Archives 2021

Navigator Core Algorithm Status

In summary, the market is likely to push a bit higher this week. There is a 70% probability that the upper end of the S&P 500 Index’s projected range will be 3893. If the market does start a correction this week, the lower end of the range is projected at 3766. There are possible continuation entry points on Transportation (IYT), Energy (XLE), and Financials (XLF or KBB). Big Tech (and therefore the NASDAQ 100 (QQQ)) has reasserted relative-strength leadership. Having said all of this, the market remains a bit stretched short-term, with a peak in the nominal 40-day cycle projected soon, and the next intermediate low projected to occur mid-February.

Last Friday, we helped everyone enter the S&P 500 Index on a continuation trade. The signal came at 3825.50 on the S&P 500 E-Mini futures, and the market allowed quite a bit of time to enter. Likely, some entered either slightly above or below this zone.

The follow-through has been muted by key resistance around 3850. That is the level to conquer if we are to take the market higher this week. As I often say, the S&P 500 claims or surrenders its territory in 50-point increments. When I see the index close above 3862, my confidence increases that the index has overcome the 3850 resistance and is ready to move to the next 50-point increment level at 3900. A close below 3833 would lessen my confidence and increase the likelihood that the market would move back to test 3800.

Recently, we have been experiencing sort of a push-pull rotation with growth stocks (think technology like the NASDAQ 100 (QQQ) and value stocks (think energy (XLE), financials (XLF or KBB), and transportation (IYT)). Essentially, Growth and Value have been swapping leadership positions over the past few months. Last week’s most notable event was the reassertion of Growth (big tech leadership), also reflected in the NASDAQ 100 index’s steep rise.

The big tech bounce came at the expense of profits rotating from the value sectors. This caused the value sectors mentioned above to move back to their mean on the daily charts – which is where they start the week. Continuation entries, or even the opportunity to take a short-term long position in the three sectors, is on my radar. I would use a close above the 5-day Exponential Moving Average on the three sectors as a potential buy signal, and I will communicate anything I see.

It is also important to note that we are in the “Nimble Stage” when considering how to treat our long S&P 500 or NASDAQ 100 positions. This means you need to be attentive because a correction in the 3% to 5% range (at minimum) will begin soon, based on the distance these indices have achieved from their mean at the weekly and daily 21-day Exponential Moving Averages.

Supporting the case for a near-term correction, we are a bit more than halfway through the Nominal 40-day cycle, with the next low projected in mid-February. The market is likely to peak and begin to move into that projected low soon.

Adding to caution here, February typically is one of the weaker months in the market, and reassertion of narrow, big-tech leadership is causing breadth to narrow, along with breadth divergences, which often precede a pull-back in the indices.

If you cannot be in front of your computer, consider setting a stop each morning on your long positions about 2 points below the 5-day exponential moving average. For example, I would set my stop at 3825.50 on the S&P 500 E-Mini Futures this morning – which also coincides with breakeven on our Friday continuation entry and ensures a profit for our original entry point at 3812.50.

In summary, then, the market is likely to push a bit higher this week. There is a 70% probability that the upper end of the projected range will be 3893. If the market does start into a correction this week (and I don’t expect that quite yet), the lower end of the range is projected at 3766.

Stay alert for my signals this week. If you are interested in live trading tomorrow, please drop me a quick email at info@BluPrintTrading.com so that I make sure you get an invitation.

A.F. Thornton

Navigator Algorithms – 100% Cash

I am saving my best thoughts for a few days from now as I am still about 10-hours from home as the freeways go. I am enjoying the drive through some beautiful Southern Utah and Western Colorado country. 

I even had a chance to catch some breakfast in Rifle, Colorado, at our new Colorado Congresswoman Lauren Boebert’s “Shooters Grill.” The breakfast was excellent, and yes, the waitresses actually did wear their weapons on their hips. It makes me wonder if that is where we are all headed, a reprise of the Old West. After all, crime was lower when everyone carried.

Of course, I am musing over the Biden administration testing the troops in D.C. for their political leanings. Let’s see if I have all of this right. We have defunded the police – now they can replace this bastion of Trump voters with loyal lefties. We will remove all Republican and independent military who voted for Trump (that will be about 90% of them and quite an adjustment period). Congress is proposing new secret police to monitor domestic terrorists (otherwise known as Trump voters). The intelligence community will focus inward on “white supremacy” – no more worries about their Chinese or ISIS comrades now that they are all on the same side. Speech that opposes the Biden regime will be deemed unconstitutional “hate speech.” I could go on, but I think you get the picture. Simply put, the Biden regime will convert all of the levers of power into loyal, lefty institutions. I would laugh if it weren’t so serious.

Clearly, I am not amused as I am smart enough to see how this will be used by all sides to oppress free speech and opposition. My job is to see how we can make money from all this, but I am not sure it will matter if these trends unfold this rapidly. After all, the new motto is “sharing is caring.” So we make money, but we have to share it in the form of draconian taxes.

Meanwhile, the US enjoyed a three-day weekend. In the Global Markets, the S&P 500 futures bounced off the mean. That would certainly be a positive start to the rest of the week. If the market can continue higher, we may realize the scene where the market wraps itself around the upper megaphone channel line, winding higher like a vine around the top of a fence line. Let’s see how the market handles this bounce when everyone is back today, and I will communicate further insights.

Meanwhile, I am eyeing those “Land for Sale” signs out here in the middle of nowhere. Nowhere seems to be a good place to be, while the greatest Country that the world has known adopts an ideology that has failed everywhere it has been tried. I am not sure where the hope will be after that – though I am having “Atlas Shrugged” fantasies that another place will arise for those of us who might not enjoy providing all the bounties for the communist harvest. Texas?

Don’t get me wrong. I do hope I am misreading the tea leaves. I may not be the sharpest tool in the shed. Perhaps I am missing something? For a President that overwhelmingly won the popular vote by 80 million-plus, why the need for all the protection? Why the need to prevent Trump from running again? Didn’t they beat him handily? How could he be a future threat? I heard they beat Trump so badly that there were more votes than even people who voted. Now that is a victory like no other! I don’t get the paranoia. The Biden regime is acting like they did not win fair and square. Behavior matters more than words.

Thus far, the market is happy. As long as the market is happy, I won’t complain. I will presume I missed something. In politics as in many other things, sometimes the bark is worse than the bite. In the meantime, I am doing my 2021 forecast live at 6 pm PST Thursday. It will be recorded.

Be there. This may be the most important forecast of my career.

AF Thornton

Navigator Algorithms – 100% Cash

We are back to cash this morning as we triggered our stop yesterday at 3798.25 (5-day EMA) for a small loss from our entry at 3801.25. For the most part, the Tech Monsters continued to be punished by investors for their oligarchical attacks on the First Amendment. The S&P 500 index and the NASDAQ 100 both suffered. Meanwhile, the New World Order is preparing to grab the reins of government – and the cash printing presses are ready to roll with an additional $2 trillion stimulus proposal. If approved, the deficit will roll on up and over $30 trillion – but who is counting?

This morning, then, we get to add an element of WWSHD (when what should happen doesn’t). The $2 trillion Biden economic plan announced yesterday has done little to cushion the Big Tech blow so far. By the way, losses for Facebook and Twitter investors now well exceed $50 billion. The Class Action Plaintiff’s bar is going to have a field day with that for sure. So while we were stopped out for a small loss, we are gifted with the added pleasure of watching the Big Tech bullies get eaten alive by their leftist brethren.

I have a long drive back to Colorado this weekend. With one in three people enduring the China Virus in Los Angeles, I decided not to fly. I will be outlining my third attempt at the 2021 outlook on the way, which I hope to record Sunday night. I am even considering a live broadcast Monday evening so that I can take questions. We will see how the weekend goes.

It is only the second time in a year we have been stopped out with a small loss. But therein lies the value of stops. Both the market and sector leadership are in flux. 

The actions of the past week are unprecedented in a Democracy. More evidence surfaced yesterday that the left organized the unrest at the Capital well in advance and dressed up as Trump supporters in collaboration with CNN camera operators. But impeachment is just another day in D.C. now, so why bother to make sure it is justified. Perhaps that narrative could change slightly – that President Trump incited the left to riot – dressed up as his supporters. That way, they could blame him for last summer’s riots too. Truth is likely to become more and more elusive as time marches forward in this dystopian movie.

The market will now start focusing on earnings. Yes, it is that time again.

More on all of this soon. In the meantime, the market generated information is to stay out.

AF Thornton