Fell out of touch mid week—daylight savings time, man

I am not one for excuses, especially when it is 7am and a cement truck is about to arrive.  Because at that point the only option is to more work on me.  Grieving over daylight savings is a popular plebeian pastime (PPP).  But by-golly my sleep schedule is out-of-whack, and with my circadian rhythms off I figured it was best I withdrew myself from the NASDAQ 100 arena.

This is the benefit of being time rich and independent.  Nobody can tell me I have to work.  I love to work, and sometimes I work too hardt.  This has not been a work-too-hardt week.  First off it has become quite cold in the murder mitten.

And I welcome the cold.  As any faithful reader of the old Raul blog knows, my primary objective is to extract as many fiat american dollars as possible from the global financial complex and use said dollars to acquire land as far north and at as high an altitude as my constitution will allow.  Then to build.  I come from a long line of builders and soldiers.  We build and we fight and we fuck and we farm.  Additional fiat american extractions will be converted into quonset huts and water-heated cement pads.  Greenhouses and solar panels and lithium-ion batteries.

So I am big on conditioning my mind and this sack of fluid my soul occupies to handle the cold.  Right now the inside temperature of Mothership is a brisk 52 degrees Fahrenheit. I am wearing finger-less wool gloves, shorts and a Nike heatgear tee shirt that is designed to wick any moisture off my body. This shirt keeps me from suffering from any sweat chills.  I am barefoot like Honest Cato, of course.  The only heat sources are a fire near by bed which I’ve kept lit this entire week, the flame below my soup stock pot and the the human mammal heat I generate via frequent jumping jacks and other calisthenic exercises.

What most millennials (and boomers) fail to understand is that the only escape from normalcy is to BE different.  I choose to remove as many modern creature comforts as possible, instead focusing on stocking my coffers with homegrown jellies, gathering wood and foraging for food and stuff to sell on Craiglist like a beautiful trash panda.

Some would see a man such as myself, who hasn’t left the house in days and say, “That fucker has no ambition.  Look at him, poking that stupid fire and reading books all day.”  Little do they know I am constantly plotting, waiting, ready to strike with merciless tenacity when the right opportunity presents itself.

And it is nearly showtime.  Or at the least, nearly snowtime.  And humble Raul thrives in the winter.

Plus the stock market is just prancing around up here at record highs.  There is not much for me to do.  I will not simply work for the sake of work, I know better than to do something for the sake of curing boredom or “appearing” productive.  What matters most is the health of my mind and body, otherwise I will be in no condition to help the people around me.  Work for the sake of work is not only a waste of time, but when it comes to trading it is a recipe for disaster.  I have seen 20 year professional traders, legends amongst our ranks, drift away from their plans and suffer major losses during slow tapes.

None of us are immune.  The best we can do is feel in-touch with our ourselves, prepare all our research, then trade our plan.  In doing this we can be liberated from the monotony of W-2 employment.  But what the heck am I going on about?  Every time I preach this line of trading to a room full of people they just want to fire tickers at me, or talk about how profound seasonality is or talk big shit about their five thousand dollar in-the-money call option position in Apple.  So I am done.  Do whatever you want.  I am off to do some dead lifts.

I will be back Sunday with an update on these super strong markets.

Good day and cheers to your weekend.

Raul Santos, November 8th, 2019

NASDAQ futures are coming into Tuesday with a slight gap up after an overnight session featuring extreme volume on elevated range.  Price worked higher overnight, making a new record high before finding sellers just ahead of 8250 and coming into balance.  As we approach cash open, price is hovering just above the Monday high.

On the economic calendar today we have trade balance at 9:30am, ISM non-manufacturing/services PMI at 11am, 52-week T-bill auction at 12:30pm then a 3-year note auction at 2pm.

Yesterday we printed a normal variation down.  The day began with a gap up to new all-time highs.  After a two-way auction sellers stepped in and slowly worked price lower.  Their campaign ended around 12:15pm New York lunch when buyers stepped in and rotated price back up and through the daily midpoint.  We oscillated back into the lower quadrant once more, not making making new lows before returning to the midpoint by end-of-day.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 8215.75.  From here we continue lower, down through overnight low 8206.  Look for buyers ahead of 8200 and two way trade to ensue.

Hypo 2 stronger sellers work down into the weekend gap and fill the gap down to 8159.25 before two way trade ensues.

Hypo 3 buyers gap-and-go higher trading up through overnight high 8248 and probing open air.  Look for sellers up at 8300 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday pro-gap up after an overnight session featuring extreme range on elevated volume.  Price drove higher overnight, discovering higher record prices throughout the globex session.  As we approach cash open, price is hovering above 8200 up at record high prices.

On the economic calendar today we have durable/factory goods orders at 11 am followed by 13- and 26-week T-bill auctions at 12:30pm.

Last week also kicked off with a gap up Monday.  Then Monday featured a slow grind higher all session until settlement, when price spiked lower and erased most of the intra-day gains.  Tuesday saw sellers continuing to pressure the tape, eventually climaxing with a sharp move lower Wednesday morning.  This formed an excess low, closed the Monday gap and served as the low-of-week going forward.  After making time for several hours Wednesday the Fed cut interest rates by 25 basis point as was expected, this introduced buying into the market.  Thursday was choppy before Friday saw price work to new highs.  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 gap up and drive higher.  Sellers stepped in before the market could establish an early range extension up and sellers pressed RE down.  They were unable however to reclaim the Thursday range.  Instead buyers stepped in and worked price back up through the daily midpoint.  Then, late in the session buyers worked us to a new high-of-day (neutral) and closed out the session on the highs (neutral extreme).

Heading into today my primary expectation is for sellers to work into the overnight inventory and trade down to close the gap at 8159.25 and take overnight low out by a few ticks 8158.50 before two way trade ensues.

Hypo 2 buyers gap-and-go higher trading up to 8246.75 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 8246.75 setting up a continued discovery of open air above.  Look for resistance at 8250 and 8300.

Levels:

Volume profiles, gaps, and measured moves:

As a rule of thumb, and folks I have massive thumbs, my hands were passed down from the old country. GRANDPA RAUL was a soldier for the fascist Mussolini regime.  He spent seven years as a prisoner-of-war in Africa before returning to Italy and adding five children to the three he’d had before the war, one of those children being Elder Raul.  As a rule of thumb I do not trade late into the Friday session because there is no sense in sullying the mind before two days of market-free rest.  A big loss late in the day Friday can distract nearly 48 hours of family time and philosophical study, and it just isn’t worth taking that risk for another seven or eight hundred fiat American dollars.  But I worked late Friday because I had a reason to stick around and trade:

NYSE TICK went third sigma on the open, what that means is I am pressing intra-day /nq longs harrrrrd

— RAUL (@IndexModel) November 1, 2019

Exodus also aligned with my late-Friday buy campaign:

also note: 80% up breadth according to Exodus

them are go with numbers, not fade numbers

im gunning for 8200 /nq

— RAUL (@IndexModel) November 1, 2019

This is a big problem with losing “traders” —they take action for the sake of action because they are trying to fill some existential void in their life with purpose, unaware that by carelessly trading financial instruments in an attempt to fill that void they are likely to blow an even wider chasm in their soul as their suffering and losing drives the people they love away from them.  Then, in isolation, these failed traders turn their self-pitying into blaming society, the democrats, women too smart/attractive to engage, Big Tech and more as an excuse for their failure.  This destructive loop continues, ad nauseam, until they either snap out of it and make a determined effort to rebuild the software inside their minds or they give up and return to being a W-2 wage slave, being told what to do like a dog because they are incapable of catching their own bounty like a wolf.

Anyways, if you are reading the old Raul blog you likely identify far more as a they/them wolf then a dog.  I worked late Friday because I had a reason to and while it is bad form to talk about winning trades I’ll just say it was a pretty sweet Friday.

MOVING ON.

Most of the firms relevant to the NASDAQ 100 have already reported.  The Fed has already cut interest rates.  It’s already November.  The algos are still bullish.  This run on the highs is long-in-tooth but that is no reason to assume it is about to roll over.  It might, but as I discussed in this Sunday’s Exodus Strategy Session, always trying to be on the ‘right’ side of the market’s oscillations is unrealistic.  YES, we have been on both sides of all the last several major market rotations inside Strategy Session, but that is not always going to be the case and to think it will be is foolish.  If you want to be a fool there is a whole finance site dedicated to being a fool.  There are also books called “Idiots Guide To…” that are perhaps better suited for people who view themselves this way.  We do not view ourselves this way.

We are astute speculators, fully accepting our fate.  We live by the sword.  We know the inherent risk of our craft and we do our absolute best to mitigate those risks.  Then we show up every day with a plan and we trade that plan and let the results of these activities happen.  Trading like this can be a tool for building our character at all times, regardless of the outcome.  Or it can be an accelerated route to becoming a degenerate.

MODELS REMAIN BULLISH.

Raul Santos, November 3rd, 2019.

Exodus members, the 259th edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Friday gap up after an overnight session featuring elevated volume and range.  Price worked higher overnight, trading  up through the Thursday high just before midnight New York before settling into balance above Thursday’s midpoint.  Then at 8:30am Non-farm payroll data came out well above expectations and sent price on a spike higher to a new overnight high.  As we approach cash open, price is hovering just about 20 points below all-time record NASDAQ highs.

Also on the economic calendar today we have ISM employment/manufacturing at 10am.

Yesterday we printed a normal variation down.  The day began flat, and the open featured a selling drive down.  Sellers traded down and tagged the naked VPOC left behind Wednesday before we formed a sharp excess low.  We then bounced back up and through the midpoint before chop ensued, chopping along the bottom-side of the mid before a late-day ramp took price back up above the midpoint.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through record high 8141 to tag 8150 before two way trade ensues.

Hypo 2 stronger buyers trade up to 8200 before two way trade ensues.

Hypo 3 sellers press into overnight inventory and close the gap down to 8089.50 then continue lower, down through overnight low 8084.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Thursday flat after an overnight session featuring extreme range and volume.  Price worked sideways overnight, chopping along the top-side of Wednesday highs for most of the Globex session before rotating back into Wednesday range.  From there onward we held balance in the upper quadrant.  As we approach cash open, price is hovering near Wednesday high.

On the economic calendar today we have Chicago Purchasing Manager at 9:45am followed by 4- and 8-week T-bill auctions at 11:30am.

All important earnings for the week are out after Apple and Facebook appeased investors with strong earnings. Big Tech continues to drive broad market action:

Apple Q4 EPS $3.03  Vs $2.91  Last Year 
Apple Sees Q1 Sales $85.5B-$89.5B vs $86.92B Est. 

Facebook Q3 EPS $2.12 Beats $1.91 Estimate, Sales $17.38B Beat $17.36B Estimate

Yesterday the NASDAQ printed a double distribution up.  The day began with a gap up in range that sellers worked down into during an open drive down.  The selling accelerated into the weekend gap, filling the gap before forming a sharp excess low.  Price then reclaimed the midpoint and chopped sideways all over it before the Fed cut its benchmark borrowing rate by 25 basis points.  The initial reaction to this was mute, but eventually third reaction was up and we worked up to 8100 before chopping into the bell.  During settlement the earnings mentioned above spiked price to a new daily high but did not take out all-time high before cash close.

Heading into today my primary expectation is for buyers to work up through overnight high 8141.  Look for sellers up at 8150 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 8081.50 setting up a move to target 8069.50 before two way trade ensues.

Hypo 3 stronger sellers trade down to 8050 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday with a slight gap up after an overnight session featuring normal range and volume.  Price was balanced overnight after briefly probing below the Tuesday low.  As we approach cash open, price is hovering about 10 points below Tuesday’s midpoint.

On the economic calendar today we have crude oil inventories at 10:30am followed by an FOMC rate decision at 2pm and a Jay Powell press conference at 2:30pm.

After the bell we’ll hear earnings from two major NASDAQ components/movers, Apple and Facebook.

Yesterday we printed a normal variation down.  The day began with a slight gap up.  After a two way auction sellers stepped inand worked price down through the Monday low and into the gap zone left behind over the weekend.  Sellers were not, however, able to close the weekend gap.  Instead buyers stepped in and drove price back to the mid point.  Sellers defended the midpoint and we ended the day near session low.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 8075.25 to set up a run to 8092.25.  Then look for third reaction after the rate cut to dictate direction into the second half of the day.  Then be aware of the likely volatility during settlement at as key earnings are released.

Hypo 2 sellers press into the overnight inventory and close the gap down to 8082.50 then continue lower, down through overnight low 8046.25 setting up a weekend gap fill down to 8034.75. Then look for third reaction after the rate cut to dictate direction into the second half of the day.  Then be aware of the likely volatility during settlement at as key earnings are released.

Hypo 3 stronger sellers trade down to 8014.  Then look for third reaction after the rate cut to dictate direction into the second half of the day.  Then be aware of the likely volatility during settlement at as key earnings are released.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday flat after an overnight session featuring normal range on elevated volume.  Price was balanced overnight, chopping the Monday midpoint and holding range. As we approach cash open, price is hovering just below the Monday midpoint.

After the bell Monday Google parent company Alphabet Inc. reported earnings, shares are down about -1% in premarket trade:

Alphabet Q3 EPS $10.12 May Not Compare To $12.38 Estimate, Sales $40.499B Beat $40.32B Estimate

On the economic calendar today we have consumer confidence and pending home sales at 10am.

Most of the major economic data and key earnings are out tomorrow.

Yesterday we printed a normal variation up.  The day began with a gap up and drive higher, trending clean through the entire session, steadily gaining higher record prices.  Sellers stepped in during settlement, fueled by Alphabet earnings, and knocked price back down below the daily midpoint.

Heading into today my primary expectation is for buyers to work up through overnight high 8118.75  to tag 8131.75 before two way trade ensues.

Hypo 2 sellers press down through overnight low 8079.50 setting up a weekend gap fill down to 8034.75 before two way trade ensues.

Hypo 3 softer selling trade down to 8066.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are gap up about +40 heading into Monday after an overnight session featuring normal range on elevated volume.  Price worked higher during a balanced session, working up record highs.  As we approach cash open, price is right up at globex high.

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

We also have Google parent Alphabet, Inc. set to report earnings after-the-bell.

Last week featured a quiet Monday, with a slight up drift.  Tuesday was a trend down that ended on the lows.  Wednesday price consolidated in the lower quad of Tuesday for most of the day before ramping into the bell.  The rest of the week was spent auctioning higher, with relative strength seen in the NASDAQ.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a double distribution trend up.  The day began with a slight gap up and drive higher, trading up through the weekly highs by late morning and continuing to extend the gains into New York lunch.  Then we flagged along the highs, balancing for the rest of the day before ramping into the close.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 8100 before two way trade ensues.

Hypo 2 stronger buyers trade up to 8131.75 before two way trade ensues.

Hypo 3 sellers work into the overnight inventor and close the gap down to8034.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

I am working on being more easy going.  After all I am growing old, having been 34 for nearly four months now, and I prefer to be kind to folks.  It is tricky when you live by the sword of trading.  In some ways I feel like the old guard and with that comes a sense of duty.  I want to exact justice against phonies who deal in selling trading education.  But what the hell for?  After the phonies go on stage and give their spiel, Q&A rolls around and people always behave in the same, disappointing way—defending their strategy, boasting of their accomplishments and demonstrating an in general attitude about doing nothing and attaining riches.

Fine.

So lately I am setting the intention to seek real equanimity, and not just some surface-level thought exercise.  I mean really meditating on it, tying with steel re bar this modality onto my mind’s foundation stones.  The slow driver?  The rude old man?  The blonde with long hair down to her cute little butt?  The clerk bagging groceries?  THE DOCTOR? The criminal?  The homeless? The body builder? That deer crossing the road? The guy selling an options trading service? The bird on the feeder? The opossum?  Giving them all the benefit of any doubt and shining my warm light their way.

I tell you what helps make my life super cruise-y and chill even though I hate to admit it—having lots of money.  It just does.  And when I make big, sweeping strides and acquire lots more money seemingly all at once, I don’t want to be a huge asshole like I can do sometimes.  Like calling people idiots for not investing in Tesla.  That is uncalled for.

Okay now let’s talk about how the market is likely to behave from today-onward.

The Sunday research I published into Exodus this morning indicates that all four major U.S. equity indices are statistically likely to be higher over the next five days.  We have three major earnings announcements coming up this week; Alphabet (Google), Facebook and Apple in that order.  The CME is pricing in a 93.5% probability that the Fed will cut rates by 25 basis points on Wednesday :::inhales and exhales slowly:::  All of these events are likely to support higher prices.

The PHLX semiconductor index is at all-time highs.

Friday is November first.

So we rally into the new month, then new funds push into stocks to start the month since every W-2 earning employee in America has a chunk of their paycheck sent to the stock market which the majority of their retirement is dependent on.  That fresh money flows like a river into quality stocks, pressing equity prices higher clean into the holiday season, then we continue to rally into year-end. Then the new year starts and we rally again.

So there is not much to do here.  Your money should already be allocated long.  You don’t need to jump from one hot stock to another in some manic way, being active for the sake of activity.  If you are bored, go dig a hole or swim.  Channel that hedonistic energy into making delicious food for your family.  If you made some more money from other capitalistic pursuits, simply buy more of the best stocks in the world: TSLA, TWTR, GOOGL, AMZN, MSFT, COST, WMT, and so on.  Avoid ghetto stocks unless you want drama.  If you want drama, may I suggest going to the theater?

One quick note about Exodus.  Bear in mind I am not compensated in any way for promoting Exodus, or for all the research I publish inside Exodus, or for posting some of my trades inside Exodus, or for blogging in public forum like this.  The Fly does grant me access to the Exodus tool suite at no charge, which saves me about 500 bucks a year.  I would gladly pay several thousand dollars a year for Exodus, but that is beside the point.  See how I can digress?

One quick note about Exodus.  From October 2nd through October 25th we had a live signal.  Normally they only last 10 trading sessions but what happened was we flagged Hybrid overbought about 7 days into the oversold cycle.  It was one of the best trades out of the software this year.  I really don’t think any members traded this signal properly.  Maybe I am wrong.  Maybe they just silently go about their business and I hope that is the case because this trade was huge.  Using TQQQ to 3x leverage the position, I returned about +16% on this trade.

If you can be patient and trade signals like these, whether from Exodus or somewhere else, you are well on your way to becoming a successful (read: consistently profitable) trader.

Okay I am done. Thanks for reading along.

RAUL SANTOS, October 27th, 2019

Exodus members, the 258th edition of Strategy Session is live, go check it out and let me know if you traded the oversold-to-overbought signal properly, cheers!