Archives March 2022

Navigator™ Signals for Swing Traders

Adjustment – Leveraged Accounts

AF Thornton 0 Comment
S&P 500 Index Continuous Futures 5-Minute Chart - At Resistance
S&P 500 Index Continuous Futures 5-Minute Chart - At Resistance

The Founder’s Group just exited the Emini Futures for Leveraged Accounts at 4382.50 and will replace it with a 100% position in the SPY. The swap deleverages the strategy for the rest of the day, locks in short-term profits, and keeps the market strategy. We will keep stops just below the SPY halfback at 434.25.

We don’t like to hold futures overnight in these circumstances. When we have a quick 56 point gain having reached our second resistance target on the day, we take the profit but stay in the market (unleveraged) consistent with the larger picture unfolding.

The S&P 500 is right at this morning’s 2nd resistance level at 4380, the Volatility Trigger, and last week’s high. The climb has a slight wedge look to it, so we may get some selling before it can break through the resistance.

The easy gain is over. The market must now work through the resistance up to the 21-day line. But if the market manages to close above yesterday’s futures high at 4399, it would achieve both a daily pivot and a weekly pivot, closing above last week’s high at 4391.25.

Also, a break through the Volatility Trigger shifts dealer focus back to positive Gamma. Instead of making losses worse because the dealers have to sell futures, the Dealers will turn around to buying dips and selling rallies to neutralize portfolio deltas. The shift also will reduce volatility.

I would be even more encouraged if I see traders buying more call positions out on the spectrum and reducing the put positions congregating at 4000. Chairman Powell’s announcement that he will stick with a quarter-point raise at the next meeting should provide some certainty that will discourage short interest.

A.F. Thornton

Navigator™ Signals for Swing Traders

New Buy

AF Thornton 0 Comment

This morning, the Founders Group took a 50% long position at 433.25 on the SPY for Swing Trade Accounts. We used an S&P 500 Emini Futures at 4326.50 for leveraged accounts. Stops are set at 431.50 on the SPY and 4315 on the Futures.

We have Navigator Algorithm buy signals, the first of which came at 4267.50 on 2/25. As we would have been holding over the weekend in the middle of the Russia/Ukraine conflict, we waited for an entry on Monday. We took a position Monday, but we were stopped out just above break-even in yesterday’s volatility.

We now have a secondary buy signal this morning, and we will try once again. We will move our stops to break even as soon as possible.

The market is volatile and tricky and not for the faint of heart. From a psychological standpoint, the buys are among the most difficult of my career. That is why we affectionately call it the “puke point.” Stops are our saving grace.

A.F. Thornton

Founder's Trading Journal

Founder’s Morning Notes – 3/2/2022

AF Thornton 0 Comment

Good morning

  • We are now five trading days out from the 2/24 low at 4101.75. Five days is a typical retest pivot, and we are not near the low at this writing. Look for the next big move to begin soon.
  • Since the 2/24 low ostensibly and successfully retested the January low, a new, full retest is not necessary or probable. The price action likely is a consolidation to move higher.
  • With all the boxes checked for the 2/24 low to be secure, I am looking at recent price action as a normal retracement of the parabolic short-covering rally off the 2/24 low.
  • Fear indicators and short interest are so high that all we need is a match to light the shorts’ pants on fire.
  • Chairman Powell begins his congressional testimony at 10:00 am EST. Let’s see if he brought any matches.
  • Meanwhile, back in Ukraine, it is getting uglier, and so is the price of oil.
This is a chart showiing the parabolic rise in Crude Oil Futures
Crude Oil Futures - Oil Parabolic at 3-2-2022
  • Just to show that our good Lord has a sense of humor, remember this from May 2020?
This chart shows the oil price crash to $-10 per barrel in May 2020
Crude Oil Futures at -$10 per barrel in May 2020
  • Some call it the Green New Deal war. The oil price dropped so low in May 2020 it distorts my chart scaling. It takes talent to go from -$10 to $111 in less than 18-months. Our enemies are getting rich while Americans get poor.
  • Stagflation anyone? 1st Quarter GDP Forecasts continue to be revised downward to and including zero, but rising oil prices ensure more inflation. Chairman Powell’s testimony today ought to be interesting.
  • Futures are up slightly to 4311.75, but well up from overnight lows of 4280. Little changed in the options landscape overnight.
  • The volatility estimate remains in line with that of the last several days: 1.17% max open/close move. Don’t forget to mark your open and calculate from it.
  • Resistance appears at 4350, then 4380. Support shows at 4310 and 4276.
This chart shows key options levels that may influence price today.
  • Note that there is a cluster of support around 4275, including the WEM low. The support should hold. If it doesn’t, look out below.
  • Resistance is similarly strong at 4350.
These Charts show BluPrint's Co-Founder A.F. Thornton's key levels for today, 3-2-2022
A.F. Thornton's Key Trading Levels - 3-2-2022
  • Overnight trade is balanced again, and all of the price action looks like a consolidation of the recent gains before we move higher.
  • There is nothing in the overnight action to guide us for the open. Given Chairman Powell’s testimony at 10:00 AM EST, better opportunities will emerge later in the session for day traders.
  • Watch where value develops closely today. It’s been relatively unchanged for three sessions now.
  • The market continues to handle a lot of bad news well. I am surprised it is not lower. While volatile, the overall read is bullish from the 2/24 swing low.
  • The war between Russia and Ukraine is and will remain an unpredictable wild card. If it bothers you, this is a good time for an extended vacation from the markets. It bothers me and I am considering one. There will always be another train leaving the station.
  • If you want to participate, this is where you apply and hone your money management skills.

A.F. Thornton

Founder's Trading Journal

Founder’s Afternoon Notes

AF Thornton 0 Comment
S&P 500 Index Continuous Futures 15-Minute Chart - A.F. Thornton's Key Morning Levels - 3-1-2022
  • I highlighted the important levels we set up in the Morning Notes in yellow. The market sold off all day until it pivoted from the lower boundary line late in the day.
  • There was buying into the last 15 minutes like yesterday, that is a net positive.
  • Note that price almost tagged the WEM low, and the dealers defended it.
  • My inner thoughts are focused around whether I am looking for a normal swing low or a crash. If it is the former, all the boxes are checked. If it is the latter, there is more to go.
  • As I look at the CNN Fear/Greed index, fear achieved 19 today, a level associated with the usual correction troughs. Yet it went even lower – down to 5 – in the March 2020 Covid-19 crash.
This is a chart of the CNN Fear and Greed Index showing the current level at 19 which is extreme fear.
CNN Fear-Greed Index - 3-1-2022
This is the CNN Fear-Greed Chart showing elevated fear at this time.
CNN Fear-Greed Chart - 3-1-2022
  • The analysis is similar in the VIX volatility index, sometimes called the “fear” index.
  • It is high enough for normal correction lows, but is not close to the March 2020 Covid-19 crash levels.
This is a chart of the VIX volatility or fear index showing the extrem level reached in the Covid 19 crash, versus its elevated level now which happens in normal corrections.
VIX Volatility Index - Covid vs Now
  • There is no easy way to resolve what kind of low we need to squeeze the shorts again. Maybe we will scale in for some longer swing trades. The volatile price action today flat stopped us out of yesterday’s swing trade.
  • We hear from Fed Chairman Powell tomorrow. I guess that he will say that the Fed will hike at least a quarter-point, and the rest will be data-driven. We won’t find out until mid-March. But it hangs over the market.
  • 1st quarter GDP estimates are being cut all over Wall Street, and the consensus is now close to zero. Consumers have clammed up in the circumstances.
  • Anything and everything can still go wrong with the Russia-Ukraine situation.
  • So do we take signals here? Do we wait for a crash? Fear indicators exceeding current levels almost require a crash to drive them higher.
  • We are dealing with an unprecedented, global red line that Putin crossed. Likely, it will be Putin or the rest of us – and it might take a long time to find out who prevails.
  • So my dilemma is simple. Do I wait for a crash? Do I start scaling in for another short squeeze? You see the problem. It helps to share it.

Did I forget to say that I am not fond of Fourth Turnings? Tomorrow’s levels will come out in the Morning Notes.

A.F. Thornton

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