Morning Notes - 4/28/2022 | Archimedes Methodologies

Good Morning:

Let’s keep it simple this morning.
The potential trade I mentioned in the morning note yesterday manifested. The Founders Group scalped about 60 points per contract in the S&P 500 futures (4185 to 4225).
But the big picture remains negative, and the algorithms are still in sell mode (see the 2-hour S&P 500 Index Chart above).
The WEM low is still holding the market in place around 4140 (futures) and should hold through tomorrow’s close.
Resistance is at 4250 and then 4300.
Support is at 4210 to 4200.
Price exploration below 4200 will accelerate the downside unless the WEM low holds.
Below that, and it is Katy bar the door to 4050, the least likely scenario on the table for today – but I cannot completely exclude it.

I propose the bear case behind door number one in the chart above. War and Deglobalization are bad for the economy.
With the first quarter GDP reported as negative this morning (two quarters in a row is an official recession), there will be a cloud over the Fed’s ability to raise rates.

But it wouldn’t be a market without the other side of the coin.
And behind door number two, War and Deglobalization are good for the economy.
GDP is currently negative, and inflation will take care of itself without the Fed.
This supports the old axiom that the cure for higher prices are higher prices.

But it wouldn’t be a market without the other side of the coin.
Behind door number two, War and Deglobalization are good for the economy. GDP is currently negative, and inflation will take care of itself without the Fed.
This supports the old axiom that the cure for higher prices are higher prices.

Behind door number three, the positives and negatives are uncertain enough that the market establishes a trading range, as it did with the stagflation a la the 1970s.
Markets spend most of their time in trading ranges.
Arguably, the S&P 500 and many other indexes have been in trading ranges since last November.

Let’s see what the day brings.

A.F. Thornton

Morning Notes – 4/28/2022