Founder's Trading Journal Bernie Madoff with his Clients’ Money / FTX’s Bankman-Fried his Clients’ of their Money Too – 11/17/2022 by AF Thornton Nov 17, 2022 0 Comment S&P 500 Continuous Future - Navigator Algo Sell Signal on Hourly Chart Good Morning:Tuesday’s sell signal on the hourly charts has morphed into a Navigator Swing sell signal overnight, triggering at 3942.Of course, today’s candle needs to close below 3942 to validate the signal. I will keep you posted on that front.A pullback from the meteoric short-covering candle on the daily charts a week ago today is to be expected.Nevertheless, we must be careful in the current environment, and the downturn is a rejection of the 200-day moving average on the daily charts.Also, we may be peaking the second of two nominal 40-day cycles in the first 80-day cycle slated to trough in mid-December.In short, it is too early to tell whether the 20-week cycle wave has peaked. We will know in due course. This may be a healthy pullback on the way to our original 4100-4150 target.But the reason we have been working the hourly chart signals rather than the daily ones is precisely what we are encountering this morning: waking up to a big sell-off.The FTX contagion grows, as do the global recession risks continuing to plague the markets.Futures are lower to 3945, down from overnight highs of 3990.Our key levels remain largely unchanged, with resistance above at 3960, then 4000. Support below is at 3904.For today, do not be surprised if the S&P 500 stages a rally today back into 4000, and with our volatility estimate of 1.03% we do not see a move down through 3900.That possibility is markedly higher for tomorrow and into next week.Yesterday there were very large volumes at the 4000 strike. The call activity, which is likely call selling, adds to resistance at that level.Conversely, there was clearly a lot of put activity below, which translated to an uptick in open interest at 3900 and 3950.We think these are likely short-term put sellers.With the algo in decidedly negative territory, we assign an edge to the downside after OPEX.We will watch the 4100 Call Wall area as resistance into month end.The Call Wall lines up closely with the widely watched SPX 200-day Moving Average mentioned above and hovering near 4080.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.