Another Calm Before the Storm?

Good Morning:

• Futures are quiet, trading near 3970. A multi-day string of key data points begins today with pre-market GDP revisions, then Fed Chairman Powell speaking at 1:30 PM ET.
• Mark primary resistance at 4000, then 4048.
• Support starts at a band near 3960 (SPY 395) to 3950, then 3890 (SPY 390 and the Put Wall).
• Today likely sets up a strong directional move into the 12/14 Fed announcement, coinciding with the 12/16 monthly options expiration.
• On a breakout higher, we are looking for a target of 4200. A close above 4000 is bullish, as 4000 should invoke strong support.
• On a break of 3900, the major support line is the 3600 Put Wall.
• Gamma flips materially negative below 3900, likely to coincide with a large implied volatility spike.
• Lower equity prices and higher implied volatility would invoke a reflexive feedback loop wherein dealers exacerbate declines by selling futures into dips.
• Meanwhile, all Navigator Algorithm timeframes are either in cash or short. We formally closed out the 10/13 swing buy signal on Monday. However, swing accounts were already in cash or short from the hourly sell/short signal on 11/24.
• This morning’s takeaway is that the range of possible prices is sharply skewed to the downside.
• But – and it is a big but (no pun intended) – you will see a rising wedge pattern still visible on the chart above, predicting one last burst higher, possibly into that 4075-4200 target area set back in October.
• I would call that the “pain” trade for now because nobody expects the market to continue higher.
• As the market currently sits on the lower wedge boundary, there is not much tolerance for lower prices today other than a few stop runs.
• A rally had been underway Monday until Fed Governors hit the speaking circuit to talk the market down. The Fed does not appear to want the stock market to go up.
• So even if the rising wedge pattern gets a final leg higher, the rally will be short-lived before the market rolls over on the Nominal 80-day cycle.
• Don’t forget that today is the last trading day of November – so not always ideal for day trading. And the market is not likely to do much until Powell’s speech is published later in the session.
• We had an exceptionally good day in the trading room yesterday. I will be in the room again on Thursday.
• You have to see the enhanced day trading algorithm to believe it. It is an awesome new tool for our arsenal.
• I have also carried many of the improvements and concepts into the swing algorithms.
• The main improvements make the algorithms use artificial intelligence to predict future prices and turns.
• In other words, we know the time and price level where the buy or sell signals will likely paint in the future. 
• Then we look for price action (HOLB or LOHB breaches) for final confirmation.
• The algo can predict patterns up to a year in advance.
• After seeing the new algorithms operate, my wife commented that she would be pleased to see my brain improve, as she currently views it as artificially intelligent too.

A.F. Thornton