The oracle of ignorance

“No man is wiser than Socrates. But if no man is wiser than the man who knows he is without wisdom, it seems to follow that “learned ignorance” is the only wisdom that man can have.” -Socratic Ignorance

Models are neutral for a second week.  That means there is no solid way of me forecasting which direction the stock market will trade over the next five days.  If I did have a solid way of making a forecast, I would present a confident forecast then spend the next days working that side of the market.  This is how I have become a consistently profitable trader.

That and closing overnight gaps.  The overnight gap, in-range has been so good to me.  I always think of overnight gaps, in-range like the teach a man to fish saying.  The trade keeps a roof over my head and wholesome food on my plate.

But beyond a solid five-day bias, and outside of trading overnight gaps, I really have no idea what the market intends to do.  Anyone claiming otherwise should be questioned and their reasoning put to the stoic test to see if it holds water.  If they are relying on their political wit, and they are not privy to secret (illegal) information, cast their opinion aside.  If they are relying on hearsay from someone else, thank them for their thoughts then kindly rinse their nonsense from your mental RAM.

There are few things I hold firm and using data to form a prediction is one.  I am a speculator by trade.  This is my vocation.  It is something I love, and also something I take seriously.  It is a business like any other.  It has overhead and cost-of-goods sold.  It has revenues and working capital.  It needs to be audited regularly and there needs to be a plan in place.  A plan extending beyond three years starts to enter fantasy land, but you can plan out your next three years.

In three years you can change, and improve, and achieve while still maintaining focus.

That is all I can offer you this icy Sunday morning—the option to ignorant.

Exodus members, the 178th edition of Strategy Session is live.  Go check out the one contextual piece we will be watching (for a second week) to provide simple, objective, directional bias.

NASDAQ futures are coming into Thursday gap up after an overnight session featuring elevated range and volume.  The first non-extreme globex session in several weeks.  At 8:30am initial/continuing jobless claims data came out below expectations.

There are no other important economic events today.

Yesterday we printed a neutral extreme down.  The day began gap down in-range, we filled with a hard move up early on.  Then we went range extension up before traversing down through the entire daily range and closing near the lows.

Neutral extreme down.

Heading into today my primary expectation is for a gap-and-go higher, up through Wednesday high 6663.25.  Look for sellers up at 6666 and two way trade to ensue.

Hypo 2 sellers work into overnight inventory and close gap down to 6592 setting up  a move to take out overnight low 6585.  Look for buyers down at 6578.75 and two way trade to ensue.

Hypo 3 stronger buyers sustain trade above 6666 setting up a move to target 6700.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday gap down after an overnight session featuring extreme range and volume.  Price gradually slipped lower overnight, offering little retrace, putting nearly all the overnight inventory short.  At 8:30am consumer price index data was in-line with expectations.

Also on the economic agenda today we have crude oil inventories at 10:30am and FOMC minutes at 2pm.

Keep an eye on Capitol Hill for information pertaining to Facebook and how testimony from the company’s 33 year-old CEO Mark Zuckerberg is received.

Yesterday we printed a neutral extreme up.  The day began gap up, inside Monday’s big range.  An attempt lower was made early on but responsive buyers stepped in ahead of the full gap fill.  Buyers became initiative ahead of New York lunch, working us range extension up but stalling ahead of Monday’s high.  We then went range extension down, but not by much, putting us neutral.  THEN we traversed the entire range and went range extension up AGAIN, eventually closing near session high, earning the neutral extreme designation.

There was a mini-failed auction.  The Tuesday high-of-day poked just beyond last Thursday’s high, last Thursday, April 5th.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up at 6623.75 setting up a move to take out overnight high 6627.75 before two-way trade ensues ahead of the 2pm FOMC minutes.  Use third reaction after FOMC minutes to dictate direction into end-of-day.

Hypo 2 sellers gap-and-go lower, take out overnight low 6550.25 then continue lower, down to 6524 before two-way trade ensues ahead of the 2pm FOMC minutes.  Use third reaction after FOMC minutes to dictate direction into end-of-day.

Hypo 3 stronger sellers press a gap fill down to 6495.75, look for buyers ahead of 6475.75 before two-way trade ensues ahead of the 2pm FOMC minutes.  Use third reaction after FOMC minutes to dictate direction into end-of-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, twice up through the Monday RTH high while coming into balance.  As we approach cash open, price is hovering above the Monday midpoint.

The economic calendar is light today—a 4-week T-bill auction at 11:30am and a 3-year Note auction at 1pm.

Yesterday we printed a neutral extreme down.  It looks like the only reason it was able to earn the extreme designation is because it went neutral (RE down after being RE up already) so late in the day.

Heading into today my primary expectation is for a gap-and-go higher.  Look for buyers to step in ahead of 6561.75 and work up through overnight high 6624.75.  Seller up at 6639.75 and two way trade ensues.

Hypo 2 sellers work into overnight inventory, down to 6624.75 before two way trade ensues.

Hypo 3 stronger sellers work a full gap fill down to 6496.75 then take out overnight low 6471.75 setting up a move to close the Friday gap down at 6451.50.  This could trigger a liquidation down to 6400 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Greetings fellow earth humans,

Floods comin’

And for now our job is to toil away in the financial markets and also like hard working capitalists to gather as many Federal Reserve notes as we can before the waters reach our threshold.  Said notes will be converted into safer decentralized robot dollars like ethereum, so that we can buy steel and oil on the dark net (tor) from the Winklevoss twins without paying taxes.

These basic materials should be used to build legacy structures on land as far north and at as high an altitude as our constitutions allow.  This will create a buffer between us and the inevitable migration of humans away from the equator.  It will also give us a fighting chance if bad actors ever decide to turn our very kind and helpful robots against us.

You should also develop a means of producing protein.  The most efficient use of land is a cricket farm.

If you must consume animal flesh, may I suggest goat?

Turning our attention to the markets, they are a mess.  You won’t find brazen confidence on this blog today my friend.  When I have a reason to trade, a quantitative bias, from my robots, yes, I am confident and will trade at the highest level of performance expecting to capture Federal Reserve notes.  When I have nothing to work with, I’m not too proud to admit it and just sit here, doodling and listening to yodeling Walmart boy.

I have a quant signal issued by Exodus which carries me through close-of-business Monday.  Then I am completely in the dark.  The model we use inside Sunday Strategy Session to determine our directional bias for the upcoming week is neutral.  There is nothing I can do here beyond scalp my morning NASDAQ report levels.  I cannot press any trades.  Which is fine.

TNA has been on my books since Monday, March 26th around 1pm eastern.  At about 3:58pm Monday, it will be sold.  The trade is losing right now, but there’s lots of time for it to pull and upset and win again.

And why the hell not, right?  If I just come here everyday and work, and make good decisions, time-and-time again, I am likely to win.  And I have been, and it feels good to stick to my process.  The money is a bonus.

Money is a silly concept to me.  So many people devote 80% of their existence to gathering dollars, leaving only a small window for appreciating all the other cool stuff here on earth.  Find your balance.

That is all lads, trade’em well, and may Elon Musk’s light shine upon you.

namaste

Exodus members, the 177th edition of Strategy Session is live.  Check out the one piece of context we can watch to help us gain foresight into potential market behavior going forward.

Alright so I’ve gone through this movie three times, the first two of which had me in the clutches of anxiety, and a third where I came to terms with our inevitable fate.  AI lads, our 2018 Theme of The Year, is on the verge of consciousness and we have no idea what that means.

And that is okay.  It is quite likely we will need semiconductor brain implants if our species is to continue existing.  Totally fine.  The moral question of AI is presented exceptionally well in Blade Runner 2049 if you want some extracurricular homework.  In Do You Trust This Computer you are shaken out of the innocuous world of science fiction and brought up to speed with technology currently being unleashed without much oversight by actors like Google and Cambridge Analytica.

Elon Musk used his Instagram account to tell everyone they need to watch.  Therefore I, a faithful Diciple of Elon, am passing on the word.  Watch Do You Trust This Computer before it goes behind a paywall Sunday.

LINK: http://doyoutrustthiscomputer.org/watch

Feel free to share your thoughts in the comments below.  As humans, we are all in this together.

Just wanted to drop a quick note on this busy Friday.

Since we are in the business of publicly disclosing premium Exodus signals, I will have you know today is day 9 of an oversold ‘buy’ alert.  The alert occurred on Friday, March 23rd at end-of-day.

Here is the performance of each major index since then

The phrase, “lies, damned lies, and statistics” is in play here.  An Exodus oversold signal is not confirmed until after-market-close which means you can not take action until the following trading day, which in this case was Monday, the 26th.

We had a big gap up into Monday.  I had about as good an entry as I could hope for that Monday, opting to see the morning action and step in after lunch, and just before an explosive afternoon rally.  The position was validated by the market.

That being said, my $TNA position, which is an ETF representing 3x the returns of the Russell 2000, is flat.

Because I always trade every single Exodus hybrid oversold signal exactly how the system is designed, I have to hold the trade until close-of-business next Monday.  I will be pressing this long into the weekend.

Bearish facts:  Breadth is low, currently only about 26% of stocks are up according to Exodus.  NASDAQ Transports are at range low, as are Semiconductors, NASDAQ net issues are also low, -75 (that is out of 100, so confirming the low Exodus breadth).  We are RE down on /nq_f.  Hybrid Chg % which shows an intermediate term bias, flipped bearish on Monday, April 2.

Bullish facts: NYSE TICK is trending higher into afternoon.  There is a ledge formation on nq_f that we are likely to spill over:

Utter nonsense that is affecting the market that we have no factual proof is bullish or bearish: TRADE WARS, Jerome Powell talking at 1:30pm.

That is all I have.  I have been working the long side since about 11:30am after the primary hypo nailed the short-of-the-day.

The key to any success in a process driven approach to trading, business, or life, is sticking to the plan.  The plan is to remain bullish until end-of-Monday, therefore I am.

Easy-peasy

NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume.  Price dove lower Thursday evening before finding balance long the mid-point of Wednesday’s trend up.  At 8:30am non-farm payroll data was well below expectations.  Some chop came through, it appears third reaction was up, but little has changed since before the numbers.

There is more focus on trade wars with China.

Also on the economic docket today we have Fed chair Jerome Powell giving a speech on economic conditions at 1:30pm and Consumer credit data comes out at 3pm.

Yesterday we printed a normal variation down.  The day began gap up.  Sellers pushed into the overnight inventory and were at first not able to completely close the overnight gap.  Buyers had a shot to squeeze higher and they didn’t.  This was the tell, in hindsight.  The rest of the day was choppy and balanced.

Heading into today my primary expectation is for buyers to work into the overnight inventory and trade up to 6559.  Seller reject a move back into the Thursday range here around 6659 and we go lower, down through overnight low 6485.25.  Look for buyers down at 6443 and two way trade to ensue.

Hypo 2 sellers drive lower off the open, down through overnight low 6485.25.  Look for buyers down at 6443 and two way trade to ensue.

Hypo 3 stronger buyers work a full gap fill up to 6602.50 setting up a move up through overnight high 6611.25.  Look for sellers up at 6636.75 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Thursday gap up after an overnight session featuring extreme range and volume.  Price worked higher during the evening, eventually coming into balance along last Thursday’s session high.  As we approach cash open, price is hovering along overnight high and outside of the Wednesday range.  At 8:30am initial/continuing jobless claims data came out mixed and trade balance came out worse than expected.

There are no other material economic events today.

Yesterday we printed a double distribution trend up.  The day began gap down and after a brief two-way auction could not take out the weekly lows strong buyers stepped in and closed the overnight gap.  Then a strong secondary wave of initiative buying came in after New York lunch and rallied the market into the close.

Heading into today my primary expectation is for a gap-and-go higher.  Trapped shorts are squeezed higher, up through overnight high 6654.50.  We trade up to 6700 before two way trade ensues.

Hypo 2 stronger buyers trade up to 6722.50 before two way trade.

Hypo 3 even stronger buyers trade up to 6750 before two way trade ensues.

Hypo 4 sellers work into the overnight inventory and regain the Wednesday range 6591.75.  They continue lower, down through overnight low 6581.  Look for buyers down at 6573.75 and two way trade to ensue.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Wednesday trading along the Tuesday low after an overnight session featuring extreme range and volume.  Price worked lower overnight, quickly, pressing below the Tuesday low and further into the February low before coming into balance.  At 8:15am ADP employment data came out better than expected but yielded little response.

Also on the economic docket today we have ISM manufacturing/services at 10am and crude oil inventories at 10:30am.

Yesterday we printed a normal variation up.  The day began gap up, sellers quickly closed the gap then we traversed the entire daily range, pressing up RE up.  Then we went back to the mid and chopped along before rallying back to the daily high near end-of-day.

Heading into today my primary expectation is for sellers to gap-and-go lower.  Look for sellers to reject a move back into the Tuesday range 6351.25 and take out overnight low 6306.75 setting up a liquidation down to 6231.25 before two way trade ensues.

Hypo 2 buyers work into the overnight inventory and trade up to 6400 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 6400 setting up a full gap fill up to 6469 then up through overnight high 6475.50 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves: