As always, all market references below are to the S&P 500 Index Continuous Futures Contract, 24-hour session.
The Deep State Davos dictators, Joseph Goebbels–trained media conglomerates, and Silicon Valley techno-fascists ran a trick/trap operation last week because they had lost control of the narrative. Courts overturned, and companies reversed mandatory vaccine policies. OSHA had to abandon its compulsory vaccine rules. President Brandon’s approval numbers had dropped below those of any modern President. Build Back Bankrupt was struggling to pass the Senate. The crowd was no longer buying less freedom and more government.
The Brandon junta had to rejuvenate fears and shift blame. Voila – the Davos crowd dropped another of (many more to come) Covid variants on the Thanksgiving table while families were gathered around to stoke the fire, and the financial markets were vulnerable to potentially light volume and a half trading day. Anything to keep the little people off-balance. Keep in mind that the mild Omicron variant had been around for two weeks. Yet, the W.H.O. had to inject the “emergency” into the news cycle on Thanksgiving evening?
There are no coincidences. The insiders made a fortune on this market operation last Friday. But the damage has been done. We have to determine if this morning is a dead cat bounce or if the animal is merely wounded. By the way, what is the new narrative? The new (but milder) Covid variant might be “vaccine-resistant.” Really?
The hard data shows that all of Covid is vaccine-resistant. Anyone paying attention knows the vaccines have become practically useless on the core virus and its variants. Running a scam like this would put most of us in jail – not on Billionaires Row.
Emerging evidence also shows the vaccinated may be worse off than the unvaccinated when all is said and done. Two years of this psychological operation to introduce Totalitarian Rule is more than enough. We are all sick and tired of it – and we are tired of Komsomol Fauci too.
Rejecting the latest Covid lies, savvy stock market participants have been buying all night, and the market is recovering significantly this morning. Already, the market managed an orthodox gap open in Globex and climbed up to the bottom of Friday’s gap down at 4642.75, now the Globex high.
All told, the market has already recovered a little less than half of the decline from the new, all-time high at 4740 achieved about a week ago. For now, we have to assume that a lot of this overnight buying is short-covering. Whether or not genuine buyers are at hand remains to be seen in the next few sessions.
The “One Thing” has shifted from bonds and interest rates to oil. Oil nearly collapsed last week, falling to $67 a barrel from $85 in late October. That could indicate that the recovering economy will sputter, and inflationary pressures will decrease. Oil is now THE barometer of economic recovery.
Do you remember April 2020? The price of oil futures dropped below zero. Falling oil prices, along with falling interest rates, may reinvigorate the stay-at-home trade and NASDAQ 100 index as commodities and financials wane again. It is too early to tell – but I would still keep an eye on the DBC, IWM, DIA, and XLF, though I believe that oil’s collapse is a game-changer. Watch sector fund flows carefully this week for clues.
Swing traders need to warm up their “Enter” keys here and stay alert for my signal. There is no draconian downdraft or major cycle due now. We were declining into the nominal 80-day cycle trough when this operation hit.
Over a month ago, I had already pointed out that we needed to expect some late November weakness into this trough. We now transition into the last few days of the current month and the first few days of the new month. These days are primarily bullish for 401(k) payroll cash flows into the market. The Santa Claus rally is also on the docket in early December.
If anything, a trading range could finally be upon us. But before making too many judgments, I want to see how the market navigates this retracement of the recent decline in the next few sessions. The Navigator Algorithm kept Swing Traders out of this decline, so let’s allow it to bring us back in at the appropriate time.
Day traders should first be aware that the short-term bias has shifted to bearish as long as we stay below the 21-day line at 4642.75. Also, the expected move (at double recent levels) anticipates a lot of volatility for this coming week. This coming Friday’s expiration contemplates a 135 point move in either direction from last Friday’s close.
Also, keep an eye on the November monthly candle open at 4608.25. Falling below this level will accelerate any decline. The level will dictate whether November’s candle is green or red, asserting some influence on December’s prospects and whether or not another new high can be achieved before year-end. A red candle would indicate that the breakout from the September/October outside, outside pattern is failing.
We are otherwise in a period of seasonal strength, and day traders should be looking for market-generated information for guidance. Sellers lost hope of lower prices from the gap open last night, so they are currently on the ropes.
On the upside, how far can we invade Friday’s gap-down today? On the downside, how far do we invade this morning’s orthodox gap higher?
Friday’s gap down starts at 4643.25, but overnight trading found resistance just below at 4642.75, now the Globex high and also the 21-day line and mean. These are vital levels to overcome if Friday’s decline was a one-off, news-driven event. Mark this morning’s open for the top of today’s gap higher.
Again on the upside, conquering 4650 for at least a few hours (as a half-roundie and the five-day line) is bullish and puts the Navigator on a buy-alert status. It is a lot to ask the market to take these levels out today, as Friday did severe psychological damage. Also, it is not unusual to see a retest of Friday’s low about a week out – though most lows since last year have been “V” reversals.
Cutting to the chase, I will stay optimistic above the overnight halfback at 4615.75. Overnight inventory is 100% long, most short-sellers have covered, and there is a 70% chance of a fade at the open. If there is no fade, assume an initial, bullish bias but expect strong resistance around 4650, and then on to a complete gap fill up to 4700.
On any opening fade or a reversal from 4650, I will be looking to go long at the overnight halfback at 4615.75. Looking doesn’t mean doing – it is where I will look for confirmation of a turn. Below 4615.75, my next “look” will be at the Globex low of 4688.75. But even before that level, short positions become more attractive if we fall through the November candle open at 4608.25.
I will have more later and an important announcement about the new, live trading room officially launching on December 1st.
Good luck today.
A.F. Thornton