Morning Notes – 5/23/2022

Good Morning:

• I will publish the weekly report later today. After a week away from the screens, I had to catch up over the weekend.
• This week is not much better, as I have a time commitment to help a friend right some legal wrongs. Once a lawyer, always a lawyer, as the saying goes.
• But the bottom line is that Friday’s retest of the 5/12 low was successful, but the leprechauns still managed to stop me out of my calls for a loss Friday, my first loss of the year.
• I like the adage, how could I be so right and still lose money? But it happens – especially when I am not in front of my screens.
• The formal buy signal comes if we close above the Navigator Algo trigger today. On Friday, the market closed on (but not above) the trigger. I call that a wobbler, and I don’t take wobbler signals in this environment.
• Watch for a True Gap at the Open and apply Gap Rules. I would also apply Spike Rules, given the quick short-covering burst at the Friday close.
• I am confident in calling an intermediate-style low on Friday, but the wild card is the Fed. The Fed has jawboned every rally attempt. The Fed has decided to use the stock market decline to tamp down inflation as they used advances to rescue the economy in the past.
• So there is your wild card, making the market treacherous at best.
• Subscribers will get the buy signal if it manifests today.
• I am looking for solid resistance at 4000, with support at 3900, then 3875, and then 3800.
• The Put Wall has moved down to 3700, with the Volatility Trigger (and positive gamma) up at 4350.
• Volatility remains high, though this week’s WEM range drops down to just under 200 points. So the WEM high comes in at SPX 4000 (SPY 400), with the low at about SPX 3800 (SPY 379).
• And we are still in negative gamma, meaning dealers have to sell into declines and buy into rallies, making the moves longer and more volatile.

Good luck today,

A.F. Thornton