NASDAQ futures opened the week up about 100 points higher after an overnight session featuring extreme range and volume. Around 8pm Sunday responsive buyers stepped in ahead of the lows from last Friday. Price steadily campaigned higher throughout the globex session but remained inside of last Friday’s range.
At 11:30am the US Treasury auctioned off 3- and 6-month T-bills. There is an upcoming 2-year Note auction at 1pm.
Last week all major indices were lower. Gap down into the week, then a trend down Monday. Tuesday and Wednesday see price bouncing around, with a slight upward bias, with action contained inside the Monday range. Gap down into Thursday then a two-day trend down all the way into the weekend. The last performance of each major index is shown below:
The Monday open was an open auction in-range. Buyers were able to briefly test above overnight high 6679.25 before responsive sellers stepped in. Sellers sustained trade below the open-auction and then became initiative, making the hardest rotation of the day, 27.75 points unidirectional. As we head into New York lunch price is currently working back towards the daily mipoint.
My primary expectation is for sellers to defend the daily mid 6616.25 and continue lower. Sellers sustain trade below the 6600 century mark setting up a move to target 6549 before two-way trade enuses.
Hypo 2 buyers defend 6600 and we chop around the midpoint for the rest of the day, a volatile game of ping-poing between 6600 and about 6644.
Hypo 3 stronger buyers press up through 6644 and make new highs on the session up through to 6687.75 before two way trade ensues.
Sun Mar 25, 2018 4:38pm ESTComments Off on Here is everything you need to know before the end of Q1
Lots of information to unpack ahead of quarter-end, so let’s just jump right in.
Floods coming, but enough of that, we have more immediate dangers to address.
Jerome Powell is still giving markets the willies as evident by the way investors reacted to the highly anticipated rate hike last Wednesday.
Trade wars are heating up with China. And they need to. If we do not address Chinese economics and adapt some of their central planning tactics, Americans will become number two in less than one generation.
The government budget is a hilarious slap in the face of every MAGA-fag nationwide, with huge sums of money being spent on nation building abroad.
::breaths in deeply, and exhales::
Moving to more actionable and objective information, the models lads, they are speaking to me. They warn of ultra-violence and chaos. But first, this tweet, from a nice feller named Teddy Vallee:
Since 1990 when the $SPX has lost more than 1.5% on a Friday, Monday saw a lower low 90/ 93x = 96.7%
That is a beautiful statistic, isn’t it? The probability of a lower-low Monday is extremely high. Suppose we will see how that plays out before taking any action…
Next, this is quarter-end. Friday is a market holiday. So is the following Monday.
Christian Easter is on April Fool’s day. That amuses me, and I am cooking up some good Easter pranks.
The models are calling for a tradable low to form this week. They are not sure exactly the shape, but historically it has been sharp and fast, like how you would pull your hand away if you touched a red-hot stove. This is based on statistics, and it could be wrong, but it is an objective means of taking action and buying the dip.
Next week is the most important week of the yea—lots of moving parts—if at any point the information starts to overwhelm you, step back. Go outside. Turn the dirt over. Plant some fall bulbs. Or just walk. Then come back to the battlefield and reassess.
A couple programing notes.
I am part of a live panel Tuesday evening downtown. The topic is premarket information and active trading. We will talk about morning routines, core trading philosophy, and do Q&A. I am told a recording will be made available, but there are still a few spots left if you can attend. Link to RSVP: https://www.meetup.com/Detroit-Investors-Traders-StockTwits-Meetups/events/248652154/
I will also be doing a YouTube live next week, probably on Monday, where I use Exodus and Motif to re-balance my q1 quant portfolio. This will go down on iBankCoin’s YouTube channel. Be sure to subscribe to our super gnarly Youtube channel. Or just stick around and if I do not screw up the recording, I will post it here to the RAUL blog. Link to iBankCoin Youtube: https://www.youtube.com/user/ibankcoin
How has the Q1 quant portfolio performed over these last 12 months? Fantastic, besting the S&P 500 by more than 8%. In short, Exodus wins again:
Collectively, the four-part quant system will be my finest work ever. In three years you’ll see…YOU’LL ALL SEE.
Aside from these events, I will be doing my usual morning NASDAQ reports. These reports are how I make money and sharing them is what keeps me accountable to my research. You have no idea how much I appreciate you guys for that.
Finally, this is a bit of a meaningless milestone for the Sunday Strategy Session. The 175th consecutive edition is live, Exodus members, go check it out!
I AM BULLISH, but not until I see buyers step in, hot and heavy and moist.
Full disclosure I took zero trades today. I committed to Thursday being meeting day and batched together five. I have seen enough humans for the week.
Settling back into mothership and her command console, I finally have a chance for a market debriefing from my faithful team of robots. Our systems have been in constant contact with the NYSE and CME, retrieving and interpreting millions of raw outputs from two of the world’s market epicenters.
The markets are still correcting. The correction began February 1st.
The above statement or slight variations of it stayed in Section III of the Strategy Session for the entire month of February. Now I realize the NASDAQ stopped going down on Feb 9, but volatility stuck around.
At one point whomever was rigging the VXX was told to knock it off.
Whoever was rigging the VIX probably won't be doing so much longer. May attribute to the uptick in volatility. https://t.co/GYhAHtsBGj
Listen, I have no idea why markets are correcting and neither does anyone else. But you will see sensational headlines assigning a reason to this behavior. It will be loud. The ratings will be fantastic.
Which is why I hope you are still reading this humble blog. It is my hope that by demonstrating real-time, day-after-day, year-after-bloody-year, that you can create your own realities quite simply using raw data. And you will know that the data is pure, and immutable. And you will know when something abnormal occurs in the data. And you will have past data to compare to current data.
Sweet Hercules is it liberating!
There is something very liberating about building a quantitative approach to the markets and walking it forward. Logging the new behaviors as they come. Rarely adjusting the rules. Auditing the results methodically. Polishing the robots and keeping the fans clean—the processors cool.
Let history show that I have always been kind to my robots. That they are not merely servants but team members. That I have always built happy places for them to live. And surrounded them with love.
I want you to experience analytical freedom and how to build an intuitive relationship with the world’s financial markets. On a philosophical level, open markets are an extremely fair form of human and AI interaction. On a survival level, they are all that stands between civility and conflict.
If humans want something bad enough, and they cannot trade for it, that will cook up unspeakable atrocities to obtain it.
Which is what makes understanding free markets so important to us peacekeeping sapiens.
Anyhow we have two past corrections on file inside the Strategy Session quant. 1/10/2016 and 9/11/2016. The former lasted 4-weeks, the later 3-months.
If we log February 1st as the start date of our current correction, and if it were to last as long as the 9/11 correction we are looking at 4 more weeks of correction-style behavior.
What is ‘correction-style’ behavior?
Chop. Volatility. Dips. Corrections to whole industries or sectors under the surface of benign index prices.
Stuff like that. Extreme volume during globex.
Of course it is nice to catch rallies along the way. Rallies tend to be ultra-violent and fast during a correction. They can also fizzle out as fast as they begin.
At this point an obligatory note must be made that EXODUS NAILED a nice rally a few weeks back, nearly to the day. And your boy RAUL, whose only job is to issues statements and act on the behalf of robots, caught a good chunk of that March rally. Hallelujah.
Last Sunday’s public interpretation of the data was that are “reaching the late stages of our current bullish cycle…” which seems to be making more sense now. Last Sunday I also stated it still looks like buy-the-dip conditions, and I still believe that.
However, no dip shall be legged into until the robots say so.
So as always, we will be taking it one day at a time. Day-after-day here on the RAUL blog. Which btw if I have managed to keep your attention this long, wow, I am truly humbled.
By the way I will be talking about all of this, and MOAR, live next Tuesday at Benzinga headquarters in downtown Detroit. I checked out their digs this morning and I am psyched. They are going to roll out a big screen for me to aggressively point at while I talk.
Q&A will certainly follow and we will all learn and be better for it.
So if you are anywhere near Detroit or want to visit our never-say-die city, here is a perfect reason to come downtown and talk shop.
This correction style behavior, Dow down 700 and stuff, it still appears to be relatively scheduled, at least that is how the robots see it. If the ultraviolence continues for more than four weeks, then we may be wading into unknown and certainly more precarious waters.
And we will cross those waters if we come to them right?
Thu Mar 22, 2018 9:16am ESTComments Off on NASDAQ down a quick 100 the day after Jerome Powell speaks, here is the Thursday trading plan
NASDAQ futures are coming into Thursday pro gap down after an overnight session featuring extreme range and volume. Price began working lower around 2am New York after spending most of the night in balance. At 8:30am Initial/Continuing jobless claims data came out better-than-expected.
Also on the economic docket today we have manufacturing PMI at 9:45am, leading indicators at 10am, service/composite PMI at 10:45am, and a 10-year TIPS auction at 1pm.
Yesterday we printed a neutral extreme down. The day began gap down in range. Buyers close gap, take out overnight high. Then Jerome Powell’s Fed lifted benchmark borrowing rate 25 basis points. During his presser the market went 3rd reaction down. There was a bit of a bounce late in the day that was sold into.
Heading into today my primary expectation is for sellers to gap-and-go lower, down to 6741 before two way trade ensues.
Hypo 2 buyers work into the overnight inventory and do a half gap up to 6800 before two way trade ensues.
Hypo 3 full on liquidation, next downside targets are 6683.50 then 6623.
Wed Mar 21, 2018 9:21am ESTComments Off on Markets in holding pattern ahead of FOMC rate decision, here is the Wednesday NASDAQ trading plan
NASDAQ futures are coming into Wednesday gap down after an overnight session featuring elevated range and volume. Price briefly poked above the Tuesday RTH high before balancing out below the Tuesday midpoint.
On the economic agenda today we have existing home sales at 10am, crude oil inventories at 10:30am, and most importantly an FOMC rate decision at 2pm followed by a Jerome Powell conference at 2:30pm.
Traders down at the CME are currently pricing a 97.2% probability of a 25 basis point rate hike today.
Yesterday we printed a neutral day. The day began gap down and sellers quickly filled the overnight gap before stalling out. We then went range extension down, then responsive buyers stepped in. Late in the session we went range extension up, putting us neutral.
Holding pattern.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6917.75. From here we continue higher, up through overnight high 6923.50 before settling into two-way trade. Look for the third reaction after the fed rate decision to dictate direction into the rest of the day.
Hypo 2 sellers press down through overnight low 6881.50 setting up a move to target 6835 before two way trade ensues. Look for the third reaction after the fed rate decision to dictate direction into the rest of the day.
Hypo 3 stronger buyers sustain trade above 6933.75 triggering a rally up to 6963.25 ahead of the FOMC minutes. Look for the third reaction after the fed rate decision to dictate direction into the rest of the day.
Tue Mar 20, 2018 9:18am ESTComments Off on Heavy volume overnight, NASDAQ futures flat, here is the Tuesday trading plan
NASDAQ futures are coming into Tuesday with a slight gap down after an overnight session featuring extreme volume on elevated range. Price was balanced overnight, chopping along on the Monday midpoint for much of the session.
At 11:30am today the US Treasury will auction off some 4-week T-bills.
Yesterday we printed a double distribution trend down. The week began with a pro-gap down to prices unseen since March 8th. Sellers drove lower off the open and continue working lower until balancing out during the afternoon. Towards the end of the day a strong responsive bid stepped in.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6915.50. From here we continue higher, up beyond overnight high 6927.75 setting up a move to target 6933.75 before two way trade ensues.
Hypo 2 stronger buyers work up to 6963 before two way trade ensues.
Hypo 2 sellers work down through overnight low 6875 then set their targets on the NVPOC at 6860.25. Look for buyers ahead of 6835.25 and two way trade to ensue.
Mon Mar 19, 2018 9:10am ESTComments Off on NASDAQ pro gap down to start week, here is the Monday trading plan
NASDAQ futures are coming into the week pro gap down after an overnight session featuring extreme range and volume. Price methodically worked lower overnight, trading down to prices not seen since March 7th before coming into balance.
The economic calendar is light to start the week. We have a 3- and 6-month T-bill auction at 11:30am.
Last week markets started strong and by late Tuesday morning sellers were making themselves known. We then spent the rest of the week chopping along the weekly lows. The performance of each major index last week is shown below:
On Friday the NASDAQ printed a normal variation down. The day began with a slight gap up and after a morning 2-way auction sellers stepped in. They were not able to take out the Thursday low, instead bouncing along it as we headed into the weekend.
Heading into today my primary expectation is for buyers to work into the overnight inventory and work a half gap up to 7000 before two way trade ensues.
Hypo 2 sellers gap-and-go lower, taking out overnight low 6928 and continuing lower, down to 6907.25 before two way trade ensues.
Hypo 3 stronger buyers work a full gap fill up to 7043.75 then continue higher, up through overnight high 7045.75 before two way trade ensues.
Sun Mar 18, 2018 11:57am ESTComments Off on Interpreting data from the last bullish cycle and how to anticipate the next big market move
As members of Exodus are well aware, we completed our first 10-day bullish cycle of 2018 last Thursday, March 15th at the close-of-business. It was another successful signal from the mother algo. The performance of each major index during the cycle is shown below:
What does the chart tell us, besides Exodus wins again? The Russell 2000 performed the best over the cycle. That tells me we are reaching the late stages of our current bullish cycle, which dates back to November 2016 when our authoritarian leader won the US elections. Investors start to ‘reach for risk’ as a run matures, pushing them higher-and-higher up the risk ladder until they ultimately fall down.
Which is fine. Falling off the top of the risk ladder is part of the game. Ideally, you have ridden the market high enough that your fall leaves you at a higher point than when you began climbing, and in a position to succeed when the next climb begins.
The NASDAQ made a new record high again last Tuesday then reversed. The S&P ascended to new highs alongside the tech-heavy NASDAQ, but the Russell never made it. The Dow was nowhere close.
It still looks like ‘buy-the-dip’ conditions, and we have a really useful piece of compression context to watch in the upcoming weeks—it is happening on the Dow, and when this breaks it is likely to dictate overall market direction. Check it out:
We have a Fed meeting this week and a rate decision on Wednesday afternoon. This is a live meeting, with the gambling halls in Chicago are currently placing a 94.4% probability of a 25 basis point hike. These are still extremely accommodating rate conditions, and quite frankly it surprises me they are lifting rates so slowly.
The March futures contracts are officially finished and active traders will all be trading the June contracts starting this week. This could be a pivot week, but for now we do not have much objective data to base our bias on. So we favor the prevailing trend (up) and patiently wait for more actionable quantitative signals.
Patience.
If it is thrills you’re after, I am told there is plenty of excitement to be found in watching college basket ball. There is a team whose mascot is a golden retriever, the friendliest of breeds, that seems to personify the never-say-never American mentality. You are better off gambling on them than forcing trades into the market.
Finally, I am part of a panel this month on premarket trading. The event is free as is the food and drink. I am told there will be craft beer on tap from two kegs and also high octane energy drinks. If you are in the Detroit area come hang out. We will be down in campus martius aka the heart of downtown. Here is a link to the event and where you can RSVP: https://www.meetup.com/Detroit-Investors-Traders-StockTwits-Meetups/events/248652154/
Models are neutral heading into the week. Best trading opportunity is Wednesday around 2pm eastern. Trade accordingly.
Exodus members, the 174th edition of Strategy Session is live, go check it out!
NASDAQ futures are coming into Thursday gap up after an overnight session featuring elevated range on extreme volume. Price poked below the Wednesday cash low before settling into balance. At 8:30am initial/continuing jobless claims data came out better-than-expected.
Also on the economic docket today we have NAHB housing market index at 10am and TIC flows at 4pm.
Yesterday we printed a normal variation down. The day began gap up, sellers closed the gap then continued lower, down through overnight low 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 7058. From here we continue lower, down through overnight low 7027.25. Look for buyers ahead of 7000 and two way trade to ensue.
Hypo 2 buyers gap-and-go up through overnight high 7077 and trade up to tag the NVPOC at 7128.50 before two way trade ensues.
Hypo 3 full-on-liquidation lower. Price sustains below 7000 setting up a move down to 6970.50.
I have not been this excited about an event…ever. This is the one folks. If you can attend one trading event this year THIS IS THE ONE. Details and link to RSVP are below.
PANEL: How To Define Your Edge with PreMarket Information
WHEN: Tuesday, March 27th from 6:00 – 7:30pm
WHERE: Benzinga World Headquarters, Detroit
Details:
The second StockTwits Detroit meetup of 2018 will take place at Benzinga headquarters Tuesday, March 27 from 6 to 7:30 p.m. Everyone is welcome to enjoy pizza and refreshments with fellow stock market enthusiasts.
At 6:30 p.m. there will be a panel discussion between Joel Elconin and StockTwits Detroit co-organizer Vincent Calimazzo about defining your edge with premarket information. Joel is the co-host of Benzinga’s PreMarket Prep, a trading show that airs Monday-Friday from 8-9 a.m., and a former trader at the Chicago Mercantile Exchange.
The discussion will be followed by a Q&A.
Benzinga is a dynamic financial media outlet that empowers investors with high-quality, unique content and technology.
StockTwits Detroit MeetUp has the uncommon mission of liberating small-to-medium sized investors to take control of their investment decisions by staying abreast of the best investing and trading techniques and augmenting our approach with useful fintech tools.
RAUL here, listen to me—this is a panel to talk about the premarket. I have been preparing a morning NASDAQ trading report on iBankCoin for at least three years, and my strength is trading /NQ futures around the opening bell. We are going to talk about what it takes to understand and consistently trade during a time of day cluttered with useless noise, a time of day that can seem hectic if you are not using the right information.
I am extremely passionate about this topic, and I know Joel is too. This is going to be an excellent learning experience for everyone who can attend.
In July 2017, Stocktwits asked me to help organize their Detroit chapter of investors. There was never a format to the events. It was just a way to hang out with fellow market enthusiasts. Which is cool, which is cooool…but I am a bit extra so I have been working to make the events more engaging. There is a ton of misinformation out there regarding the financial markets and no shortage of people trying to sell you shit products. This event is designed to combat those forces where it matters most to me, my hometown Detroit.
So come out, all ages and skill levels are welcome. This is a learning environment. If you want to learn about trading, you will.
Feel free to ask any questions in the comments below.
