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Pre-Market Outlook – 6/23/2021

Jun 23, 2021 AF Thornton 0 Comment

While momentum buyers have been in control the past few sessions, the S&P 500 index has hit its Weekly Expected Move (“WEM”) high for the week and will likely be rangebound through Friday, with the WEM level around 4250 acting as a magnet. The index may be able to squeak out a new all-time high above 4258, but it would have to punch through the WEM high at 4250, and there is a 70% probability the index will end the week at or below that level.

It also appears that whatever fear Fed Chairman Powell and Fed Governor Bullard may have temporarily injected into the market, traders are discounting/ignoring the coming QE “taper” in a big way.

Globex activity failed to test the single prints of yesterday’s regular session. And yesterday’s distribution came down to the same level as the overnight low and rallied from there. Between yesterday and Monday, there is a lot of emotional trading (short-covering) and poor structure below the current level for the market to repair and carry forward potentially.

Last night’s overnight distribution also stopped sellers just shy of yesterday’s Point of Control (POC) at 4230.75. Markets that test visual and mechanical (not to mention nuanced) references like this are controlled by short-term traders rather than longer-term investors. This is not necessarily negative or unsustainable. If anything, one might see it as bullish as this faction of traders has not proven to be easily shaken and can stay in charge for long stretches.

Coming into today’s session, we have a key level above us that is noteworthy and could be the key to higher prices should it be taken out. The overnight high at 4248.25 stopped right at the same price where two recent day sessions also topped out. Use this as a potential go/no-go break-out level, keeping the WEM high at 4250 on your radar too.

Yesterday’s single prints also should be entered into the larger narrative, even if they aren’t exactly key levels today.

Assume buyers are in control and will continue to be today. Pullback buys are probably the best strategy unless the market signals otherwise. Watch the 30-minute range first. Also, after two trend days, a range day is in the cards.

Any breach of the overnight high level puts the all-time high at 4258 into play. That all-time high was made in an overnight session which makes it less secure. The market will likely pull back to the WEM high on a pivot lower even if the index breaks out. The NASDAQ 100 is almost at its WEM high as well.

A.F. Thornton

Navigator™ Signals for Day Traders

Mid-Day Report – 6/22/2021

Jun 22, 2021 AF Thornton 0 Comment

The NASDAQ 100 had managed to best the overnight high and yesterday’s high to achieve a new, all-time high (at least intraday). So far, price is finding acceptance in the NASDAQ 100 expanded range. The S&P 500 has achieved the same besting of the ONH and yesterday’s high, but not the all-time high.

The Founder’s Group has maintained its small, initial short position and is looking to add to it late today, depending on how the rest of the day goes. We were very close to getting stopped out on the last hourly bar – but squeaked through thus far.

The price movement has been impressive, but the internals are lousy. Nothing has changed significantly in the macro picture outlined in our View from the Top discussion earlier this week. If I am wrong on a slightly bearish call here, it will be because we are being undermined by the capitalization math of the tech stocks. If that turns out to be the case, then I will move from the index itself to a narrower target like the sector or some sector leaders. That is my personal, unofficial position for the Founders Group.

The Navigator swing strategy remains 100% cash for now.

For day traders, we did have another nice breakout trade from the initial 30-min range today, just like yesterday. I will post it at the end of the day.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 6/22/2021

Jun 22, 2021 AF Thornton 0 Comment

I feel like I am living in three different worlds at the moment. First, there is the NASDAQ 100, growth stock, and tech world where all seems well. Then there are nine out of the 11 S&P 500 sectors that have been correcting for a month. Finally, there is the S&P 500 index itself trying to ride the fence.

Was yesterday a “key reversal?” Did one Fed Governor’s comments Friday send the market reeling, only to recover yesterday on seemingly opposing comments from a different Fed governor? Did the publication of Fed Chairman Powell’s proposed Congressional testimony overnight help preserve yesterday’s gains? Was Friday just another one-off bounce to the 50-day line and back?

When I look across the correcting sectors, I would argue for yesterday’s action to be a dead cat bounce. Those are the bounces that suck amateurs back into the market while the professionals sell their inventory to them and then pound the market down. Of course, nothing is ever quite that simple.

In the chart above, the most optimistic scenario is that we just keep going today and challenge the old highs on the S&P 500. The middle ground is that we continue to form the reversal pattern mentioned yesterday and outlined on the hourly chart above. The pessimistic scenario is that we retraced a little more than half the sell-off and we continue down to new lows.

The Founders Group took a small, unofficial short position at 4215 on the index yesterday. Unofficial means that this is not a formal, announced Navigator trade. We are simply sharing our thinking out loud.

Sometimes, you want to nibble at establishing a short position when the index is ripping higher as the premium is rich enough to give you an extra boost. The initial stop was the old high, but now we have lowered that to a close above the Navigator trigger line. The trigger line is dynamic, currently 4225 at this writing. As far as we are concerned, this was a low-risk entry point for a short (if nothing else) with a reasonable stop.

If my conviction was high, I would be more aggressive, but the jury is still out a bit on whether the NASDAQ 100 and growth will pull us out of the broad market, stealth correction. Or, alternatively, will the broad market eventually pull the narrow growth=style group down to new lows. Let’s just see what happens and let price guide us.

Today’s Plan

The size of yesterday’s reversal was a bit of a surprise to the bears, leading to poor structure in the distribution range, which was roughly 60% single prints. These singles are caused by panic short-covering.

Today’s session will be all about whether or not these higher prices are accepted or not. As of now, they have been accepted in the overnight session – but see the discussion above.

Continue to carry the single prints forward until they are tested. Holding above them is bullish and nips the odds of heading lower. Testing them increases those odds. I will be watching how the market handles the overnight high at 4226.25, settlement (also the value area high at 4219), and 4202 which is the top of the single prints.

It’s common after an expansion of range to balance a bit which is what we could have in today’s session. As of now, overnight activity is already doing so and the regular sessions often follow the tone of the overnight. If so, assume responsive trade. As mentioned above, only acceptance below the top of the single prints brings potential for change.

Navigator™ Signals for Day Traders

Mid-Day Outlook – 6/21/2021

Jun 21, 2021 AF Thornton 0 Comment

If you followed the morning plan, today was textbook of the 30-min breakout range I described. Strong internals, strong breakout, but to me it is a shorting opportunity as I believe that the trend is now down.

If you are in the bearish camp, as I am, this is where you can start to short the market. You can buy at the money puts, as I will. I am starting here. I am starting with the S&P 500, but you could get more bang for the buck from the NASDAQ 100. If either index goes higher, you can do more but start conservatively. Your stop is a new closing high in either index. You can go out to the July 16th monthly expirations or beyond. July 20th would be a perfect candidate for the 18-month cycle trough – but calling it to the day is nearly impossible – but it is in the zone.

After the first down leg (which I believe ended Friday), you can expect the market to retrace most of it before it rolls over again. Call premiums are still high if you want to sell calls, but consider a vertical spread so you have some protection. I am not a fan of selling a naked call.

As in life there are no guarantees. When you buy a put, your risk is what you paid for it. As always, remember I can be wrong and certainly have been wrong at times. You have to make your own decisions.

Start slow.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 6/21/2021

Jun 21, 2021 AF Thornton 0 Comment

Neighborhood Watch Chart

Let’s start with the 2-hour candle chart above. I have been using a 2-hour chart as my master chart for day trading lately. I will change that from time to time, but it is working well for now. In this chart, I define the neighborhood where the market will hang out this week. You know what they say. You need to know your neighborhood, and trading is no different.

What is nice is that the neighborhood (highlighted in gray above) is defined by the Weekly Expected Move. There is a 70% probability of staying within the Weekly Expected Move range each week. In fact, multiple billions are betting that price will stay inside this range. Also, each week, there is a high probability that the price will tag one end of the range. Once you have established the week’s direction, the corresponding end of the move is your ultimate target.

I will always do my best to help you prioritize the support and resistance you will encounter each day. In so doing, I look at the market from two perspectives. First, we have the traditional chart perspective as outlined in the normal price chart above. Second, we will look at the market/volume profile perspective, which measures volume and time at a price.

In creating your chart, then, start by calculating the Weekly Expected Move and drawing it in. Then, using monthly, weekly and daily charts, draw in any major support or resistance that you will encounter in the range. I usually market these on the right with an “M,” “W,” or “D.” Also, look for important moving averages you may encounter in the week’s range from the monthly, weekly, and daily charts.

Normally, you will contend merely with the 5-day line from the daily chart. In a larger correction (such as the one unfolding now), you may encounter the daily 21, daily 50, and weekly 21.

I draw or program all of this into my 2-hour chart. As stated above, I like my 2-hour chart to at least be readable. Even if it appears cluttered at first, I can step down to a 5 or 15-minute trading chart which will be uncluttered but have all the relevant lines I need to day trade.

Also, recall from our discussion last week, you always want to paint yesterday’s high and low and the overnight high and low (if you are trading the futures chart). Initially, traders will move the market towards these key levels to test strength or weakness for direction. You can pivot at one of these levels or breakthrough it as the case may be. Breaks can be fake-outs – so monitoring for acceptance and continuation at the new levels is important. Often, you are applying one or more of the setup rules I point out pre-market.

Today’s Plan – Micro Narrative

This morning, the market will open with overnight inventory balanced and prices in the upper 1/3 of Friday’s range. Having said that, overnight range expanded Friday’s range lower overnight, so carry that forward today as well. About half of the overnight trading is above and half below Friday’s settlement. In such cases, nothing tips us as to the market’s initial direction. Accordingly, I will mark the top and bottom of the first 30-minutes and take a trade in the direction of the first breakout, but only after the market pulls back from the initial breakout. I look for a price pivot on the pullback. A good target, assuming nothing else is in the way, is double the range. This is not easy and can be tricky at times. The market can change direction several times before it settles down. Usually, by 10:30 am EST, there is a 70% probability that the high or low of the day has been established.

Overnight we have somewhat of a “V” bottom. That leaves the potential for a reversal pattern to go higher. All of Friday’s identified “support” levels will now act as resistance if the market attempts to go higher. If the market can take out the overnight high at 4177.50, I would target the former breakdown low around 4185.50, all the way up to the 21-day and downtrend line from the top, which both congregate around 4200. Be cognizant, though, that the market could not punch through the 50-day line on Friday, which is about the same level as the overnight high at 4177.50. That level could act as a magnet or center line to prices today, but that is a wild guess.

On the downside, target Friday’s settlement at 4151.25, also the overnight halfback. Then focus on the overnight low at 4126.75.

As stated before, the default direction of the market every day is sideways or rangebound once a range is established. Market internals can help you determine this. Mixed internals usually mean rangebound or what we call “responsive” trading. You buy and/or short when you get to the end of the daily range and pivot. The safest trade is to get out at the middle of the range. That is where running a daily Volume Weighted Average Price (VWAP) line can be helpful. It gives you the middle in rangebound conditions. You can run standard deviation bands on the indicator to help identify the range boundaries.

I have highlighted the WEM range in the gray box above. So if you see the gray highlight in a 5-minute chart later today, you will know what it is. As a side note, the safest calculation for the WEM is the hand calculation on the SPX Cash Index. The cash index is also the best place to calculate your support and resistance. There is a lot of premium in the new September futures contract – so the cash index levels will not correspond well to the futures. It turns out that the SPX cash index actually did pound against the expected move on Friday, before the index rolled over. I missed that occurrence in the cash index because I was not allowing for the extra premium in the new futures contract.

I will publish a quick primer on determining a price turn with some precision later this week. It is unwise to put on trades simply because you are at support or resistance. There is a method to confirm a turn. Once you know it, you can watch the price to determine its probability of pivoting before you commit to the move. And as stated before, some support and resistance are more important than others. Usually, that will be where multiple support and resistance zones congregate.

Last week’s decline from the Fed meeting is impulsive and has exceeded the typical, symmetrical a-b-c wave. The “c” portion of the wave extended, increasing the probability that the market’s top is in. The market ended Friday very oversold on the intraday charts, so a bounce this morning is not surprising. However, the S&P 500 index is not yet oversold on the daily charts, so caution is warranted for longs.

Good luck today. I don’t trade Mondays typically, as I often state. Weird behavior often follows weekends, as it follows a Friday of quadruple witching expiration.

My fingers are tired from typing anyway this morning. The next update will come out about Noon EST. Have a great trading day.

A.F. Thornton

Navigator™ Signals for Day Traders Navigator™ Signals for Swing Traders

Pre-Market 6/18/2021

Jun 18, 2021 AF Thornton 0 Comment

As indicated yesterday, I am not trading today, nor would I with quadruple witching (monthly and quarterly options and futures expiration). There will be no commentary today as it is an important religious holiday here in Greece. Since just about everyone on this island is either a relative by blood or marriage to my wonderful wife, appearances are important.

The Navigator Swing Strategy remains 100% cash as it has been for the past week or so. As to day trading today, as previously set forth in these pages weird things can happen on quadruple witching days. As a perfect example, we see now (at 8:33 EST – the time of this writing) the S&P 500 making another pass at the WEM low – putting in a brand new (post-Fed Meeting) low at 4173.50. I hand calculate the WEM low to be 4188 – while the computer calculation is 4189. The point is that many people will lose money today if the S&P 500 futures close below the WEM low level.

I was forbidden from sneaking another trade to or from the WEM low here, but I will sneak in a few comments. In this area, between say 4165 and 4188, we have the important rising intermediate trendline at 4193, the Fed Day reversal low at 4183, the 50-day EMA at 4176, and the 6/3 pivot low at 4165. That is a lot of support.

But for today only – I would key in on the 4188-89 WEM options expiration low. There is nothing else to probabilistically cradle the market below 4188-89 after expiration this afternoon. The WEM low will act as a magnet.

While the Weekly Expected Move low holds the market 80% of the time, on the occasions when it doesn’t, especially on an expiration Friday, we could experience a waterfall decline of sorts as market makers rush to neutralize their losses by selling S&P 500 futures contracts. That would be the exception to the rule.

Otherwise, I would expect the market to move back to the 4188-89 level or higher before expiration at the close today – from wherever the market decides to pivot higher after this latest or any further sell-offs later today.

You don’t blindly buy the WEM low. You buy the pivot from the ultimate low or lows the market achieves today (maybe using a 15-minute chart as your primary analysis for the turn). So in one scenario, you may be buying close to the WEM low and continuing higher above it, with a successful retest of the Fed Day low around 4183 in place. Also, however, you could be riding a buy trade from a much lower level back up to the WEM low at 4188-89 by the close. Do you see how this works? Treat the WEM low as a magnet as long as the S&P 500 is trading below it.

Beyond that, the market needs to close above the rising, intermediate trendline currently around 4193 to keep the intermediate trend alive. The S&P 500’s negative divergence (meaning the broad market is not confirming the new high in the NASDAQ 100 by a long shot) is concerning.

But for the NASDAQ 100 firing its last shot higher yesterday, I would be betting that the intermediate trend is finally rolling over. I will have more to say over the weekend, as I am not 100% confident in the analysis yet, but rolling over is my leaning.

Trading much below the 6/3 low today, which sits at 4165.25, could trigger the outlier, waterfall decline from which the market will not recover back to the WEM low. Admittedly, this is something we rarely experience. For now, traders could be running the stops under the Fed Day reversal low at 4183 – only to load up inventory to bring the market right back to the 4188-89 level to take profits late in the day. Right now, the market looks to be forming a falling wedge pattern to reverse higher on the 24-Hour futures data.

With yesterday’s settlement all the way back up at 4212, we would be dealing with a gap this morning (and perhaps a true gap if we open below yesterday’s low at 4183). If so, GAP rules would apply.

Also, keep in mind that we would be opening outside our recent balance area, which has the southern boundary at 4205, with the 5-day EMA just above there at 4209 and the 21-day EMA just below at 4204.

Summarizing then, a close below the 5-day EMA (4209), 21-day EMA (4204), 50-day EMA (4176) and the intermediate trendline itself (4192) nips the intermediate trend. It definitively shifts our strategy from buying dips to shorting rallies for swing trades. Day trades have to be considered day by day.

Best of luck if you decide to trade today, and enjoy your weekend.

A.F. Thornton

Navigator™ Signals for Day Traders Navigator™ Signals for Swing Traders

Fed Update – 6/21/2021

Jun 16, 2021 AF Thornton 0 Comment

The Fed sounded dovish (no apparent policy changes), and the market is unhappy so far. This is the misstep I worried about that would seem illogical at first blush. We like easy monetary policy, right? Unless inflation gets out of the box, which it has.

The price did not even seem to vacillate as usual. Instead, it just sold off right to the Gap area and Weekly Expected Move Low. The WEM Low and our downside target was 4189. The low so far is 4190.25. Ok, I missed it by 1.25 cents. Nobody is perfect.

Let’s see if anything is walked back in the news conference. The WEM low and the 21-day EMA are holding the market thus far, but the wedge is broken. Of course, anything is possible, but it is reasonable to conclude that the intermediate correction we expect is underway. The close will define where we sit, which depends on where the market stands.

Stay tuned – the next update will come after the close.

Navigator™ Signals for Day Traders

Mid-Day Update – 6/16/2021

Jun 16, 2021 AF Thornton 0 Comment

Not much happening as would be expected prior to the Fed announcement in a few hours. The S&P 500 sits in the middle of the prior three-day range. The CBOE Put/Call ratio is neutral. Breadth on the NASDAQ and the NYSE are almost in parity, but slightly positive. The NYSE tick distribution has been mostly positive. The four positive sectors are Real Estate (XLRE), Energy (XLE), Health Care (XLV), and Consumer Cyclical (XLY). The remaining seven S&P Sectors are negative, though only slightly so. Financials (XLF) are leading on the downside.

Looking at the profiles, value (where 70% of the volume has occurred) and the VPOC are virtually unchanged from the prior three days. The more the market consolidates, the higher the expected move – so no changes from this morning. Target the all-time high on the upside, and the gap on the low side.

Of some short-term concern are the topping patterns on the 30-minute charts for the NASDAQ 100 and the S&P 500. Unless caught by the rising trendlines, these could be problematic.

Again, today is a bit of a crapshoot – so no predictions. My next update will be about 30-minutes after the Fed announcement at 2:30 pm EST.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 6/16/2021

Jun 16, 2021 AF Thornton 0 Comment

Navigator View

Overall, the market continues to rise incrementally along the top corner of what may be a rising wedge / ending diagonal and 5th wave Elliott pattern previously identified in these pages and visible on our primary Navigator Algo chart above. We are bouncing off the rising wedge support line pre-market.

Yesterday’s Globex session marked a slow tempo and weak internals, but on above-average futures volume. There was an element of “stalling” price action in yesterday’s regular session when the above-average volume failed to move the price materially higher. Stalling can mark a price peak.

Monday night’s Globex session did result in new all-time highs above the most recent balance area high, but there was no acceptance of the range expansion in yesterday’s regular session. Last night fared no better.

The regular session ended in the middle of the 24-hour candle, and the cash index experienced an inside day contained within Friday’s range from a regular session perspective. Thus far, last night’s Globex range traded inside yesterday’s regular session range and is trading in the lower 1/3 of yesterday’s 24-hour candle.

In short, the price action in the last few sessions is, for the most part, ambiguous. There is little to guide us then for today’s open, at least beyond what we already know. We are in the upper corner of a potentially ending diagonal/wedge, with neutral to complacent sentiment, in the context of a nominal 18-month cycle expected to peak sooner rather than later. Today, we have the added wildcard of a word salad from the Fed expected to hit the wires about two hours before the market closes today.

Volume / Market Profile View

The Above Chart Contains the Daily S&P 500 Regular Session Futures Volume and Market Profiles Chart. The Volume Profile is the White Histogram on the Left and the Market Profile is the Orange / Red Lettered Histogram on the Right for each Day. A Profile Grouping on the Chart With the Market Profile in Blue / Magenta is an Overnight / Globex Session for that 24-hour Day. Typically, You Will Only See One Globex Profile on the Chart Coming into the Morning, Unless I Want to Highlight a Past Globex Session for Its Importance. The Value Area (Where 70% of Volume Occurred on the Volume Histogram / Time was Spent on the Market Profile) is Highlighted in Grey. The Volume Point of Control for Each Day is the Red Bar on the White Volume Profile Histogram. The TPO (Where Price Spent the Most Time) is the Subtle Green Highlighted Line in the Red-Colored Area of the Market Profile Histogram. Other Key Levels are Lined and Labeled Except the Solid Horizontal Magenta Line Which Marks The Current Price Level When I Printed the Chart. Generally, the Key Areas on Each Profile are the Top and Bottom Prices of Each Value Area and the POC / TPO for Each Day's Profile. These are the Areas Where we Expect Prices in Upcoming Market Sessions to Encounter Support and Resistance. Other Areas of Importance are Where the "Single Prints" (the Single Vertical Time Lines on the Market Profiles) Begin and End. A Solid Vertical Line Will Appear Above and Below the Single Print Letters. Finally, Prices Often Find Support or Resistance at the "Halfback" or Halfway Point of the Current Day, Globex / Overnight or Previous Session Range. The Halfback is Marked with a Gold Horizontal Line that Extends Across Both the Volume and Market Profile Histograms. You can Also Eyeball it as the Halfway Point of Any Day's Range. Horizontal Reference Lines Drawn in Green Generally are Expected to Provide Support in a Decline. Drawn in Red they are Expected to Provide Resistance in an Advance. If the Reference Line is Drawn in Cyan, the Line is Highlighted For Your Awareness. The Grey Histogram at the Right Chart Margin is the Cumulative Market Profile Representing the Last 10 Trading Days. The High Points on the Histogram Represent the Price Where the Most Volume has Occurred in the Past 10 days, with the Valleys Representing the Lower Volume Price Areas. Price often Reacts at Both High and Low Volume Nodes.

Viewed from the perspective of the Volume/Market Profile Chart above, Monday night’s Globex trading range now looks like an island above Friday and Monday’s regular session range. Nevertheless, value (where 70% of volume occurred) rose from Friday’s levels, a positive. The high volume node (Point of Control or POC) also rose to 4234.50 and that is positive, but the POC was back inside the balance range of the past few sessions.

Today's Key Levels - S&P 500 Futures 24hr Data

Keep in mind that some of the levels identified below are dynamic, and can change slightly throughout the course of the day. Clearly, some levels are more important than others, especially levels where key lines cluster. Nevertheless, these are levels for your awareness as the market climbs and falls. I will always prioritize the most relevant levels in the narrative below.

The Micro Narrative

Going through the Algorithm labels, the Algo stops have been triggered with the overnight data, but those are intra-day candle readings that would not be confirmed until the candle closes today. Everything else is green except the trend strength. We typically look for a reading in excess of 20, so at 11.3 this morning, the yellow label color indicates waning strength. Keep in mind that these are intra-day candle readings that would be accurate only should the current day’s candle close at or below the 4237.75 price at this writing. However, it would take an unexpected, giant move to turn this particular label green. You never know on a Fed day, right?

The top line of the current, rising wedge pattern is a bit ambiguous at the moment. For clarification, it is useful to toggle between the 24-hour futures candle, and the cash index as measured by the cash SPY (S&P 500 Index ETF) or the cash SPX (S&P 500 Index derived from the underlying index members).

The fairest interpretation is that the topline may have been reached on the cash indexes, but I would allow up to 4255 on the futures. One scenario might be a tag of that level, perhaps even slightly above the all-time high yesterday at 4258.25, before rolling over and closing below yesterday’s low. Yesterday’s all-time high in Globex is weak, and subject to being taken out in regular session trading as Globex all-time highs should never be considered secure.

Keep in mind that the rising wedge pattern also could be invalidated. Even a throw over (rise above the upper line) is not uncommon before a reversal takes hold, and the pattern manifests as an ending, 5th diagonal wave.

Today's Day Trading Plan

You might wait for at least an hour after the Fed announcement before making your move – unless you are a gambler or you execute a specific option strategy.

Having said that, I rarely trade the last hour as the professionals are usually balancing their day-end cross trades on mutual and related fund deposits and redemptions. In other words, the final hour action tends to have cross currents unrelated to market strategy and market direction.

Tomorrow would be a better day-trading session for me, perhaps the last session for the week. Friday is quadruple witching day – meaning monthly and quarterly options and futures expire. Quadruple witching is not a wise day to trade unless you have a specific strategy aimed at the particulars of the day, such as an option pinning strategy.

If I were to trade today, the 5-day EMA would be my bull/bear bias line, and my absolute line in the sand would be a close below yesterday’s low around 4228 for anything beyond a day trade. I start getting excited at any range expansion and acceptance above 4249.25. In a melt-up after the Fed Meeting – target the all-time high at 4258. In a melt-down, target the Gap area down to the WEM Low. Always remember the S&P 500’s fondness for fighting in 50 point increments along the vertical scale.

If positive range expansion finally takes hold, and we find acceptance above the recent balance range, there arguably is some more upside room in the wedge or the pattern could be negated (as half of most patterns are).

In that case, we would need to consider a swing trade, as the market could double the May low to yesterday’s high move – some 200 points higher from here. That would complete a large, two-step – a-b-c correction. The current pattern portends otherwise, but I will put it on the table for your consideration. Even short of that, the Fibonacci projection from the May seed wave is 4293.51, which is right below the Weekly Expected Move high at 4306. Carry all of this forward in your narrative.

Since we have no great insights to trade from Globex or the last few sessions, assume more balance until the Fed comments are released at 2 pm EST. Responsive trade is the rule when the balance range is solidified. Watch internals. Mixed internals underpin responsive trade. Solid internals in either direction tend to lead to trend trading off the 5 or 15-minute 21-period EMA.

Truly, I don’t know how to call today. The waning strength and breadth of the rally is concerning. The cyclically sensitive sectors (including the Dow itself) rolling below their 21-day lines also warns of trouble brewing. The stock market / treasury ratio has yet to confirm recent new highs – possibly indicating defensive posturing.

Yet, it has been a difficult market to fight if you are a bear. The price seemingly climbs relentlessly. Growth stocks have reasserted leadership – a positive. And why would rates be falling of late if the economy and inflation are expanding out of control? Has gridlock in Congress tempered economic enthusiasm and inflation fears – especially as it relates to infrastructure spending?

Experience tells me that doubts should be resolved in favor of the current trend, which is bullish. But I have so many doubts! Regardless of the volatility this afternoon, keep your head on and don’t take unnecessary risks. You don’t have to trade today. There is always another train leaving the station. Your job is to make sure you have enough money left to take the next train.

Good luck today.

A.F. Thornton

Navigator™ Signals for Day Traders

Epilogue – 6/15/2021

Jun 15, 2021 AF Thornton 0 Comment

Nothing like getting the Pre-Market Outlook after the close, right? The updates must have been strange today without the base information. Somehow the writing got stuck in the scheduler this morning. It is out now, but prints below the two previous updates. Simply scroll down. I will do better tomorrow. Every once in a while, I will encounter a technical glitch.

The close was unimpressive, and we closed inside yesterday’s range. No surprise ahead of the Fed announcement tomorrow. I can argue both for higher or lower prices – but remain satisfied to be in cash for our Navigator swing strategy. As for day trading, the bias is still bullish, as we closed above the 5-Day EMA and Navigator trigger line, though not by much.

The market eeked out a new all-time high, but only in Globex last night. As for today’s session, the market could not fight its way out of a wet paper bag. It simply wound down from the open, with a few flurries higher in the afternoon. The flurries led nowhere.

Tomorrow is a crapshoot – so your guess is as good as mine. My concerns have been laid out in these pages. One caution, however, is in order. What if the Fed does start talking about tapering or even raising rates sooner than anticipated due to inflation concerns?

One assumes that the market would interpret such news negatively. And likely it would. But when a market wants to go up – it goes up. The narrative could shift to celebrating a “vigilant” Fed. So, don’t ever think you can figure these events out. We know the issues – let the price tell us what to do next. It will. It always does.

A.F. Thornton

Category Subscribers

Pre-Market Outlook – 6/23/2021

Mid-Day Report – 6/22/2021

Pre-Market Outlook – 6/22/2021

Mid-Day Outlook – 6/21/2021

Pre-Market Outlook – 6/21/2021

Neighborhood Watch Chart

Pre-Market 6/18/2021

Fed Update – 6/21/2021

Mid-Day Update – 6/16/2021

Pre-Market Outlook – 6/16/2021

Navigator View

Volume / Market Profile View

Today's Key Levels - S&P 500 Futures 24hr Data

The Micro Narrative

Today's Day Trading Plan

Epilogue – 6/15/2021

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