Another extreme overnight session, here is the Wednesday NASDAQ trading plan

NASDAQ futures are coming into Wednesday gap up after an overnight session featuring extreme range and volume.  Price briefly took out the Tuesday RTH low overnight before spending the rest of the session working higher.  As we approach cash open price is trading below the midpoint of Tuesday’s trend down.  At 8:30am advance retail sales data came out below expectations.

Also on the economic agenda today we have business inventories at 10am and crude oil inventories at 10:30am.

Yesterday we printed a trend down.  The day began with a brief push higher which took out overnight high, establishing a more ‘quality’ higher before reversing and going trend down for the rest of the day.  Responsive buyers showed up near last Friday’s open.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7082.75.  From here we continue lower through overnight low 7042.50.  Look for buyers down at 7034.75 and two way trade to ensue.

Hypo 2 buyer continue their overnight campaign, pushing higher, up through overnight high 7121.50.  Look for sellers up at 7142.50 and two way trade to ensue.

Hypo 3 stronger buyers trade all the way up to 7182 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme volume on elevated range.  Price was balanced overnight, slowly working higher, before spiking up on the 8:30am economic data, the often immaterial consumer price index.

The other economic events today are a 4-week T-bill auction at 11:30am and a 30-year bond auction at 1pm.

Yesterday we printed a neutral day.  We came into the week gap up and after a 2-way auction sellers attempted to close the gap.  Their efforts failed ahead of last Friday’s range and we traversed the entire daily range, pushing us neutral.  Then two-way trade ensued, along the daily midpoint.

Neutral.

Heading into today my primary expectation is for a gap-and-go up, through overnight high 7202.50 to tag the measured move target at 7241.75 before two way trade ensues.

Hypo 2 sellers work into the overnight inventory and close the gap down to 7160.25 then continue lower, down through overnight low 7151.25 before two way trade ensues.

Hypo 3 stronger buyers sustain trade above 7241.75 triggering a trend up.  Open air.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into the week gap up, trading at record highs after an overnight session featuring extreme range on extreme volume.  Price slowly campaigned higher overnight before finding sellers around 7150.

Busy day down at the US Treasury today.  There are 3- and 6-month T-bill auctions at 11:30am, 3- and 10-year Note auctions at 1pm.  Then there is a monthly budget statement at 2pm.

Last week markets worked higher.  The week began with a slight gap down and we spent all week working higher.  The last week performance of each major index is shown below:

On Friday the NASDAQ printed a trend up.  The day began with a gap up.  After a brief 2-way auction price began working higher and was trend up all session.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 7123.  From here we continue lower, down through overnight low 7122.25.  Look for buyers down at 7100 and two way trade to ensue.

Hypo 2 buyers gap and go higher, up through overnight high 7177 before two way trade ensues.

Hypo 3 stronger buyers continue to campaign the market higher, look for sellers up at the measured move target of 7241.75.

Levels:

Volume profiles, gaps, and measured moves:

Classic trading axiom—being wrong is totally okay.  It is part of the business.  We are speculating on the future outcomes of things we have zero control over.  Being wrong is inevitable.

Staying wrong is not okay.

Staying wrong will eliminate you from the battle.  The battle to dominate the financial markets.

Like lets say you have a systematic trade based on a statistic.  And that system triggers.  But you are too busy riding around, gettin’ it and you miss the signal.  That is an error, which should make you feel bad, and that is fine, but if you still have the chance to act, to right your ship, do it.

DO NOT COMPOUND your folly by continuing to make errors.

Seeing people ignore their tried-and-true robots makes me sad.  God damn, the system is the system is the system.  Execution is up to you unless you automate your actual orders.

If you keep getting in your own way the market will eliminate you.  Slowly…then all at once.

Listen we all make errors.  They suck and we need to do everything we can to minimize the risk of error.  Algorithms and trading models work for me.  They are immutable.  And maybe something else will work for you.  We all have a job.  As good capitalists our job is to analyze, plan, and execute.  Over and over.

They say good trading is boring.  Maybe, unless you find gratification is following a plan.  If you do not make rules and follow them, then someone else will make rules for you.  Then they will manage you, like dog, and if you don’t perform they will either whip you or eliminate you.  Is that how you want to live?  Along the lines of someone else’s vision?

Discipline is the key to freedom.

Okay I am done.

Listen I have big plans for March, stay tuned.

As for the stocked market, I am bullish heading into OPEX.

Exodus members, the 173rd edition of Strategy Session is live.  Go check out what has me bullish for the next few days

NASDAQ futures are coming into Thursday gap up after an overnight session featuring elevated range and volume.  Price steadily campaigned higher overnight in a manner akin to 2017 when volatility was nonexistent.  As we approach cash open price is hovering near the high from February 28th, the last day of last month.  At 8:30am initial/continuing jobless claims data came out mixed.

There are no other important economic events today.

Yesterday we printed a neutral extreme up.  The day began with a gap down that buyers quickly filled.  Then we traversed the entire range and took out IB low pushing us neutral.  The next move was back to the mean, like most neutral days do.  Then buyers rallied the market into the bell.

Heading into today my primary expectation is for sellers to work into the overnight inventory and attempt a move back into the Wednesday range 6937.  Buyers defend and reject a move back into Wednesday range and we go higher, up through overnight high 6965.75.  Look for sellers up at 6976.50 and two way trade to ensue.

Hypo 2 sellers work a full gap fill down to 6923 then continue lower, down through overnight low 6913.50.  Look for buyers ahead of 6900 and two way trade to ensue.

Hypo 3 buyers gap-and-go higher, triggering a rally up to 7000 before two-way trade ensues.

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 was balanced overnight after an impulsive drop lower on the unexpected news that Gary Cohen would step down from his role as economic counsel to President Trump.  Price worked down near the Monday low before discovering a bid.  At 7am MBA mortgage applications came in worse than last week.  At 8:15am ADP employment data was better than expected.  At 8:30am Trade Balance data was below expectations.

Also on the economic docket today we have crude oil inventories at 10:30am, Fed beige book at 2pm, and consumer credit at 3pm.

Yesterday we printed a neutral day.  The day began with a gap up and slow move higher.  After briefly going range extension up sellers stepped in and close the overnight gap, taking us RE down along the way.  The rest of the day we spent chopping along the daily midpoint.

Neutral.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the overnight gap up to 6906.  Look for sellers ahead of 6922 and two way trade to ensue.  A check back to the “scene of the crime” to see if sellers truly meant business.

Hypo 2 sellers arrive ahead of 6882 setting up a move to take out overnight low 6798.25 which triggers a liquidation down to 6764.50.  Look for buyers ahead of 6740 and two way trade to ensue.

Hypo 3 stronger buyers rally up through 6920 and sustain trade above it setting up a move to target 6947.75.

Levels:

Volume profiles, gaps, and measured moves:

NASDAQ futures are coming into Tuesday gap up after an overnight session featuring elevated range and extreme volume.  Price steadily campaigned higher overnight, taking out the Monday high along the way.

On the economic calendar today we have factory/durable goods orders at 10am then a 4-week T-bill auction at 11:30am.

Yesterday we printed a double distribution trend up.  The day began with a gap down that was quickly resolved.  Then, an attempt lower was rejected when responsive buyers defended the area around last Friday’s NVPOC.  We spent the rest of the day working higher, up through overnight high and beyond, eventually testing above last Thursday’s trend down before close of business.

Heading into today my primary expectation is for sellers to work into the overnight inventory and close the gap down to 6877.  From here we continue lower, down through overnight low 6876.  Look for buyers ahead of 6850 and two way trade ensues.

Hypo 2 gap-and-go higher up through overnight high 6926.  Look for to defend the NVPOC from 2/28 (last day of February) up at 6950 and two way trade to ensue.

Hypo 3 stronger buyers take us up to 6960 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 and volume.  Price briefly worked above the Friday high before settling into balance.

On economic calendar we have ISM non-manufacturing/services data at 10am, then a 3- and 6-month T-bill auction at 11:30am.

Last week markets began strong but by Tuesday sellers stepped in.  The selling accelerated through the week before finding a strong responsive buyer late Friday.  The last week performance of each major index is shown below:

*note the relative strength of the Russell

On Friday the NASDAQ printed a double distribution trend up.  The day began with a gap down to a new low on the week.  The rest of the day was spent steadily campaigning higher.

Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 6805.50.  This sets up a move to take out overnight high 6833.  Look for sellers up at 6845 and two way trade to ensue.

Hypo 2 sellers gap and go lower, take out overnight low 6742.50.  Look for buyers ahead of 6700 and two way trade to ensue.

Hypo 3 stronger buyers trade us up to 6872.25 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves:

Sometimes interesting things happen inside a data set.  A rare quirk that makes you remember the specific rules of your system.  Today’s IndexModel reading is the exact same as the hybrid Exodus score, so the spread between the two is zero.

This has never happened.

If the IndexModel score were one one hundredth lower, it would trigger the bunker buster signal—my favorite signal—an alert of ultra-violent markets that knife lower and ultimately form a tradeable low.

But instead the model is neutral.

I have been bearish based off of extreme model signals many moons ago, back on February 4th.  I laid into Jerome Powell pretty hard last week, and I feel bad now.  He is probably a decent dude, I just saw the uncertainty he introduces to the market, and being bearish, I overly-criticized him to fit my narrative.

That being said he does look soft as pudding, and he is a new character on the scene.

Our authoritarian leader is adding to the uncertainty by meddling with huge economic levers.  I had to dust off the old macro-economics book and chart out a few tariffs as a refresher.  Overall I think it is a bad idea.  We do not like central planning in America.  It seems to work for China.  They will literally force an entire village of humans to move into apartments in some other city.  And it works.

Like some good central planning would be to force everyone in Flint to move to Detroit.  Detroit has everything they need and it is a waste of time, people living out in Flint.  There is no good reason for humans to live in Flint.

But we do not like central planning in America.  Libertarians really don’t like central planning.  I thought republicans didn’t either, but who knows anymore how those bible freaks like to get off.

With algos whispering in my ears, and global economic saber rattling, I am taking the upcoming week real slow, and while I suspect we are in the middle of a correction, I am cautiously optimistic about next week.

TBD

Exodus members, the 172nd edition of Strategy Session is live, go check it out!

NASDAQ futures are coming into Friday gap down after a session featuring extreme range and volume.  Price worked lower overnight and as we approach cash open price is hovering below the Thursday low.

On the economic docket today we have U of Michigan sentiment at 10am.

Yesterday we printed a double distribution trend down.  The day began gap up, which was quickly filled, then after some violent two-way action price gave way to selling.

Then we went into balance.  But right after lunch President Trump announced a saber-rattling steel and aluminum tarrif directly targeting the Chinese, who are enjoying the end of their annual holiday, Chinese new year.  It sent markets careening lower into the end of the day.

Heading into today my primary expectation is for sellers to press down to 6600 before two way trade ensues.

Hypo 2 buyers attempt back into Thursday low 6689 but are rejected, sending us down to 6600 before two way trade ensues.

Hypo 3 buyers regain Thursday low 6689 and work up to 6764 before two way trade ensues.

Levels:

Volume profiles, gaps, and measured moves: