Founder's Trading Journal - 9/15/2022 | Archimedes Methodologies

S&P 500 Index Continuous Futures / Today’s Close – 3919.25 / -46.25 pts (-4.35%)1.17

Thursday Afternoon, September 15, 2022

Navigator Swing Strategy™

Navigator Algorithm™ Trends

Navigator Trading Sandboxes™

Click here to learn about Trading Sandboxes and how they work. The table below lists the granular price obstacles a trader will encounter inside the expected move ranges. The DEM and WEM help us narrow our focus for the day and week ahead. We also included a few important price levels outside the range boundaries – for the less probable occasions (like yesterday) when the price exceeds the edges.

To successfully navigate this data, traders need to monitor the price auction with volume profile histograms for the day and a cumulative profile aggregating the last 10-20 sessions. As price travels north or south from level to level, volume tapers off at reversal points, and the process begins anew in the opposite direction. Professionals call this “price discovery.”

Founder's Journal and Trading Notes

Below are a few relevant excerpts for today from A.F. Thornton’s trading journal. Check out the full notes with a paid Subscription, which also includes access to Mr. Thornton’s live charts in the Founders Trading Room. The full journal contains Mr. Thornton’s daily trading plan and reflections on his daily gains and losses.

References to “the Market” below mean the S&P 500 Index. The quoted numbers are from the front month E-Mini Continuous Futures Contract (now December 2022).

A few excerpts on today and what to expect tomorrow...

“There are many things to worry about in the current environment; e.g budget and trade deficits, unemployment, sovereign debt, corporate earnings, GDP, recessions, elections, wars, weak leadership and more. But none of that really matters as much as this: there is an estimated $1 quadrillion in global derivatives (e.g. options, futures, swaps, etc.) outstanding. For some perspective, $1 quadrillion is $1,000 trillion.

The actual capital (down payment or margin) backing these derivatives is a mere fraction of the dollar amount outstanding – literally pennies by comparison. What happens when a panic starts, and the majority of market participants head for the exits at once? We could face a 1929 crash on steroids. Central Banks around the world could not possibly rescue such a market, much less the economy.

Confidence is fragil. It takes many years to build, but can be lost overnight. One morning, we will wake up and the world as we know it will be over. I believe more than any other time in my career that this is a real possibility.

This is not a time to be long financial instruments. If you are approaching retirement, you may want to cash in your chips. Talk to your financial advisor and make sure he or she has some gray hair.

It may not be professional to say so, but I have an unsettling feeling in my gut, unlike anything I have ever experienced.”

A.F. Thornton – Wednesday Evening, 9/15/2022

Friday’s options and futures expiration already began to exert some influence today, as the market danced around 3950 for most of the day before spilling over toward the September 7 low (3883.50).
While the market managed to stay above 3900, the bull’s main hope is a double bottom at the September 7 3883.50 low.
I still don’t see evidence of a bottom forming in the new decline, so lower prices are the most likely path.
It seems that the WEM low at 3975 is a lost cause by now, so I put the two standard deviation WEM low at 3882.50 into the table above – coincidently, the level is only a point below the September 7 low.
Mercy from options and futures expiration could draw prices back up to 4,000 or hold them near 3900, but the probabilities are low. Still, carrying the possibilities forward in your narrative does not hurt.
With the rollover, we can now project some lower targets starting with 3730, where the new down leg equals the 8/16 to 9/7 down leg. The 1.618% target is 3758, with the 2.618% target at 3000. We also drew the levels on the first chart above, along with some lesser goals.
Our regular Navigator Swing Trading accounts remain 100% cash, with aggressive accounts short from our last sell signal on 9/12 at 4127.50.
The key 10-year treasury interest rate closed a thin mint short of a new high today. As I have said, a new, sustained high in 10-year interest rates likely means new lows in the indexes.
Meanwhile, Rome continues to burn while ~~Nero~~ President Orwell obsesses about Trump World.
Batten down the hatches; a bad storm is brewing next week and it could come early tomorrow.
I hope I am wrong.
I want to be wrong

A.F. Thornton

BluPrint’s business model for retail services is sharing the buy/cover short and sell/short signals generated by our proprietary Navigator Algorithms™ for the S&P 500 index. Subscribers can implement the signals with the SPY ETF, SPX or SPY options, S&P 500 EMini (and micro) futures, or a combination of these instruments as the context warrants.

Futures and options are leveraged instruments that involve high risk, volatility, leverage, and loss. They have different characteristics with comparative advantages and disadvantages. With leveraged futures, you could lose more than your original investment. Past performance does not guarantee that you will achieve similar results, nor do we.

A.F. Thornton is not a financial advisor, nor is he your financial advisor. He only expresses his opinion based on his experience. Your financial situation and experience may be different. This blog is for educational and inspirational purposes only. Your investments are solely your responsibility. You must conduct your own research.

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Founder’s Trading Journal – 9/15/2022