Founder's Trading Journal 0 Comment Good Morning: Tounge in cheek, the Babylon Bee is reporting that Apple is waiting for permission from China to ban Twitter from the Apple store. The reporting seemed so apropo these days – I almost believed it. Futures are up slightly to 3958 from overnight lows of 3916 – a somewhat positive turn after the weekly unemployment claims came out in line with expectations this morning. 3950-3960 (SPY 395) remains the first resistance, with 4000 the next stumbling block. Bottom Line Support is at 3900. But the WEM Low is also Cushioning the Market at 3930. Our volatility estimates remain near a Somewhat benign 1% today. Traders have built up this “balance range” of positioning from 3900 -4000, which implies this zone should be sticky into Friday. We will be in the Trading Room tomorrow instead of today, as we want to take advantage of the CPI Report Release. Also, we are continuing the Room Upgrades today, allowing us to record future day sessions. So charts will not be up until late morning. For now, the balance area/channel lows near 3950 are the battle lines at hand. The dip into mid-month still seems the most likely course. And, yes, I am watching the Twitter saga, and I will have more to say about that soon. Twitter’s shift to fairness is encouraging, but the 2020 Marxist Coup/Takeover of the United States of America seems all but complete. All that remains is the Trumpification of Elon Musk if they don’t outright assassinate him. My Prayers are with Mr. Musk. A.F. Thornton
Founder's Trading Journal 0 Comment S&P 500 Index - 60-year Cycle Good Morning:Futures were quiet overnight with a slightly negative bent. Price is trading near 3925 at this writing. The key levels we are watching remain unchanged, with the one-day implied move at 0.95%.Support shows at the WEM low at 3930, then 3910 (SPY 390) – 3900, with key resistance at 3950-3960 (SPY 395). Resistance above there is at 4000.Overnight traders are testing prices below yesterday’s low, which casts a negative pale at the open, should prices find acceptance at these levels.But Dealers should also defend 3930, and prices below that number should be out of the question for the rest of the week.Woulda, coulda, shoulda, right? The WEM range has been less reliable since the MEME and DTE crowd stepped in, but we will note the projected WEM low for the record.For decades now, arbs run the market up before the first week of the last month of the calendar quarter and then short S&P 500 index products for a week or so.Add tax selling to the equation in a down year like 2022, and you can see the ensuing pattern of a dip into mid-month.This year, we have the Fed Meeting uncertainty and monthly/quarterly options and futures expiration to add to the picture.So regardless of anything else, the market will likely follow the December script it has tracked since the late 1800s and laid out in these pages last week.In my view, it simply started a few days early this year.So do we get the next bear leg – taking us to new lows?That depends on whether the longer, 60-year cycle has already bottomed.We cannot know that yet for sure. The “scheduled” bottom was October 22. But we can continue to respect the 12/1 Navigator Swing sell signal until the next buy signal paints.In the meantime, let’s follow the December pattern and patiently await Santa, who usually shows up around December 15.I will be in the trading room again tomorrow. In the meantime, the live charts are up.A.F. Thornton
Founder's Trading Journal 0 Comment Good Morning:I expect sideways to higher to continue over the next few sessions, before a roll-down into the middle or late middle of the month;Though Europe just reported another surge in inflation, the absence of exogenous stimuli Here at Home likely results in traders selling implied volatility which is a market positive.Let’s peg 4,200.00 as the current upper bound. Below this, I expect muted volatility so long as the Volatility Trigger at 3,995.00 is unbroken.Now, back to the headline. I am going to answer this question with our 2023 forecast which I plan to publish right after Christmas.The S&P 500 forecast will be available to all subscribers, but the forecast for premium subscribers also includes:US Indices: DJIA and Nasdaq (Master Cycle Forecasts)Harmonic models for 2023 and much much more…Treasury Notes and USD Dollar IndexCommodities: CRB-index, Crude Oil, Wheat, Gold & Silver, andMajor Stock Market Indices: FTSE, AEX, DAX, NSEI, SSEC, HSI, N225 & XAOThere will belots of analysis using different Gann, Hurst Cycle, and other technical analysis techniques.And yes, I will be disclosing one of my long-held secrets, a simple change I made to turn my inconsistent, mediocre trading results into seven-figure gains almost overnight.This change has never stopped working and likely never will.For swing and day-trading subscribers, I will be putting up the hourly swing chart with the Navigator buy and sell signals live in the Trading Room later today.Also, be sure to sign up for the phone app in the Trading Room to receive live swing trades. They come fast and frequently in the current volatility.A.F. Thornton
Founder's Trading Journal 0 Comment This is a multi-year composite of Dow Industrials 4th Quarter data from 1885 showing the typical December pattern. I would assign a 65% probability to this outcome. Good Morning:Well, dear, not exactly. it is a good thing we went back to cash yesterday with a nice scalp under our belt. The hourly charts continue to be THE reliable harmonic for the current tape.And the price action (pre-market) dovetails with the path forecasted in chart above, which shows the seasonal tendency for December. There is a 65% probability we peak about now and dip into mid-month. That times with the Fed rate announcement and monthly options expiration.And so, in our final data point this week, the November jobs report this morning blew out the consensus number at 200,000 new jobs, coming in at 263,000. Of course, we still have to analyze how much the Orwell Administration cooked the books, as has been their habit.Needless to say, recession hungry Miss Market is not happy! This is one of those “hot” prints feared and discussed as a risk earlier this week.As a side note, average hourly earnings were up, but not enough to keep up with inflation. And the average work week is hovering around 34 hours. Where the hell are we, Europe?Back to the market, resistance remains at a band above from 4100 – 4110 (the SPX Call Wall + the SPY 410 Call Wall). There is resistance above there at 4126.Still, mark any SPX move >4110 as overbought.Support shows at 4050-4055 (SPY 405), then 4000.Given where we are, we vote for the typical December pattern in the chart above, with must-hold support at 4000 for any bull case to remain alive. S&P 500 Index - Daily Chart Cycle Analysis There is a lot not to like about this latest rally leg. It is wide and disjointed compared to the rallies earlier this year.And we have now completed our three pushes-up in the bearish rising wedge pattern.There are lots of negative divergences in the pattern. And accumulation lacks the strength of the previous run-ups.And the volume on the explosive up day Wednesday looks like a spikey peak.On the positive side, if the foldback marked in the chart above crosses above the August 16 high, I expect the S&P 500 to move into the crest of the foldback. Measured moves may indicate a potential target price/time area but are certainly not guaranteed.Also. the accumulation indicator (lower chart) suggests that accumulation lags compared to early swings.Bullish investors could try to buy the 4000 area on this dip but keep your stop tight.Otherwise, it might be best to look for an entry in mid-December.As always, stay tuned, and have a great weekend.A.F. Thornton
Founder's Trading Journal 0 Comment Good Morning:Remember the video we put out above around the October bottom? My favorite part of the scene is the guy waving out the window at the other guy trying to get on the train that is leaving. That must be what it was like to be short yesterday. I think I will take a victory lap on this video. But dont worry, i wont let it go to my head. This business always has some humble pie to serve up when you get cocky.I will be in the Trading Room for the morning session today. I am working on a one-week free trial to those who may want to give it a try.Futures are off marginally to 4077 after a quiet overnight session.The 4100 Call Wall is now near-term resistance, with 4124 slated to provide additional resistance above.Support today shows at 4055 (SPY405) to 4050, with 4000 as key bull/bear threshold support.Back in positive Gamma territory, we now look for volatility to begin contracting sharply, implying average daily S&P 500 Cash Index moves <=1%.Still, bulls are not quite on solid ground, as the options market still shows some anxiety around the PCE/ISM reports today and Non-Farm payrolls tomorrow.This can be seen in the SPX options term structure. Right now, the shortest-dated implied volatility is above the longer-dated.The implication is that traders are worried about a “hot” print in today and tomorrow’s data, which could quickly unwind yesterday’s gains.And some event volatility premium remains around the 12/14 Fed Meeting and rate announcement.For now, there is room for the market to grind a little higher, where it will encounter the bear market down trendline while it fights to hold and conquer the 200-day line around 4075.Also, note from the chart below that the price is approaching the center of the 20-week cycle. The cycle would have peaked in the first 1/3 of the semi-circle in a more bearish environment. Like the previous 20-week cycle that brought us the October 13th low, this cycle shows early, bullish intentions. S&P 500 Index Futures Daily Candles - Navigator Algorithm - and Cycles Analysis - Prices are Rapidly Approaching the Middle of the 20-Week Cycle While Tagging The Bear Market Down Trendline and the Key 200-Day Moving Average Yesterday’s price action continues to be a stunner and an indication of the unrelenting focus required in this environment. I reprinted the hourly chart with our signals above.We came in yesterday morning with our strategies in cash and our more aggressive clients short from the 11/24 sell signal and peak. I almost wanted to take the morning off.But our algos started painting buy signals two hours before Fed Chairman Powell spoke. It paid to reverse course, though it was a difficult choice in an environment where the consensus view expected a crash after Fed Chairman Powell’s speech.As a side note, several Fed Governors are hitting the speaking circuit today, and I am already wondering whether they will try to walk back Chairman Powell’s dovish tone yesterday.For now, It has paid to manage from the hourly chart perspective in this DTE ( one-day to expiration) options environment. A reprint of yesterday’s algo buy signals (with the 11/24 sell signal) appears in the chart above. While we enjoyed the gains, let’s note for the record that days like yesterday and 11/10 (brought to us by the DTE options crowd) will also present in reverse, so don’t take your proverbial eye off the ball.Let’s see if there is enough follow-through for the market to grind a little higher from here before the cycles catch up. The algos will guide us, and we will stick to the hourly charts for swing trading until something changes.A.F. Thornton