Volatility compressing, NASDAQ flat into Thursday, here’s the trading plan

NASDAQ futures are coming into Thursday flat after an overnight session featuring elevated volume and range.  Price was balanced overnight and as we approach cash open prices are hovering along the Wednesday low.  At 8:30am initial/continuing jobless claims data came out better-than-expected.

Also on the economic calendar today we have a 4- and 8-week T-bill auction at 11:30am followed by consumer credit at 3pm.

Yesterday we printed a normal variation down.  The day began flat and a brief two-way auction gave way to selling.  Sellers were able to push the market range extension down early on.  Then we checked back to the daily midpoint, sellers defended, and we ended the day chopping along the daily low.

Heading into today my primary expectation is for buyers to work up through overnight high 7126.75.  Look for sellers up at 7138.25 and two way trade to ensue.

Hypo 2 stronger buyers trade us up to 7168 before two way trade ensues.

Hypo 3 sellers press down through overnight low 7082.50 setting up a move to target the open gap at 7035.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday flat after an overnight session featuring elevated volume on normal range.  Price was balanced overnight, trading along the Tuesday midpoint.  At 8:15am ADP employment data came out below expectations.  As we approach cash open, price is hovering above the Tuesday mid.

Also on the economic calendar today we have crude oil inventories at 10:30am followed by the beige book at 2pm.

Yesterday we printed a normal variation up.  The day began with a gap down and small move lower.  Responsive buyers were on the scene near the Monday NVPOC 7130 and from there onward we auctioned higher, closing the overnight gap, going range extension up and eventually settling into two-way trade before buyers could take out the Monday high.  The day ended just above daily mid.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7164.75.  From here we continue higher, up through overnight high 7168.75.  Look for sellers up at 7186.25 and two way trade to ensue.

Hypo 2 stronger buyers trade up and probe Monday high 7211.50.  Look for sellers just beyond, up at 7222.75 before two way trade ensues.

Hypo 3 sellers press down through overnight low 7138.75 setting up a move to target 7100 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday with a slight gap up after an overnight session featuring elevated range and volume.  Price worked sideways overnight during a balanced session that held onto Monday’s mid.  As we approach cash open, price is hovering just above the key intra-day reference point.

On the economic calendar today we have new home sales and ISM non-manufacturing at 10am, a 4- and 8-week T-bill auction at 11am, and a Treasury budget release at 2pm.

Yesterday we printed a normal variation down.  The day began with a gap up and slight push higher before sellers stepped in and drove price lower, successfully closing the overnight gap and continuing lower, down near last Thursday’s low (right along the weekly ATR band), before buyers stepped in.  Said buyers worked price back up above the daily midpoint by end-of-day.

Heading into today my primary expectation is for buyers to work up through overnight high 7169.25 setting up a move to target 7186.25 before two way trade ensues.

Hypo 2 sellers work down through overnight low 7125.75, setting up a move to target 7100 before two way trade ensues.

Hypo 3 stronger buyers trade us up to 7200 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday gap up after an overnight session featuring elevated volume on normal range.  Price worked higher overnight after going gap up into the globex session.  The market stalled out and balanced ahead of the open gap from 11/7/18, and as we approach cash open, price is hovering in the 11/7 range.

On the economic calendar today we have construction spending at 10am followed by 3- and 6-month T-bill auctions at 11:30am.

Last week also started gap up across all major indices.  Then we faded lower through Wednesday morning before rallying back up to the weekly highs by the end of the week.  The last week performance of every major index is shown below:

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up through overnight high 7206.25 to close the gap up at 7219 before two way trade ensues.

Hypo 2 buyers sustain trade above 7222.75 setting up a trend up.  Look to target the open gap at 7313 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory and take out overnight low 7167.  Sellers continue lower, to close the overnight gap at 7156.  Look for buyers down at 7151 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

I am the most ruthless trader on ‘fin-twitter’.  Not that it matters.  It doesn’t.  But I am.

The only reason I blog is to clarify my thoughts to a peer group I respect. By forcing my thoughts into words, I have a mechanism for owning for any goblins hiding in my brain.

My biggest weakness has always been over-confidence.  It makes me rush and take senseless risk.  I’ve never been afraid of dying, even though I’ve been quite close three times.

Being on the right side of this v-shape recovery since it began has resulted in an exceptionally long win streak, and I’ve been dancing on the heads and cocks of my competition for the last few days.  I sense some hubris in my bull-trot.

That being written, the models lads, the ones guiding my whole approach, they remain bullish.  Now lets add some context.

Semiconductors.  They have a little potential bear trap setting up.  That ugly looking red candle that recently printed—if we make a sharp move lower soon, it will entice sellers to jump into the SOX.  It could end up they jump into the proverbial hole, where they are subsequently trapped, and eventually killed.

keep an eye on the potential island top on $SOX this index is THE story teller of the last few years, it will likely tip its hand first pic.twitter.com/FiRmANKkVq

— RAUL (@IndexModel) March 3, 2019

Seasonality.  Monday kicks off the first full week of March.  New month, new money needing to go to work.  Everyone says we are entering a tough spot, seasonality-wise.  All I need to do is pull up QQQ inside Exodus and voila!  I can cut through all the chatter with dat-rr.  March has seen the most popular NASDAQ ETF higher 68.42% of the time, better than any other month:

Sentiment.  This is a hated rally.  I refuse to drudge up any proof.  You have a device that can access Twitter, yes?  Spend a few hours rolling around in that cesspool of misery.  The planet, fucked.  Politics, a disaster.  War, any moment now.  Markets, rigged!

Put it all together.  These are prime (primal?) conditions to make hay as a speculator.  You have the tools, what you choose to do with them is up to you.

This week’s strategy session ends with a Seneca quote that I think all traders can meditate on this month:

“Above all, it is necessary for a person to have a true self-estimate, for we commonly think we can do more than we really can.”

Listen, we all have a unique set of strengths.  Whether or not we overestimate them depends on whether we can keep our ego in check.  Success can make honestly assessing your strengths, and the limits of those capabilities even more difficult.  Long breaks from trading have always been my best means of assessing what needs to be done.  Then I build mechanisms that augment my approach.  Rules.  Systems.  And so on.

I have so much h*cking respect for my fellow iBankCoin misfits.  We come here and talk shop with the explicit intent of extracting fiat from the global finance markets.  We are more powerful as a community.  So thank you for coming along for the ride and best of luck to you out there.

RAUL SANTOS, March 3rd 2019

Exodus members, the 224th edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme range on elevated volume.  Price spiked higher twice during the globex session, with the second spike taking price up near the week’s high. As we approach cash open, price is hovering in the upper quadrant of Monday’s range.

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

Yesterday we printed a normal variation up.  The day began with a gap down and drive higher to close the overnight gap.  Sellers stepped in at the gap and pressed to new low of day, but could not take the market range extension down.  Instead we worked back up through the morning high.  Price stalled ahead of Wednesday’s high and two way trade ensued.

Heading into today my primary expectation is for sellers to work into the overnight inventory but fail to regain Thursday’s range.  Buyers defend around 7130.75 setting up a move to take out overnight high 7159.50 and up through the Monday high 7168.50.  This triggers a move up to 7200 before two way trade ensues.

Hypo 2 sellers work a full gap fill down to 7114 then continue lower, down through overnight low 7098.25.  Look for buyers down at 7094.50 and two way trade to ensue.

Hypo 3 gap and go higher, sustain trade above 7200 setting up a move to close the gap at 7219. \

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into the last day in February with a slight gap down after an overnight session featuring elevated range and volume.  Price was balanced overnight, maintaining trade inside the Wednesday range.  As we approach cash open, price is hovering above the Wednesday midpoint.  At 8:30am GDP and initial/continuing jobless claims data came out in-line with expectations.

Also on the economic calendar today we have the US Treasury auctioning off 3- and 6-month T-bills at 11am, then 4- and 8-week bills at 11:30am.

All the major impact economic/political/social events of the week are complete.  Any market moving news at this point would have to be unexpected.

Yesterday we printed what I can best describe as a double distribution trend up.  The day began with a gap down, and after buyers sharply resolved the gap down with a spike higher, sellers stepped in and drove price lower.  Price drove lower right until 10:30am.  They never pressed the market range extension down.  Instead we sharply rallied off the lows, forming an excess low, up through the midpoint, and closed near session high.

Double distribution trend up because the daily VPOC shifted to the highs 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 7122.25.  From here we continue higher, up through overnight high 7127.  Look for sellers up at 7136.25 and two way trade to ensue.

Hypo 2 stronger buyers rally us up to 7151.75 before two way trade ensues.

Hypo 3 sellers work down through overnight low 7072.50, setting up a move down through Wednesday low 7048.  Look for buyers down at 7030.25 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring NORMAL range on elevated volume.  These normalized stats were in-part due to the globex session being halted for several hours at the CME.  However, action has been light since the market re-opened around 1:30AM New York, and as we approach cash open, price is hovering inside Tuesday’s range, near the cash session low.  At 8:30am advance goods trades balance came in below expectations.

Also on the economic calendar today we have Fed Chairman Jay Powell delivering a testimony to the House finance committee at 9:45am (CNBC may release the prepared remarks a few minutes earlier, like they did yesterday), factory orders at 10am, and crude oil inventories at 10:30am.

Yesterday we printed a normal variation up.  The day began with a gap down, and after a brief two way auction price worked higher, closing the overnight gap then continuing higher, up near Monday’s midpoint before setting into-two way trade.  Buyers held the daily mid, and late in the session made another push which was sold into near closing bell, putting price back down below the daily mid.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7121.  From here we continue higher, up through overnight high 7127.50.  Look for sellers up at 7151.75 and two way trade to ensue.

Hypo 2 stronger buyers sustain trade above 7164.25 triggering a conviction trend up, up to close the gap at 7219 before two way trade ensues.

Hypo 3 sellers gap-and-go lower, trading down through overnight low 7089.  Look for buyers down at 7083.50 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme volume on elevated range.  Price worked lower overnight, giving back the gap up we had to begin the final week of February.  At 8:30am the housing starts data came in well-below expectations (-11.2% vs -0.1% consensus) and building permits came in slightly better than expected.  As we approach cash open price is hovering inside last Friday’s range, near the highs.

Also on the economic calendar today we have Fed Chairman Jay Powell set to testify before the Senate banking panel at 10am.  Consumer confidence data also comes out at 10am.  At 11:30am the US Treasury is auctioning off $26 billion worth of 52-week T-bills, then at 1pm $32 billion worth of 7-year T-notes.

Yesterday we printed a neutral extreme down.  The day began with a gap up, putting the market out-of-balance to start the week.  We trade up to close the 11/8/18 gap to the tick, briefly going range extension up before the auction failed.  Sellers moved us down through the entire daily range.  By late afternoon price had rallied back to the daily mid, but it was defended by sellers and we closed out the day on the lows.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7125.75.  From here we continue higher, up through overnight high 7129.25.  Look for seller up at 7137.75 and two way trade to ensue.

Hypo 2 sellers gap-and-go lower, trading down through overnight low 7073.25 to set up a move to target the open gap at 7035.25 before two way trade ensues.

Hypo 3 stronger sellers trade us down to 7023.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday gap up after an overnight session featuring elevated range and volume.  Price worked higher in a balanced manner, trading up into prices unseen since November 8th.  As we approach cash open price is hovering along the 11/08 lows.

On the economic calendar today we have wholesale inventories at 10am, a 6-month T-bill and 2-Year T-note auction at 11:30am, and a 3-month T-bill and 5-year T-note auction at 1pm.

All major earnings announcements have been submitted for Q4.  There are several non-impactful companies reporting earnings this week, but they are extremely unlikely to affect the Nasdaq 100.

Last week was shortened.  We were closed Monday in observation of George Washington’s birthday.  Tuesday saw a sharp gap lower that was bought up right at the open.  We balanced through Wednesday.  The FOMC minutes Wednesday afternoon resulted in a third reaction up.  Thursday attempted lower but failed after auctioning through the Tuesday low, and we spent the rest of the week rallying, eventually ending at weekly highs.  The Russell had divergent strength, which suggests risk tolerance is increasing.  The last week performance of each index is shown below:

On Friday the NASDAQ printed a normal variation up.  The day began with a gap and push up and away from the Thursday range.  Price stalled ahead of the weekly high and reversed much of the daily range, but sellers were unable to press the day into a neutral print.  Instead we rallied back up near the day’s high by end-of-session.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to close the open gap at 7167.75 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory, working down through overnight low 7102 then closing the weekend gap down to 7088.75 before two way trade ensues.

Hypo 3 stronger sellers drive price down to close the Thursday gap down at 7035.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves: