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Navigator Swing Strategy – 5% SPY and 5% QQQ (Call Spreads)

We are up so much so fast on our Friday positions; we are taking some profits. We cut futures and calls on the S&P 500 and NASDAQ 100 in half, from 10% back to 5% of our balance. As for the SPY or QQQ without leverage, we would wait for an intermediate Navigator sell signal and/or the sale of the other half of Friday’s positions.

A.F. Thornton

Navigator Swing Strategy – 20% Long

Price closed above the 5-EMA and triangle on a short squeeze into the close as anticipated. The best observation is that we likely have a short-term low in place. I would emphasize that it is “A” low but not likely “THE” low.

The market ran out of runway today so we landed on the 200-day line but did not conquer it. I also remind myself that short-covering is not buying.

I need to see follow-through buying by institutions to become a true believer. Even with that, the market may only recover half of the corrective decline before rolling over again.

There are many differences between this corrective decline and the garden variety pullback. We are likely to visit these levels again, though it may be on a longer cycle trough out in front of us.

As I always say, let the evidence take us where the market wants to go. Strong opinions have a way of coming back to haunt us.

A.F. Thornton

The next hurdle for the market (S&P 500 Index Futures) is t0 break the top of the triangle and close above the 5-day EMA on the day. The market is pausing to reflect on the task, as seen in the 15-minute Candle S&P 500 Futures chart above.

I know I am going a bit out on a limb, but I suggest that this first corrective phase from the January 4th peak has bottomed. Now we will see how much we can recover and whether another leg down will be necessary.

I doubt I will have anything further today—time to ride the wave.

A.F. Thornton

S&P 500 Futures (4298.50) / NASDAQ 100 Futures (13905)

We are taking the Navigator Swing Strategy to 20% invested, half in the NASDAQ 100 and a half in the S&P 500. You can use calls, ETFs, futures, or whatever works for you.

Since the buy signal is intraday, it could be negated by the close, but the context is very positive. Anyway, let’s take it a day at a time.

A.F. Thornton

The 10-Day Put/Call Ratio just climbed above 1.0 for the first time since March 2020. The ratio shows extreme fear (bullish) and raises the risk of a short-covering rally that could bring us to the bottom of this first corrective leg.

So far, the market is finding support on the Weekly Expected Move low at 4277 but resistance at the hourly mean around 4322.

I am already long some SPY calls at 4281 that I will hold for a swing trade and a couple of futures contracts at 4299 with 5 point stops. I want to accumulate the calls slowly as we might still see a flush today. Let’s see how it goes, it could be a long day.

We have breached yesterday’s regular session low, and a full retest of Monday’s low at 4212.75 on the futures appears to be underway. But the put/call ratio is over 1.0 – so watch for the flush. Given the volatility, I will be considering a couple of long calls into the flush, likely with 10 point stops. I will keep you posted.