Adjustment – Leveraged Accounts

Adjustment – Leveraged Accounts

S&P 500 Index Continuous Futures 5-Minute Chart - At Resistance
S&P 500 Index Continuous Futures 5-Minute Chart - At Resistance

The Founder’s Group just exited the Emini Futures for Leveraged Accounts at 4382.50 and will replace it with a 100% position in the SPY. The swap deleverages the strategy for the rest of the day, locks in short-term profits, and keeps the market strategy. We will keep stops just below the SPY halfback at 434.25.

We don’t like to hold futures overnight in these circumstances. When we have a quick 56 point gain having reached our second resistance target on the day, we take the profit but stay in the market (unleveraged) consistent with the larger picture unfolding.

The S&P 500 is right at this morning’s 2nd resistance level at 4380, the Volatility Trigger, and last week’s high. The climb has a slight wedge look to it, so we may get some selling before it can break through the resistance.

The easy gain is over. The market must now work through the resistance up to the 21-day line. But if the market manages to close above yesterday’s futures high at 4399, it would achieve both a daily pivot and a weekly pivot, closing above last week’s high at 4391.25.

Also, a break through the Volatility Trigger shifts dealer focus back to positive Gamma. Instead of making losses worse because the dealers have to sell futures, the Dealers will turn around to buying dips and selling rallies to neutralize portfolio deltas. The shift also will reduce volatility.

I would be even more encouraged if I see traders buying more call positions out on the spectrum and reducing the put positions congregating at 4000. Chairman Powell’s announcement that he will stick with a quarter-point raise at the next meeting should provide some certainty that will discourage short interest.

A.F. Thornton

AF Thornton


A.F. "Arthur" Thornton is an expert in logic, risk/reward quantification, market fractals, pattern recognition and asset class behavioral analysis with 34 years devoted to developing algorithmic and quantitative trading systems. In addition to trading his own capital, Mr. Thornton designs custom algorithmic and quantitative trading systems for a small and exclusive group of exceptionally qualified traders.


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