Riding the Five to Stay Alive

Good Morning:

1. S&P 500 EMini futures resistance today is at 4055 and then 4080. Support shows at the 200-day/5-day conjunction(3985), then 3970. 
2. Our flagship S&P 500 Index closed out last week above the key 200-day line. The question is whether this is a head fake or sustainable move.
3. As the chart above shows, the Dow index (interchangeable with the S&P 500) is tracking the 60-year cycle roadmap thus far, but with a dip still scheduled for early February.
4. What has been working since the last buy signal has been to load up on the five-day stop line and lighten up at the top of the small pullback bull channel.
5. The behavior reflects algos accumulating on that line.
6. Another way to look at it is the market climbing the wall of worry.
7. Retail sales and wholesale inflation report this week, and we will continue to see Fed commentary going into the early February meeting.
8. I see a stock market that wants to move higher but a Fed that wants to keep a lid on it. Only time will tell who wins or loses – the market or the Fed.
9. The Navigator Swing Strategy remains in a Buy signal with an absolute stop a few ticks below the five-day line, though I doubt we would hold a full position to that level. We are more likely to continue what has been working as described above.
10. On an interesting side note, Bitcoin surged higher last week. Rumor has it that our airline system was attacked last week and held for ransom, which was the true cause for all planes to be grounded for the first time since 9/11. The U.S. had to pay ransom in Bitcoin to regain control of their systems – thus the buying surge.
11. Similar attacks recently occurred in the Philippines and Canada.
12. But don’t worry; we are all in safe hands with the Orwell Regime in charge!
13. I am still traveling to my nuclear-proof bunker in Antartica (just kidding) for the next few days, so the Trading Room will be open Thursday and Friday this week.

A.F. Thornton