Morning Notes – 8/5/2022

Good Morning:

• Is it time to buy the dip again or sell this recent rip?
• The July Employment Report came in at double the consensus indicating that the economy delivered 500,000 new jobs for the month.
• The market immediately went from pricing a 50 basis point rate increase to 75 for the next Fed meeting.
• And the stock market initially sold off on the report, with our core S&P 500 Index giving up 50 points, coming right down to our bull/bear threshold at the 5-day line.
• Since the market will have a True Gap down at the Open, Gap Rules will apply.
• Whether the crowd buys this dip or follows through to the downside will tell us a lot about next week’s direction.
• Though we got off to a rocky start yesterday in the Trading Room (breaking even for the morning), we ended up with 24 points of gain per contract. The S&P 500 pinned at the 4150 level for most of the day – creating a lot of chop.
• The Swing Strategy is in cash for now, and we will reevaluate depending on how the day turns out.
• The DEM range for today is forecast at +/- 35 points, giving us a range from 4120 to 4190. We are opening with a True Gap down right above the lower end of the range.
• Support lies at 4105 and 4075, with resistance at 4135 and then 4155.
• If the market continues south on the report today, the WEM low at 4050 would be the guard rail on the downside where dealers will step in to aggressively defend the price.
• Join me on YouTube Sunday night at 6:00 PM EST – there will be a lot to cover.

Have a great weekend!

A.F. Thornton