Archives November 2023

How Much Fuel is Left in the Tank?

Good Morning:

— We remain long in the Hourly and Daily Strategies, with about half of our positions left. Sustained price action a few ticks below the five-day line is our stop. It is a judgment call when to take the stop as the price can dip below the line on a stop raid and finish above it. But always remember that pigs get fat and hogs get slaughtered.

— The market is tiring, and momentum is waning. Volume has not supported the rally. The price is on thin ice. The next turn date is Wednesday. How much higher can the market go?

— At the end of the day, Markets seek liquidity or rest. Liquidity is market fuel and transaction business for Dealers/Market Makers. They will move the market to high transaction levels to get the business, usually where most buy and sell stops gather.

— For the S&P 500, 4600 is the next filling station. We are too close to that level for Dealers to ignore it. They will try to drive prices there before a meaningful pullback. 

— Note that the NASDAQ typically leads and has already conquered the equivalent level on its chart.

— The 4600 area also challenges the bear market down trendline, connecting the 2022 top and the recent July 27th peak. (See chart above).

— I will leave it for a future discussion, but the underlying rally structure is very weak. We may need a parachute when the market does tip over. There are six unprecedented unfilled gaps and nearly as many open VPOCs.

Stay Tuned,

A.F. Thornton

Volatility is Here to Stay

Good Morning:

— If such a thing as “resistance” still exists, the S&P 500 and the NASDAQ 100 have reached the pinnacle. The S&P 500 has a little headroom left up to 4600.

— We remain long in our Daily and Hourly Strategies but have scaled down to about half a full position over the past few sessions.

— The current rally is stunning, and the volatility (the mega rips up and down) appears to be a permanent guest.

— On one hand, it reminds me of the period leading up to the 2000 top (Dot Com Bubble). You can see the choppy top in the chart of the Dow Industrials below.

— Back then, we would have a stellar month, followed by retracing most of the gain the next month, and so on.

— Recently, however, the reasons for the exaggerated moves appear less related to the economy or company earnings per se.

— Of late, these moves are technically driven. In particular, new derivatives are adding to market volatility. The derivatives market (options and futures) is rapidly approaching One Quadrillion Dollars. Yes, folks, that is One Thousand Billion dollars!

— In particular, the options market has become the proverbial tail that wags the market instead of the reverse.

— Rallies start with the usual short-covering but then move into self-reinforcing boom and doom loops due to “Gamma Squeezes” in the options market. “Gamma Squeeze” was an esoteric term back in the day.

— The introduction of daily options (so-called zero-day to expiration) over the past year has resulted in a parasitic exaggeration of the indices that never existed before.

— Due to these Gamma Squeezes, the sudden rips up and down will continue as long as daily options exist.

— This volatility can be an advantage to traders once we accept it as the permanent reality.

— Unsurprisingly, then. the darker side of this latest rally will return soon.

— And in the current situation, the underlying market structure is weak due to the quick rip and six unfilled gaps.

— Also, the volume has diminished daily with this recent impulse wave. It is also below average, making me question the current move’s sustainability and whether the rally will be retraced. Even a half retracement could be fast and unpleasant. And “overbought” does not begin to describe current conditions. We are up 15 days without tagging the mean.

— Upcoming Fed minutes, something on the global front, or even the wrong move by the Orwell Administration could be the next catalyst.

— And someday, we will witness an epic meltdown as the counterparties fail to meet their obligations on many of these instruments.

— I’ll do my best to help you navigate these waters, but keep your seat belt on.

— I doubt I will publish anything before the holiday, so enjoy Thanksgiving and we will be back next week.

A.F. Thornton

One More Thrust?

Good Morning:

— We are still in an uninterrupted buy signal from earlier this month. And another thrust higher into the red zone on the chart above is likely before we get a meaningful retracement. But recognize that we are in the nosebleed seats. The risk/reward ratio is heavily skewed toward risk, short-term.

— The problem is that short-sellers remain aggressive, but they contribute to their losses when the market fails to cooperate, forcing these traders to buy to cover their positions. It is a doom loop from their perspective. For now, we call “higher” the “pain trade.”

— The options market has been less than accurate lately but forecasts a 64-point range today (+-32 points from Friday’s close). The forecast for this week is 108 points (+-54 points from Friday’s close.

— Key levels and ranges are marked on the chart above.

— Year-to-date results have been excellent for subscribers to the room and our flagship, M-Squares Daily Strategy.

— On the zippy side of the scale, an account with a starting balance of $50,000 timely trading one Emini futures contract on the signals achieved a 174% return through Friday’s close.

— Slowing down the leverage, SPY options, or the Cash SPY reduces the return but still handily beats the market. 

— So what about the bear case?

— Let’s just say that the bears are hanging by a thread, as you can see from the chart above. Nobody can call an all clear unless or until the all-time high in January 2022 is beaten.

— How about the bull case?

— For now, it’s fair to say that the Bulls have the football. I tend to favor the bull argument but always keep an open mind.

— Even in the bull case, remember that the price will need to reach down for fuel occasionally. This could result in retracements of 24% to 50%.

— The M-Squares signals will guide us.

A.F. Thornton

A New Adventure

Greetings Everyone:

I hope you are doing well. I am wrapping up my sabbatical and look forward to returning to these pages. As we navigate the unpredictable waters of the financial world and I try to bring some balance to my life, I wanted to share a personal endeavor that brings me immense joy and serenity outside the trading floor.

My wife and I have recently embarked on a meaningful journey by establishing a 501(c)(3) sanctuary dedicated to the rescue and well-being of donkeys and horses. This venture is born out of our deep love and appreciation for these incredible creatures, and we believe in the profound positive impact they can have on our lives.

Our sanctuary is not just a haven for donkeys; it’s a sanctuary of the heart. Spending time with these gentle beings has proven to be a source of solace and balance in my life as a trader. Their quiet strength and unspoken wisdom serve as a grounding force, offering a welcomed respite from the demands of the financial world.

We want to share our passion for this cause with you, our valued clients. By fostering a connection with these remarkable animals, we can create a ripple effect of compassion and well-being in our lives and, hopefully, in those we touch.

You can meet the donkeys at our new website (

Thank you for allowing us to share this personal and meaningful aspect of our lives. Please don’t hesitate to reach out if you have any questions or want to learn more about our sanctuary. Your continued support means the world to us.

I wish you success and tranquility in all your endeavors.

Warm regards,

A.F. Thornton and Erasmia Spyros

He’s Back – A Light in the Darkness

I have been on Sabbatical since May, as it were. The time passes quickly. And as I complete one last road trip, I thought I might return to these pages with the usual market analysis and a touch of wisdom. Writing is a lot of work, but I have missed it. It is cathartic in some way.

Since wisdom is in shorter supply these days than opinions about the financial markets, let’s welcome my return to these pages with some thoughts from Kunstler. Sometimes, you run into someone who can express your thoughts better than you. Rush Limbaugh was the first person I encountered who did this for me in the late 1990s. I still miss him. But Kunstler will give anyone a run for their money. He has the gift of gab to go along with his wisdom. Here goes it on his latest musings. It is exactly what I am thinking about our current situation – encapsulated:

The sun is low on the horizon all day long now, and darkness creeps in like a home invasion of your mind. Demons descend through a red and black sky and no help is on the way. Our country is so mentally hog-tied trying to unravel the twisted events of just a few years past that it has no mojo left for rationally anticipating the events of just a few years ahead. Have you ever felt more alone?

       This is the end-process that we’ve been softened up for: the inability to think and plan. The gigantic “intel community” evolved from something intended to act as sensitized antennae for detecting threats against our republic into what is now a remorseless mind-fucking operation against our republic. That word, by the way, derives from the Latin res publica: the public thing, a society that literally belongs to the people, who decide its affairs. Now, so much is mysteriously decided for us, and not in any good way.

      It’s no wonder more than half the country can’t think straight, and it’s a whopping irony that this group comprises most of our country’s thinking class —the bureaucratic managers, the professors, the curators, the editors, the reporters lost in mis-reporting. This group used to play a critical role in the res publica: to earnestly determine what is true and what is real, and to present us with a way of understanding all that so we can think and plan. They appear to be captured by malign forces. The scribes are hard at work defending every act of official malice. The dishonesty at work is epic. You need a decoder ring to keep your mind right.

      You are probably desperate to understand why this is happening — how, for instance, a blatantly corrupt and ignorant attorney general in New York state can get away with bringing a politically-motivated nonsense case against the leading presidential candidate in a courtroom ruled by a judge who acts like a jester in a Shakespeare play. New York AG Letitia James gets away with it because the flagship organ of the thinking class, The New York Times, is in on the gambit. But why?

     We struggle to sort this out. One explanation is that the Chinese Communist Party (CCP) has infiltrated the management of our country at every level so as to eventually conquer our territory for its resources while eliminating or enslaving the population. Surely, the CCP has made significant inroads, starting with the successful bribery and compromise of “Joe Biden,” probably other elected officials, too, in placing many CCP agents in the vast array of university research departments, NGOs, PACs, and lobbying gangs, and extending to the purchase of vital businesses and farmland to prepare the gameboard for eventual takeover. My opinion is they’ve accomplished a good bit of this, but it’s not the answer you’re seeking.

      Another popular idea out there is that a sinister cartel or cabal composed of the World Economic Forum, the WHO, the EU, and a claque of super-rich megalomaniacs (e.g., Bill Gates, George Soros, Mark Zuckerberg) trying to usher in the so-called “transhumanist” next chapter of human history. This scheme is so full of preposterous contradictions that it remains hard to take seriously. The main one is that their engineered collapse of techno-industrial civilization would destroy the very network of complex systems that might support their supposed cyborg nirvana, especially a reliable electric grid. Secondarily, collapse would result not in centralizing power but just the opposite, re-localizing power away from the center, negating the possibility of global rule.

      A third theory is that the USA has somehow gone “communist.” The universities have, for sure, but in a most half-assed way imaginable that presents more as a case of collective mental illness than a true political ideology. Higher education has lately enjoyed stupendous subsidies and revenues that funnel down to the miserable cat-ladies who have taken over the faculty department chairs, plus the deans and president’s offices. The Niagara of grants and lavish salaries has funded the dissemination of incoherent cat-lady ideas, such as the foundational notion that all men are hopelessly defective except the ones who pretend to be women or vice-versa. Such postulations lead to ridiculous actions like the drag queen story hour, or men competing in women’s swim competitions. These actions-and-effects are “communistic” only insofar as they induce some Marxist-Gramscian overthrow of normality (i.e., a coherent cultural consensus) in order to usher in the utopia of perfect social equity, where nobody is allowed to do better than anybody else — that is, a society of cat-ladies (plus men pretending to be cat-ladies), all equally miserable.

     Are the editors and reporters of The New York Times all bought off by the CCP, Soros, Gates? I doubt it. That’s not what’s going on here. And the same goes for the Intel Community, much of the rest of the executive branch of the US government, the various “blue” state and blue city governments, and the great social media companies. Are all the employees of these vast bureaucracies dedicated communists?  Bwa-ha-ha-ha-ha-ha….

     What’s going on is that all these players are now desperate to evade the blame for and consequences of their many crimes. Hundreds of top bureaucrats and elected officials will be liable for prosecution for monstrous acts of perfidy and treason against our republic and its citizens. The New York Times and other compliant news outlets that lied about everything from Russian collusion to election fraud to the safety of Covid-19 vaccines to protect their fumbling allies in power are desperate to save their reputations — though that will be impossible as the truth eventually unfolds, and it will. Their knowing lies did real and lasting harm to the public thing.

     Take heart in these darkening days. The light will not be extinguished. It will return, as everything does in this universe of endless cycles. A nation turned upside down will find its feet again. The wicked will answer. The counter-revolution has begun. You are not alone.

Kunstler (

Remember when I told you about the “Fourth Turning” only a few short years ago? Even knowing it was coming and fully preparing for it, I still underestimated what it would be like to live through it. How do you like it so far? 

Then there was that 80-year War Cycle thing. Do you believe me now?

The good news is that all cycles have an implicit end.  Cycle trough to cycle trough. And there will be an end to this series of cycles, too. And more likely, due to the wisdom of non-Western leaders worldwide, we hope to make it with our cajones intact.

I am back, though I cannot promise daily musings…

A.F. Thornton

P.S. Next up, my latest stock market Magnum Opus


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