Navigator™ Signals for Day Traders Morning Outlook – 4/9/2021 by AF Thornton Apr 9, 2021 0 Comment Let’s start here: When day trading, sometimes we tend to get lost in the weeds. We are likely in the midst of a bit of a momentum blow-off, coming out of volatility squeezes and pushing through the Weekly Expected Move highs for the week. In the chart above, I highlight the last two momentum blow-offs since the 2020 March China Virus lows. In one or two days, we erased a couple of weeks’ worth of gains. One way to prevent this, especially if you are buried in your day trading screens, is to always set a disaster stop. That way, no matter what hits the tape if you are trading with your microscope, you are covered. There is no level in particular to target – just decide what the maximum loss is you want to take in an unanticipated liquidation break. Obviously, it needs to be wide enough so as to permit normal fluctuation. Looking at the S&P 500 as our proxy this morning, the Asians explored prices all the way up to 4102.50, but could not hold the level and closed back inside the top of yesterday’s regular U.S. session.The Europeans then gave it the old college try, but could not even get it as high as the Asians, and are holding near the Asian close at 4090.75 at this writing. As you can see from the first chart above, we remain at the top of the daily trading channel, approaching overbought territory with nominal 40-day and 18-month cycle corrections looming – and indexes operating at various levels of divergences. I have seen healthier environments and will be taking longs cautiously. Price exploration was even less convincing in Globex for the NASDAQ 100. Overnight inventory is net long, and we are coming in this morning testing the top of yesterday’s gap after rejecting 150 points overnight. A full or partial gap fill is possible. Trading below yesterday’s low and into the gap would change the overall tone to negative, and don’t discount the possibility that the market makers could try to press down to the WEM high to let their weekly options expire profitably. This is why Fridays are not my favorite day-trading days. Screens go green if we come back up through the open. Comments are much the same for the S&P 500 index. Overnight inventory is net long, and we are coming in this morning with the price inside of yesterday’s regular session. The S&P 500 already filled its gap yesterday. Use yesterday’s point of control at 4086 as your bull/bear bias line. Trading below yesterday’s low would change my overall bias to negative – and could indicate that the 40-day cycle correction is underway. Here too, as with the NASDAQ 100, the market makers could try to press down to the WEM high to let their weekly options expire profitably. Screens go green if we come back up through the open. Best wishes for a profitable day. I am sitting today out – it is a travel day for me. A.F. Thornton
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AF Thornton Website: https://tradingarchimedes.com 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.