A Morbid Anniversary

Good Morning:

Unhappy first Russian invation anniversary! Of course, I am referring to the anniversary of Russia’s invasion of Ukraine on 2/24/22. The first anniversary comes on Thursday. Will there be any surprises from Russia? Can you even believe all we have been through since?
It is a good moment to step out and gain some perspective on price. In the S&P 500 Index Futures Chart above, our chief broad stock market proxy, we posted the Founders Group’s weekly view.
Notably, this morning, the market is slated to Gap below the weekly stop line. Gap Rules are on the table. The downward trajectory of the index continues to validate Our timely exit on 2/3
Also, note that the price is entering its third week of correction (slightly lower highs and lower lows) concurrent with the third month of alternating slightly higher highs and lows. essentially, Price formed a wide trading range capped with rejection spikes at 4208.50. The lower boundary is framed with rising spikes starting at 3700 In November at the extreme.

If you didn’t notice the correction, it is understandable. Day to day, The index has been so strong that the higher highs and lower lows are barely noticeable on the weekly or Monthly chart. getting lost in the weeds is easy.
The bullish rise from October perhaps indicates that the October low is the Nominal 18-month Hurst Cycle low and the conclusion of the first phase of the bear market.
But the Bears see that most buying has been retail, sometimes called the “Dumb Money.” So they don’t give the advance much credence.
Moreover, the Hurst Nominal 54-Month Cycle might easily be crowning over the top of us On its way to the presidential Election cycle low scheduled for late 2023 or early 2024. But profits are profits even when we take them from the retail crowd.
And remember something else; Bull Market corrections tend to come late in the cycle, carving quick, deep, and climactic. And then there is the retest. Recall the spike lows and retests we experienced in the Bull Markets before the 2022 bear market commenced.
Anyway, strap in and patiently await the low. There are no old, bold traders. If we just began the first intermediate correction of a new bull market, Some wild slides may mark the week ahead. But mercifully, one can hope it won’t last.
And looking at the monthly candle bodies, 4088 has been handily rejected in November, December, January, and February. There is the old saying, “Persistence Beats Resistance.” Still, will that hold true if we remain in the Bear Market?
And when do you know for sure that the bear market is over? Unfortunately, it takes a new, all-time high to decisively Confirm the end.
For now, Conquering 4088 (and eating its tail up to 4208.50) opens the door to doubling the Monthly Range. A conservative Target would be the full Octave from October at 4288, previously discussed on these pages.
On the other hand, dropping through the 3888 floor suggests a minimum return to 3688, perhaps Tagging the rising trendline connecting the March 2020 China Virus Low (ES 2121) with the October 2022 low (ES 3502). That will be the optimistic case if the market starts flirting with significantly lower prices.
The bottom line is that the market has been correcting/consolidating for three months. It has been building energy. Now it will expend some of it.
Is this balance zone distribution ahead of further bear declines or accumulation ahead of another bull market leg? We should know by Friday.
Our best judgment is that the market is declining into the 20-week trough this week. The track appears shallow and Manageable at this writing, though the price may spike lower into the turn. According to Navigator II, The First likely pivot higher will occur on 2/23 (Thursday).
Multiple turn windows exist between 2/23 and 2/25, but the Navigator II magnetic flux reversal promises to exert considerable influence on the stock market to reverse its prior trend coming into Thursday.
While the indicator predicts the turn, it does not give us a target. We will derive that from our other work.
Note that this magnetic field burst also affects the weather and can induce hurricanes, earthquakes, and other anomalies.

Historically, the market reverses its prior direction 85% of the time when the magnetic field indicator exceeds 7 (solid horizontal line on the histogram chart above).
In the other 15% of cases, the market noticeably accelerates in the same direction.
Every time the indicator exceeded 7 so far this year, the market reversed direction down to the minute.
No doubt, The market may give the crowd a good scare this week, but ultimately will turn higher and test 4108 again.
This analysis does not negate the bear argument, as the bears are as entrenched as I have seen in my career and they may eventually be right.
For the bearish case, we need more confirmation that this “B” wave higher has ended. But if it has, the dreaded “C” wave could already be underway. carry the bear case forward forward in your narrative until we can negate it.
Our annual forecast called for the market to move higher into late February, correct into March, and go sideways to slightly higher into May. After May, we see a lot of technical pressure reasserting the bearish case.
Let’s see what happens, but the Navigator Swing Trading Algorithm went to cash (short for aggressive investors) on February 3rd and remains there. I am confident with three algorithms that are wholly Diverse in their approaches; we will stay out of harm’s way and find the low soon enough.
And don’t forget that war is good for business, though otherwise reprehensible. And business only benefits if all of us are not blown to smithereens.
But the black swans are swimming too. Don’t enter the fray without prudent downside protection.

A.F. Thornton

A Morbid Anniversary

AF Thornton

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A Morbid Anniversary

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