FOMC minutes in the afternoon, here is the Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring elevated range on extreme volume.  Price worked lower overnight, working down through overnight low by midnight and sustaining trade below it.  As we approach cash open, price is a few points below the Tuesday low.

On the economic calendar today we have crude oil inventories at 10:30am followed by FOMC minutes at 2pm.

Yesterday we printed a normal variation down.  The day began with a gap up to new all-time highs.  High was set during globex.  Before buyers could work up through globex high, sellers were active, driving lower on the open to close the overnight gap.  Sellers continued lower, tagging the Monday midpoint before rotating back up through the daily midpoint and chopping above it into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 8338.50.  From here we continue higher, up through overnight high 8343.25 before two way trade ensues.

Hypo 2 buyers pres sup to 8358.75 before two way trade ensues.

Hypo 3 sellers gap-and-go down, taking out overnight low 8291.50 which sets up the gap fill down to 8265.50 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 worked higher overnight, uni-directionally rotating up to a new all-time high.  At 8:30am Housing starts/building permits data came out mixed.  As we approach cash open, price is hovering at all-time highs.

There are no other major economic events today.

Yesterday we printed a normal variation up.  The day began with a slight gap down and drive lower.  The selling pushed into the Thursday gap zone but sellers were unable to fill it.  Instead responsive buyers stepped in and we spent the rest of the session auctioning higher.  We ended the day in the upper quadrant.

Heading into today my primary expectation is for a gap-and-go higher, up through overnight high 8379 to tag 8381.50 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 8381.50 setting up a run to 8400.

Hypo 3 sellers press into the overnight inventory and close the gap down to 8333.25.  From here they continue lower, down through overnight low 8317.25.  Look for buyers down at 8300 and two way trade to ensue.

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 and volume.  Price worked higher overnight, rallying in the early AM hours alongside Asian markets, notably the HKEX which was up more than 1.2% at one point overnight.  Then around 8:30am CNBC released a statement from a Chinese government source that erased all those early AM gains, and more.  China wants to wait until the American “Who wants to be a President?” contest and impeachment hearings are finished.  As we approach cash open, price is hovering above last Friday’s midpoint.

Also on the economic calendar today we have NAHB housing market index at 10am, 13- and 26-week T-bill auctions at 11:30am, and net long-term TIC flows at 4pm.

Last week began with a gap down, then some chop with a slight upward bias through Thursday, then a rally Friday.  The Russell lagged behind all week.  Here is the last week performance of each major index:

On Friday, the NASDAQ printed a normal variation up.  The day began with a gap up to new all-time highs.  Sellers worked into the overnight inventory but were rejected before they could reclaim the week’s prior high range.  Buyers took control from there working back up to a new high, then chopping until a late session ramp to end the week on the highs.

Heading into today my primary expectation is for buyers to work into the overnight inventory and return to ‘the scene of the crime (news)’ taking out overnight high 8367.  Look for sellers up at 8381.50 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 8306.50 and tag 8300, then look for buyers down at 8289 and two way trade to ensue.

Hypo 3 stronger sellers trade down to 8265.50 (Thursday gap) then tag 8254.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

I saw some feller on the Twitter this morning tweet that he was 100% cash in his investment portfolio.  He was asking some other feller if he should feel okay about his position, because the other feller had tweeted something about how good trading is about being alone.  Okay enough about it without sharing the original tweet:

Psychology is EVERYTHING.

When you're supposed to load up on risk, you're alone. Everyone is terrified. You go offside, short term.

When you're supposed to get out and derisk, everyone is celebrating. You're alone. Stupid, short term.

Doing it right…is always alone.

— Robert Duval (@Cessnadriver50) November 16, 2019

so I should feel like a jerk in 100% cash or I am brave for de-risking here.

— jimmyolsenblues (@jimmyolsenblues) November 17, 2019

I am not trying to put these fellers on blast without reason.  I share these tweets because I think it is irresponsible to yourself and the people who are stakeholders in your well-being for you to ever, I repeat EVER, be 100% cash.  Cash is not king.  Wealth is owning capital goods. Stocks are liquid and really only to be sold as needed to fund purchases of even longer-term, less liquid assets like land and cement.

Land and cement and steel and wood that you can use to generate income.  A place to charge Birds near an urban center.  A greenhouse full of ornamental plants you can sell to girls in yoga pants with lots of disposable income.  A workshop where you can crank out doohickeys to sell online.  A garage to store your tractors and tools—tools that you can use to help people realize their building ambitions whilst making an honest gain.

Welcome to the gig economy.  More and more people are waking up to the fact that serving a corporation for 30-40 years while it realizes its ambition is not a fulfilling use of brief human existence.  The most natural state for a human to be in is either resting or engaged in sex.  Anything beyond these two states is unnatural and unlikely to satisfy our core needs.

But of course we need “money”.  But cash is risky.  You’re better off having some liquid cash, some tradable inventory that you produce yourself, and stores of wealth/work like solar panels or batteries or art.  You need mechanisms in place that passively produce income so people will leave you alone to rest and make love.

With that being said, my futures trading account goes to all cash every day.  Any time I have a big run up in that account, I funnel it over my long term accounts and immediately buy stocks using FAITH BASED INVESTING.  Faith based investing is the only way you will be able to tolerate the volatile nature of concentrated stock market investments.

Most americans are over-diversified.  It is why they end up making modest improvements to their wealth situation but never meaningful, life changing gains.  Which is fine if that allows them to fill their life with cheer and rest.  If you are going to put 25-40% of your investment portfolio into Tesla, you better be fully committed the way a faithful person is to their god(s).  Otherwise, uncertainty will lead to error and then guess what?  You go 100% cash at an even worse moment than some jobber going all cash with markets at record highs.  Without faith, the unfortunate outcome for most concentrated bets is the panic sell, that when looked back upon several years later on a chart looks really, well, unfortunate.

And that is all I had to say about investing and that set of tweets above.

Models are bullish.  They are registering their highest readings ever.  My play is to only work the long side of the tape, intra-day on the NASDAQ futures.  If we come into a day with a gap down inside range, you best believe I am taking a position pre-market and then continuing to accumulate into any early selling, with the goal of working the gap fill.

If we cross up through the daily mid, and there is still an overnight stat or range extension stat, I will be working that cross targeting either of those stats.

If we trade down into one of the market profile levels highlighted during my morning reports, I will be fading that move back higher.

Those are may three main moves.  I’ve made my career on those trades.  I’ve practiced those same three kicks, live, over two thousand times.  Once I have done them 10,000 times, perhaps I will be approaching some sort of real mastery.  Until then I remain a student.

Bullish until noted otherwise.

Raul Santos, November 17th 2019

Exodus members, the 261st edition of Strategy Session is live, go check it out.

NASDAQ futures are coming into Friday up a quick +40 after an overnight session featuring extreme range and volume.  Price worked higher overnight, chopping a bit at 8300 before continuing its ascent to new all-time high prices.  At 8:30 advance retail sales data came out stronger-than-expected.  As we approach cash open, price is hovering at all-time highs, about 10 points above 8300.

Also on the economic calendar today we have industrial/manufacturing production data at 9:15am followed by business inventories at 10am.

After the bell Thursday, major semiconductor component Nvidia reported stronger than expected earnings:

NVIDIA Q3 Adj. EPS $1.78 Beats $1.58 Estimate, Sales $3.01B Beat $2.92B Estimate 
 
NVIDIA (NASDAQ:NVDA) reported quarterly earnings of $1.78 per share which beat  
the analyst consensus estimate of $1.58 by 12.66 percent. This is a 3.26  
percent decrease over earnings of $1.84 per share from the same period last  
year.  The company reported quarterly sales of $3.01 billion which beat the  
analyst consensus estimate of $2.92 billion by 3.08 percent.  This is a 5.38  
percent decrease over sales of $3.181 billion the same period last year.

Shares of NVDA are unchanged in pre-market trade.

Yesterday we printed a neutral extreme up.  The day began with a gap down and two way auction.  Buyers eventually stepped in and started working the gap fill but stalled out a few points shy of it before sellers drove price down to new low of day.  The selling pushed down near Monday’s midpoint before responsive buyers stepped in.  Said buyers reversed all the selling, and more, working up into a neutral print and eventually closing on session high, a few points above the Wednesday close.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 8336 before two way trade ensues.

Hypo 2 stronger buyers pivot up-and-away from 8336 to tag 8350.

Hypo 3 sellers press into the overnight inventory and close the gap down to 8265.50.  Look for a tag of the massive composite VPOC at 8255.50 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 volume on elevated range.  Price was balanced overnight, holding Wednesday range after briefly poking above it around 10pm New York.  At 7am Walmart reported stronger than expected earnings but missed on quarterly sales.  They raised their fiscal year 2020 guidance:

Walmart (NYSE:WMT) reported quarterly earnings of $1.16 per share which beat
the analyst consensus estimate of $1.09 by 6.42 percent. This is a 7.41 percent
increase over earnings of $1.08 per share from the same period last year. The
company reported quarterly sales of $128 billion which missed the analyst
consensus estimate of $128.63 billion by 0.49 percent. This is a 2.49 percent
increase over sales of $124.894 billion the same period last year.

Walmart Raises FY20 Adj. EPS Guidance, Says Now Expected To Be Slight Increase
Over FY19 Adj. EPS Level

So far NASDAQ futures are not reacting to the announcement, WMT shares are about +2.8% higher in pre-market trade.  Reminder: major semiconductor manufacturer Nvidia is set to report earnings after the bell.

As we approach cash open, price is hovering along the Wednesday lows.

Also on the economic calendar today we have Federal Reserve chairman Jay Powell going before the House Budget committee at 10am, crude oil inventories at 11am and 4- and 8-wek T-bill auctions at 11:30am.

Yesterday we printed a normal variation up.  The day began with a gap down that buyers slowly resolved higher.  Price then took out overnight high by a few ticks before sellers stepped in and drove price lower.  Said sellers were unable to press the futures into a neutral print, instead we rallied back up through the midpoint and saw buyers defending the mid into the bell.

Heading into today my primary expectation is for buyers to work into the overnight inventory, closing the gap up to 8266.50 then continuing up through overnight high 8285.50.  Look for sellers up at 8300 and two way trade to ensue.

Hypo 2 stronger buyers trade up to 8336 before two way trade ensues.

Hypo 3 sellers press down through overnight low 8237.50 setting up a move down to 8200 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme volume on elevated range. Price worked lower overnight, trading down through the Tuesday low and down into the lower quadrant of Monday’s range before discovering a bid.  As we approach cash open, price is hovering inside the lower quad of yesterday’s range.

On the economic calendar today we have Federal Reserve Chairman Jay Powell speaking to congress at 11am followed by a monthly budget statement at 2pm.

Yesterday we printed a neutral day.  The day began with a slight gap up and drive higher, trading up to 8300 before settling into a tight range.  Then, around 2:15pm New York sellers made a hard move lower, making a new low of day and pushing us neutral.  Then buyers ramped price back to the midpoint by day-end.

Neutral.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 8271.75.  From here we continue higher, up through overnight high 8275.50.  This sets up a move to probe beyond Tuesday high 8300.25.  Look for sellers up at 8336 and two way trade to ensue.

Hypo 2 buyers close gap 8271.75 then stall just above overnight high 8275.50 and balance out.

Hypo 3 sellers press down through overnight low 8220 setting up a move to target 8200.  Look for buyers down at 8187.75 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday flat after an overnight session featuring elevated range and volume.  Price was choppy overnight, dropping back to the Monday midpoint before rotating up through the Monday high.  We did not take out all-time highs but we came close to it.  As we approach cash open, price is hovering above the Monday high.

On the economic calendar today we have 13- and 26-week T-bill auctions at 12:30pm.  Also President Donald Trump is set talk trade policy at the New York economic club at 1pm.

Yesterday we printed a normal variation up.  The day began with a gap down inside range.  After some initial selling took out overnight low responsive buyers stepped in and began working the gap fill.  The rest of the session featured a slow ascent higher, with the day ending just a few point shy of the gap fill.

Heading into today my primary expectation is for buyers to work up through overnight high 8274 setting up a move to tag 8300 before two way trade ensues.

Hypo 2 sellers press down through overnight low 8228.50, look for buyers down at 8200 and two way trade to ensue.

Hypo 3 stronger buyers tag 8336 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday gap down after an overnight session featuring elevated range on elevated volume.  Price worked lower overnight, making one slow, uni-directional downward move throughout the Globex session.  As we approach cash open, price is hovering below last Friday’s midpoint.

There are no economic events scheduled for today, possibly because it is Armistice Day.

Last week began with a gap up and sideways drift through late Tuesday.  Then sellers pressed late Tuesday and into Wednesday before discovering a responsive bid.  Buyers then auctioned price higher through Thursday afternoon before we balanced out into the weekend.  The Russell lagged throughout the week.  Here is the last week performance of each major index:

On Friday the NASDAQ printed a normal variation up.  The da began with a gap down that buyers quickly resolved with an open drive up.  Sellers then pushed down through the Thursday low before forming a sharp excess low.  The rest of the day was spent auctioning higher, including a strong ramp near end of day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 8256.25.  From here we continue higher, taking out overnight high 8264.25.  Look for a tag of the naked Thursday VPOC at 8267.50 before two way trade ensues.

Hypo 2 sellers press down through overnight low 8213.75 setting up a move to target 8200 before two way trade ensues.

Hypo 3 stronger sellers tag 8187.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Not much to say.

Sunday research is complete.  I like that Walmart reports before market open.  There are only a handful of stocks that anyone should bother paying attention to, and even fewer that anyone should own.  For the most part, the tickers worth owning come from the west—names like Apple, Alphabet, Amazon, Microsoft, maybe Twitter.  You always have to wait until after-market-close to trade these earnings announcements.  But Walmart, which is just as worthy of tracking and owning as the above, they report in the morning.  Like a chicken and bread eating American they are on the road early, commuting to their work, at their work station by 7am sorting boxes and clicking buttons.  I dig that.  Walmart reports Thursday morning then Nvidia reports Thursday afternoon.  Thursday is likely to be pivotal.  Sure, Fed Chairman Jay Powell speaking Wednesday afternoon is likely to cause some rotations, but the Fed has proven predictable.  Walmart tells the story of America’s economy (and therefore the world’s economy) better than any silly government statistic.  Certainly more relevant than GDP.

As we continue to transition to decentralized currencies like bitcoin, government stats will become less-and-less relevant, much like the various stations of the government have already become.

Anyhow enough of that.  As I highlighted in the strategy session the NASDAQ transportation index is really pressing up into the upper boundary of its multi-year price range.  This key contextual sub index is likely to tell a story about the overall stock market soon and you should have at least 1/5th of your computer screens dedicated to monitoring this instrument.

You really don’t need anything else.  We are at all-time record high stock prices lads.  These are casual times where advisors are gods, optimists are right again and active trading is less lucrative than when we’re in the thick of the auction.  Behave accordingly.

Raul Santos, November 10th, 2019

Exodus members, the 260th edition of Strategy Session is live.  Be sure to read the notes about the NASDAQ Transportation index, at a minimum. Cheers.