning from 01/13 – 01/15. Sellers rejected a move up into this area around 3:30am New York, but buyers reemerged and probed the area again. At 8:30am durable goods orders came in stronger than expected. As we approach cash open, price is hovering in the low-value area of the 01/13-01/15 micro-composite balance.

Also on the economic calendar today we have consumer confidence at 10am, 2-year Notes and 52-week T-bills auctioning at 11:30am, a 7-year Note auction at 1pm.

Then major NASDAQ component Apple reports earnings after the bell.

Yesterday we printed a normal variation up.; The day began with a pro gap down to a new 11-day low. Buyers were on the scene after a sharp move lower on the open. They defended their conviction buy range from 01/08. WE spent the rest of the session working higher, eventually forming a weak high just above 9000. Selelrs drove price back down below the midpoint late in the day and we ended the session below the mid.

Heading into today my primary expectation is for sellers to work into the overnight inventory and tag the 9000 level before responsive buyers (responsive relative to the open, initiative relative to Monday’s close) step in and work up through overnight high 9040, working higher to close the open gap at 9059.50 before two way trade ensues.

Hypo 2 sellers work a full gap fill down to 8954 then continue lower, down through overnight low 8949.75 before two way trade ensues.

Hypo 3 stronger sellers flush down to 8900, setting up a move to check back to the Iran conflict level 886 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday pro gap down after an overnight session featuring extreme range and volume. The globex session kicked off Sunday night with about a -70 point gap down and then drove lower before coming into balance above 9000, levels unseen since January 10th.  Then another leg lower took shape, trading down into the 01/08 conviction buying range, which was a pivot up-and-away from the initial reaction to U.S. air strike in Iran. As we approach cash open, price is hovering in the upper quadrant of this conviction buying range set back on 01/08.

On the economic calendar today we have new home sales at 10am followed by 13- and 26-week T-bill auctions at 11:30am. Then 2- and 5-year Note auctions at 1pm.

Last week was holiday shortened, with markets closed Monday in observation of Dr. Martin Luther King, Jr. day. On Tuesday we opened gap down and had a choppy Tuesday with buyers resolving the down gap before giving up much of their gains and eventually returning to the daily midpoint by close.  Wednesday was gap up to record highs before some afternoon selling erased the day’s upward progress. Thursday served to work price back up to record highs before a gap up to new record highs Friday set up a trend down Friday.

We ended the week lower. The Russell was divergent weak the whole time.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a trend down. The day began with a gap up to new record highs. After a two-way auction sellers stepped in and began driving lower, resolving the overnight gap before driving down through the entire Thursday range. Price sort of came into balance near the end of the session but sellers could still be seen exerting control.

Heading into today my primary expectation is for sellers to gap-and-go lower, trading down through overnight low 8942.50. Look for buyers down at 8925.50 and two way trade to ensue.

Hypo 2 stronger sellers trade down to the 8900 century mark then continue lower, down to 8865 (Iran air strike level) before two way trade ensues.

Hypo 3 buyers work into the overnight inventory, reclaiming 9000 and sustaining trade above it, setting up a move to 9040 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

The quote from this week’s Exodus Strategy Session is about perfect for our current trading environment:

“There are many things of which a wise man might wish to be ignorant.” – Ralph Waldo Emerson

I don’t care about the impeachment process. Yes, I care that our government is set up to reward power-hungry psychopaths and that our state corrupt, but this is beyond my control. I do not care about the impeachment.

I love love love the way Senior The Fly is covering the corona virus here on iBankCoin and out on Twitter, and I hope he and others make a mint trading the pathogen pin action. Me, I trade NASDAQ futures and long-term invest is thoroughbred stocks like AMZN, FB, MSFT, TSLA and so on. I don’t care about the corona virus. My immune system is somewhere near the apex and will make to kill any virus or germ. As I said last week, my cock and constitution are rock hard.

Ignorance is bliss. I have an explicit purpose when I sit down and trade, and that purpose is to extract as many fiat american dollars as possible from the global financial complex. I am not here to make friends. When I publish my plans, it is to clarify my thoughts and provide valuable insight to a handful of other traders without wasting their time. Then I make my way into the NASDAQ arena, which is essentially like entering the Hunger Games. Nothing matters except executing the plan. Survival necessitates that I have an optimal grip on what moves the NASDAQ 100.

What has my attention big time is the NASDAQ Transportation index. It could be taking what I call the ‘penultimate step’ right off the springboard of a vital Fibonacci level. If you were never one of the top long jumpers in your state like Humble Raul, then you may be unfamiliar with the penultimate step. It is the final two foot placements before you launch your body into the air from a full sprint. The goal is to take two really tight steps, with the toe of your launch foot striking as close to the edge of the wooden board that separates the runway from the sand as possible. Then you fly. It maximizes the amount of your running momentum that is converted into flying. When done correctly, your two feet nearly strike the ground simultaneously.

The NASDAQ Transportation index printed this stupidly good-looking excess low Thursday. Quite possible a powerful enough penultimate step to finally launch up-and-away from the multi-year range price has been trapped in:

The more likely outcome is that gravity wins and we fall back down through the well-established range. Folks don’t realize that assets spend most of their time in balance and only occasionally go into discovery mode.

They think it’s all Tesla moments, pushing and pushing and pushing higher and higher and higher. Stick around long enough and you’ll be learned one way or another that balance is the primary mode.

Which is why you need to become good at two things—identifying balance and positioning accordingly and (more importantly) how to milk a winner for everything it has to offer. If you grab ahold of a position BEFORE it enters discovery, your greatest alley will be patience.

Most people lack patience. Our entire economy is built around making us compulsive, chaotic fools…pulled towards any new shiny thing dangled before our nose. It really blows my mind that Amazon can deliver millions of items in ONE DAY.  How are you not invested in a company that can do that?

Anyhow, I choose selective ignorance. I only take in the information that is neccecary for me to make money. The rest might as well be girl gossip. I don’t care.

One final note. Something so clean and orderly about a month completing itself on a Friday, don’t you agree? What a nice way to start the year.

Raul Santos, January 26th 2020

Exodus members, the 271st edition of Strategy Session is live. The main algo inside Exodus is behaving unlike it has in the last few years. I discuss what I think it means in Section III. Go check it out!

NASDAQ futures are coming into Friday gap up after an overnight session featuring elevated range on extreme volume.  Price worked higher overnight, propelled by strong earnings out of major NASDAQ component Intel after the bell Thursday:

Intel  Q4 EPS $1.58 Vs $1.12 Last Year
Intel's revenues for the quarter were up 8% to $20.2 billion from last year's revenue of $18.7 billion. Analysts had a consensus revenue estimate of $19.23 billion for the quarter.

As we approach cash open, price is hovering along all-time record highs.

On the economic calendar today we have Markit composite data at 9:45am.

Yesterday we printed a double distribution trend up, mostly due to Intel earnings, otherwise it would be classified as a normal variation up.  The day began with a slight gap down that sellers drove down into before a sharp excess low formed.  The rest of the day we spent slowy auctioning higher, with a grind taking form in the late afternoon before the Intel earnings sent price careening higher. Trade halted before buyers could take out all-time high.  It was later accomplished in globex.

Heading into today my primary expectation if for sellers to work up to 9300 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 9248.45.   Look for buyers down at 9213 and two way trade to ensue.

Hypo 3 stronger sellers trade down to 9200.  Look for buyers down at 9183.50 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme volume on normal range. Price was balanced overnight, chopping along the Wednesday low. Sellers defended two whacks up into the midpoint. At 8:30am initial/continuing jobless claims data came out better than expected. As we approach cash open, price is hovering along the Wednesday low, which is a few point below the Wednesday’s close.

Also on the economic calendar today we have leading index at 10am followed by crude oil inventories at 11am.

Be aware that major semiconductor Intel is set to report earnings after the bell. Given the extended nature of the PHLX semiconductor index, a primary driver of our current broad market rally, and that Intel is a major component of that index, these earnings are likely to give some pause to the market, intra-day, then potentially reveal direction into the tail-end of the week.

Yesterday we printed a neutral extreme down. The day began with a gap up beyond the Tuesday high. After a brief two-way auction at the open buyers drove higher, achieving new record highs and briefly pushing range extension up before responsive sellers stepped in and drove price back down through the daily midpoint. From then-on price was choppy, walking all over the midpoint before eventually succumbing to selling pressure late in the session that pushed us range extension down (neutral). The day ended near session low (neutral extreme), with buyers attempting to reject a move back into Tuesday range.

Heading into today my primary expectation is for buyers to work into the overnight inventory and take out overnight high 9210.75. From here we continue higher, tagging 9238.25 before two way trade ensues.

Hypo 2 stronger buyers trade up to 9266 before two way trade ensues.

Hypo 3 sellers press down through overnight low 9173.75, then close the open gap from Tuesday at 919.75.  Look for buyers down at 9142.25 and two way trade to ensue.

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 about 9:30pm New York when a strong bid entered the market. Said buying to price to a new record high before coming into balance again for the duration of Globex. As we approach cash open, price is hovering in the middle of this mini-balance.

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

Yesterday was the first trading day of the week and we printed a normal variation up. The day began with a gap down, with price beginning the holiday-shortened week at last Friday’s midpoint and volume point of control.  Buyers stepped in early on and worked price higher, closing the overnight gap then continuing a few points beyond the Friday high before falling back to the daily mid in the afternoon.  Sellers were asserting themselves into the close as we ended the session in a choppy manner, along the mid.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 9266 before two way trade ensues.

Hypo 2 sellers work into overnight inventory, breaking down and out of the mini balance low (around 9211) setting up a gap fill down to 9169.75.  From here we continue lower, down through overnight low 9165.50. Look for buyers down at 9142.25 and two way trade to ensue.

Hypo 3 stronger buyers trade up to 9300 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Greeting lads, and an early well wishing, of a Happy Dr. Martin Luther King, Jr. day to you all.

Dr. King inspired the greatest movement our country has ever seen, and despite the efforts of some to belittle the civil rights movements, or the proclivity of others to persist in the hatred of their fellow man due to race or sex or creed, here in America we are closer than ever to True Freedom and Zion.

I’ve been in the mountains for a while, high atop the peaks of the Canadian Rockies, undoubtedly the most beautiful place on earth. No longer being a tender youth, some of the side effects of age reared up while I was trekking at altitude. My knees were barking. When I crane my neck during a hunkered down mountain traverse, searing pain signals were issued from my cervical spine. During a 25 kilometer hike to a hot spring my IT band seized up, converting my gate into a trudge that would make Quasimodo blush.

But man did it feel good to send my person careening down steep cornices and couloirs with their clarity and dedication of a committed send artist. Between brave acts of physicality I read philosophy books and fiction, journaled my own altered-state thoughts with pen and paper, and did my best to operate precision photography equipment in the unforgiving wet and cold of the north.

While I’ve been back since early Monday, I’ve sort of stayed in the mountains mentally. Opting to cook soups and sip tea whilst burning thickets of incense, floating around the house in a contemplative state, tweeting occasionally along the way. Aside from caring for the people who mean the most to me, I have been sitting in silence, and reading. Studying.

Last night I did most of my research and updated Index Model. It is bullish for the eighth consecutive week.

I’ve been keeping Mothership at 52 degrees Fahrenheit.  Ever since I left the tent I haven’t been able to handle warm places. My blood is thick—my cock and constitution hard. My mind is at peace.

But I do have an important message to bring to you, noble reader of the Humble Raul blog (HRb). For many of my young developmental years as a trader, as a seeker of knowledge in the way of a consistently profitable operator, I would always reach an impasse with my mentors and peers at a critical juncture. Some called it feel, or gut. The better teachers called it context. But none of them could describe to me what context was but they all insisted it was what separated the winners from the losers. After about 15 years, I think I know why.

There are two type of knowing—-having and being. We can have a set of tools, charts and indicators and entry/exit strategies and models and bla bla bla lots of it. We KNOW what these things are. This is our KNOWLEDGE.  It is useful

Then there is being. Being a trader. Observing your emotions. The behavior of others. The interplay of your KNOWLEDGE, your tools, in real time. That listless gaze we take on when we are mindful and fully emerged in our craft. Optimal grip. Not too tight or loose. This is WISDOM. And wisdom cannot be taught. Wisdom is difficult to put into words. You must feel it, around you, around all of us. The force that delicately interconnects everything.

Depending on the path you take, that context will come to you differently. You perception is like a lens and it can deceive you. We all know those who harbor prejudice are far less likely to cut through the bullshit and see, SEE, clearly. All life is suffering, rather, all life has the ability to deceive us into forfeiting our freedom, our own reasoned choice. The only thing we truly have control over.

That’s the message I bring from the mountains.

It is good to be back and I know it can seem redundant but it is an honor to write these thoughts and know people are reading them. Thank you. Cheers, and again, Happy Dr. Martin Luther King, Jr. day.

Raul Santos, January 19th, 2020

Exodus members, the 270th edition of Strategy Session is live. YOU HAVE TO be aware of what is happening on the NASDAQ transportation index. Check out Section IV, if nothing else.