Buy on the Canons – Sell on the Trumpets?

Buy on the Canons – Sell on the Trumpets?

S&P 500 Index Futures - Hourly Chart
S&P 500 Index Futures - Hourly Chart

Good Morning:

 — If there is one thing that has kept me out of the bear camp, it has been the draconian doom and gloom of the crowd.

 — And who doesn’t sympathize with the bears among them? Another banking crisis is at hand; WWW III looms; Rampant Inflation permeates the economy; the Russians promise to destroy us now that we will use Uranium infused bullets and shells (essentially Dirty Bombs) in Ukraine; etc. The bears have a lengthy list of legitimate concerns.

 — But the point is that when the crowd tilts too far to the negative side, that also means that they have positioned themselves accordingly. Who is left to sell? And then the market stops falling. Soon enough, the buyers show up. Fear of Missing Out (FOMO) kicks in, and it is Spring again in the stock market.

 — And in the darkness that pervades a low, I always harken back to one of my most revered mentors, who told me that if buying the stock market feels good, it will likely turn out to be a bad decision.

 — He used to call it the “Puke Point.” When you feel ready to regurgitate, it is time to buy. Until then, hold on to your cash.

 — And, naturally, the Puke Point is somewhat malleable, like most things in the stock market. A good short-term trade might start with you feeling mildly ill. That is how I view the market now.

 — Perhaps a nice rally “leg” will ensue from yesterday’s S&P 500 Futures 3994 buy signal before the market sells off again.

 — Hence the Archimedes Hourly Strategy is the preferred vehicle when positioning from “mildly ill” with trouble still on the horizon. Perhaps 4100-4200 might be a reasonable target before it is time to “sell in May and go away.”

—  Whereas the Puke Point from your hospital bed, where all seems lost in the cancer of negativity, is more likely to lead to the start of a brand new bull market – typically from the bowls of September or October.

 — In my opinion, we are not at the September/October kind of entry point. Hence, following the Archimedes Daily Strategy typically presents a better long-term buy signal. Keep in mind, however, that the hourly signal always has the potential to be an early entry into the daily strategy, as we are seeing this morning.

 — Lest we get too comfortable, note that the Unemployment Claim numbers arrive tomorrow morning, followed by a slew of Fed Governors speaking. We need to kill all those jobs to make up for the errors of the Central Planners.

 — And the Fed’s favorite inflation measure, Personal Consumption Expenditures (PCE), will be released on Friday.

 —  One has to brave these reports upon entering the market now. But the more confirmation you need, the more you will pay. And the more you pay, the more money you will lose if your stop is triggered.

 — And lest I forget, Friday is the last day of the 1st Calendar Quarter for 2023. Money Managers tend to do strange things into the close, like “Window Dressing” their portfolios.

 —  For example, large-cap tech stocks have been doing well of late, with companies like Apple close to all-time highs. Who would have thought, right?

 — Client to Money Manager, “Hey, why did we perform so poorly for the quarter? I see from my statement that we own Apple and some other names that did well.” Money Manager to Client “well, you know how statistics and performance can be so confusing; look to the long-term, and all will be well.” Money Manager to herself ” I am so glad we sold those bank stocks and bought Apple and a few others on the last day of the quarter – or we would look even more like fools!”

 — We use a few ticks below the 5-hour line for the Archimedes Hourly Strategy stops and a few ticks below the 5-day line for the Archimedes Daily Strategy stops.

 — Without a subscription, the decisions we discuss now and then in this free blog will not be timely. But there is always something to be learned from following our decisions, even from afar.

And so it goes…

A.F. Thornton 

AF Thornton


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.


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