Afternoon Notes – 6/30/2022

Good Afternoon:

• I mentioned the “Walk Away” trade in the Morning Notes – refer to them for the details.
• And right on cue, the market peaked at lunch and sold off the rest of the day.
• I cannot believe that the trade still works. I started taking this trade 25 years ago. 
• Even with all the computers, and the sophistication of today’s modern trading world, I guess money managers are still people, and they don’t change.
• Speaking of tendencies, for the past 21 years, tomorrow (the first trading day in July) has far and above been the most consistently bullish day of the year. 
• And the good news is that the bullish tendencies typically spill into the next nine trading days. You may have heard this referenced as the “Summer Rally.” 
• And if we are lucky enough to have it present – the rally may be the last clear chance to avoid the accident promised this Fall.
• When you have witnessed multiple crashes in September and October over the years, one begins to believe that it is called the “Fall” season because of the stock market – not the leaves.
• But even the “Summer Rally” requires context. We are still in a bear market. 
• I found it more natural to take a short trade on the “Walk Away” today, but going long on a seasonal tendency is a bit more difficult. It does not seem to fit the current narrative.
• And if the market waxes and wanes in the next ten “reliably bullish” sessions, that tells us something too.
• Whatever your setups may be, never forget WWSHD (When What Should Happen Doesn’t). Always treat the failure of a high probability setup as an indicator in and of itself.
• The average trader gets mad and starts yelling at her computer screens.
• The master trader immediately recognizes the contraindication and fully reverses the trade, rather than just abandoning it in frustration.
• We had another good day in the Trading Room today. We took two very conservative trades, given the distractions of month-end and quarterly options expiration.
• We started with the gap-and-go trade (per Gap Rules) and then aligned with Money Manager window dressing leading up to the Walk-Away trade.
• They always say, “If you can’t beat ’em, join ’em.”
• We picked up 19.5 S&P 500 points before closing shop after the first two hours.
• Room Members got the text alert when I decided to buy a put option at the Walk-Away peak on the chart above.

I will have more on how we will prepare for next week in tomorrow’s AM live session at 8:30 AM EST on YouTube and Rumble. I think it fair to say that we closed out June with an ugly monthly candle.

The point I will make is that you need to put your big boy/girl/whatever pants on next week as it will be a wild ride when we return from the three-day weekend on Tuesday.

Stay Tuned, and Well,

A.F. Thornton