Buys – Another Shot 10/10/2021

Buys – Another Shot 10/10/2021

There is a lot that does not make sense right now. But regardless of the narrative, price action is what matters.

We sit here today with the highest inflation reading in 39-years. Yet Gold does little or nothing (and has done little or nothing), rates remain low, interest-sensitive growth stocks rally, and so do interest-sensitive utilities and REITs.

Perhaps the market believes that inflation is peaking here – and there is a solid case to be made.

Whatever the Fed plans to do, it is no secret and is already baked into the tape.

If the market holds its ground at 3:55 EST (in 25 minutes), which means it holds above 466 on the SPY, we will reenter a 25% position in each of the DIA and SPY at-the-money calls expiring January 18th at or near the closing price.

Since we will be executing in the last 5 minutes, I can only publish after the fact. At the moment, I am simply waiting for expiration to be out of the way.

The DIA has remained the strongest of the indices this past week. It has a symmetrical V reversal pattern, which is also visible in the SPY.

Straight calls are okay now with the drop in the VIX today. We will hold our other 50% in abeyance. I will communicate stops over the weekend, as they are unnecessary (and not possible) on calls. Our risk is limited to what we pay for them.

Stay tuned,

A.F. Thornton

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.

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