If nothing makes sense to you right now, you are not alone. We are all victims of Mass Formation Psychology, and it is no accident. It is a PsyOps operation likely conducted out of the leading, left-wing, behavioral think tanks at the behest of the Davos totalitarian cabal. Dr. Mattias Desmet has the best handle on this and the best explanation I can find. It is worth a few minutes of your time to listen to his analysis here. Mass Formation Psychology is genuine, and the future of our Republic is at stake.
And that is the best introduction I can give you as to why the market is struggling in the wake of a new strain of the China Virus that is (i) milder than its previous cousins and (ii) just as vaccine-resistant. When one of the Big-Pharma cartel chiefs announced last night that it could take months to develop a new vaccine, the market dropped precipitously. That’s right; a less virulent strain of a virus that is already vaccine-resistant with a 99% survival rate is tanking the market.
Now, I am fortunate enough to have a brilliant reader base. You are not so easily distracted. You already know that you must keep your eye on the ball. The problem at hand is less about the new virus strain and more about the overvalued market. Fed policy is becoming less friendly. And even if the problem is about the virus strain, the market is focused on how governments worldwide will use the event to implement more authoritarian totalitarianism that could negatively impact corporate earnings. In other words, think of the theme “the cure is worse than the disease,” and you will be close to the truth about the market’s concerns.
Of further note, the stock market just triggered the “Hindenberg Omen” and its cousin the “Titanic Syndrome.” I won’t bore you with the technical details; know that we have a combined 12 triggers in a few days. It has been rare to get a cluster of such signals in the last 25 years. Historically, medium-term returns that have followed such signals have been, shall we say, challenging?
Swing Traders
Swing traders should continue to keep their powder dry until our Navigator Algorithm conjures up a buy signal.
Day Traders – Key Levels
Day traders had nearly a perfect roadmap yesterday, though we never quite reached our initial turn target in the morning. The day was strong for the Monsters of Tech, which helped carry the NASDAQ 100 and S&P 500 indices higher.
In a perfect world, that might have been a good thing. But this is not an ideal market. Other indices, such as the Dow and Russell 2000, were anemic. So the broad market continues to diverge from their big-cap brethren. We need more to turn the tape around.
Day traders should be aware of the monthly open for November at 4608. The monthly candle turns red below that level, and we tagged 4608 again overnight. Other than that, know that Friday’s low was 4577.25, yesterday’s low was 4588.75, and last night’s low was 4582 – smack in the middle.
On a positive note, the overnight sellers lost traction at 4582, and we are trading around overnight halfback at the open. On a negative note, this is the last day of the month, and we might trade around 4608 as bulls and bears battle it out for the candle color.
Also, note that we have a true gap lower and gap rules apply this morning. Start there as there is significant M.G.I. associated with how the market handles this gap.
Use Friday’s low at 4577.25 as your line in the sand today. Recall that the 50-day line is the next signpost below that at 4529 for a first downside target. We can stay optimistic above Friday’s low and preferably above 4600 and 4608.
Target yesterday’s high at 4669.75 for the bullish case. But remember that we need to get through the 21-day line (mean) at 4641 first to truly turn the tape bullish again and have a chance at taking the 4669.75 level.
While noting all of the specific numbers above, watch your downtrend and uptrend lines as they often interfere with hitting exact targets. Remember, we might be in a trading range or triangle for a few days before the market resolves anything. Also, this is the last trading day of the month, which can lead to some anomalous trading as institutions adjust their portfolios.
A.F. Thornton