2022 | Archimedes Methodologies

Founder's Trading Journal

Morning Notes – 3/11/2022

Mar 11, 2022 AF Thornton 0 Comment

Good Morning:

I usually arise at about 2:30 am PST. So as I was executing my morning routine, I saw the Putin Pop hit the market at about 3:20 am PST. Initially, the S&P 500 jumped 70 points, right into our resistance wall between 4300 and 4320.
Apparently, Putin reported some positive progress in the talks with Ukraine. He is a master of deception, so it is hard to gauge the truth.
For all I know, his finance minister came to him and said, “Hey Vlad, do you feel like running a short-squeeze over in New York today?”
And that reminded me of what I have been telling you all week. It is too late to initiate shorts here without copiously managing the trade. There are too many outstanding shorts at the moment, and the indicators show that rally risk considerably exceeds decline risk.
With all the fear and negative news, you have to be betting on a nuclear event to cash in on shorts initiated from current levels. As I said a few days ago, if that is what you believe, you need to make sure you will still be around to collect.
There will be more chances to bet on lower prices ahead. Let’s wait for some higher prices.
My quant calculations can go out the window in a news-driven market like this morning, but I will give it a go on some ranges.
My best judgment, and it is somewhat speculative, is that we will open at the 4300-4320 resistance area and pin in a tight trading range. As you can see from the chart below, 4300 stands out as an obstacle to higher prices at least through weekly expiration today.

On the very optimistic side, I can calculate a gamma-adjusted volatility range of about 63 points up or down from the Open. If we open around 4300, that ranges between 4363 and 4237. But that is very optimistic.
With the top of the Weekly, Expected Move up at 4453 – there is headroom for more gains today, but it would counter the falling wedge downtrend line on the daily chart, which might still be our best range guide at the moment.
Last night (which is the most accurate picture), the options market was pricing a 52 point move from yesterday’s close at 4257.25. That would give us a range between 4205 and 4310.
So a lot depends on where the market opens. But there is considerable resistance at 4300 and 4320. The market is likely to pin there for the rest of the day.

I will mark the options pricing range from yesterday’s close on the quartile shading. Remember that we will open at the top of the range I would have projected without the Putin Pop.
The idea is that you want to take longs in the first quartile of the projected range, which is light green. Traders should take shorts in the top quartile or light red end of the spectrum.
In this kind of volatility, it is best to avoid taking positions in the middle of the range.
I will update the weekly outlook over the weekend.
Next week is the big Fed meeting.
The market is ready to rally, and it could start before the meeting, but I still believe that monthly expiration a week from today has the potential to hold the market back.
Lately, the rally starts on the Tuesday after expiration. We will have a better idea as we approach monthly expiration next Friday.
I would view most rallies at this stage to be “short-covering.” They will be subject to fast reversals.
Clarity on monetary policy and geopolitics will drive sustainable gains, but I suspect the significant positions expiring next week are Fed hedges.
I will adjust all levels and repost once I have the Opening price.
While a lot of the Putin Pop has retraced, the market will open with a True Gap, so Gap Rules apply this morning.
If the gap fills easily, it would be bearish, and sellers are likely to return on acceptance within range. If the gap is not filled at all or only filled partially, that can be a long signal for further short covering.

Have a great weekend.

A.F. Thornton

Founder's Trading Journal

Afternoon Notes – 3/10/2022

Mar 10, 2022 AF Thornton 0 Comment

Good Afternoon:

The inflation report came out today at 7.9% and within expectations. Still, it was the highest rate in 40 years. The number did not reflect recent commodity or wholesale inflation spikes. It will get worse.
A 30+ VIX is supportive of daily SPX ranges between 1.50-3.00%. However, the indexes are relatively stable in comparison to underlying components which are actually very volatile.
There was no follow-through to yesterday’s relief rally, so it appears that the market awaits the Fed meeting and announcement next week.
The S&P 500 Index stayed within predicted ranges for the day.
We were able to capture a nice trade for the day trading subscribers from the Weekly Expected Move low at 4200 and cashing it in near the close around 4262.
The WEM low held its ground all week and likely guards further downside into the close and expiration tomorrow.
Absent any other catalyst, the market is status quo, sandwiched between 4200 and 4300 for now.
I will update the numbers in the morning.

A.F. Thornton

Founder's Trading Journal Navigator™ Signals for Day Traders

Interim Update Revisited – 3/10/2022

Mar 10, 2022 AF Thornton 0 Comment

Subscribers closed out a 50 point S&P 500 Futures Trade from the red circle a few minutes ago. I posted an alert when we made the trade here. We entered my green zone and then tagged the Weekly Expected Move low.

Some other inside baseball was that I knew there were a lot of puts expiring tomorrow. Due to Vanna (time decay), the crowd needs to cash those chips in ASAP or roll them. Otherwise, profits go “poof.”

The dealers have to buy the index futures when the crowd sells puts to accommodate them. That boosts the index.

Nothing is foolproof, but it was a nice combo. And you saw it here from trade inception.

Afternoon notes will be out in a few hours. I start at 2:30 am PST and I need a break…

A.F. Thornton

Navigator™ Signals for Day Traders

Interim Alert – 3/10/2022

Mar 10, 2022 AF Thornton 0 Comment

S&P 500 Futures appear to be wedging (falling wedge) into the Weekly Expected Move low at 4200. Watch for a pivot and potential long from the green zone.

Founder's Trading Journal

Morning Notes – Key Trading Levels for 3-10-2022

Mar 10, 2022 AF Thornton 0 Comment

Founder's Trading Journal

Morning Notes – 3/10/2022

Mar 10, 2022 AF Thornton 0 Comment

Good Morning:

Day 14 – where is Fauci?
The U.S. economy is already teetering on fiscal and monetary cliffs.
The risks are now compounded by the war in Eastern Europe and record-high (even understated) inflation.
In February, the Consumer Price Index for All Urban Consumers rose 0.8 percent, seasonally adjusted, and 7.9 percent over the last 12 months. The number is in line with expectations but does not reflect the parabolic rise in food, energy, and industrial materials over the past few weeks.
The Fed has only a few choices at next week’s meeting.
The first choice is to keep monetary policy loose and risk an intractable rise of inflation and the complete loss of confidence and credibility of the central bank.
The second choice is to tighten monetary policy enough to deflate the massive bubbles in bonds, real estate, and equities.
Batten down the hatches as either choice will end in disaster for the stock market and the U.S. economy.
The piper must be paid from the Fed counterfeiting trillions of dollars to distort and obliterate free markets.
The song “Welcome to My Nightmare” keeps playing over and over in my head.

Do I cover my shorts now, or wait until next week’s Fed meeting and options expiration? Things that make you go hmmm. Dealer’s choice?
I cannot think of a comparable negative moment in my 35-year career other than 9/11.
So, I am going to cash in my shorts now and hopefully, get to put them back on at higher prices before the Fed meeting next week.
I am always reminded that Pigs get fat and hogs get slaughtered.

There is little change to key levels. Resistance remains at 4300 and 4320 (SPY 430 equivalent). Support comes in at 4146. Consider long positions with a target at 4400 should prices find acceptance above 4300.
While I would still be very careful putting on shorts here, my first target would be 4170.
With high implied volatility, it doesn’t take much to spark violent rallies. But I am still viewing rallies as “short covering” and subject to reversals until the S&P 500 index closes over 4300.
A closing over 4300 could lead to a reduction in volatility, but below 4300 I look for price action to remain fluid.
4400 remains a brick wall, should we get there. I will consider more shorts at that level.
I will publish other key levels after the Open.

A.F. Thornton

Founder's Trading Journal

Afternoon Notes – 3/9/2022

Mar 9, 2022 AF Thornton 0 Comment

Good Afternoon:

The Russia/Ukraine war rages on as the Biden Regime attempted to explain away the BioLabs that “didn’t exist” in Ukraine.
The White House recently deleted archived videos of President Obama at the BioWeapons facilities in Ukraine that the White House tried to deny existed until Victoria Nuland spilled the beans yesterday.
Meanwhile, President Clinton is resurrecting the Clinton Global Initiative. Either there must be a new grift operation ready to gear up with Ukraine aid from the U.S. Government, or Hillary must be preparing to throw her hat back in the ring for 2024. Maybe it’s both.
Clinton Cash by Peter Schweizer nailed the previous Clinton pay-for-play schemes.
“Ukraine crisis is bad, but ‘wait until you see’ flood of climate refugees,” Frozen Botox Face and Climate Czar John Kerry today as he stepped off his Lear Jet. The headlines write themselves.
Anyway, attention will now briefly revert to the inflation numbers coming out tomorrow morning. The numbers won’t include the explosion in commodities prices over the past week, but the last wholesale numbers were 10%. Either that boosts consumer prices commensurately, or earnings will shrink. You cannot have it both ways.
As predicted, the stock market produced a good relief rally ahead of the report. The market opened at 4249, the first resistance announced in today’s Morning Notes, then briefly rallied just under the second resistance at 4300 before crowning a bit into the close.
Today, commodities (including wheat and oil) took a well-deserved hiatus on some profit-taking.
It looked like the stock market action reflected some profit-taking and cautionary repositioning ahead of the CPI report.
While I saw some encouraging behavior in the S&P 500 yesterday, today, there was considerable shorting again around 4300, and it far exceeded any call buying.
I guess that on today’s gap higher, participants with a longer time horizon saw the move as an opportunity to sell/short at better prices; aggressive put buying and call selling persisted all day.
The market remains stuck in a high volatility box between 4100 and 4300.
No doubt, tomorrow’s report will be the catalyst to break the top of the range or retest the bottom.
But even with another rally day, there is a brick wall at 4400 that is unlikely to break until we get clarity from the Fed, and we pass through monthly expiration after that.
I would not be surprised to see the market pin around 4400 into monthly expiration.
Given participants’ put-heavy, negative-delta positioning, counterparties are pressuring underlying products through their hedging activities.
The market remains oversold and poised to deliver further gains if it can climb the wall of worry.
The WEM low remains strong support at 4200, and the Put/Wall at 4000 would also take the wind out of further declines.
My best judgment is that the market wants to go up the wedge before going down again. Tomorrow promises to be interesting!

A.F. Thornton

Founder's Trading Journal

Morning Notes – 3/9/2022 – Key Levels Update

Mar 9, 2022 AF Thornton 0 Comment

Founder's Trading Journal

Morning Notes – 3/9/2022

Mar 9, 2022 AF Thornton 0 Comment

Good Morning:

Yes, these genuinely are my raw notes – to answer a few emails. I keep a Word document open on my desk where I constantly jot down my thoughts and issues from my reading throughout the day. Other than running them through a spellchecker, my notes are raw.
No, I am not political, nor are these pages. I am a Libertarian and attribute equal blame for our economic and social predicament to both political parties – or the “Uniparty,” as I call them. As the old saying goes, “it takes two to Tango.”
I view the current struggle as the Globalists (most aptly represented by the World Economic Forum and Great Reset run by CEO Dr. Evil (Klaus Schwab) versus regular, hard-working people.
If I have a political viewpoint at all, my core philosophy would be “Follow the Money.” It takes the mystery out of most problems. So count me a member of the FTM party.
When the “R’s” are back in power, assuming there are elections this November, I will be an equal opportunity critic.
Anyway, I only care about politics and discuss the subject when it is impacting our trading, investing, and economic well-being. Nuclear War and my potential demise are always subjects I stay abreast of as well.
Cardinal Vigano, the former Vatican Papal Nuncio to the United States and one of the most intelligent people I know, nails the “real story” on Ukraine in an open letter. His views are not what you might expect.
BioLabs in Ukraine? The State Department has now confessed. No wonder Putin is angry. Here is the map.

And then there are the usual suspects associated with Ukraine…

So let’s get to it. The bottom line this morning is that the market is holding the rising Covid crash trendline, with the WEM low ar 4200 and the Put Wall sitting at 4000. The risk of a reflex rally far exceeds the risk of further declines here. A massive short-covering rally could be sparked at any moment.

We start this morning with Saudi Arabia, the UAE, and Brazil refusing to take Biden’s phone calls. $200 per barrel of oil is all but inevitable. Things that make you go hmmm…
Volume spiked yesterday – and it was a big candle – but mostly inside Friday’s range. In other words, in the scheme of the new normal volatility, the price did not move down like it usually would on such volume. Early signs of a pivot? Time for a reflex rally?
Consumer Staples nose-dived. Is risk back on? Or is this attributable to a temporary hit to consumer brands pulling out of Russia? Canceling an entire country can be expensive.
Overnight futures are putting in a very positive overnight candle. Sure, we are down at must-hold levels, and the WEM low is doing its job. But I can feel the rally risk in the air. Let’s see how this develops from here.
Don’t forget that after tomorrow’s inflation report and next Wednesday’s Fed Meeting and announcement, monthly options expiration follows on Friday the 18th. Previous monthly expirations have caused the most significant dips each month into the following Monday and Tuesday.
There is enough runway before the 18th if a rally got underway in the next few sessions. Otherwise, the market may ping pong down the falling wedge until monthly expiration. Then the market has room to stage a more sustained relief rally.
Let the price action guide you.
If you look carefully, the VIX started giving up on more panic during the final washout yesterday. Note the short-term out-performance by VIX.
That yield curve is flattening. Is a recession coming soon?

It’s been another crazy overnight session. We have a 100 S&P 500 point range with futures currently trading at 4240 up from the overnight low (also yesterday’s RTH low) at 4139.
Volatility will continue to be elevated as long as the S&P is under 4300.
This morning’s primary resistance lines are at 4249 and 4300. Support lines are at 4200 and 4076.
Eyes are on this morning’s European Central Bank meeting and their reaction to current events – it could be a sneak preview into next week’s Fed meeting.
From an options perspective, The considerable Open Interest at 4000 and 4300 frames the market. The market is fluid between the levels. If traders conquer 4300, there will be significant resistance above 4400.
The market is stalled below the overnight high and will open on the key, five-day line. The level is also near our first significant upside resistance level.
Overnight inventory is nearly 100% long – which could lead to an opening fade on profit-taking. While the market will gap higher from yesterday’s close, it is not a True Gap as it is still inside yesterday’s range.
My crucial line in the sand is the balance area low and yesterday’s RTH high at 4275. if [price punches through the level and there is continuation, I would be more short-term bullish. It may take a couple of attempts. tAs long as we stay below, assume the status quo.
I will update the levels and publish the RTH chart as soon as I have the opening price.

A.F. Thornton

Founder's Trading Journal

Afternoon Notes – 3-8-2022

Mar 8, 2022 AF Thornton 0 Comment

This chart shows the S&P 500 Futures - 5-minute RTH Chart . The chart shows how the price action reacted to the various key levels in the Founder's Morning notes. — This chart shows the S&P 500 Futures – 5-minute RTH Chart . The chart shows how the price action reacted to the various key levels in the Founder’s Morning notes.

Though it closed negative and on the lows, the market held its ground today and stayed within predicted ranges.
The old Balance Area low at 4275 acted as resistance to the first rally attempt, and then our preannounced 4228 acted as resistance to the second rally attempt.
Closing back on the lows was unhelpful.
Of course, closing on the long-term trendline is positive but keeps us guessing, as the market likes to do.
The market managed to stay inside our predicted ranges today, almost perfectly.
Today, the Nickel market broke after the metal doubled to $100,000 and deliveries failed.
The NASDAQ and Russell 2000 are now officially in bear markets, down over 20%.
The Biden Regime banned Russian Oil imports. Kudos for consistency. But they need to stop blaming high prices on the Ukraine Crisis.
The cost of oil had already doubled before the crisis due to executive orders hostile to fossil fuels signed in Biden’s first week in office. Biden is happy to see $7 per gallon gas to force the Green Energy boondoggle. If the Russians or Chinese take down our energy grid, I want gas power.
The Biden Regime not only caused oil prices and gasoline to double before the Ukraine crisis, but the oil price shock has threatened our national security and exacerbated the Ukraine effect.
An inflationary recession is coming soon to a theater near you.
What do you think happens to consumer spending when inflation eats into incomes? There is a reason that presidential ratings are highly correlated to gasoline prices! And all of this is happening when the Fed only just ended Q.E. and still has rates at zero.
So much for the reopening trade; travel stocks (AWAY) are plummeting on higher gasoline prices.
There have been rumors about U.S. Biolabs in Ukraine. The corporate media and administration first deflected the rumors as conspiracy and Q’Non theories.
The illustrious Victoria Nuland, the architect of all things Ukraine for the State Department and a key witness in the last Trump impeachment, admits today that the U.S. maintained multiple Biolabs in Ukraine.
The State Department is now concerned that the labs will fall into the hands of the Russians. Why? Aren’t they just making Aspirin?
Like Wuhan, the labs are black sites designed to circumvent U.S. laws and regulations. No wonder Putin is angry.
Once again, Ukraine is a George Soros operation through and through. What are these people doing?
By the way, where is Fauci? What happened to him? He hasn’t been on T.V. in days…

We need to watch Taiwan Semiconductor (TSM) as a potential China Invasion of Ukraine Barometer.

Taiwan Semiconductor (TSM), a great and profitable company producing many of our semiconductors, has lost 1/3 of its value. Does this portend China’s invasion? If the stock diverges from the semiconductor group (SOX), it may serve as a good China invasion barometer.

This is a weekly chart of the S&P 500 Index Futures revisiting this morning's chart and showing the the market closed on the trendline, so nothing has been resolved. — This is a weekly chart of the S&P 500 Index Futures revisiting this morning’s chart and showing the the market closed on the trendline, so nothing has been resolved.

Revisiting this morning’s chart, the market didn’t resolve anything today, closing on the lows again, but it held the trendline and Globex low. That is a net positive.
The reason could be, as predicted this morning, the WEM low prevented a more precipitous fall, but it also felt like a slight change to a more positive tone unfolded.
There appears to be some positive movement in resolving the Russia/Ukraine dispute. Time will tell.
Let me repeat – the risk of a rip-your-face-off rally on ANY resolution of the Russia-Ukraine conflict or supportive U.S. Government data releases is off the charts with $1 trillion in Put Option open interest. Even the intraday rally today was more extensive than we have been recently experiencing.
Be careful here. I would rather wait to establish some long positions than short at this juncture. If you do short, stops are critical.

A.F. Thornton

Archives 2022

Morning Notes – 3/11/2022

Afternoon Notes – 3/10/2022

Interim Update Revisited – 3/10/2022

Interim Alert – 3/10/2022

Morning Notes – Key Trading Levels for 3-10-2022

Morning Notes – 3/10/2022

Afternoon Notes – 3/9/2022

Morning Notes – 3/9/2022 – Key Levels Update

Morning Notes – 3/9/2022

Afternoon Notes – 3-8-2022

Subscribe!