Regaining routine

We all slip up sometimes, which is fine.

I like helping people I care about, and people I care about have needed me to be a bit more hands on these last several months.  At some point, about when the heat dialed up into the mid-80s, I stopped putting my best effort into the Sunday Strategy sessions, skipped a bunch of morning trading reports, and also broke away from several other wellness routines (exercise, diet, etc).  Again, this is fine.

All of these mechanisms, or routines if we’re humanizing it, were established over the years to check me before I do something selfish like emotionally trade.

I have lost so many US Federal Reserve notes to emotional trading, mostly during my hot-headed 20s, when I was more than a little obsessed with making money.  Wanting something so bad and forcing it usually doesn’t go well, ask me how I know.

Anyways, it doesn’t feel good to break routine.  Its like when you’re full of pizza, but you enjoy the taste of it some much that you ram another piece down and then you’re sick for the next 18 hours.  I feel the same sick kind of way when I break routine, and that tells me to be cautious on all fronts—with relationships, with business decisions—everything.

I don’t trade when my research doesn’t feel good or when I plum skip it, I can’t afford to waste my resources anymore.  Truthfully, I couldn’t back in my 20s either but that lesson took some pain to really take root.

So hopefully this week I can dial back in.  I’m not sure yet, but temperatures are on track to drift down to more comfortable levels, and the people I care about are getting back on their feet.  But who knows what sort of fuckery lies ahead.  So, as always, TBD, and we’ll be taking it one day at a time here on the old RAUL blog.

Raul Santos, July 22nd, 2019

Exodus members, the 244th edition of Strategy Session is live.  I think the NASDAQ Transportation index paints an interesting picture, plus there is little else to go on, algorithmic or trading model-wise, so it’s about all we’ve got in terms of observable bias.

Model remains bullish.  It has been bullish for the last four weeks.

Here’s the Executive Summary from this week’s Exodus Strategy Session:

I. Executive Summary

Raul’s bias score 3.88, medium bull*.  Expect price to consolidate at/near record highs, with any sizeable directional moves on the week being faded back near the mean.  Watch for the third reaction to Wednesday afternoon’s Fed Beige Book to provide direction into the second half of the week.

Watch for Netflix earnings Wednesday after-market-close and Microsoft earnings Thursday after-market-close to potentially provide tradable volatility in the late-afternoon, especially on the NASDAQ.

*extreme Rose Colored Sunglasses [e(RCS)] long bias triggered, see Section IV

The Sunday summary are the broad brush strokes I make heading into the week.  I know where the market likely wants to go, and I make my first few broad swipes on the proverbial blank canvas.

The quote on the Strategy Session comes from slave-born Greek philosopher Epictetus, and it reads like a compacted ‘how-to trade’ manual:

“First say to yourself what you would be; and then do what you have to do.” – Epictetus

That’s all wer’re doing over here folks—planning, trading, and refining our craft.  There is nothing fancy about this blog.  Come Monday, if it is the will of the gods, I will write up a trading plan then go to work trading it.  Again Tuesday and Wednesday and so on, then next Sunday a blank canvas and some new brush strokes.  Nothing to it but to do it.

Hope you all have a strong week of mental fortitude and physical strong cock-edness.

RAUL SANTOS, July 14th, 2019

Exodus members, the 243rd edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Friday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, reclaiming the Thursday midpoint and continuing a bit higher.  As we approach cash open, price is hovering in the upper quadrant of Thursday’s range.

There are no economic events today.

Yesterday we printed a neutral day.  The day began with a gap up and slight move higher, probing to a new record cash-session high but not to a new record high, which was set during Wednesday night globex.  Aftermaking the higher price fell lower once, then rallied back to more highs (RE up) before sellers stepped in and drove price RE down and into a neutral print.  The 7900 century mark was a wall and we rallied back to the midpoint by end-of-day.

Neutral.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7918.75.  From here we continue lower, down through overnight low 7911.75.  Look for buyers again down at 7900 and two way trade to ensue.

Hypo 2 gap-and-go higher, trading up through overnight high 7943.25 setting up a run to probe above record highs 7963.25 before two way trade ensues.

Hypo 3 stronger sellers trigger a liquidation down to 7846.25 Tuesday gap before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Thursday gap up after an overnight session featuring elevated range on extreme volume.  Price worked higher overnight, trading up to a new record high before settling into balance.  At 8:30am Consumer Price Index data came out better-than-expected and initial/continuing jobless claims data came out mixed.  As we approach cash open, price is hovering in the upper quardrent of Wednesday’s range.

Also on the economic calendar today we have Powell’s semiannual testimony to the Senate at 10am followed by a 30-year bond auction at 1pm.  Also, the only other Fed member who seems to move the needle, President of the Federal Reserve Bank of Minneapolis Neel Kashkari is set to give opening remarks at a town hall in South Dakota at 5pm.

Yesterday we printed a normal variation down.  The day began with a gap up that saw us begin the day just below record highs.  There was a buying spike in the first hour of trade that made new record highs before sellers stepped in and worked us range extension down by a few points.  However, this down move discovered a strong responsive bid and we spent the rest of the day chopping along above the midpoint.

Heading into today my primary expectation is for sellers to press into the overnight inventory and close the gap down to 7928.50.  From here we continue lower, down through overnight low 7920.  Look for buyers down at 7900 and two way trade to ensue.

Hypo 2 buyers press early on, trading up through overnight high 7963.25 setting up a run higher to tag the 8000 century mark before two way trade ensues.

Hypo 3 stronger sellers trade down to close the Tuesday gap down at 7846.25 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 was balanced for most of the overnight session, marking time above Tuesday’s midpoint.  Then around 8:30am something Fed Chairman Powell said creating a buying reaction that saw price spike about 70 points to a new all-time high.  As we approach cash open, price is hovering at record highs.

On the economic calendar today we have Powell’s testimony to the House Financial Services Panel beginning at 10am.  Crude oil inventories are due out at 10L30am.  There’s a 10-year note auction at 1pm followed by FOMC Meeting minuets at 2pm.

Yesterday we printed a trend up.  The day began with a gap down below Monday’s range. Sellers briefly probed below last Tuesday’s low before discovering a sharp responsive bid.  Buyers then began a campaign higher, filling the overnight gap then counting higher to close the Friday/weekend gap.  We closed near session high.

Heading into today my primary expectation is for the higher time frames to duke it out.  This looks like wide rotations in both directions before buyers ultimately break away higher and tag 7950 before two way trade ensues.

Hypo 2 sellers press into overnight inventory, erase 8:30am spike higher and continue lower, down through overnight low 7811.25 setting up a tag of 7800 before two way trade ensues.

Hypo 3 stronger buyers tag 8000.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into the week gap down after an overnight session featuring elevated range and volume.  Price drifted lower overnight then found balance inside of Friday’s range.  As we approach cash open, price is hovering in Friday’s lower quadrant.

This is a busy week for Fed speak, with several key members scheduled to speak along with Fed Chairman Powell set to testify at the House and Senate Wednesday and Thursday, respectively.  Today we have 3- and 6-month T-bill auctions at 11:30am followed by consumer credit at 3pm.

Last week kicked off with a big gap up that was sold into for most of Monday, but sellers were unable to erase the gap before bidders took action.  Tuesday was mostly flat but there was clear strength under the surface.  This ultimately lead to a late-Tuesday spike that that followed through clean into the 4th of July.  Then Friday we opened gap down and buyers spent most of the day working it higher.  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 down below Wednesday’s range (markets were closed Thursday for 4th of July).  After a brief two-way auction sellers stepped in and worked price lower, briefly pressing the market range extension down before discovering a strong responsive bid.  Buyers then pressed neutral and drove price higher but were unable to fill the overnight gap.  There was some selling late into the settlement period.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7851.  From here we continue higher, up through overnight high 7863.50.  Look for a fill of the Wednesday open gap 7889.25 before two way trade ensues.

Hypo 2 stronger buyers tag the 7900 century mark before two way trade ensues.

Hypo 3 sellers press down through overnight low 7808.25.  There is a battle at the 7800 century mark which eventually gives way to lower prices.  Look for buyers down at 7772.25 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

Listen lads, it is finally summer up here in the murder mitten and it has all the trimming of a maddening one.  There has been a major uptick in the amount of neck tattoos listlessly wandering through Trump county, their brain tissues inflamed by the same histamines responsible for their itchy noses and bloodshot eyes.  They pose little risk, inebriated by the oppressive sun heat and their own choices, they’re just a clear indication it’s summer in July.

There was a hostage situation a few blocks down from Mothership, with some crazed lunatic locking himself and ‘lover’ in his basement, barricaded in with a wide array of assault weapons.  Again, not caring so much, more signs of the summer.

Up north word got out through various social media channels that the place to inebriate was a small state park beach in an otherwise hokey small town.  Authorities in the area claimed they’ve never seen anything like it, youths  by the 100s descending like gulls, beer bongs and injection needles in tote.  The beach was eventually shut down, and as the police chased away the flock, an image emerged of a wonderfully bleak field of unconscious party fiends littered across the sand—some from opiates others from chaotic brawling.  I really do not care, these are all signs of summer up here in the murder mitten.

I took solace in the city, which has been receiving isolated rainstorms.  The usual crazies haven’t been filing into their desk jobs.  The highways are nearly empty.  The sidewalks don’t have their usual confetti of adderall pills and extinguished cigarettes.  I’d imagine most of those loons took time away from the mortgage servicing complex to go up north.  Only the hardened locals are left; calmer loons, content with the groceried-cart lifestyle.

From my small garden oasis it all seems rather meaningless, except a few things:

• the urgency to acquire gratuitous sums of wealth via independent pursuit
• placing two middle fingers firmly in the faces of outside investors/vultures
• keeping my best cards in my own hand
• playing them when the time is right
• spinning all these plates while I dig holes

On Monday, the quant strategy I use to diversify fiat american dollars into stocks made its quarterly adjustment.  It picked ridiculous stocks. I’m hands off, stock picking is a robots job, not mine. I can only pick real investments like TSLA or TWTR or MTCH, and build massive 10-year holds, but quarterly stock picking?  Or even shorter time frames? For the robots.  Are you a simulation or a human?  What makes you so sure?  Even if I wanted to pick stocks, I don’t have the mental bandwidth right now, it’s hotter than Haiti, and I am busy playing offense while all these jacked asses fart around on pontoon boats.

The roaring ’20s kicks off in six short months.  Will you let your little start-up project sit on the back burner until then?  Back to work.

RAUL SANTOS, July 7th, 2019

Exodus members, the 242nd edition of strategy session is live.  Semiconductors are starting to tell a story here, see Section IV.  At a minimum, log in and read the executive summary so this week’s events don’t catch you flat footed.

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring normal range on elevated volume.  Price was balanced overnight, trading inside Monday’s lower quad for the entire globex session.  As we approach cash open, price is hovering in said lower quad.

There are no economic events today.

Yesterday we printed a double distribution trend down.  The day began with a pro gap up to levels unseen since May 3rd.  After a brief open two-way auction sellers stepped in and began working price lower.  There was some chop and balance before New York lunch before sellers worked a second rotation lower.  Buyers stepped in late in the session, near last week’s high print, and we ramped nearly back to the daily midpoint by end of day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7791.  From here we continue higher, up through overnight high 7799.50.  Look for sellers up at 7810 and two way trade to ensue.

Hypo 2 stronger buyers work up through Monday high 7849.75 setting up a move to target 7887.50 before two way trade ensues.

Hypo 3 sellers press down through overnight low 7763 setting up a move to target 7737.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into the new week/month/quarter gap up after an overnight session featuring its own gap up, then elevated range on extreme volume.  Price chopped along overnight until about 8pm New York when it attempted to press down into the gap up that occurred when globex opened for trade at 6pm.  Buyers rejected the move and price worked up beyond the initial chop.  As we approach cash open, price is hovering near globex highs, trading inside the 05/03 range, just about 30 points off of record highs.

On the economic calendar today we have ISM manufacturing/employment along with construction spending at 10am, then both a 3- and 6-month T-bill auction at 11:30am.

Last week was mostly a sideways drift.  Monday was flat, Tuesday saw strong selling but no follow through for the rest of the week.  Instead we marked time by trading inside the Tuesday range, going sideways for the rest of the week.  The Russell demonstrated relative strength throughout the balance.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation up.  The day began with a gap up that was sold into.  Buyers showed up just below the Thursday low, before sellers could press range extension down, and price rallied to back near the highs.  We did not go range extension up however until the final moments of the session when a strong ramp took prices to a 3-day high as we ended the week.

Heading into today my primary expectation is for buyers to gap-and-go higher, closing the open gap up at 7865 then continuing higher to tag 7888 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and take out overnight low 7772.75 setting up a move to target 7759.50 before two way trade ensues.

Hypo 3 full on trend up.  Trade up through 7888 and sustain trade above it, setting up an exploration of open air.

Levels:

Volume profiles, gaps, and measured moves:

I have been slacking on my market research routines and this is not something I want to get into the habit of doing.  The Sunday research I began 241 weeks ago elevated my trading.  The morning trading reports have always been my rock, even in the most uncertain times.

This week starts with a Monday the first day of a new quarter.  That means I will be making an adjustment to the quant system I run using Exodus and Motif.  Then I will likely be taking the rest of the week easy.

I’ve been all around this great big world and there are few places more enjoyable than Michigan these next few weeks.  It is real hot, not that California pleasant heat but real, oppressive temperatures.  There are freshwater rivers and lakes everywhere.  Spirits are high.  Therefore as important as it is to not become lazy with my research, I can also avoid error by simply not trading.

The market will still be here when I dial back in, just like it was here long before and will be here long after.  Cheers to free market capitalism.  It is the only ethos worth acknowledging.

Now I must be going, a good friend’s birthing day party is about to kick off at a nearby swimming pool.

ciao ciao and kiss kiss

-Raul Santos, June 30th, 2019

Exodus members, the 241st edition of Strategy Session is live.