Archives 2021

Navigator™ Signals for Day Traders

End of Day – 6/10/2021

AF Thornton 0 Comment

Big picture, we are closer to the end of this run than the beginning. That is for sure. You can draw that 5th Wave wedge previously discussed in these pages on the daily S&P 500. That would potentially get us a move higher into the 4250ish area – that would be my bull case. The NASDAQ 100 would likely be testing its all-time highs in the circumstances.

There is simply tension between all of the sectors keeping the picture mixed. The Financials look bad today – no surprises with interest rate spreads compressing. The industrials like Caterpillar and Deere are correcting. A vote on stalled infrastructure negotiations? Health care (XLV) looks great – maybe one of the best charts I have seen in a while – but the returns may not be what we are accustomed to in tech. But tech is not fairing badly either today.

How about this; if we close above 4235 on the S&P 500, I would see a continued, yawning grind higher as we saw earlier today. If we close back inside the balance range and below that level, I will shift to “prove it to me” with the bulls.

It is late here, so I am signing off for the night, comfortable taking no position until the picture clarifies.

As of this moment, the NASDAQ 100 is not much above our exit point yesterday, and that is a bit disappointing for a “breakout.” Maybe the close will be more pleasing.

Internals have deteriorated steadily from the open, another disappointment. This morning really looked like the market could do the trick. So far, my contrarian stance was warranted, and that is a bit of a surprise too.

A.F. Thornton

Navigator™ Signals for Day Traders

Mid-Day Update – 6/10/2021

AF Thornton 0 Comment

I cannot call this one right now. We looked above and failed. That normally means a move back down to the bottom of balance – 4205. And if we cannot maintain a break out above 4232 on the unemployment and inflation figures, what will be the catalyst to take us higher? This morning was another WWSHD – at least in my view. Now, we have climbed back to the top of the range. 

So I believe it best to wait for the close. The additional MGI (market-generated information) will be helpful. If we go back into the range, or below it, with the entire world looking at the same breakout levels, it will not bode well. This does not have to happen, but be aware of it.

Add all of this to yesterday’s comments. Low VIX, low put/call ratio – no fear. Complacency plus a key level – that is the issue today.

A.F. Thornton

Founder's Trading Journal

Pre-Market Update – 6/10/2021

AF Thornton 0 Comment

Solid breakout on the S&P 500 with strong internals. 

The initial move includes some short-covering, we will see if price is accepted in this area. 

The NASDAQ 100 has broken out above its near-term high, but remains below the all-time high. If price is accepted here, the head and shoulders pattern to reverse higher is solidified. 

I am continuing to lighten on my personal positions in the rally. I want the weekend to make any further decisions.

Energy and tech are leading. That is unusual as of late. Financials are laggards thus far.

Stay tuned. 

Navigator™ Signals for Day Traders Navigator™ Signals for Swing Traders

Pre-Market Outlook – 6/10/2021

AF Thornton 0 Comment

When one is half Irish as I am, I find myself always on the lookout for Leprechauns. And just because I am paranoid does not mean that they won’t steal my gold. Leprechauns come in many forms.

At least one of them has been around trying to prevent me from launching our Founder’s Group live trading room. The trades I provide to this special group of exceptionally qualified traders are something we have been looking forward to sharing in real-time. Three solid years of work and trading went into creating our discipline, strategies, and algorithms. We continuously improve them.

We were ready to go; then tragedy struck with my father-in-law rapidly deteriorating and passing after his second China Virus shot. As a result, I will be in Greece until early July – and then back again soon after. On this beautiful (but remote) Island, Gig-speed Internet is a fond memory from the States. They will be going straight to 5g, but it still is a few months out.

I cannot broadcast with something akin to dial-up – which is the out-of-the-box service here. Even my Sprint cell phone Internet is faster than the home WiFi service here.

Truly, I am amazed at how well what I do have works. I certainly would not trade a one-minute chart, but 5-minute charts seem to do fine. For now, I will begin the new service by substituting with three daily updates – plus an end-of-day wrap. However, I need to make one more adjustment for the service to have a chance at working.

If we were live in a trading room, I would constantly be sharing my thoughts. If we did a buy or sell, the “why” would be obvious. In the current circumstances, not so much.

Yesterday, by the time the Founder’s Group had sold its NASDAQ 100 position, it took me another 15-20 minutes to write up the “why” and send it out with charts. By that time, the price had moved another 30 points against the trade. What is the point of that?

And this is not the first time that has happened. That is one reason I have not published the investment performance recently. It can render false hope if traders cannot truly achieve it.

So from here on out, I will merely publish “buy” or “sell” and the relevant instrument. I will not explain until later in the day. Most likely, you will glean where I am going by reading the updates.

You have been around long enough to know that my decisions are correct at least 80% of the time and the results have been excellent. Stops, as long as you set and monitor them, take care of the rest.

Had you been able to execute close to the signals, you would be up nearly 400% year-to-date – starting with our humble $10,000 account at the beginning of the year. $10,000 is now $40,000. Last year’s returns were close to 900%. $10,000 became $90,000.

I am also working on a text alert system if I cannot figure out a way to run Pro-Trading Room from the Island. I will likely be spending most of my time here in Kefalonia over the next year, so I will find a solution. Many, many opportunities are opening up here as I am able to span so many time zones.

Also, I will be issuing passwords to the new service, as we do not want the information to be available to the public. I will send you your unique password as soon as it becomes available.

So the market continues to favor the bulls. Still, I published my very short-term concerns yesterday regarding the unusual complacency levels here as we continue to congregate around the all-time highs.

I view this lack of fear and respect for risk in the context of the 18-month cycle as being quite mature. The treasury/stock market ratio also has a negative divergence, as do the number of stocks over their 20 and 50-day moving averages. Leadership yesterday shifted to defensive names.

Consider that the rally in treasuries might actually relate to defensive posturing rather than any vote on higher or lower interest rates.

For all of these reasons, the Founder’s Group went back to cash yesterday. We will give up some gains if a positive break-out occurs this morning, but we will gladly make the sacrifice in light of reasonable indications that the breakout could be a bull trap and fail.

The inflation numbers came out slightly higher than expected, and it is a historically high number for recent times regardless. So far, the S&P 500 has rocked in about a 20-point range, taking out yesterday’s low, the overnight low, and the overnight high (all within minutes after the release). 

Since we have moved below yesterday’s range, traders may want to retest that level in the regular session today. As far as balance goes, nothing has been resolved and it would be difficult to know what additional catalyst the market requires to make its ultimate, directional move. We will, therefore, learn a lot in today’s time frame.

Today’s Strategy

Today is the reverse of yesterday. Look for a possible test of the overnight low, and treat it is a go/no go situation. I would treat the top of the range similarly – if we get there. Any acceptance below the overnight low would be negative and my line in the sand for the day. If the overnight low holds, the scenario remains tipped to the bulls.

Good luck today.

A.F. Thornton

Founder's Trading Journal

Late Day Update and Sell Signal – Charts Added

AF Thornton 0 Comment
Put/Call Ratio Over S&P 500 Index - Arrows Mark Ratio in Similar Position
VIX Volatility (Fear) Index Over S&P 500 Index - Lowest Level Since Pandemic Lows

The Founder’s Group just closed its position in the NASDAQ 100 at 13870.50. My concern is the extreme complacency developed in the past 24 hours – most notably reflected in the put/call ratio. It is at the lowest end of its year-long Pandemic range. 

Typically, the indicator is not as good at picking tops as picking troughs. Still, the current level is exceptionally low today, indicating a disturbing sense of security in all that we see. Every time the ratio hit these levels in the past year, the market topped – at least short term. If a double top does develop, it will seem obvious (in 20/20 hindsight).

Also, we got out as the afternoon drive rolled over at a lower peak than this morning. Sell in the morning / buy in the afternoon is fine. Sell in the morning, sell in the afternoon is not so fine.

Tomorrow, we get the inflation numbers. While there is likely to be no surprise, it may nevertheless be a catalyst for what happens next. I am acting out of a superabundance of caution in making this decision this afternoon. The risk here warrants a more vigilant,  protective strategy.  Also worth noting is the VIX volatility (fear) index hit its lowest level in a year yesterday at 15.15. While the crowd is not giddy, they may well be asleep at the wheel. With the SKEW at record levels as well, tail risk is as high as its been recently.

This decision does not negate any of my previous comments. Likely, the market will break out here. But we had a nice profit in our NASDAQ 100 position, and I can always re-enter.

Sometimes, the return of our capital can be just as significant as the return on our money. Tomorrow may be one of those moments. Again, the odds still favor the break higher. Nevertheless, I am always willing to look dumb as long as I lock in a profit.

Another possibility is that the inflation reports drive a rally that the professionals use to liquidate their positions. Keep that in mind as well – kind of the bull trap I have been mentioning. 

Tomorrow promises to be exciting – assuming we are on the right side of it.

A.F. Thornton

Founder's Trading Journal

Mid-Day Update – 6/9/2021

AF Thornton 0 Comment

Yawn. Sorry to say it. The words are getting well-worn. More balancing action today. What will it take to break the curse? I am not sure, but it is, indeed, getting old.

Responsive trade from the Value Area Highs and Lows is all that is working today in the indexes. Once again, the value area is essentially unchanged from yesterday. Once again, the overnight action inside yesterday’s range accurately predicted more balancing. There is, however, plenty of action under the surface if you look for it.

Growth and tech still lead for now. I am surprised the NASDAQ 100 has not performed better, given that the 10-year rate tucked under the critical 1.5% level today.

We still need a catalyst. Let’s see what the afternoon drive brings. It starts in an hour or so.

Stay tuned.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 6/9/2021

AF Thornton 0 Comment

Persistence Beats Resistance?

Sometimes I think even Barnum and Baily would be jealous of the circus that goes on inside my head. We have a full moon on Thursday. Does it affect the market? Most of the time – yes. Hospital emergency rooms fill up too.

Then we roll from June into the September futures contracts on the same day. The September S&P 500 futures contract currently trades about 10 points below May. Go figure. Coincidence? Maybe. Regardless, these extraneous factors can be tricky.

The S&P 500 has been beating on the overhead resistance around 4233 or so. The all-time (intraday) high is 4238.25. There is an old saying – persistence beats resistance. There is a 75% chance the S&P 500 will break out, but the other 25% can kill you. As I said last week, it is like Grandma slapping my hand in the cookie jar every time the S&P 500 tries to soar. Yesterday was no exception, but Grandpa cannot seem to pound the market down either.

The overnight traders (remember it is daytime where they are) often love to break the market out in Globex and take away the candy from the Americans in the regular session. Thus far, they have not managed to do so, so the S&P 500 is inside yesterday’s range. I do like the sell in the morning and buy in the afternoon action the past few days. That is more bullish than bearish. Also, the value area (where 70% of the volume occurred) is unchanged for three days in a row. That is undoubtedly not bearish.

So, where does that leave our plan for the day? Ditto yesterday. We are trading inside of yesterday’s range which still reflects a balancing market. If we do break out, it is a go/no go situation. Watch internals for support or not. 

We either need the majority in on the game or the FAANGMAN+T group to carry the water for everyone else. Today, like yesterday, is a bit like a look above under balance rules. Monitor for acceptance and continuation or not, as the case may be. Yesterday’s mid-day lows (4424 on the S&P 500 futures and 13829.25 on the NASDAQ 100) are my line in the sand today. My bias is positive above those levels.

Good luck today!

A.F. Thornton

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