Founder's Trading Journal Mid-Day Update – 6/17/2021 Jun 17, 2021 AF Thornton 0 Comment Bizzare – that is my primary thought here. Let’s start with 10-year US Treasury yields paring back under 1.5%. Clearly, that favors growth and tech. Next, the NASDAQ 100 screamed out of the open straight up to tag a new all-time high before stalling. Next, the S&P 500 went straight to nowhere – stalling right at the overnight high. Financials (XLF), Basic Materials (XLB), and Energy (XLE) are getting clobbered – all down north of -3%. Energy is approaching -5%. The S&P 500 ran into the supply mentioned this morning. NYSE breadth is nearly 3:1 negative. NYSE Tick distribution has been negative all day. The broad NASDAQ breadth is even. Honestly, I don’t know what to make of this at all. Is the QQQ and/or NASDAQ 100 a solo artist? A one-hit wonder soon to join the living dead? Or, will it pull everything else back up with it? I would favor the former over the latter. But at this point, I don’t know. I am wondering if any of this has to do with quadruple witching tomorrow? Maybe that is where the term “witching” comes from. Is it another full moon? I woke up at 4:30 am here, and that is when both indexes were retesting their lows overnight in the futures market. Trading rehab never worked for me. Naturally, I took a dive toward my keyboard. I picked up two contracts on each of the NASDAQ 100 and S&P 500 futures (counting once again on the WEM lows holding through Friday). I woke up to blissful profits, but sold at the 15-minute / 21 EMAs on the cash indexes about an hour after the open. I could not have imagined the NASDAQ 100 would keep going. All I will say for now is that I would keep my powder dry until the picture is a bit clearer. The divergence here between tech and the rest of the market is not healthy. I need the weekend to figure all this out. I have seen some weird markets and weird times, but this dystopian drama we have all been experiencing seems to get stranger and stranger. I just picked up two S&P 500 minis off the 4189 WEM low for a trade. Hang in there with me until we can ready, fire, aim again. A.F. Thornton
Founder's Trading Journal Pre-Market Outlook 6/18/2021 Jun 17, 2021 AF Thornton 0 Comment Focus on these three levels this morning – 4213 (the overnight high), 4196.50 (the low of our recent four day balance area) and 4183 (the overnight low which also clusters with the WEM low of 4189 and the 21-day line at 2199. All of these numbers relate to the 24-Hour S&P 500 Index futures but you can run similar lines on the SPY or SPX cash index. The FOMC can change the market’s tone, and sometimes that is exactly what they intend. But we got the usual word salad yesterday, and the initial reaction to the announcement was mixed. Prices initially recovered 100% of what they lost, but then pulled back into the close. Then when it came to Globex, we found the markets not only revisiting the lows but putting in marginal new lows, before recovering slightly into the NYSE open here in a few minutes. Today will give us the true clues to our near-term future. It is important to note that the intermediate trend has not yet been violated. While the day was rocky and the range was wide, it can only be viewed as negative in the context of the narrow ranges of late. Compared to the usual correction, the price action has not been particularly negative as yet. While overnight inventory is 100% net short, we are still trading within yesterday’s range so the early trade is a “maybe.” We are close to the overnight halfback – so maybe the overnight traders took their profits already and that further skews the early trade. The key takeaway from yesterday, which held the 21- day EMA on both the S&P 500 and NASDAQ 100, is that prices found acceptance below the low of the recent four-day balance, and overnight activity went further below that. Early trade could be governed by persistent overhead supply from that balance (especially the marginal new high longs I discussed yesterday). All of these participants may want to liquidate – but weak hands are out of the way for now with yesterday’s temporary plunge. Mark the overnight high as weak as it went right to settlement and reversed. Should we see strength, assume moving up and through this level as a potential buy and then monitor for continuation. Overnight activity tested the TPO VPOC from June 3rd. This would be the target with any further weakness. Below than, let’s talk again Monday as you should be shorting or in cash.A.F. Thornton
Founder's Trading Journal The Walk-Back- 6/21/2021 Jun 16, 2021 AF Thornton 0 Comment In the news conference, Chairman Powell walked back and clarified the dovish stance outlined in the initial release. First, he clarified that rates would remain near zero – dovish. That is when the sell-off first abated. Then, Powell indicated that the Fed would start selling some mortgage-back securities – which contracts the balance sheet and moves away from Quantitative Easing. This, along with introducing the tapering topic and more governors becoming hawkish, was enough to calm the hawks without alarming the doves. So the market has recovered quite a bit from the initial decline. And that is why you have to give the market some time to digest all of this, sometimes even the entire next session. Most notably, leadership completely reversed from tech to financials, which indicates that higher rates are ahead. The 10-year rate confirmed the same. I will reserve my deeper analysis for the pre-market outlook tomorrow. So far, there is nothing extraordinary to concern us with today’s decision, except for a market that likely needs to take a rest, and this is just as good of an excuse as any. I must also assess a possible leadership change. News often distorts the market, and today was no exception. Let’s see how we close and how the market behaves tomorrow. Let me also harp again on the Weekly Expected Moves that I calculate every Friday for the week that follows. I specifically mentioned the WEM Low this morning – and the likelihood we would tag it in any move to the south. Once again, it was the WEM Low that caught the market in this decline. That is vital information to have and know. I picked up $2,500 off the low in a nice trade with a couple of S&P 500 mini futures contracts. That made spinning my wheels all day worthwhile. Have a wonderful evening. A.F. Thornton
Founder's Trading Journal Special Update – 6/21/2021 Jun 16, 2021 AF Thornton 0 Comment The SKEW index, which measures smart money tail risk, just hit the highest level in its history at 161.35. While not a perfect timing indicator, this is not to be taken lightly. It could portend a Fed misstep, but what would that be? If the Fed fails to pull back on QE – is that a negative or a positive? Is the market looking for a hawkish or dovish Fed? This is not an easy call, but the price should tell us, and why I prefer to trade tomorrow.
Founder's Trading Journal End of Day – 6/11/2021 Jun 11, 2021 AF Thornton 0 Comment Sure, it is approaching 11:00 pm here on a Friday night, but I would having trouble staying awake with this market regardless. Remember Pete and repeat? They are back again today.Nothing is resolved in terms of balance. The cluster of support around the 4220 – 4225 area caught the fall, as I suspected it might this morning. It may have saved the “look above and fail” trip to 4205. Time will tell.We called the low of the day within minutes after it was in – 14 contracts traded was the key. That is where volume and market profile can help. The “V” drive was a nice long.Settlement is likely to be at the same level as most of the past week.All doubts in a bull market should be resolved in favor of the bull. We can start there and update the narrative over the weekend.Enjoy the time off for a few days. I am glad the snooze fest is over this week.A.F. Thornton
Founder's Trading Journal Mid-Day Outlook – 6/11/2012 Jun 11, 2021 AF Thornton 0 Comment Yawn. While it has been a slow road today, the market has thus far survived the tests previously discussed and congregating around the 4225 – 4227 area. Investors traded only 14 contracts on the S&P 500 at the 4221.50 low, which could be the low of the day.Perhaps there will be some action at the close, but nothing is resolved. The market remains in balance and largely in the same value area as the past week. Tempo is slow, internals are mixed, and that won’t drive a trend.There is a nice “V” off the lows and into the 4228.30 settlement from yesterday. With another small dip forming a right shoulder, we may have a long trade before the close. I did take a nice short off the 4236 area this morning, but my confidence level was not high enough to convey it. I used two micros and made $50. Again, yawn.I would take a long trade if it presents, but I want to be out for the last 30-minutes of trade on a Friday. I think it is up to the bears to press their case here. We can criticize the breakout failure, but we have not broken down either – at least yet.Stay tuned,A.F. Thornton
Founder's Trading Journal Pre-Market Outlook 4 -6/10/2021 Jun 10, 2021 AF Thornton 0 Comment This is a good place to rethink swing long positions and abandon new ideas – at least temporarily. Consider position size and leverage carefully. This will be my last comment until early afternoon.
Founder's Trading Journal Pre-Market Update 3 – 6/10/2021 Jun 10, 2021 AF Thornton 0 Comment Leadership surrendered to health care and consumer staples – defensive. Look above and fail per balance rules in S&P 500. Likely to take NASDAQ 100 with it. Uptrend line testing. Careful here. Moment of truth.
Founder's Trading Journal Pre-Market Update 2 – 6/10/2031 Jun 10, 2021 AF Thornton 0 Comment Critical test, prices coming back into balance range as breakout initially rejected. They should not come much deeper or we could see a reversal – hence the bull trap. Moment of truth.Apple – a bellweather – not holding VWAP.
Founder's Trading Journal Pre-Market Update – 6/10/2021 Jun 10, 2021 AF Thornton 0 Comment Solid breakout on the S&P 500 with strong internals. The initial move includes some short-covering, we will see if price is accepted in this area. The NASDAQ 100 has broken out above its near-term high, but remains below the all-time high. If price is accepted here, the head and shoulders pattern to reverse higher is solidified. I am continuing to lighten on my personal positions in the rally. I want the weekend to make any further decisions.Energy and tech are leading. That is unusual as of late. Financials are laggards thus far.Stay tuned.