How Much Fuel is Left in the Tank?

Good Morning:

— We remain long in the Hourly and Daily Strategies, with about half of our positions left. Sustained price action a few ticks below the five-day line is our stop. It is a judgment call when to take the stop as the price can dip below the line on a stop raid and finish above it. But always remember that pigs get fat and hogs get slaughtered.

— The market is tiring, and momentum is waning. Volume has not supported the rally. The price is on thin ice. The next turn date is Wednesday. How much higher can the market go?

— At the end of the day, Markets seek liquidity or rest. Liquidity is market fuel and transaction business for Dealers/Market Makers. They will move the market to high transaction levels to get the business, usually where most buy and sell stops gather.

— For the S&P 500, 4600 is the next filling station. We are too close to that level for Dealers to ignore it. They will try to drive prices there before a meaningful pullback. 

— Note that the NASDAQ typically leads and has already conquered the equivalent level on its chart.

— The 4600 area also challenges the bear market down trendline, connecting the 2022 top and the recent July 27th peak. (See chart above).

— I will leave it for a future discussion, but the underlying rally structure is very weak. We may need a parachute when the market does tip over. There are six unprecedented unfilled gaps and nearly as many open VPOCs.

Stay Tuned,

A.F. Thornton