Founder's Trading Journal
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The Navigator swing-trading algorithms have been in a buy signal since 1/28 at S&P 500 Futures 4298. Non-Leveraged Accounts should be invested 50% in the S&P 500 Index and 50% in the NASDAQ 100 index and holding. The leveraged accounts are now reinvested 5% in SPY calls and 5% in QQQ calls when the SPY hit 448.50 on 2/7. This is the second round for leveraged accounts as they trade more actively due to the volatility.

Day Traders can skip to the bottom for Today's levels.

Glory be! The Blue States started dropping their draconian China Virus policies like dominos yesterday. Was it an internal poll? Was it a focus group? Was it President Biden’s historically low, 38% approval rating? No! 

According to White House Press Secretary (Little Lying Red Riding Hood), the “Science” has changed! Really? Perhaps Florida’s Governor Ron DeSantis said it best yesterday, the “Science” hasn’t changed, but the “Political Science” has.

As of last night, the memo hadn’t yet reached the talking heads in Lamestream Media. They were still lamenting the loss of authoritarian rule. Like the Russian Collusion fraud, the media is unsure how to run away from this latest hoax. With CNN’s ratings down 90%, it might be time for them to reflect on their past few years of reporting. Maybe John Malone, the apparent new owner, will restore the network to glory days like during the Gulf War. One can only hope.

As the White House now says, the Lockdowns, etc., were all Trump’s fault anyway. He was the one who developed the vaccines too! When the propaganda media switches gear on a dime, you know something is up. Even two of Canada’s provinces succumbed to the new, Blue World Order yesterday, abandoning their China Virus measures. 

Maybe the Canadian Truckers are getting somewhere after all. Who would have thought that Canadians would be the ones fighting for our freedoms! Apparently, it is not as much of an “insurrection” to protest in Canada as in our own “Constitutionally Protected” Country. I cannot wait to throw these bastards out of office!

But as you all know, I am not political on these pages. So there is a method to my brief foray into political madness. But I need indulgence on one more subject that is near and dear to me first, having lost two people close to me this past year. The subject is vaccines. 

There are significant problems with them, and no censorship will hide the dark side. The stock market knows too and has for some time. How about a quick peek at Moderna, the darling of mRNA technology?

Why has the darling of the mRNA vaccines dropped 72% since last August? Why has Pfizer been fighting tooth and nail to delay the release of their vaccine trial data for 50-years? Fortunately, the courts recently disagreed and have ordered otherwise.

And what about Pfizer stock:

Pfizer gapped down yesterday on this language in their quarterly report: “Unfavorable Pre-Clinical, Clinical Or Safety Data’ May Impact Business.” Things That Make You Go Hmmm…? Guess what? There is no immunity for fraud, Moderna and Pfizer! That is an exception to your government immunity deal.

And how are we finding out about all this now? Leave it to the insurance companies. You know them – the ones who collect premiums but never want to pay claims. The unbelievable jump in vaccine-related deaths and life insurance claims has both the life and health insurance industries screaming. And political correctness will not hamper these quants in cardigans.

The fact that the vaccines are experimental and some short-term side effects are stated and known now has the insurance industry classifying the claims as uncovered “suicide.” Even health insurance policies will come into question for those who thought they were covered but realize now they’ve jeopardized their policies. Indeed, you cannot make this stuff up!

And, for some additional satisfaction (or sweet revenge), let’s take a quick look at the stock of Big Government and Big Pharma’s social media co-conspirators and censors:

Sweet satisfaction! And so, the chickens come home to roost, just as they always do. The truth eventually rises to the surface, just as sure as the sun comes up every morning.

Meanwhile, what does this rant have to do with the stock market? Well, quite a bit. The end of the Pandemic and reversal of Blue State authoritarian rule is boosting the stock market. At least that is the case before tomorrow morning’s latest inflation report. The market managed to get back to yesterday’s mentioned resistance at the 21-day line, also the volatility trigger around 4520 or so.

Overnight, we have exceeded these critical resistance levels, but we seem to be wedging into 4450 on the hourly chart.

Wedges usually point to a reversal back to its base, the gigantic open interest again at 4500 on the S&P 500 Index (450 on the SPY). The level has become worse than flypaper. Approximately 7% of the options at that level expire today at the close, so the day promises to be interesting and the market could easily pin back to 4500 by the close. Let’s hope the market makers can come up with a workaround that allows this next leg to progress a bit further. But there will be no clear sailing anyway until tomorrow’s CPI report.

While Pfizer and Moderna may be crashing, take a look at some of the “reopening” stocks, as reflected in the “AWAY” ETF:

And so, winners and losers abound in this market, which may be searching for the top of a trading range in the next few sessions, as long as the inflation report has no surprises tomorrow. Recall that in a trading range, there are still trending stocks, about half in rising trends and half falling.

Day Traders

Liquidity is nearly as bad as the China Virus crash in March 2020, so exogenous events (e.g. Russia invading Ukraine) could be especially wicked on the downside. So long as there is increased interest in near-the-money strikes tied to SPX 4500, ranges may continue to remain tight. However, should there be a catalyst or a “reset” in gamma exposures as a result of mid-week options expiration today, participants may see expanded ranges. The further that the market moves away from 4500 (as with the overnight futures tagging 4550) would cause more buying to kick in.

The implied move today is still about 57 points on either side of the open. But if overnight levels are accepted, the wind is at the market’s back. Keep in mind that the WEM high on the SPY is 456.52, and it is already trading at 455.12 pre-market. The WEM high is always to be respected as the potential cap on this week’s gains and I will be taking profits there.

Both Gap and Balance Rules are in play this morning. Watch for the look above and fail, especially with the rising wedge on the chart and the expected move above. Also, we are on the downtrend line from the market top in January. A close above it will end the downtrend.

With overnight inventory, 100% long, and a large gap higher, whether and to what extent we fill the gap will tell you a lot about the initial strength or weakness of the market. The market could pin in the range of the gap and fill it in a day or two per gap rules. And don’t forget the magnet at 4500. It should now become key support.

A.F. Thornton

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