Minor gap down into Monday, here is the NASDAQ trading plan

NASDAQ futures are coming into the second full week of October, option expiration week with a slight gap down after an overnight session featuring extreme range and volume.  Price was balanced for most of the Globex session before making a sell rotation around 5am New York.  The selling pressed into the open gap left behind last Friday before discovering responsive buyers ahead of the Monday/Thursday highs.  As we approach cash open, price is hovering along last Friday’s low.

There are no economic events today. The U.S. Government is taking a holiday.

Last week began with a slight gap down also.  Monday was strong early on before fading late in the day.  There was a big gap down Tuesday that found buyers before reversing and closing on the lows .  Wednesday gap up and slow rotation higher that continued through Thursday before a big gap up Friday and drive higher early on before chopping lower into the close.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a neutral extreme down.  The day began with a gap up and drive higher, trading up to prices unseen since 09/20 before coming into balance.  09/20 was a strong liquidation sell day and buyers were still present at these levels.  There was a considerable amount of volatility Friday, with price oscillating from daily high, to low, then back to a new high before going back to the low and closing near it.  Signs of higher timeframe activity and a market out of balance.

Neutral extreme down.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7857.50.  From here we continue higher, up through overnight high 7894.75.  Look for sellers up at 7900 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 7807 setting up a move to tag 7800 before two way trade ensues.

Hypo 3 stronger sellers trade down to 7781.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Part of the reason I fire up the old blog-o-machine every Sunday is because I am contributing thought to an industry rife with frauds and hacks, hacks who maybe don’t realize they dish out droves of bad information on trading and frauds who would just as shamelessly convince nice old ladies to wire them money.  And I figure, well I better put out something honest and true to persist and resist.  My motivation is reverence for trading competency.  It is quite liberating, right up there with growing something out of the ground that sustains you. Which is why today I posit that active trading is an art.

No indicator guarantees success.  The last month or so, I have demonstrated my systematic approach to forming a bias, and that systematic approach has been dialed in.  It has kept me on the right side of the tape, and with that approach and the rest of my tool kit I have been extracting NASDAQs from the financial complex quite well.  Yet, at the same time, I have internet people giving me grief that my indicators don’t work.  They work just fine.  These people are not making a beautiful performance of their trading.  This is something I cannot teach.

None of us control how the market behaves.  It pops and drops and marks time.  There is no such thing as good or bad, the market simply is.  It is a numeric representation of the net interactions of hundreds-of-thousands of humans and the algorithms they have built to execute their human ideas.  The entire existence of all of this is completely intangible, a collective conscious that we do our best to measure.  How one interacts in this environment is an art.  Are they playful and light?  Or is the market rigged?  Choose your beliefs carefully.  They will tint every observation you see.

We only control our own reasoned choice.  What we choose to take in, what we ignore, and how we interpret that data is something we have power over.  Whether or not we position our capital into or out of a position is a reasoned choice.  The reasons behind our actions are art.  Are your impressions swayed by the words or actions of others.  That is hardly creative.

I blog to demonstrate a repeatable approach to trading and to offer clarity along the way.  My reasoning is simple.  I was new once and had to wade through this mess of online gurus to find real insight from real people who actually trade.  It sucked.  I paid lots-and-lots of money to phonies, money that would have been better spent on pole barns or solar panels.  To learn to trade you must trade.  And to trade well is an art.

That’s all I am in the mood to write today.

Raul Santos, October 13th, 2019

Exodus members, the 256th edition of Strategy Session is live.

NASDAQ futures are coming into Friday pro gap up, trading at a new 12-day high after an overnight session featuring extreme range and volume.  Price worked higher overnight, trading up into the 09/24 range, prices unseen for nearly three weeks before settling into balance.  As we approach cash open, price is hovering just up above the tips of responsive seller excess highs printed on 09/25 and 10/01.

On the economic calendar today we have University of Michigan’s primary October reading of sentiment at 10am.

Yesterday we printed a normal variation up.  The day began flat then with buyers spiking price higher shortly after the open, closing the Monday open gap.  After a tight flag buyers took the market range extension up, trading up near Monday’s high before discovering responsive sellers and trading back to the daily mid.  Price chopped along the mid for a bit before sellers made a try lower.  Their attempt was thwarted, and before they could make a new low-of-day (nLOD) a sharp excess low formed and we rallied up into the upper quadrant of the session before day’s end.

Heading into today my primary expectation is for a gap-and-go higher, trading up to 7890.75 before two way trade ensues.

Hypo 2 stronger buyers sustain trade above 7890.75 and tag the 7900 century mark.  A battle ensues here with buyers ultimately prevailing and continuing higher.  Stretch targets are 7914.25, 7920 and then 7942.25.

Hypo 3 sellers defend their 09/24 conviction selling, pressing into the overnight inventory and reclaiming Thursday high 7786.25.  This sets up a gap fill down to 7761.25.  Look for buyers down at 7730.25 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 worked down through the Tuesday low briefly overnight before rallying up near the cash session’s highs.  Eventually price balanced out above the Tuesday midpoint.  AS we approach cash open, price is attempting to break down-and-away from that overnight balance, and is floating just above the Tuesday mid.

On the economic calendar today we have Fed Chairman Jay Powell taking part in a listening event over in Kansas at 10:30am along with crude oil inventories at the same time.  At 1pm there is a 10-year note auction then at 2pm the FOMC minutes.

Yesterday we printed a neutral extreme down.  The day began with a gap down and drive lower, trading down into the upper quadrant of last Thursday’s trend up before coming into balance and rallying higher.  The rally took price up near the Monday low before sellers again stepped in and worked price lower, eventually pushing us to a new low-of-day and into a neutral print.  Closing on the lowers sealed the deal as a neutral extreme down.

Heading into today my primary expectation is for sellers to poke down into the tape, trading down to 7666 before finding buyers who work price up through overnight high 7719.  Price continues higher, closing the open Monday gap at 7739.25 before two way trade ensues.

Hypo 2 sellers work a full gap fill down to 7622 then continue lower, down through overnight low 7604.  Look for buyers down at 7600 and two way trade to ensue.

Hypo 3 stronger sellers press price down to 7560 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight, trading down through last Friday’s low around 5:30am New York during a move that began around the European open.  As we approach cash open, price is balanced inside of last Friday’s range along the lower quadrant.

On the economic calendar today we have a 52-week T-bill auction at 11:30am followed by a 3-year Note auction at 1pm.  Then at 1:50pm Fed Chairman Jay Powell will do some speaking at some conference.

Federal Reserve Chairman Jerome Powell to speak at the 61st National Association of Business Economics Annual Meeting in luncheon remarks entitled “A View from the Federal Reserve Board of Governors” in Denver, Colorado.

Yesterday we printed a normal variation up.  The day began with a gap down inside range that buyers quickly resolved shut.  The buying continued, trading up near last Tuesday’s strong selling reaction.  Responsive sellers were present in this area again and rotated price back down to the daily midpoint.  Buyers defended the area through New York lunch, thrusting price back up to a new daily high before again discovering a responsive bid.  This time sellers took price down through the mid and pivoted along it, rotating price back down near the daily low (but not pressing us neutral) into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and attempt to reclaim the Monday low 7724.25.  Expect a battle here before buyers prevail and continue higher, closing the overnight gap 7739.25.  Look for sellers up at 7750 and two way trade to ensue.

Hypo 2 sellers reject a move back into Monday low 7724.25 setting up a move down through overnight low 7665.50.  Look for buyers down at 7604.50 and two way trade to ensue.

Hypo 3 stronger buyers trade price back up to 7800 century mark.  Look for sellers up at 7820.25 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday gap down after an overnight session featuring extreme range and volume.  Price came into the Globex session gap down and continued to drive lower for that first minute of trade, tagging the Friday midpoint and bouncing about halfway back up before that first minute of Sunday evening was complete.  Then we chopped along the upper quadrant of the Friday range for the rest of the session.  As we approach cash open, price is hovering inside the upper quadrant of Friday’s range.

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

Last week began with a gap up and steady auction higher.  On Tuesday, October 1st prices spiked higher on the open only to reveal a strong responsive sell flow.  The auction reversed and by Tuesday afternoon we had taken out Monday’s low.  Wednesday featured a strong gap down and trend lower.  Thursday morning the trend spiked lower before discovering a strong responsive bid.  Price then rallied back up, nearly to the weekly highs by Friday close-of-business.  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 gap up and after a two-way auction buyers assumed control and worked us range extension up.  We marked time through New York lunch before continuing to trend up into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7763.75.  From here we continue higher, up to 7790.25 before two way trade ensues.

Hypo 2 sellers press down through overnight low 7682.50 setting up a move to close the gap down at 7658 before two way trade ensues.

Hypo 3 stronger buyers tag the 7800 century mark before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Just wrapped up Sunday research.  Now I am ready for the week.  I stayed up all night dancing to house music at an unsanctioned venue somewhere in southwest Detroit.  Then I did 90 minutes of hatha-style yoga and had a modest brunch.  This put me into a pleasant mid-day sleep and here we are.

IndexModel is back to neutral.

The algorithims have been dialed into the market these last several weeks and the morning trading plans have been solid.  On Thursday last week, I pulled a pivot that took a bit longer than I would hope.  There was an error in my execution that cost me about 200 NASDAQ points that I could have booked and then ripped back the other direction.

Regardless, I manage to flip around and trade on the proper side of the tape for the tail-end of the week.  It is okay to be wrong, it’s not okay to stay wrong.

Anyhow there is not much else on my radar.  I am bullish into the first full week of the fourth quarter.

The last quarter of the decade.

Cheers.

Raul Santos, October 6th, 2019

Exodus members, the 255th edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Thursday with a slight gap up after an overnight session featuring elevated range on extreme volume.  Price marked time overnight, balancing along the lower half of Wednesday’s range.  At 8:30am initial/continuing jobless claims data came out mixed, slightly worse than expected.  As we approach cash open, price is hovering below Wednesday’s midpoint.

Also on the economic calendar today we have ISM non-manufacturing/services composite PMI along with durable goods/factory orders at 10am followed by 4- and 8-week T-bill auctions at 11:30am.

Yesterday we printed a double distribution trend down.  The day began with a gap down putting the market out of balance from the past few weeks.  Sellers drove lower off the open, trading down to 7600 before catching a bounce.  The selling campaign continued lower, trading down into prices unseen since late-August before a rotation up to the daily midpoint occurred.  Sellers defended the mid and worked price back near the lows into the close.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7546.50.  From here we continue lower, down through overnight low 7540.75.  This sets up a test below Wednesday’s low 7525.50.  Look for buyers down at 7500 and two way trade to ensue.

Hypo 2 stronger sellers liquidate down to 7424.75 before two way trade ensues.

Hypo 3 buyers work up through overnight high 7587.75 and tag the 7600 century mark before two way trade ensues.

Hypo 4 stronger buyers work price up to 7659.25 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 featuring extreme range and volume.  Price worked lower overnight, trading down through the recent swing low, down into the September 3rd range before settling into a balance.  As we approach cash open, price is hovering inside of last Friday’s range.

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

Yesterday we printed a double distribution trend down.  It was nearly a trend day but there were signs of buyers—who spiked price higher on the open before being overrun with sale orders, and again late in the session around the Friday gap fill 7699.50, showing up around 2pm New York and rotating price higher a bit, before finding seller in the lower quadrant of the range who worked price back down near the lows before end of day.

Heading into today the NASDAQ is out of balance from yesterday and we are likely to see higher time frame participation at the open.  Look for sellers to gap-and-go lower, trading down to close the 09/03 open gap at 7616.75.  Look for buyers down at 7596.75 and two way trade to ensue.

Hypo 2 buyers work into the overnight inventory and close the gap up to 7697.  Look for price to continue higher, up through overnight high 7730.50 before two way trade ensues.

Hypo 3 full on liquidation, trading down to 7573 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 volume on elevated range.  Price worked higher overnight, trading up near last Wednesday’s high before settling into balance.  As we approach cash open, price is hovering above Monday’s range.

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

Yesterday we printed a double distribution trend up.  The day began with a gap up, and after two-way auction buyers stepped in and drove price higher.  The auction stalled out ahead of last Friday’s high before rotating back to the daily midpoint.  Price then rallied back near the high in a late session ramp.

Heading into today my primary expectation is for sellers to press into the overnight inventory and reclaim the Monday high 7788.75.  From here we continue lower, closing the overnight gap 7784.50.  Look for buyers down at 7762.75 and two way trade to ensue.

Hypo 2 buyers gap-and-go higher, trading up through overnight high 7826.75.  Look for sellers up at 7868 and two way trade to ensue.

Hypo 3 stronger buyers rally up to 7900 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves: