NASDAQ gap down into Tuesday, here is the morning trading plan

NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme range and volume.  Price worked higher overnight, briefly exceeding the Monday high before sharply reversing lower.  As we approach cash open price is hovering inside the lower quadrant on Monday’s range.

On the economic calendar today we have a 4- and 52-week T-bill auction at 11:30am followed by a 3-year note auction at 1pm.

Yesterday we printed a normal day, which is anything but normal.  They only occur about 5% of the time.  The day began with nearly a 40 point gap up which sellers quickly erased.  The selling during the first hour of trade was dynamic and created a wide range that we never exceeded for the rest of the session.  Instead we slowly worked back higher, eventually ramping up a bit off the daily midpoint near the end of the session.  It was also an inside day, with the entire daily range being contained inside of last Friday’s range.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7460.75.  From here we continue higher, up through overnight high 7486.75.  Look for sellers up at 7500 and two way trade to ensue.

Hypo 2 sellers gap-and-go lower, down through overnight low 7421.75 setting up a move to target 7400.  Look for buyers down at 7379.75 and two way trade to ensue.

Hypo 3 stronger sellers sustain trade below 7379.75 setting up a move to target 7364.

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 overnight, slowly working up near last Friday’s high before coming into balance.  As we approach cash open price continues to hover up near Monday’s high.

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

Last week began with a gap down Tuesday after US markets were closed Monday in observation of Labor Day.  A drive lower Tuesday morning discovered a responsive bid and the rest of the day was balanced.  Then Wednesday featured another gap down and drive lower, this time with more downside.  While the NASDAQ continued lower for the rest of the week the Dow Jones Industrial Average demonstrated relative strength.  The last week performance of all major indices is shown below:

On Friday the NASDAQ printed a normal variation up.  The day began with a gap down below the Thursday low.  Responsive buyers quickly worked the gap closed and continued a bit higher before finding a responsive seller.  We then spent the rest of the day in balance, slowly working lower.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7439.75.  From here we continue lower, down to 7400 before two way trade ensues.

Hypo 2 buyers gap-and-go higher, take out overnight high 7483.50 ad sustain trade above it setting up a move to target 7500 before two way trade ensues.

Hypo 3 stronger buyers trade up to 7515.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Last week the model flagged bullish and that resulted in me taking my knocks all week long.  Fortunately it was a holiday shortened week.  Also one of my favorite trade setups materialized Thursday morning which allowed me to recapture some losses.  I am going to explain that trade in a very simply way since I had a few people ask about it.

But first a quick note regarding this Sunday’s Exodus strategy session.  The model flagged neutral after a four week long streak of flagging directional bias.  It went bearish four weeks ago then bullish for the last three.  It is back to neutral.  There are no major economic releases scheduled next week, so I will only be trading my bread-and-butter top trade setup, scalping the price levels highlighted in my morning reports, and taking the ‘day after trend day’ setup up if it again materializes.  I will otherwise be sidelined.  This is how I trade when the IndexModel goes neutral.

Alright let’s go.

Last Wednesday the NASDAQ 100, which I track and trade via the E-MINI NASDAQ 100, a futures contract which trades on the CME, printed what I can best describe as a ‘double distribution trend down’.  It was not a full trend day.  A full trend day [down] prints a lower high and lower low during every 30-minute time period, all the way into the close and closes at-or-near session low.  Wednesday the market caught a bounce late in the morning, right up to the daily midpoint, but then it methodically worked lower the rest of the day.  The session did not form two distributions but it’s the closest name for what actually happened.  In short—it was a trend day but not a full blown trend day.

The trade then has to setup overnight.  After the market closed Wednesday it went into a drift but never took out that Wednesday low.  Here’s an expert from the Thursday morning trading plan:

NASDAQ futures are coming into Thursday flat after an overnight session featuring extreme range on normal volume.  Price was balanced overnight, hovering along the bottom quadrant of Wednesday’s range.  As we approach cash open price has yet to take out Wednesday’s low.

The setup was in place.  My first trade was to sell short the NASDAQ 100, via the front month futures contract (September 2018, or @NQU18) and target the Wednesday low.  Hence the primary expectation of the Thursday trading plan:

Heading into today my primary expectation is for sellers to work down through overnight low 7509.75.  Look for buyers down at 7495.75 (08/24 gap) and two way trade to ensue.

The trade netted nearly 40 points. This is a simple trade that my statistics show has a high win rate.

But my bread-and-butter trade is the overnight gap in-range.  This setup occurs when we are trading inside the prior day’s range but price has moved away from where we closed the day before.  My first trade of most days is to close this gap.  My trading career is built on closing overnight gaps.

And that’s the thing about trading.  You actually don’t need a bunch of sophisticated trades—just a few setups that you can execute well over-and-over, building size into them as you become more competent.  Bruce Lee famously says that he doesn’t fear the man who has practiced 10,000 kicks once but the one who practiced one kick 10,000 times.

Those are my two favorite trades.  They setup often, they setup when my ability to trade is its sharpest, and they are simple.  At the end of every Exodus Strategy session it says trade simple.  Simplicity is the one thing I feel most people misunderstand about trading.  Hopefully this quick blog entry has some light bulbs flickering on in your minds.

Let’s have a strong beard first full week of September.

Exodus members, the 199th edition of Strategy Session is live, check out Section IV and where we may see the market tip us off to its next directional move.

Full disclosure:

I bought TQQQ Tuesday morning and still hold the position.  I will sell the position by end-of-business Friday, September 7th.  It will likely be a losing trade. Sad trombone.

I only blog about Tesla and our fearless leader Elon (Praise to Him) when it matters.  Today (September 7th) matters.  Also TSLA is my largest position by a long stretch.  I accumulate more TSLA every quarter via the most reliable form of investing, dollar cost averaging.  And I will continue to do so until the ability to buy Tesla shares is taken from me or my death, whichever comes first.

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Habitual pot smoking is a nasty habit unbefitting of a CEO.  Elon Musk (Glory to The Leader) did not inhale the pot smoke he sucked into his mouth from a half tobacco, half cannabis cigar (blunt) that he was handed during a Joe Rogan podcast.  There is a misinformation campaign led by troll accounts on Twitter that hopes to paint Mankind’s Last Hope as an erratic drug addict.  They are liars and should be reported to Jack Dorsey as often as possible.

If a CEO desires habitual stimulation of her serotonin receptors, a regular dose of psilocybin mushrooms would be a more appropriate intoxicant.  Is marijuana consumption a bad idea for everyone?  Not really.  But a CEO in America requires a sharpness and tenacity that is lost in the fog of THC.

Which brings me to CBD drinks.  CBD is one of the other phytonutrients found in marijuana and hemp. CBD drinks are not a good idea as a business.  First of all that plant compound is listed as a schedule one controlled substance in America. AMERICA.  The real one. Not Canada.  That means interstate trafficking of CBD in America is a federal crime similar to transporting heroin or cocaine.  Seems like lots of risk for a product that has profit margins similar to regular drinks that aren’t federally illegal.

Bear in mind Jeff Sessions, the US Attorney General, is a good ‘ole boy who fully subscribed to reefer madness and the Nancy Regan ‘just say no’ campaign.  You think he’s going to sit around all day by a swimming pool with his fellow statesmen while a company like NBEV publicly breaks federal law?  Meanwhile there are several first movers already in the CBD drink space.  A cursory internet scan turns up this company in San Fransisco, for example, that will ship you a CBD-spiked lemon drink.

Another problem with CBD drinks is they don’t make the consumer feel high.  So it is like trying to sell people on eating their vegetables more than selling a hit of a drug.  Coffee gets you high.  So does Pepsi.  So does THC.  How do you make people spend money on CBD drinks instead of soda pop or coffee or whisky?

Back to Tesla.  The chief accounting officer leaving is a red flag.  Even a diehard believer in the company cannot overlook accountants leaving.  It goes back to my years of being an accountant and knowing that accountants are logical people who do not run away from their post for no good reason.  The CFO needs to address this situation ASAP.

The HR director leaving, whatever.  As long as the company can continue to combat the destructive potential of their labor force organizing into a union they will be fine.  The last thing any company needs, ever, is contempt between the people doing the work and management.  The labor force must be made to feel included in the company’s growth and compensated in a satisfactory way while working in desirable conditions.  WITHOUT A UNION FATALLY CRIPPLING PROGRESS.

I have been on the wrong side of the tape all week with my TQQQ position and with my NQ_F futures trades.  It has been a losing week.  But discipline keeps it from being a devastating week.  I’m taking my knocks, but little rules like ‘day after trend day’ have kept me from experiencing huge losses that I was fortunate to experience many years ago during development.  I am trading well even through IndexModel had me on the wrong side of the tape this week.

You have no idea how grateful that makes me.

Because this blog post went all over the place let me sum it up—Elon is the world’s best CEO and did not inhale pot, therefore he was not made to be stoned nor is he a habitual marijuana smoker.  Pot stocks are trash unless they are Canadian, and even then I have zero interest in owning pot stocks.  The accountant leaving Tesla troubles me.  And I am infinity grateful for my learned ability to stick to my trading plan even when that means losing money.

Discipline for the win.  Good luck out there.

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume.  Price was balanced overnight, holding inside the lower quadrant of Thursday’s range until non-farm payroll data came out.  This economic data drove price down below the Thursday range and as we approach cash open prices are hovering below Thursday’s low.

There are no other major economic events today.

Yesterday we printed a double distribution trend down.  The day began with a slight gap down, basically flat, and with a wide open auction.  Then initiative sellers stepped in and continued to drive price lower trading down to the 08/23 open gap before two way trade ensued.  Near the end of the session we ramped back to the daily midpoint.

Heading into today my primary expectation is for sellers to reject a move back into Thursday’s low 7407.75 setting up a move down through overnight low 7393.  Look for buyers down at 7379.50 and two way trade to ensue.

Hypo 2 stronger sellers trade us down to 7343 before two way trade ensues.

Hypo 3 buyers work up into Thursday’s low 7407.75 setting up a move to close the overnight gap 7456.50 then continue up through overnight high 7470.25 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 on normal volume.  Price was balanced overnight, hovering along the bottom quadrant of Wednesday’s range.  As we approach cash open price has yet to take out Wednesday’s low.  At 8:15am ADP employment data came out below expectations.  At 8:30am initial/continuing jobless claims data came out above expectations.

Also on the economic agenda today we have ISM non-mfg/services data and factory orders at 10am followed by crude oil inventories at 11am.

Yesterday we printed a double distribution trend down.  The day began with a gap down and drive lower, a selling drive that pressed clean through the first hour of trade.  Sellers briefly pushed the market into RE down just after the first hour.  Then we worked back to the daily midpoint, which sellers defended.  We spent the rest of the session inside the lower half of the daily range but never making new lows.

Heading into today my primary expectation is for sellers to work down through overnight low 7509.75.  Look for buyers down at 7495.75 (08/24 gap) and two way trade to ensue.

Hypo 2 stronger sellers trade us down to 7487 before two way trade ensues.

Hypo 3 buyers work up through overnight high 7544.50 and sustain trade above it, setting up a move to target 7597.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring elevated range and volume.  Price worked lower overnight, staying inside Tuesday’s range before coming into balance.  As we approach cash open price is hovering along Tuesday’s midpoint.  At 8:30am Trade Balance data came out better-than-expected.

There are no other major economic events today.  Federal Reserve’s Kashkari is giving a talk at 4pm that may be interesting but will likely not impact today’s tape.  Fed’s Bullard is speaking at 9:20am but Bullard is rarely a market mover.

Yesterday we printed a normal variation up.  The day began gap down, down to last Thursday’s low.  Sellers drove lower off the open, rejecting us away from the Thursday range.  We traded right down to the weekly lower ATR band where a strong responsive bid stepped in and drove price up through the entire daily range and briefly pushed us range extension up.  Sellers stepped in again and worked us lower, nearly taking out the morning low.  But responsive buyers showed up again and we slowly rallied for the rest of the day. closing near the daily high but not making a new high.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7640.  From here we continue higher, up through overnight high 7644.75 setting up a move to target the labor day gap at 7668.25 before two way trade ensues.

Hypo 2 sellers press down through overnight low 7595.25 settign up a move to target the open gap at 7578.75 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 7668.25 setting up a move to target 7682.50 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 early this morning after spending much of the globex session in balance.  As we approach cash open price is hovering just below last Friday’s low.

On the economic calendar today we have construction spending and ISM employment/manufacturing at 10am followed by a 4-week, 3-month, and 6-month T-bill auction 11:30am.

Last week began with a gap up and drive higher across the board.  The rally continued into Wednesday.  Then we saw divergent strength from the tech-heavy NASDAQ while the other indices retraced.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation down.  The day began with a slight gap down that buyers closed.  Buyers discovered a responsive seller ahead of the Thursday high and we spent the rest of the session slowly grinding lower—eventually going RE down late in the session before bouncing back to the midpoint end-of-day.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7672.50.  From here we continue higher, up through overnight high 7693.75.  Look for sellers up at 7700 and two way trade to ensue.

Hypo 2 stronger buyers sustain trade above 7700 setting up a move to the measured move target of 7739.50.

Hypo 3 sellers gap-and-go lower, down through overnight low 7628.50 setting up a move to target 7600 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Greetings lads,

I hope everyone is enjoying their Labor Day weekend.  The model is bullish for a third consecutive week—it is calling for upward pressure on the tape these next four trading days.  Four because US markets are closed Monday in observation of Labor day.

The model has been on a run.  It was short bias three weeks back during a down week.  Then bullish these last two weeks.  The trading over these last few weeks had a meaningful impact on my life.  Hopefully I can continue to dominate the NASDAQ arena.

I talk to plants and have been avoiding the popular conversations on Twitter like, is THE MSM trying to normalize pedophilia?  It’s not—they just know what achieves clicks—and these dying media companies live by the click.

Was Ariana Grande out of line for wearing a sexy black dress to Aretha Franklin’s funeral?  She wasn’t.  Wear whatever you want whenever you want.  Just be kind to people.  And animals and plants.

Is Tesla…never mind.  Tesla is Tesla.

There is one thing you should know for certain.  If you want to redo the hardscape around your property, hire a company.  Otherwise you will launch a campaign that will literally test every bit of your physical stamina and sanity.  You may take a year off your life—racing the clear all the sod before the rain comes.  Making hay while the sun shines.  Hammering 70 ten inch spikes into the ground.  Changing the grade with a shovel and wheeled barrow.  Laying 50lb blocks to form retaining walls.

If you do not have machinery or access to three Mexicans—real Mexicans—not some swarthy rednecks who listen to Alex Jones.  Real Mexicans, that say, “gracias senor,” when you delegate to them a task.  Real Mexicans, not trust fund hipsters who grow lettuce on rooftops.  Real Mexicans, hard working, loyal, resistant to sunburn.  Real Mexicans, with dancing horses and underground channels into Juarez.  Real Mexicans, that bring out the whole familia because we’re picking watermelons today Mexicans.  Eating grass to make it another day Mexicans.

If you do not have access to real Mexicans at the prevailing rate for undocumented workers, then hire a company.

I am on day 12 of laboring from sunrise-to-8:30am, then trading/doing computer work from 9-11am, then laboring until sundown.  I’ve caused permanent damage to certain parts of my body.  I am sure of it.  And it looks like about 8 more hard days before the project is complete.  Hire a company.  You are a good person, your inner masochist is malnourished and meek.  Mine is an 800lb gorilla.  Hire a company.

Anyways, model is bullish.  Enjoy your late-summer and let me be the first to welcome you to September.

mahalo

NASDAQ futures are coming into the Friday before USA Labor Day with a slight gap down after an overnight session featuring normal range and volume.  Price held Thursday range overnight and as we approach cash open prices are hovering near Thursday’s low.

On the economic agenda today we have Chicago purchasing manager at 9:45am followed by a final reading of July sentiment from the University of Michigan.

Yesterday we printed a neutral day.  Day started gap down and with buyers working the gap fill.  Then they continued rallying, stopping just shy of the 7700 century mark before discovering a responsive seller.  Sellers quickly traversed the entire daily range putting us into our second range extension.  The tail-end of the session was spent drifting back towards the mean.

Neutral.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7648.75.  From here we continue higher, up through overnight high 7663.25.  Look for sellers ahead of 7670 and two way trade to ensue.

Hypo 2 stronger buyers trade up through Thursday high 7697 and probe the 7700 level.  Open air, could continue to rally.

Hypo 3 sellers press down through overnight low 7635.25 setting up a move to target 7610.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves: