Random Thoughts and Stops

Random Thoughts and Stops

So the wife is in Greece indefinitely. Her father, 92 years young, is terminal, and we believe it directly relates to his second China virus shot. Imagine, he was healthy as could be and even survived World War II as a captain in the Greek navy. Yet, he is randomly taken out by vaccination against a bioweapon. Oh, and by the way, in recent simulated Pentagon War games, apparently we lose fast with a Chinese biological-weapon attack. Well, if there were any doubt, the anecdotal evidence now is profound. Just listening to the bizarre rant by President* Biden last night should be enough to convince you.

If you are going to get the vaccination, one of our group owns a prominent biotech company and favors the Johnson & Johnson version. It likely won’t surprise you that I am not a vaccine person. But I am a math person. Let’s see, if your income bracket is low enough, you get a $1,400.00 stimulus check. Yet, the U.S. Government is incurring another $17,000 of debt on your behalf. Somehow, that does not add up, especially when you consider that only 10% of the stimulus bill is going to China Virus related stimulus. Maybe the next largest portion is going to bail out the blue states that screwed their economies and drove small businesses into the ground. Then there are the reparations buried in the bill. And, a family of five with two unemployed parents looks to be able to make about $95,000 a year, at least until September. Nice! This gives new meaning to that scary phrase, “we are the government and we are here to help.”

As I analyze all the recent bills and proposals, here is what I am thinking. Since gender is up for grabs these days, and science doesn’t matter unless it is fudged to make you wear a mask, I am seriously considering identifying as a minority, LGBT woman. No offense intended to the real ones determined by the old scientific method.

The point is, this would give me many, many government benefits. If I had a farm, the new stimulus bill pays it off up to 120% of the original loan. Then there are the SBA loans that never have to be paid back. I could guilt all my white friends about their inherent bias – maybe even getting one to mow my lawn for free! I am willing to pledge to nevermore use any of those nasty, prejudicial terms like mom, dad, parents, brother, sister, grandmother, grandfather, etc. And you shouldn’t either, it might offend me. But I don’t plan to give up the term “China Virus” term anytime soon – I am holding onto it just to keep a small part of my former self.

And this does not yet include the new $2 trillion stimulus bill yet!

Of course, all of this is beyond ridiculous, and I don’t mean to offend anyone beyond making the point that this is the logical extension of all these policies. And while I am on the subject, I am sick and tired of the term “woke.” Every time I hear it, I literally want to puke! The proper application of the term, given the circumstances, is to wake me up when this is all over!

So what does any of this have to do with the stock market or our current posture? Besides being upset that these government policies and mandates may kill my father-in-law, the lack of market enthusiasm for the stimulus bill explains the volatility we have been experiencing in the debt and equity markets. Market participants, especially as it has related to growth stocks and interest rates, are less than thrilled at the moment.

The good news is, we had a fabulous day yesterday. The bad news is that neither the NASDAQ 100 nor S&P 500 gains qualified as follow-through days, as the volume still has not exceeded the prior days. 

The NASDAQ 100 index slammed into its Weekly Expected Move high and had formed a rising wedge pattern by yesterday’s close. The pattern broke overnight. A rising wedge pattern is often the first wave of a new advance. So that is a good thing. The NASDAQ 100 held at a 50% retracement of the recent gains from the bottom overnight, also a good thing. But the overnight action did not tell us a lot for today’s session, as the traders could not take out yesterday’s low or high.

On the other side, and having experienced these one-hit-wonder days over the past few weeks, I want to lock in profits while giving the markets some room to maneuver. I don’t want to ride a full retest of the lows or even the possibility that the NASDAQ 100 decides to tag a new low at its 200-day moving average. So let’s set a stop as an hourly close below the overnight low at 12776. Stay alert, as we are not too far off the low at this writing. I think that is a solid plan for the S&P 500 as well. The stop level there is 3900.75. These stops only apply if the price is below the stated levels for an hourly bar close.

Day Trading Plan

As you know, I don’t usually day trade on Fridays, especially when we are skirting expected moves at weekly options expiration, as is the case with both the S&P 500 and NASDAQ 100 indices.

As to the S&P 500, the all-time high is slightly below its WEM high, likely to cap gains today. In fact, the all-time-high in the S&P 500 index could take time -even several more days to resolve.

As well, the NASDAQ 100 high yesterday, it’s overnight high, and the WEM high all congregate just above 13,000, also likely to cap any gains today.

The potential is strong for some balance today. Watch for internals to be slightly conflicting. The settlement, points of control, and value area lows are very close to each other and could be used as responsive shorts.

Overnight activity filled yesterday’s small gap, but this does not count towards a fill because it did not occur in a regular day session. If context supports it, sellers can target that gap fill on a short from the aforementioned levels.

Have a great weekend!

A.F. Thornton

AF Thornton

Website: https://tradingarchimedes.com

A.F. "Arthur" Thornton is an expert in logic, risk/reward quantification, market fractals, pattern recognition and asset class behavioral analysis with 34 years devoted to developing algorithmic and quantitative trading systems. In addition to trading his own capital, Mr. Thornton designs custom algorithmic and quantitative trading systems for a small and exclusive group of exceptionally qualified traders.

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