Little -40 point gap down in-range, here is the Thursday NASDAQ trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume.  Price worked lower overnight, uni-directionally, and briefly probed below the Wednesday cash low before settling into balance.  At 8:30am initial/continuing jobless claims data came out better-than-expected.  As we approach cash open, price is hovering on the low-end of Wednesday’s range.

Also on the economic calendar today we have a 4-and 8-week T-bill auction at 11:30am, Fed Chairman Powell is speaking in Washington the the economic club at 12pm, and a 30-year bond auction at 1pm.

Yesterday we printed a neutral day.  The day began with a gap up and small push higher before settling into a two-way auction.  Sellers managed to press us range extension down and close the overnight gap before responsive buyers stepped in (responsive relative to Wednesday’s open, initiative relative to Tuesday’s close) and worked us up through the daily range and pushed us neutral.  We drifted along daily high for much of the session before reverting back to the mean 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 6602.75.  From here we continue higher, up through overnight high 6618.25.  Sellers are just above overnight high and two-way trade ensues.  Then look for the third reaction after Powell speaks to drive direction into the second half of the session.

Hypo 2 stronger buyers press us up to 6666 before two way trade ensues.  Then look for the third reaction after Powell speaks to drive direction into the second half of the session.

Hypo 3 sellers gap-and-go lower, trading down through overnight low 6540.50 to target 6520 before two way trade ensues.  Then look for the third reaction after Powell speaks to drive direction into the second half of the session.

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 higher overnight, taking out the Tuesday high around 8pm New York before discovering some responsive sellers.  The rest of globex was spent flagging and forming balance along Tuesday’s high.  As we approach cash open price is hovering just above the Tuesday range.

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

Yesterday we printed a normal variation down.  The day began with a gap up and push higher to tag the naked vpoc from 12/12.  Price went a few ticks beyond it before sellers stepped in and close the overnight gap .  We then spent the rest of the day working higher, slowly reclaiming the daily midpoint and closing above it.

Heading into today my primary expectation is for buyers to gap-and-go higher, trading up to 6666 before two way trade ensues.  Then look for the third reaction after the FOMC minutes to dictate direction into the end of the day.

Hypo 2 seller work into the overnight inventory and close the gap down to 6554.75.  Look for buyers down at 6520 and two way trade to ensue.  Then look for the third reaction after the FOMC minutes to dictate direction into the end of the day.

Hypo 3 stronger buyers sustain trade above 6666, setting up a move to target 6693.25 before two way trade ensues.  Then look for the third reaction after the FOMC minutes to dictate direction into the end of the day.

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, trading well up into the 12/19 range.  As we approach cash open, buyers continue to explore higher prices.

On the economic calendar today we have a 3-year note auction at 1pm followed by consumer credit at 3pm.  Also be aware that President Trump is scheduled to give a speech on immigration and border security at 9pm.

Yesterday we printed a double distribution trend up.  The day began with a small gap up and two way auction that resolved the overnight gap.  Then, shortly after setting initial balance the market drove higher and began to trend up through the 12/19 liquidation before settling into a flag for the rest of the afternoon.

Heading into today my primary expectation is for buyers to gap-and-go higher, tagging the 12/19 naked VPOC at 6582.25 before two way trade ensues.

Hypo 2 stronger buyers carry price up to 6666 before two way trade ensues.

Hypo 3 sellers work into the overnight inventory, closing the overnight gap down at 6494.75 then continuing lower, down through overnight low 6491 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 extreme range and volume. Price worked higher overnight, taking out the Friday high before falling back into the upper-quadrant of Friday’s range.  As we approach cash open, price is hovering in the upper quadrant while some morning selling works into the tape.

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

Last week started out with a balance day, then we we closed Tuesday for New Years Day.  We went gap down into 2019 and found a strong bid for most of the day.  Thursday went gap down and erased most of the Wednesday gain but the Russell began to bullishly diverge.  Friday say a gap up and trend higher.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a trend up.  The day began with a gap up and drive higher.  The buying took us to a new two-week high, probing up in the the 12/19 distribution day before finding any sellers.  Sellers did show up near end-of-session and we flagged into the close.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6432.25.  From here we continue higher, up through overnight high 6495.50.  Look for sellers up at 6550 and two way trade to ensue.

Hypo 2 sellers press down through overnight low 6402.50 setting up a move to target 6273.50 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 6550 setting up a move to target 6600 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Sometimes you look back and wonder how your mind was so wrapped up in the minutia that you missed an obvious cue.  Sure, my trading and investing is grounded in solid routine and habit.  Yes, I would never take a single trade unless I completed my Sunday research, formed a morning trading plan, and then received an algorithmic entry signal from MOTHERSHIP.  We should have healthy routines for approaching something as important and big as trading index futures, but we run the risk of being so caught up in all of that intellectual work that we miss a not-so-subtle wink from the universe.

Listen to me, did you see that little dog nearly split asunder by the giant fucking longhorn bull last week during an American football match?  That is everything you need to know going into next week.  A pathetic little dog that needs its skin folds regularly cleaned with q-tips, and its butt hole wiped after every poop, was nearly killed on national teevee by a big, healthy Texas long-dicked bull.

The resources wielded by short sellers are very much the size of that dog in relation to the money coming into the stock market every American pay period.

While this weekend has been difficult, and I nearly didn’t make it to my desk to file the Sunday research due to my time being in high demand, I checked in and filed my latest Exodus Strategy Session.  It has all sorts of reasons to be bullish, and it has a plan of attack for the first full week of 2019, but it should be suffice for all readers of this public blog to know that a bullish omen has been sent.

Position accordingly.

ciao

Exodus members, the 216th edition of Strategy Session was late to post, but it is live.  We have an interesting dialogue going in Section III that takes all the recent signals IndexModel has been generating and gives them words.  Be sure to read through how I’ve been navigating this market trough, and what I expect next.

NASDAQ futures are coming into Friday gap up after an overnight session featuring extreme range and volume.  Price worked a few points below the Thursday low during globex before a strong responsive bid stepped in and drove price 130 points uni-directionally higher.  Sellers were found ahead of the Thursday high and we spent the rest of the session balancing/flagging.  At 8:30am Non-farm payroll data came out mixed and as we approach cash open price is hovering near overnight high, in the upper quadrant of Thursday’s cash range.

Also on the economic agenda today—at 10:30am we have a panel interview featuring Fed chairman Jay Powell and former chairmen Yellen and Bernanke, then at 11am crude oil inventories.

Yesterday we printed a normal variation down.  The day opened with a gap down and after a brief two-way auction sellers worked price down through overnight low.  A responsive bid stepped in by was eventually overrun later in the afternoon as price worked back down to tag the 12/27 naked VPOC at 6148.75.  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 6286.25.  From here we continue higher, to close the open gap at 6370.  Look for sellers up at 6400 and two way trade to ensue.

Hypo 2 buyers stall out around 6300 and two way trade ensues.

Hypo 3 sellers work into the overnight inventory and close the gap down to 6163.50 which sets up a move to target 6100 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 range and volume.  Price worked sharply lower shortly after Wednesday settlement on news that Apple was cutting their sales guidance.  Per the Associated Press:

Cook said Apple’s revenue for the October-December quarter — including the crucial holiday shopping season — will fall well below the company’s earlier projections and those of analysts, whose estimates sway the stock market.

Apple now expects revenue of $84 billion for the period. Analysts polled by FactSet had expected Apple’s revenue to be about 9 percent higher — $91.3 billion. The official results are scheduled to be released Jan. 29.

By 10pm New York, NASDAQ futures were probing below the Wednesday cash low.  However by 7am responsive buyers had worked price back into the Monday range.  At 8:15am ADP employment change data came out much stronger than expected:

ADP Employment Change For Dec. 271K vs 179K Economist Estimate ?

— RAUL (@IndexModel) January 3, 2019

The ADP data brought additional buying into the morning pre-market, reducing the overnight losses to -100.  The Labor department remains funded despite the U.S. government shutdown, however the Commerce department is closed and no construction spending or unit vehicle sales will be released today.  At 8:30am initial/continuing jobless claims data from the Labor department was worse than expected.

Also on the economic agenda today we have ISM manufacturing/employment at 10am followed by a 4- and 8-week T-bill auction at 11:30am.

Yesterday we printed a double distribution trend up.  The first day of the 2019 trading year began with a pro gap down that started prices out in the middle of a conviction buying zone established on Thursday, December 27th.  Buyers were active on the open and drove price higher, filling the pro-gap by New York lunchtime.  Buyers managed to extend their gains in the afternoon, but the auction stalled out just after probing above last week’s high.  Mini failed auction.  The day ended with price in the upper quadrant of the session.

Heading into today my primary expectation is for buyers to work into the overnight inventory, trading up to the 6300 century market.  A two-way battle ensues here before buyers ultimately continue working higher to close the overnight gap at 6370 before two way trade ensues.

Hypo 2 buyers press down through 6220 on the open, setting up a move down through overnight low 6188.25.  This sets up a move to tag the naked VPOC at 6151.75 that we left behind on 12/27.

Hypo 3 stronger buyers work up through overnight high 6361 setting up a move to target 6406.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

The iBC top-down sector analysis Q4 quantitative account which is chosen by Exodus and executed through Motif is set to rebalance on market open.  The Motif platform will automatically execute 30 trades that result in the account being equally weighted into the following stocks:

Here is the performance of the account over the last 12-months verses the S&P 500 and verses a hypothetical scenario where it was holding the above stocks instead of its actual holdings:

NASDAQ futures are coming into 2019 with a pro-gap down after an overnight session featuring extreme range and volume.  Price worked up through the Monday high briefly before beginning a sustained, unidirectional move that descended 230 points lower.  As we approach cash open price is finding balance inside last Thursday’s range, in an area we saw conviction buying last week.

The U.S. government remains shutdown.  This appears to be affecting an 8-week T-bill settlement auction that was scheduled for today.  The only other economic event today is PMI manufacturing index at 9:45am.

On Monday the NASDAQ printed a normal variation down.  The day began with a gap up and after a brief two-way auction at the open price worked lower to close the overnight gap and go range extension down.  Then responsive buyers stepped in and we chopped into the close.  It was an inside day, with the entire daily range being contained in last Friday’s range.

On Tuesday U.S. markets were closed in observation of New Year’s Day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and work a half gap up to 6275.  Sellers step in here and two way trade ensues.

Hypo 2 sellers gap-and-go lower, taking out overnight low 6154 and trading down to 6100 before two way trade ensues.

Hypo 3 stronger buyers trade up to 6300 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

My bullishness these last 5-or-6 weeks looks foolish in hindsight.  I realize that as well as you do.  There is not much I could have done to avoid this drawdown.  I could have given the failed auction at the beginning of October more weight.  There’s that.  At the risk of looking like a broken clock [not caring so much what I look like] I am once again writing a bullish Sunday blog entry.  I am bullish heading into 2019.

I do not acknowledge that we are in a bear market.  The way people numerically assign this market as being a bear or some other market as being a bull is just another social construct that only exists inside the human brain.  Quite frankly, I think humans are the most out of touch mammals on the planet.  They do not spend enough intimate time with plants or mushrooms.  If they lived in closer proximity to both, and stopped being flesh-eating maniacs, then maybe I would assign more value to their collective thoughts.

We have a long way to go.  The NASDAQ is about 18% lower than its October 1st close.  One of the positions I initiated at the beginning of October [$ALGN] is about -50% over the last three months.  It’s as much a loss of time as it is U.S. fiat dollars on a computer screen.  Other names have been resilient, real resilient.

Like Tesla, all these flat earthers have been mother fucking wrong about that one, ammirite? I’m sorry for swearing. Listen, Larry Ellison joined the Tesla board or directors last week.  Larry, the evil billionaire from Oracle.  If you work in the finance department of any major company, you know what Oracle is like—you cannot escape Oracle.  Oracle makes it all work and you pay your tithing to Larry Ellison whether or not you want to.  The fate of all corporate souls lies in the hands of Larry muh fuckin’ Ellison.  That sort of genius is now a personal guide to Tesla.  I’d imagine they are no longer paying tithing to Oracle either.  Have fun betting against that.

It’s not too late.  To buy Tesla or solar or CRISPR or whatever public stock has a mission you believe in down to your plums.  Truthfully, a lack of faith in your investments will result in you losing lots-and-lots of money.  Will Google’s ideals persevere over the next ten years?  Will Fords?  Two totally different scenarios.  Each able to invoke an emotional response.  Avoid that.  Emotions and investing don’t mix.

There’s still bitcoin.  I had far less bitcoin conversations this holiday, but the few I did have were significantly more meaningful than hearing the regurgitated media talking points 100 times last year.  I still like bitcoin, and since I have no idea what all this forking business is about, I like having some exposure to the other bitcoins too, CASH, GOLD, and SV.

To me, I see little difference between the current market structure and the structure we’ve seen at the beginning of any other ‘v-shape’ recovery since this bull market began got its legs back in ’16.  Fractals of fractals, magnitudes are different, measurements are different, shapes are the same.

There is a key piece of context I will be watching into 2019, it’s the PHLX semiconductor index.  Semiconductors have been the primary driver of our recent growth.  If you recall, our big theme heading into 2018 was Moore’s Law, exponential growth, the rise of AI, and the ushering in of the roaring ’20s, a period of economic prosperity the likes of which no living human has ever seen.  After seeing the behavior of our new Federal Reserve Chairman, Jay Powell, I will only add that this exponential growth theory that economic prosperity will be concentrated among less people than I initially realized.  The wealth gap will widen, super wealth will be enjoyed by a select few.

If you have any ideas for pushing yourself over to the right side of the wealth gap before hyper-growth really takes hold, I suggest you put your head down and execute those ideas with an intense urgency.  Otherwise prepare to be left in a massive pool of poverty while others are gilding their staircases with gold and lining their purses with blocked-chain.

You can lose your temper because forces beyond your control are affecting reality in a way you don’t like, or you can remove yourself from the observation, open you third eye, and take a bite out of the pie for yourself and your people before it’s too late.

Ideals are fine unless they hinder your ability to create and execute a solid plan.

Finally, you have no idea how much it means to me that you invest your time into reading my blog,  that you invest your time and money into my research, and how must all your interactions my content help me.  I am so grateful for the community of investors and traders I have to opportunity to interact with both locally in Detroit and online.  I truly believe we can rise up together.  There is plenty of opportunity and no reason for us to wish ill upon each other.  I am not always the best at communicating how you guys help me become a better trader, investor, business man, and human, but you do!  Thank you for all you do.

Here’s to another year of approaching the markets with a steady hand and calm mind, explicitly for the reason of extracting U.S. dollars from the global financial complex.

saluti

RAUL SANTOS, December 30th, 2018

Exodus members, I know the fourth quarter has been a grind.  The 215th edition of Strategy Session is live, check out exactly what I am looking at on the PHLX semiconductor index, and be sure to read through all of Section III and let me know if you have any questions, thank you!