Founder's Trading Journal Bernie Madoff with his Clients’ Money / FTX’s Bankman-Fried his Clients’ of their Money Too – 11/17/2022 Nov 17, 2022 AF Thornton 0 Comment S&P 500 Continuous Future - Navigator Algo Sell Signal on Hourly Chart Good Morning:Tuesday’s sell signal on the hourly charts has morphed into a Navigator Swing sell signal overnight, triggering at 3942.Of course, today’s candle needs to close below 3942 to validate the signal. I will keep you posted on that front.A pullback from the meteoric short-covering candle on the daily charts a week ago today is to be expected.Nevertheless, we must be careful in the current environment, and the downturn is a rejection of the 200-day moving average on the daily charts.Also, we may be peaking the second of two nominal 40-day cycles in the first 80-day cycle slated to trough in mid-December.In short, it is too early to tell whether the 20-week cycle wave has peaked. We will know in due course. This may be a healthy pullback on the way to our original 4100-4150 target.But the reason we have been working the hourly chart signals rather than the daily ones is precisely what we are encountering this morning: waking up to a big sell-off.The FTX contagion grows, as do the global recession risks continuing to plague the markets.Futures are lower to 3945, down from overnight highs of 3990.Our key levels remain largely unchanged, with resistance above at 3960, then 4000. Support below is at 3904.For today, do not be surprised if the S&P 500 stages a rally today back into 4000, and with our volatility estimate of 1.03% we do not see a move down through 3900.That possibility is markedly higher for tomorrow and into next week.Yesterday there were very large volumes at the 4000 strike. The call activity, which is likely call selling, adds to resistance at that level.Conversely, there was clearly a lot of put activity below, which translated to an uptick in open interest at 3900 and 3950.We think these are likely short-term put sellers.With the algo in decidedly negative territory, we assign an edge to the downside after OPEX.We will watch the 4100 Call Wall area as resistance into month end.The Call Wall lines up closely with the widely watched SPX 200-day Moving Average mentioned above and hovering near 4080.A.F. Thornton
Founder's Trading Journal Klaus Will Own Everything and Be Happy; How About You? – 11/16/2022 Nov 16, 2022 AF Thornton 0 Comment Good Morning;The only thing scarier than the U.S. elections is the World Economic Forum that is behind it all. Here is yesterday’s message to the G20 from the WEF fearless leader, Dr. Klaus Evil.And just to keep it interesting, the FTX Crypto scandal promises to swallow Joe Biden and more Democrats whole.Apparently, FTX and its fearless, fraudulent leader, Sam Bankman Friedman, or SBF as he likes to be called, was the successor to the Jeffrey Epstein Operation. Oh, what a tangled web awaits us. Would somebody please wake me up from this veritable nightmare?As they say, I want a new timeline in the quantum world.Meanwhile, back at the ranch, Our models continue to point towards mean reversion into the large 4000 strikes through Friday’s OPEX. , with resistance at 4024 and 4040 and support at 3960.A little consolidation is needed before we push to the final target for this 20-week cycle at 4100-4150.From there, we travel to the 18-month cycle low next spring.The next turn dates are November 22nd and December 3rd.The 11/22 turn looks to be from lower to higher and vice versa on December 3rd.These are the minor waves, but the biggest wave down is still in front of us as we head into the nominal 18-month cycle low.Tom will be in the trading room to start the day, and I will be there in a few hours – watch your text alerts.We are still in the macro Navigator swing buy signal from 10/13 as long as the S&P 500 continues to close above its 5-day line.However, the Founders Group continues to work the buy and sell signals on the hourly RTH charts. That chart rolled into a short-term sell signal yesterday at 4028. Look for a buy signal soon.A.F. ThorntonA.F. Thornton
Founder's Trading Journal Inflation is over, the Orwellians retained Power, and Everything is fine, Dear… 11/15/2022 Nov 15, 2022 AF Thornton 0 Comment Good Morning:I overslept this morning in a rarity so infrequent I cannot remember the last time it happened.I have been burning the midnight oil on several breakthroughs in our algorithms to automate day trading and will have some exciting announcements soon.Futures have bounced back toward 4420 (440 SPY) on a less negative (than expected) wholesale inflation report (PPI).Likely due to the anticipated report, our current volatility estimate today is high at +/- 1.54%. Further, there remains a heavy negative gamma position in both SPY & QQQ. The 400 SPY and 4000 SPX are the interim floors we are watching now as support. Resistance holds at the 4050 line.The abovementioned levels remain the main feature of the S&P 500 index layout through Friday’s expiration.If my crystal ball continues to serve us well, we still see the market moving up to 4100-4150 before the next trip down to the valley at 3000 or so.For now, the market is short-term overbought, but the options complex gives it a slight bullish edge through Friday’s monthly expiration. Look for pinning around 4000 for the rest of the week.After Friday’s expiry, what should we expect? Well, one only needs to ask voters:More crime,No more prisons or prisoners,Skyrocketing energy prices,Skyrocketing inflation,A recession followed by a depression and ravaging deflation,No more free speech,A disastrous withdrawal from Ukraine in favor of War with China over Taiwan and war with North Korea, Iran, and Russia,Nuclear War (don’t worry, it is survivable, Lol),More plandemics plus untested and mandatory shots to kill people,A false flag EMP attack (the same people who rehearsed the plandemic a month before it hit have been rehearsing an EMP attack),A shortage of candles, Weber Grills, wood, and charcoal,More oppression of small farmers and centralization of food and water supplies,More cricket sandwiches,More altered plants and food,New models of horses and buggies,Abandoned cars converted to housing,New non-farting horses,Open borders,More corruption, including a corrupt judiciary, DOJ, and FBI,More surveillance state,Less free speechMore attacks on those terrible domestic terrorist parents,More grooming and sexualization of children,The return of serfdom and slavery, Reducation camps,An indictment of former President Trump,Indictment and jailing of that troublemaker Elon Musk,World War III, and many more issues I have likely forgotten.I know the majority wants all of this, and they voted for it. But apparently, I don’t run in those circles because I have never met one of these voters. Nevertheless, I look forward to meeting these comrades and learning more about how this works for the greater good.I know I am carping, but learning that the Orwellians funded their midterm elections with American taxpayer money laundered through Ukraine to Sam Friedman and the fraudulent FTX Crypto Exchange – only to come back to the Democrat Party in the form of $40 million in midterm campaign contributions set me off this morning.No trading room today, as I need to get the video done and out. I will be in the room every other day this week, beginning tomorrow.A.F. Thornton
Founder's Trading Journal Rent a Rally? 11-14-2022 Nov 14, 2022 AF Thornton 0 Comment Mid-term Election Seasonality - U.S. Stock Market Good Morning:Futures are off slightly to 3985 after a quiet overnight session. 4000 remains the large resistance/pin area and is likely in play until 11/18 OPEX (monthly options expiration). Above that level for today, we note 4024 and 4040 resistance. Support shows at 3976 ad 3948.The “Pain Trade” is still higher. I have targets up to 4150.This rally seems different, and too many people think it will fall apart. The probabilities are that it won’t fall apart quite this soon. Note the comparison between the S&P 500 daily chart and the composite seasonality chart above. All the market has done so far is follow the typical pattern for a mid-term election cycle. The real bear may still lie ahead of us.For now, the market is a bit ahead of itself, so consolidation or even a slight dip into 11/18 OPEX (monthly expiration) is possible. I am putting together an extensive, post-election video that will come out late today.Meanwhile, we are in a Navigator Swing buy signal. We are “renting” the rally for now. We are riding the hourly charts for entries and exits.A.F. Thornton
Founder's Trading Journal Interim Update – 11/11/2022 Nov 11, 2022 AF Thornton 0 Comment Good Morning:I am still under the weather today, but I hope to be back in the saddle on Monday. We will feature Tom from Bookmap in the trading room today. Tom specializes in trading order flow and is a terrific teacher.Indeed, after one of the biggest short-covering rallies I can remember, the Navigator Algorithm gapped into a buy signal yesterday, which technically triggered at 3850 in Globex after the CPI report. A small Gap may also present this morning so that Gap Rules would be in play again. The Gap and Go rules served traders quite well yesterday.We came into yesterday’s session in cash, and there was no reasonable way to execute the Navigator Swing buy signal at 3850 in the regular session. Buying in Globex on a CPI report bounce wasn’t prudent either. We had to let the market play out a bit, and the first opportunity to buy on a pullback came mid-day around 3905.As I had suspected, more than 40% of yesterday’s short-covering came from the DTE crowd – so it was appropriately painful for them, and maybe a lesson learned.On a bullish note, however, investors finally began to add to higher call position strikes, moving the Call Wall up to 4000 and restoring our original target for the 20-week cycle peak to 4100.While yesterday’s behavior was a classic, rip-your-face-off short-covering rally, there was a character change similar to the March and June 20-week cycle lows, with investors adding materially to higher call positions.As a result, we are confident that there were some real investors yesterday. We will cautiously scale in on hourly chart dips for a swing while carefully monitoring the progress from here.Between now and OPEX (options expiration) on 11/18, we look for pinning between 4000 and 4100, along with lower volatility in a positive Gamma environment. The DTE crowd (a new phenomenon) could bring unforecasted volatility.Also, yesterday, the MOVE index (bond volatility similar to the VIX for equities) finally began to break, indicating that the bond market is getting more comfortable with the current yield forecast. The break in the MOVE index is another character change.As the MOVE index shows, bond yields also plummeted yesterday.One has to remain skeptical that there will be follow-through from the short-covering since the CPI report still reflected 7% inflation and barely beat expectations. In my view, the short-covering rally is more likely attributable to a clearer Republicrat victory yesterday, with the House and Senate majorities within reach. Wall Street loves gridlock, as we all should. We are all better off if our illustrious government stops “helping.”The traditional market path in a mid-term election year is bullish from here. But these are not typical times.Soon enough, the reality of the global situation will set in again.Meanwhile, there is a pattern in the market that could take the S&P 500 index back to the August high at 4350. And perhaps that trading range I keep talking about finally sets in from there.Meanwhile, the next major trough is the 18-month cycle low in early March 2023. Typically, the forecast low would be lower than September, landing in the 2500 to 3000 zone. Only time will tell.Today, the 4000 target level is possible. Above 4000, look for resistance at 4010 (SPY 400), then 4049. Support shows at 3958 and 3946.We see 4100 as the top end of the range going into the 11/18 expiration. Enjoy your weekend.A.F. Thornton
Founder's Trading Journal Interim Update – 11/10/2022 Nov 10, 2022 AF Thornton 0 Comment Good Morning:I am under the weather this morning, so I will cover the Trading Room tomorrow. Tom will cover the room beginning at 10:30 EST today.The CPI Report beat expectations this morning, so the short-covering has kicked in spectacularly, with the S&P 500 jumping 3% pre-market. Yesterday, I had estimated a 2.5% move in either direction based on option pricing – obviously a little light on the forecast.Gap Rules will be in order this morning, emphasizing #2 and #4.Today is not likely to be a great day-trading day, as distortions will abound in the indicators any time there is a move such as this in either direction.And the move may be nothing more than the DTE (one day to expiration) crowd running for the hills. Watching them suffer along with Bitcoin on the road to ruin is a pleasure.Every bull market cycle has its pretty lady, and she was Bitcoin for this one. There could be nothing more representative of pure Ponzi speculation save for U.S. Treasuries. And the 10-year treasury auction was awful yesterday. Nobody seems to want what the U.S. government is selling.But just like the election, onward we go for now.So, do we get our second leg up in the 20-week cycle or a complete reversal of these gains today? As I have repeatedly pointed out, the 20-week cycle usually runs for at least four weeks, even in a bear.When I look at the wacky way everything turns out these days, a complete reversal of the 3% gain would not surprise me in the least today. That is pure speculation on my part (and not science). It is just a feeling when we live in a world where up is down, and down is up.And fading this rally would be the brave thing to do – if one truly believes Armageddon awaits us in the third push down of the bear.And my embrace of an upside-down world is in no small part drawn from Tuesday’s election results where a very high percentage of voters seemingly approve of (i) skyrocketing energy prices, (ii) skyrocketing inflation, (iii) a rapidly deteriorating economy, (iv) suppression of free speech, (v) a disastrous withdrawal from Afghanistan, (vi) untested and mandatory shots that are killing people, (vii) open borders, (viii) a corrupt DOJ and FBI, (ix) a police state attacking parents, (x) grooming and sexualization of our children, (xi) World War III, and many more issues I have likely forgotten in these wee morning hours.I suspect Satan himself could be elected our next President, assuming he is not already in office.In past bears, the upward portion of the cycle at this point ran for eight weeks. This week counts four from the October 13th low.So let’s see how the day unfolds and whether traders and investors set a positive tone into weekly expiration next week (or not).Markets easily fool the unwary, just as elections do. But in the markets, everything starts with short-covering, though today is an extreme.Follow-through rules the day – and it may take a few days to confirm investor moods. For now, this is another day to cull your portfolio. Keep the winners and sell the losers.Imagine the money lost this morning by the meme crowd shorting the market for one-day. It is likely the same crowd eating their Bitcoin. That is why I prefer probabilities rather than gambling.We remain in cash. Even if the Algo issues a signal today, I will need more confirmation as the indicators will distort for a few days. If the picture is clear, we will let you know. The Founders Group covered our shorts yesterday for a nice profit from our last sell signal. We always prefer to be neutral going into any high-volatility events.A.F. Thornton
Founder's Trading Journal Interim Update – 11/8/2022 Nov 9, 2022 AF Thornton 0 Comment S&P 500 Index Continuous Futures - 5-Minute Algo Forecast and Results Good Morning:Futures are down at this writing but still inside yesterday’s wide trading range. Overnight inventory is net short.Key levels remain similar to yesterday, but there appears to be more of a tilt to long put positions added yesterday. Support comes in at 3800, then 3780. Resistance is at 3836 and 3851.The Bitcoin crash and liquidity crisis drove yesterday’s wild and extreme moves.We took full advantage in the Founders Room, and I hardly had a chance to get off the mic for a break.I felt like I was calling out a horse race.As Bitcoin was the culprit, I was pondering the suggestion that Crypto is the new gold.The proposition reminded me of the Red Wave expected in the election last night.Crypto is hardly the new gold, and the Red Tsunami now looks more like a ripple.And, by the way, gold finally looks as if it is ready to make its move higher.And, it is a good time to remind everyone that the Navigator Algorithms are either cash (a short signal for more aggressive investors).We will keep an open mind, as always. Yesterday was a key reversal day on the annual calendar. Since we rallied into the day, it is reasonable to expect a decline after.And there is nothing like the CPI report on the table tomorrow to give us a catalyst. Of course, we never know what the CPI report will do – but the options market is pricing in a 2.5% move.And whether the Orwellians maintained most of their power due to cheating last night or because they are better at elections, it does not matter.As a side note, we always marveled at the 9/11 low-tech terrorist operation. Yesterday’s Arizona elections sabotage appeared to be similar. When the Orwellians knew that most Patriots showed up on election day, what better way to suppress the vote than having 20% of the machines stop working in the reddest and most populated areas of Maricopa County in Phoenix?And, given that the Orwellian gubernatorial candidate was in charge of the elections – the rest is history.Nor would a Red Wave tsunami, now less than a ripple, have made any difference.And if you look at Florida and Ohio, where the States cleaned up their elections, and it is more difficult to cheat, you likely see a true barometer of where the country stands.The point is this; the die is cast, and the outlook for our nation and the global economy is ominous.The average person, and maybe even the above-average person, has no idea what is coming.You see, bad as things are, they will get much, much worse. Dystopian is the most polite word that comes to mind.You can already see the plugging of the proverbial dike. First, Credit Suisse. Whoops, another leak – Bitcoin. There will be another and another until the system finally blows.I hope I am wrong. I want to be wrong. But I also know I am right.As to the short-term, the Bitocin crash dashed the last gasp of bullish momentum yesterday morning.On a positive note, it was fun to take money from the “one-day wonder” Meme, DTE, and YOLO options crowd yesterday as they panicked to cover their shorts, giving us two trading extremes on the same day. We took full advantage.Tomorrow’s CPI report looms large – and it will likely be more of a wait-and-see chop day today.A 2.5% expected move is forecast for tomorrow. I will be in the Founders Room, and you should be too.A.F. Thornton
Founder's Trading Journal Interim Update – 11/8/2022 Nov 8, 2022 AF Thornton 0 Comment Good Morning:The day has finally arrived. Will we kick the bastards to the curb? Will it make a difference?And here is the greatest irony:But first, you must understand that the elite cabal wants to control the weather.After all, they look at themselves as gods. Some think the elites are already manipulating it.Add to that conspiracy, one strategy the Republicans are deploying is to all vote in person on election day. This way, the Democrats cannot override the election results with machine algorithms.So here I sit in California this morning, and we are having one of the worst rainy days we have experienced all year.It won’t be pleasant to vote in person in California today.Things that make you go, mmmm…Back to reality, the market will gap open today – so Gap Rules are in order.Our Volatility Trigger (3800) is sliding higher, indicating puts are being closed and calls added.While the current gamma region is somewhat flat, negative gamma kicks in below 3800 with significant, positive gamma building near 3900.Simply put (no pun intended), the market encounters higher volatility below 3800 and lower volatility as it approaches 3900.Today, there is a band of resistance above at 3834, 3842, and 3850. Support lies (no pun intended) at 3800, then 3760 (SPY 375).The election should release event volatility and support markets into Thursday’s CPI reading.Still, the VIX is consistently drifting lower to its current level of 24.5 despite the CPI volatility event looming.Without getting into the mechanics of making sausage, we associate the current VIX structure with regime change – e.g., from bear to bull markets.When this signal failed in the past, it was due to an unfriendly Fed – just like now. So I point this out to keep it in our narrative as we weigh all the evidence as we advance.I am in the trading room for a few hours this morning, where I will be featuring my new predictive Energy Algorithm. This new algo is still in beta testing, but we will monitor it today in real time.The algo predicts turns by analyzing the day’s low and high-energy magnetic field periods. We make this location specific, as we can switch between Chicago and New York, where the EMini futures contracts trade.Oh, did I forget? One last item from yesterday. The Commander of US STRATCOM recently said: “Ukraine is just a warm-up for what’s coming, and we need to prepare for the big one.”Happy Election Day – the election might offer a small modicum of hope in this insane period – or not…A.F. Thornton
Founder's Trading Journal Interim Update – 11/7/2022 Nov 7, 2022 AF Thornton 0 Comment Good Morning:Futures are higher this morning. But in my view, Friday’s key levels are largely unchanged.Support shows at 3780 (also the Volatility Trigger), then 3755 (SPY 375).Resistance lies at 3833 and 3850.We are positively retracing the most recent sell-off, with the possibility of another leg up in the nominal 20-week wave. As I have been counseling, it seemed too early to bury the market last week as the 20-week cycle typically doesn’t peak for a minimum of four weeks, even in a bear market. And eight to nine weeks is more typical.We are entering the fourth week today. And tomorrow could be a key turn date to watch based on our algorithms. So far, we are marking up into that date so that the turn would be in the opposite direction.The market loves gridlock – so even if Republicans only take the house, the market will be happy with this outcome. Still, likely this outcome is already reflected in the rally from October 13. If Republicans capture the Senate, the market could rally into the CPI report. Only after the passing of these events will we see if this second rally attempt has legs.Keep in mind that it still takes a formal pivot to trigger whenever we identify a turn date or alert window. So we don’t just take the date and run with it.And there is no guarantee that the bear continues – which would mean that the bottom is in. That is not my current thesis.The WEM high is 3864 this week, which would fall short of the most recent peak at 3925. The WEM levels have not been reliable recently, another victim of the meme option players and their DTE preferences.On an encouraging note, we may regain the 5-day line today, but the Algo Trigger also needs to be conquered at 3842 to count this as a decent up leg with a chance to match the first leg from October 13 – October 28.And the latest CPI report comes on Friday – likely the largest volatility event of the week.The price is a short-term retracement of an intermediate-term bear market.All doubts should be resolved in favor of the bear. A.F. Thornton
Founder's Trading Journal Interim Update – 11/4/2022 Nov 4, 2022 AF Thornton 0 Comment Good Morning:The strong October jobs report this morning confirms my theory that even in this recession, the declining population will keep employment growth stronger than we have experienced in the past.And given the people dropping like flies from the jab, the labor shortage will only accelerate.Futures are higher this morning to 3780, opening at the top of yesterday’s candle and suggesting a potential pivot at the 50% retracement for a second rally leg higher, just as I had suspected might occur and mentioned yesterday.If the market follows through, note the power of the nominal 20-week cycle – even in a bear market.Seeing the positives, the addition of put positions yesterday keeps us on our toes. The new, major overhead resistance now drops down to 3800, also the new Gamma flip point.Above that level, we believe dealers switch back to a positive Gamma stance, giving prices a bullish edge. Above 3800 resistance, we mark 3835 and 3900 as resistance. Support shows at 3710-3700 and 3650.Yesterday was a relatively quiet session after the S&P 500 gapped down to open at 3700.Contemporaneously, the VIX dropped back to 25, but there appears to be no incremental demand for long put protection.Our implied volatility metrics suggest traders are still content selling downside puts into market drawdowns. There is just no bear follow-through.Despite the Put Wall support remaining at 3600, the new flow coming into 3700 has made it a sizeable Gamma strike and decent support.Given the dynamics, you can see why we favor an upside recovery in the short term.As new data comes in, we will reassess.A.F. Thornton