Morning Notes - 6/13/2022 | Archimedes Methodologies

Good Morning:

Heading into this pivotal week, futures are down 2% to 3800. We look for high volatility today, with initial support at the 3800ish May 20 low, then 3700. Resistance (should we be lucky enough to encounter it) is at 3900, then 3950.
High-volume nodes stretching out to the left above (shaded across the chart in grey) are where the market will likely find support.
Low-volume valleys (also marked across the chart as the dark black background areas) tend to be “air pockets” on the way down.
Price can slide through the air pockets quickly, but where the valley contracts the most can also provide support.
So the price will move from each peak to valley until it finds the price the institutions are willing to pay in the circumstances.
Over the next few sessions, the S&P 500 will be testing the May 20 low. It has been a long time since we have seen “spike” lows, with accompanying panic and fear. But that is what I am expecting over the next few sessions.
If the retest fails, and failure is more probable than not, the subsequent high volume nodes from here start at 3400.
3400 down to 3200 is the likely support for any spike lower today through Friday, as the market wanders through the next Fed meeting and VIX expiration on Wednesday, then quarterly options/futures expiration on Friday.
Our subscribers are sitting on substantial year-to-date profits and remain in cash. We will proceed cautiously as the market searches for support. When we think an intermediate low is in place, we will share it with the public on these pages.
If you review our Current Market Thesis on the menu to your right, the market is right on track to confirm the projections. Amazingly, the thesis has not changed since January, though we are always keep an open mind.
We recently communicated that the consensus for a continued bear market rally was too high – so the market rolling over is not a surprise.
But the fact that the rally stalled so early could be ominous. We are in a “3” wave down – generally the most significant decline in a series. And it could also be the case that this is the “3” wave in the first wave down.

I hope I am wrong, but we are still very early in this bear when one overlays the bear markets of 2000 and 2007 and projects them proportionately into the future.

The 2007-2009 bear was even quicker in pace, but no less damaging over time.
Today’s retest would have been successful if this were the 2007-2009 bear, and the market would rally up into July/August before rolling over again.

Of course, nobody knows what comes next, though I do my best to lay out the roadmap. Again, I try to keep an open mind.
I always chuckle to myself when we are required by the SEC to say that past performance is not a prediction of future results when all we do is study the past to try to predict the future.
In addition to every other negative, rumors are floating that the Fed could hike rates by 0.75 basis points on Wednesday. If so, the market might view that positively as a tough and committed Fed.
The S&P 500 Index closed at 3840.25 on the day the Biden Regime was sworn into office. So, in addition to every other negative record broken by this incompetent administration, the stock market is now lower than when they took office.
Also, if the S&P 500 Index closes below the May 20th low, the index officially joins the other indexes in an official bear market (-20%).
I have never experienced or observed such purposeful destruction of a prosperous economy.
As frustrating as Trump was, I would take him back in a heartbeat over the current regime.
I will save an analysis on the Friday options expiration and its potential influence for separate writing. Don’t forget VIX options expiring on Wednesday.
As we are opening with a solid True Gap lower on 100% net short overnight inventory – Gap Rules are applicable. The 100% short overnight inventory adds to Friday’s bearish close.
Be on alert for some profit-taking on shorts (buying) near the open—more on that below.
Ten-year yields have made a fresh new swing high overnight (well over 3.25%) which I’m sure isn’t helping.
Key Levels should be marked off today as the overnight range is extensive but has two prior VPOCs within it.
As the overnight activity has breached the May 20 swing low from 5.20, although the price is trading somewhat above this level, the level will be pivotal today.
Shorts may have gotten ahead of themselves below that low, and some may be feeling the pain of poor location this morning.
I would not be surprised to see a fade move early if markets open above the swing low.
Today’s focus should be on the 3800 level and whether price action is above or below it.
Remember that today is the first official day that the new “U” contract is trading.
The contract change was moved up from Thursday in an announcement from the CME last week.
The Value Area data is still on the “M” contract today and will reflect the new contract in tomorrow’s report.

Be careful if you are going to trade this today,

A.F. Thornton

Morning Notes – 6/13/2022

Morning Notes – 6/13/2022

AF Thornton

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Morning Notes – 6/13/2022

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