One More Thrust?

Good Morning:

— We are still in an uninterrupted buy signal from earlier this month. And another thrust higher into the red zone on the chart above is likely before we get a meaningful retracement. But recognize that we are in the nosebleed seats. The risk/reward ratio is heavily skewed toward risk, short-term.

— The problem is that short-sellers remain aggressive, but they contribute to their losses when the market fails to cooperate, forcing these traders to buy to cover their positions. It is a doom loop from their perspective. For now, we call “higher” the “pain trade.”

— The options market has been less than accurate lately but forecasts a 64-point range today (+-32 points from Friday’s close). The forecast for this week is 108 points (+-54 points from Friday’s close.

— Key levels and ranges are marked on the chart above.

— Year-to-date results have been excellent for subscribers to the room and our flagship, M-Squares Daily Strategy.

— On the zippy side of the scale, an account with a starting balance of $50,000 timely trading one Emini futures contract on the signals achieved a 174% return through Friday’s close.

— Slowing down the leverage, SPY options, or the Cash SPY reduces the return but still handily beats the market.

— So what about the bear case?

— Let’s just say that the bears are hanging by a thread, as you can see from the chart above. Nobody can call an all clear unless or until the all-time high in January 2022 is beaten.

— How about the bull case?

— For now, it’s fair to say that the Bulls have the football. I tend to favor the bull argument but always keep an open mind.

— Even in the bull case, remember that the price will need to reach down for fuel occasionally. This could result in retracements of 24% to 50%.

— The M-Squares signals will guide us.

A.F. Thornton

One More Thrust?

AF Thornton

Subscribe!

One More Thrust?

Related Posts

Subscribe!