Morning Notes – 4/5/2022

• In 2009, the NASDAQ 100 and the rest of the stock market lost half of their value after the Spring 2009 rally.
• The moral of the story is not to get too comfortable.
• The Navigator Algorithm closed out its latest swing trading buy signal last week. But given the steep rally, we may see a second buy signal form. It hasn’t happened yet, but it is in the realm of possibilities.
• In the meantime, the fundamental negatives keep piling on while the market sails on by.
• I see muted volatility again today, with an open to close implied move of 0.65% or about 30 points from the open.
• Resistance is at 4600, with support at 4550 and 4500.
• Supportive interest finally filled the 4550 area yesterday and helped fill the void I mentioned.
• Risk remains “on” based on moves in single stocks and volatility. Bulls retain the edge as long as the S&P remains above 4500.
• The bullish tilt remains only as long as the market holds the 4500 Vol Trigger level. The 4600 Call Wall remains at the top of our range until/unless that strike rolls higher.
• The “all-clear” or “risk-on” signal is coming more by attrition (expiration) than anything else. Neither put nor call demand is prevalent, and a lot of the speculation is in individual stock names.
• Last Wednesday, the Fed reported an additional $45 billion added to the balance sheet, hardly a sign of Quantitative Tightening.
• I can’t wait for the next report, but if you want to know why the market keeps going up, the explanation is that the Fed, despite its rhetoric, has done minimal tightening.
• But the Fed governors are on the speaking circuit today, so watch out.
• Also, we need to see the short-term trendline from 4/3 hold on the hourly charts for the bulls to remain in control. 4560 or so is the level that holds both the trendline and the 5-day EMA, also a key line on the chart.
• Key A.M. Trade Levels and Charts are posted.

I keep threatening to take a few days off, and my birthday is Friday, so I plan to be out Thursday and Friday. So only key levels will be published on those days.

Have a great day ahead.

A.F. Thornton