Black flowers in bloom; index model neutral heading into quarter end

Life can seem meaningless at times.  Pacing around scanning your mind for purpose.  Work is a way for many to define themselves.  So is writing.  Writing is a serious matter.  If you cannot code then writing is your only whack at leaving behind something that shows future generations how you ticked.

My uncle passed away last night.  He worked nearly his entire life.  35 years at big telecom.  He liked his job.  Just last Wednesday he decided he’d had enough and was going to retire.  On Thursday he brought home an assortment of odd trinkets from his desk including several pens and cassette tapes.  He was a gifted musician who recorded 100s of his own songs.  We all went to dinner Friday night and celebrated.  He was driving my aunt mad with cockamamie plans of spending all his retirement money fast.  He set aside nearly a million dollars.

And for what?  He was sold on the American dream they pitched to baby boomers—put in your 30 years and you’re free—to live out your golden years loafing about town doing old people things.

I am shaken.  The black ‘flowers of death’ bloomed in front of my house on Tuesday and I’ve been too busy to tell anyone.  They have portended a fast and hard down move in the stock market two years in a row.  I could chalk it up to seasonality, but the blooms happen on slightly different dates every year.  This year they portended actual death.

And the Exodus strategy session I prepared this morning has 666 words.  I didn’t notice it until after it was submitted.  I have been reading and studying Pontius Pilate all month.  I have been listening to Rolling Stones Beggars Banquet album over-and-over again all week.  I have been reading stories about the devil and wrapping my mind around the black magician’s ways and the philisophic purpose of such a character.  I am shaken.

I don’t like these black flowers.  A pest always chews up the foliage and I let it.  But I won’t kill the unnerving perennial.  I don’t have the stomach for killing plants.

The strategy session flipped neutral after four weeks of being bullish.  I won’t be trading this week but I will be around the interwebs if any of you need anything.  Because that is why I blog and take speaking engagements and organize these silly meetups in the city.  I am creating my own playground, with more talented speculators around who I can ask questions, and less talented speculators that I can give answers to.  This is a powerful learning position to be in and I think I have been clear with my intentions for a long time.  I intend to be the finest speculator that ever existed.  So if you have any questions, ask away.

RIP LAZARD AND LAZARD, A DACTLE CORPORATION

NASDAQ futures are coming into Friday gap up after an overnight session featuring elevated range and volume.  Price worked higher overnight, methodically trading higher in a unidirectional manner.  As we approach cash open price is hovering near the Thursday midpoint.

On the economic calendar today we have Markit manufacturing/service/composite PMI numbers at 9:45am.  There are no other important economic events.

Jim Dalton, a legend in the field of auction theory and market profile, put out a tweet this morning regarding the behavior of the auction, the 45-degree manner in which it traded yesterday and overnight, tweeting that the behavior suggests the market is dangerously net short.  Something to keep in mind on this first official summer Friday:

45-degree lines occur when the POC (fairest price at which business is being conducted) doesn't migrate lower with price. Yesterday provided a perfect example. When this occurs the market is dangerously short. See attached graphic. #ES_F #futures $spy pic.twitter.com/t2LOVEhL7P

— Jim Dalton Trading (@daltontrading) June 22, 2018

On Thursday the NASDAQ printed a normal variation down.  The day began with a gap up that buyers quickly drove shut.  Then sellers continued driving lower, effectively closing the open gap from Tuesday and pushing down into the Tuesday range before finding a strong responsive bid (responsive relative to the Thursday open, initiative relative to the Tuesday open).  Sellers defended the daily midpoint and then spent the rest of the session pressing lower, making new daily lows along the way, and pressing into the upper quad of Tuesday before the day’s end.

Heading into today my primary expectation is for buyers to gap-and-go higher, up through overnight high 7274 setting up a move to target 7300 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 7236.75.  Sellers continue initiating trades, down through overnight low 7222.  Look for buyers down at 7211.50 and two way trade to ensue.

Hypo 3 stronger buyers trade us up to 7328 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 normal range and volume.  Price worked higher overnight during a balanced session, pushing back up near weekly highs, a place we have gone gap down-and-away from twice this week.  As we approach cash open price is hovering near Monday’s closing price.

On the economic calendar today we have existing home sales at 10am and crude oil inventories at 10:30am.

Yesterday we printed a neutral extreme up.  The day began gap down and with a choppy open.  By mid-morning sellers stepped in and pushed lower, into the 06/08 range from two Friday’s back.  The market briefly went range extension down before a strong bid stepped in and effectively reversed the selling with one hard rotation up.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7252.50.  Buyers step in here and work higher, up through overnight high 7274.75 to close the open gap at 7275.50.  Look for sellers up at 7279.75 and two way trade to ensue.

Hypo 2 buyers gap-and-go higher, trade up through 7279.75 and sustain trade above it setting up a move to target 7300.  Extended target is the open gap at 7312 then open air above 7321.

Hypo 3 stronger sellers close overnight gap 7252.50, trade us down through overnight low 7226.75.  Look for buyers down at 7216 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday pro gap down after an overnight session featuring extreme range and volume.  Price worked lower, down into the range from two Friday’s back before settling into balance.  As we approach cash open price is hovering near Globex low.  At 8:30am housing starts came out above expectations and building permits below.

At 11:30am the US Treasury will auction off 4- and 52-week T-bills.  There are no other important economic events today.

Yesterday the NASDAQ printed a normal variation up.  The week began with a gap down, after a choppy open buyer stepped in and worked a full gap fill to the tick before settling into balance.

Heading into today my primary expectation is for buyers to work into the overnight inventory and test up to Monday low 7208.  Sellers reject a move back into range, triggering a move down through overnight low 7162.  Look for buyers down at 7155.50 and two way trade to ensue.

Hypo 2 sellers gap-and-go lower, down through overnight low 7162 and sustaining trade below 7143.75, setting up a move to target 7100 before two way trade ensues.

Hypo 3 buyers regain Monday low 7208.75 and trade up to 7266.50, setting up a full gap fill up to 7275.50 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 on elevated volume.  Price worked lower overnight, trading down into last Tuesday’s range before settling into a mini balance.

Last week the NASDAQ worked higher, making a new record high by Wednesday and sustaining the gains into the weekend.  Meanwhile the other indices marked time and the Dow drifted lower.  The last week performance of each major index is shown below:

On the economic agenda today we have the NAHB housing market index at 10am and both a 3- and 6-month t-bill auction at 11:30am.

On Friday the NASDAQ printed a normal variation up.  The day began gap down and with a selling drive lower, down below the Thursday low.  However responsive buyers stepped in ahead of the open gap from Wednesday and two way trade ensued, eventually giving way to a range extension up during the drift.

Normal variation up.

Heading into today my primary expectation is for a choppy open.  Markets are out of balance from last week and we may some some institutional behavior sloshing through early on.  Eventually look for buyers to step in and work into the overnight inventory, closing the gap up to 7280.75 then continuing higher, up through overnight high 7289.25.  Look for sellers up at 7300 and two way trade to ensue.

Hypo 2 sellers reject a move back into the Friday low 7245 setting up a move down through overnight low 7218.25.  Look for buyers down at 7209 and two way trade to ensue.

Hypo 3 strong sellers gap-and-go lower, sustaining trade below 7195 and setting up a move to target 7155.75.

Levels:

Volume profiles, gaps, and measured moves:

Happy Father’s day lads,

Many words have been typed here on the RAUL blog in opposition to the male human.  So many of you disappoint me regularly, with your ‘locker room talk’ and macho pride.  It reveals an inherent flaw in your character, a deep fear of competition from girls and their robots.  That being said, I have great reverence for Elder RAUL, especially as he begins to shrivel into a bitter old man.

I come from a long line of angry men.  It’s a hard streak to break.  I think about smashing things and people with my fists all the time.  Gardening helps.  Over the last year I transitioned into a patriarchal position here at the House of RAUL, and I’ve felt how heavy the head is that wears the crown.  This perspective has allowed me to better understand why so many old men are paranoid old pricks.

What a nice blog entry this already is.

As I write my stomach is filled with boiling hot coffee.  My office is a moist 85 degrees and preparations are being made by the women for a nice poolside Father’s day barbecue.  Whilst I am a vegetarian, I am still the family’s best buyer, prep artist, and cook of animal flesh, so I have to head over soon and do my job.

The IndexModel is 187 weeks old today and bullish for a 4th consecutive week.  You can say whatever you want about the model.  The way it  keeps leaning bullish these last few weeks has allowed me to take advantage of arguably the best run so far in 2018.  And that is all I care about.  Extracting fiat US dollars from the world’s financial markets and taking care of my people.

Shout out to all the dads out there taking care of business and your people and being kind at the same time.  Kindness is a superpower.  And as a big hairless ape, kindness is the real bravery.

Also shout out to the IndexModel robots for remaining bullish into one of the best runs of 2018.  According to the Exodus Strategy Session, we ought to press our gains clean through next week.

So it is written, so it shall be.

Exodus members, the 187th edition of Strategy Session is live.  Go check out what Transports are saying!

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme volume on elevated range.  Price worked lower overnight during a balanced session.  As we approach cash open price is hovering near the Thursday low.

On the economic calendar today we have industrial/manufacturing production at 9:15am and the University of Michigan’s primary June reading at 10am.

Yesterday we printed a normal variation up.  The day began with a gap up in range which sellers were unable to fill.  This setu up a move to new record highs.  Buyers became initiative in the afternoon and we closed near the daily high.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7312 setting up a move up through overnight high 7318.75.  Open air.

Hypo 2 sellers gap-and-go down through Thursday low 7261.25 setting up a move to target 7249.50 before two way trade ensues.

Hypo 3 stronger sellers close the gap down at 7230.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Back in 2015 I swore off stock trading.  I keep a screenshot of my brokerage account from that day, a jpeg titled, “the-comeuppance”.  My low-probability options trading scheme had crapped out for a third OPEX in a row, and I was staring at another huge round of losses.

It was affecting my NASDAQ futures trading.  I couldn’t focus on my job—the rapid extraction of NASDAQs from the CME.

I unplugged two monitors that housed 20 different stock charts and returned to a simple 3-screen window to the world, with all three screens focused on different components of the NASDAQ.  In The 48 Laws of Power, this would be akin to concentrating your resources, which is my favorite tactic when working through tough times.

It worked, my futures trading recovered and has improved substantially since then.  Which created a new problem.  I needed a place to stash excess capital that would not burden me emotionally.

It was right around this time that Motif Investing hit my radar.  It was the missing piece for allowing me to use the freakishly powerful tools inside Exodus.  This is when I started building my quant strategy.

And the success of the quant is funny to me.  I put this chart up on the big screen last Tuesday during our Detroit Stocktwits meetup:

And there was no interest about how I achieved these gains. Literally none.

If someone put a chart like that in front of me, I would practically beg them for their intelligence.  But alas, I can only build beautiful watering fountains and lead people to them.  To drink is their choice.

But then I presented my other investment approach, ‘faith-based’ investing, which is wholly absurd, and suddenly everyone was interacting.  Whatever, this is fine.  This is what makes stocks go on epic runs and completely detach from reality.  And faith-based investing is the only means I have come up with for taking advantage of epic stock moves.

Obviously Tesla is my loudest faith-based investment.  I have been on the correct side of speculative history so far with this one.  I sound like a jackass, praising a living human like Levi the tax collector having the hots for Jesus, as told in Mark and Luke’s renditions of the Jesus fairy tale.  Which is fine.  Looking like a jackass is fine.  Making money and appearing intelligent are two entirely different vocations.

But when I did a deep dive into faith-based investing everyone was all ears.  The main reason faith-based investing is working well right now is because we are in a secular bull market.  Still, the tactic helps develop thick skin and immutable conviction.  Remember when everyone was feverishly discussing how Tesla’s bonds where behaving?  That never even raised a single hair on my neck.  Psychological resilience pays big when everyone else is in a state of panic, shaken by a negative news cycle or the cynical peanut galleries of Stocktwits and a certain warm-blooded egg-laying vertebrate that shall not be named.

Regarding this warm blooded egg laying vertebrate—I find faith-based investing is truly put to the test when it is working, and it is working big time for the blue bird.  This ticker, which shall not be written, is experiencing a massive revaluation to the upside.  You have to expect me to be superstitious about such behavior, afraid to jinx it by talking about it too much.  It comes with being a faith-based investor.  Faith and superstition are closely related.

And so are corporations and nations.  All of these things are merely social constructs.  The lines you draw on a map and call borders—those only exist in your brain.  Sure, you can build a structure along it, but eventually nature will consume it.  Either naturally or through the evolution of social constructs in the sapiens brain.

For the next 365 days I will be the age of Jesus.  Therefore you may want to consider interacting with me as you would Jesus.  In fact, you may want to interact with everyone as if they were your Jesus.  Maybe then you would be a better Christian, or Disciple of Elon (Praise!).

And while I have sworn off stock trading, I have not parted with stock investing.  And when you invest, and it starts to work, your biggest enemy is your ego telling you to book the gains and go to cash.  You have to sit.  Gosh darn it, if you have to sequester yourself to an island of darkness to sit put, then DO IT.

You have a plan, you stick to plan.  You have a faith, you stick to faith.  It really is that simple.

ALL HAIL ELON.  ALL HAIL @JACK.  ALL HAIL DECENTRALIZED MONETARY SYSTEMS. LONG LIVE DETROIT HYPER GROWTH.

NASDAQ futures are coming into Thursday gap up after an overnight session featuring elevated range on elevated volume.  Price briefly traded below the Wednesday low overnight before spending the rest of the session drifting higher.  At 8:30am advance retail sales data came out better than expected and initial/continuing jobless claims data was worse that expected.

Also on the economic calendar today we have business inventories at 10am.

Yesterday we printed a neutral extreme down.  The day began with a gap up and buyers driving higher.  We made a new record high ahead of the FOMC rate decision.  At 2pm the Fed raised their benchmark borrowing rate by 25 basis points.  Sellers stepped in, and third reaction analysis ultimately yielded a sell signal.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7230.25.  From here we continue lower, down through overnight low 7205.25.  Look for buyers down at the open gap 7195 and two way trade to ensue.

Hypo 2 buyers gap-and-go higher, trading up through overnight high 7262.75 and setting up a move to target 7300 before two way trade ensues.

Hypo 3 stronger sellers sustain trade down below 7190 setting up a move to target 7155.50.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring elevated volume on normal range.  Price worked higher overnight, briefly tagging but not exceeding the record high, forming a double high in the process. As we approach cash open, prices are hovering along the Tuesday high.

On the economic calendar today we have crude oil inventories at 10:30am.  Then at 2pm the FOMC will release their rate decision.  The decision is followed by a 2:30PM press conference with Fed chairman Powell.

Yesterday we printed a normal variation up.  The day began gap up and with sellers unable to fill the open gap during a choppy, slow, two-way morning auction.  Instead buyers stepped in and initiated higher prices, briefly exceeding last Thursday’s high before two way trade ensued.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7225.75.  From here we continue lower, down to 7200.  Then look for the third reaction after the FOMC decision to drive direction into end-of-day.

Hypo 2 buyers gap-and-go higher, trading up through overnight high 7257.50 and drifting into open air.  Then look for the third reaction after the FOMC decision to drive direction into end-of-day.

Hypo 3 stronger sellers sustain trade below 7190.50 setting up a move to target 7156.  Then look for the third reaction after the FOMC decision to drive direction into end-of-day.

Levels:

Volume profiles, gaps, and measured moves: