Day after trend day rules apply, here is the Thursday NASDAQ trading plan

NASDAQ futures are coming into Thursday gap down after an overnight session featuring elevated volume and normal range.  Price poked up to a new record high overnight before settling into balance in the upper quadrant of yesterday’s trend day.  As we approach cash open price is hovering near the high but down gap about 18 points.  At 8:30am personal consumption data came out in-line with expectations and at 8:30am initial/continuing jobless claims data came out in line with expectations.

There are no other economic events today.

Yesterday we printed a trend up.  The day began with a gap-and-go higher.  Buyers drove up through the open air, eventually coming into a tight balance just above 7650 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 7669.25.  From here we continue higher, up through overnight high 7674.50 before two way trade ensues.

Hypo 2 sellers press down through overnight low 7647.25.  Look for buyers down at 7631.50 and two way trade to ensue.

Hypo 3 sellers press hard, rejecting down through yesterday’s trend, trading us down to 7610 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday with a slight gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, briefly taking out the Tuesday cash high and lifting the all-time-high watermark before settling into balance.  At 8:30am GDP data came out better-than-expected.

Also on the economic agenda today we have pending home sales at 10am, crude oil inventories at 10:30am, a 2-year floating rate auction at 11:30am, and  7-year note auction at 1pm.

Yesterday the NASDAQ printed a normal variation down.  The day began with a gap up and after a brief morning auction sellers stepped in and closed the gap.  Buyers responded near the gap zone and two way trade ensued.

Heading into today my primary expectation is for sellers to wok into the overnight inventory and close the gap down to 7578.75.  Look for buyers around 7575 and two way trade to ensue.

Hypo 2 buyers gap-and-go higher, take out overnight high 7600 and continue exploring open air.

Hypo 3 stronger sellers trade down through overnight low 7567.25 setting up a move to target 7557.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measures moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring normal range on elevated volume.  Price was balanced overnight and continued working higher after Monday’s strong performance.  At 8:30am advance goods trade balance data came out below expectations.

Also on the economic agenda today we have the case-shiller home price index at 9am, consumer confidence at 10am, a 4-week t-bill auction at 11:30am, and a 5-year note auction at 1pm.

Yesterday we nearly printed a trend up.  The day began gap up.  After a brief two-way open auction buyers drove higher, trading right up to the weekly upper ATR bracket before settling into a tight range.  Price closed near session high.

Higher all day, closed near high, but not quite a trend day.  Nearly a trend day.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7568.25.  Look for buyers down at 7565.25 and two way trade to ensue.

Hypo 2 buyers continue exploring open air.  Gap-and-go higher.  We have no overhead reference points to target.

Hypo 3 stronger sellers press down though 7565.25 setting up a move to take out overnight low 7554.50.  Look for buyers up at 7534.25 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday gap up after an overnight session featuring elevated range on normal volume.  Price worked higher overnight, briefly trading above all-time highs.  As we approach cash open, price is hovering right at record highs.

On the economic calendar today we have 3- and 6-month T-bill auctions at 11:30am followed  by a 2-year note auction at 1pm.

Last week we saw all major US indices slowly trend higher.  Many days started strong then ended weak, but come Friday the markets rallied and held the gains into the weekend.  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 and drive higher.  Then buyers sustained the prices through the afternoon to close out the week near the highs.

Heading into today my primary expectation is for sellers to work into the overnight inventory and trade down to 7500.  Buyers reject a move back into the Friday range and we work higher, up through overnight high 7534.25 before two way trade ensues.

Hypo 2 buyers gap-and-go higher.  Open air.  Look for sellers at the measured move target 7565.25.

Hypo 3 sellers reclaim Friday range 7500 and sustain trade below it setting up a move to take out overnight low 7486.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Not much to say here folks.  I started prepping the strategy session then stopped to enjoy a long picnic on the island.

Came back. Pretty tired.  Finished the strategy session.  The model is bullish.

Highest spread reading since October 15th, 2017.  Well over +1.00.  This is a small sample set of the model, readings over one.  Not much we can confidently forecast from these extreme readings until we have a sample set around 50.  But, this chart shows prior spread readings equal-to or greater-than 1.00:

The month of August is coming to an end.  The full moon is behind us and the 31st lands on a Friday.  This is all very good and I am projecting bullishness onto these coincidental facts.

You can pay attention to the news.  I’ll take my cues from the perennials.

The moon rulez #1

Exodus members, the 197th strategy session is live, go check it out.  Check out those trannys.

NASDAQ futures are coming into Friday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, slowly.  As we approach cash open price is hovering right at the Thursday midpoint.

On the economic calendar today we have durable goods orders at 8:30am.

At 10am Federal Reserve chairman and private equity advocate Jerome Powell will talk economy and monetary policy.  His talk comes on the second day of the three-day Jackson Hole symposium which is hosted by the Kansas City Federal Reserve bank.  The topic of the symposium is, “Changing Market Structure and Implications for Monetary Policy”.

Yesterday we printed a neutral extreme down.  The day began gap down and with a strong drive higher.  Price very briefly went range extension up late-morning before responsive selling stepped in and erased the entire morning buy move.  After pushing neutral price worked back to the daily mean, then chopped along it before sellers stepped in late-afternoon to close us in the lower quadrant.

Neutral extreme.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7424.75.  From here we continue lower down through overnight low 7417.50.  Look for buyers down at 7400 and two way trade to ensue.

Hypo 2 buyers work up through overnight high 7450.50 setting up a move to test above Thursday high 7475.  Look for sellers up at 7481.25 and two way trade to ensue.

Hypo 3 stronger sellers trade us down to 7379.75 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Thursday with a slight gap down after an overnight session featuring normal range and volume.  Price briefly traded above the Wednesday high during the globex session before settling into balance.  At 8:30am initial/continuing jobless claims data came out better-than-expected.

Also on the economic agenda today we have manufacturing/service/composite PMI at 9:45am, new home sales at 10am, and a 5-year TIPS auction at 1pm.

Starting today the Kansas City Federal Reserve Bank will host its 2018 Annual Economic Symposium on the topic of “Changing Market Structure and Implications for Monetary Policy,” in Jackson Hole, Wyoming. Fed Chair Jerome Powell will speak on Friday, the second day of the three-day event, and other central bankers from around the globe are also expected to participate. The schedule of speakers and list of participants will be released on Thursday at 8 p.m. New York time.

Yesterday we printed a normal variation up.  The day began gap down and an opening auction quickly resolved the overnight gap.  Then initiative buyers stepped in and drove price higher.  They made an additional push higher near end-of-day but were unable to take out Tuesday’s high.

Heading into today my primary expectation is for buyers to work into the overnight inventory, closing the gap up to 7432 and continuing up through overnight high 7444.75 setting up a move to target the open gap at 7458.25.  Look for sellers up at 7461 and two way trade to ensue.

Hypo 2 stronger buyers trade us up to 7465 before two way trade ensues.

Hypo 3 sellers work down through overnight low 7416.25 setting up a move to target 7400.  Look for buyers down at 7379.75 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday with a slight gap down after an overnight session featuring elevated range and volume.  Price was balanced overnight, briefly working lower late Tuesday but not exceeding the Monday low before coming into balance.  As we approach cash open, price is hovering just below the Tuesday cash session low.

At 10am we have existing home sales data.  At 10:30am crude oil inventories then at 2pm FOMC minutes.

Also note — Jackson hole economic summit begins Thursday and features a talk from Fed Chairman and private equity advocate Jerome Powell.

Yesterday we printed a neutral extreme down.  The day began gap up and with buyers driving up-and-away from the Monday range.  Buyers stalled just below the gap left behind on 08/14 (last Tuesday) and responsive sellers stepped in.  Said sellers became initiative into the close (initiative relative to Tuesday’s open, responsive relative to Monday’s close) and we closed at session low which put us neutral and inside the bottom quadrant.

Neutral extreme.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7396.  Look for sellers up at 7400 and two-way trade to ensue ahead of the FOMC minutes.  Then watch for third reaction after the minutes to drive direction into end-of-day.

Hypo 2 sellers work down through overnight low 7352 setting up a move to target 7343.50 before settling into two way trade.  Then watch for third reaction after the minutes to drive direction into end-of-day.

Hypo 3 stronger buyers trade up through overnight high 7405.50 setting up a move to target 7429.  Then watch for third reaction after the minutes to drive direction into end-of-day.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Monday gap up after an overnight session featuring normal range and volume.  Price worked higher overnight, up beyond the Friday high and briefly into the upper quadrant of last Thursday before a responsive sell came in.  As we approach cash open, price has fallen back into the Friday range.

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

Last week markets began flat and with an early drive higher.  The Monday morning rally discovered a strong responsive seller and we began rotating lower.  The selling continued until late Wednesday morning when a strong responsive buyer reversed the auction.  The rest of the week saw the Dow and S&P work higher while the NASDAQ bearishly diverged lower, in part driven by weak earnings from Nvidia.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a normal variation up.  The day began gap down and with a wide opening auction.  Sellers then attempted a move down-and-away from the open but encountered a strong responsive bid ahead of low-of-week.  We then spent the rest of the day working higher, eventually going range extension up and closed out the week in the lower quadrant of Thursday.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7388.  From here we continue lower, down through overnight low 7385.25.  Look for buyers down at 7369.50 and two way trade to ensue.

Hypo 2 buyers press out of Friday range right off the open, setting up a move to take out overnight high 7420.75.  Look for sellers up at 7422.50 and two way trade to ensue.

Hypo 3 stronger buyers rally up to 7444 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Well well well, the model has shifted bullish.  But not china shop, busting cases full of dishes, rambunctious bullish.  Just drift.  Summer drift.

Summer has certainly rounded the bend.  Anyone who regularly watches the sunrise knows daylight hours have drastically shortened.  I find myself halfway through my AM rituals before the great power plant in the sky rears up from the horizon.

“Day by day, tomorrow and tomorrow and tomorrow, life creeps on at its petty pace.”  The passage of time.

There are cues of the insect variety also.  Cicadas and crickets by the thousands have emerged across my small patch of the American dream.  They’re chirping, and if you listen carefully you can hear what they’re saying, “Winter is coming. Chirp chirp sucka.”  The university campuses are heating back up.  Hungry minds seeking knowledge.  Good for them.

Out here on the internet, inside the machine, it’s still about kill and eat.  The same game we always play.  My heart…

Meanwhile our private equity Fed Chair Jerome Powell will be meeting with other ballers out in Jackson Hole starting Thursday to talk economics and hopefully fill their lungs with fresh mountain air.  They need to stay clear headed as they attempt to invisibly guide an economy that is working, and picking up speed.  Nobody knows how this is going to end but damn does it feel good.

The bill always comes due.

We made it though another round of earnings.  The biggest players saved the market every time it started to look a bit weak on the charts.  The thing is, a price chart cannot entirely bake in the power of economic expansion.  As long as the huge companies are showing growth (Walmart, Apple, Google) it means we are expanding.  That means up-and-coming businesses (like Tesla) can continue to succeed, and the stock market can continue to post gains.

Have you ever played Monopoly?  The game was designed to teach a lesson about capitalism.  That in the end one person controls everything and everyone else is left to be poor.  It is a fun game.  It is the power of vertical integration and economy of scale that we must inevitably face.  As far as I can tell, there is no better social simulation.  It fits the human nature best.

Greed is good.

Greed isolates the extremely successful capitalist.  Whether or not that’s seven digits in a bank account and another 100k in the safe is for you to decide.

What drives most people doesn’t make me blink.  Wealth is freedom of time and a better life for the kids.  How many sequoia trees you own?

So when these finance bros flash boats or exotic cars or mansions, good for you.  I will not be made to consider you dominant.

Let’s cross paths in a boreal forest and see who has bitch in their eyes…

But we can all work as a team.  We have no choice.  We’re all in this together.  There is no reason we should be driven by the same desires.

Models are signalling a calm drift during this final full week of August.  A beautiful month it has been.  As we round the bend, I can feel how much progress I gained on my competitors during a month filled with distractions.

Let’s harvest some rotations from the market this week and replenish the grain storage.  Winter is coming.

Exodus members, the 196th edition of Strategy Session is live, go check it out.