Morning Notes – 7/15/2022

Good Morning,

• We have to get through the day relatively unscathed, but if so then the market survived another rough week by any measure.
• And where the market stands at this writing after the past three weeks is somewhat remarkable.
• Think about it – 9% Consumer Inflation Wednesday, 11% Wholesale Inflation yesterday, and JP Morgan Chase and Morgan Stanley disappointing on the earnings front. This should have made the crash crowd giddy and rewarded them. 
• Yet we are almost a month out from the 6/17 low (3639) on the futures and the market cannot seem to get near it.
• What do we see? The lows for the last three weeks have held around 3750. And they barely ran the stops under last week’s low on the weekly chart before bringing the market back into range.
• The week isn’t over, but traders cannot even seem to get a full retest of the 6/17 low at 3639. And the market seemingly has stopped selling off on bad news.
• When a market stops declining on bad news, one could argue that the sellers are exhausted, and perhaps we will get some follow-through on this latest rally attempt.
• We have more earnings before the bell today, so I won’t count my chickens before they hatch, but how this market is handling a lot of bad news is encouraging. 
• Of course, Fed intervention could be keeping the market decline orderly – as they don’t desire a crash either.
• Today is both monthly and weekly expiration. Don’t forget the WEM low sitting up around 3818 on the futures. It could be a magnet. Dealers have almost brought the market back to the level already, after teasing the low 3700s mid-week. That always amazes me.
• As monthly and weekly options expire today, the market has priced in a wide birth of plus or minus 60 points from yesterday’s settlement at 3793.25. So that gives you a daily sandbox range from 3733 up to 3853.
• Of course, I rarely day trade on Monthly expiration days. The market could easily pin near 3800 or any other level in 25-point increments and chop in a tight range all day to get through expiration.
• When you boil it all down, and it is a wide birth, but the market has strong overhead resistance at 3900, seems fairly priced at 3800, and has strong support at 3700.
• And while participation in yesterday’s recovery was narrow, I was still impressed with the market’s resilience. Notably though, the Navigator Algorithm closed under the sell trigger for the second day in a row.
• The current daily chart pattern remains ambiguous and unresolved, and the bears still have the football. But they may fumble it here. 
• This current rally attempt could still be the more significant rally we have been expecting,  analogous to the same time in the 2000-2003 bear.
• I will cover all this Sunday night live on YouTube at 7 pm EST. I will post the video here later that night.
• In the meantime, I am sitting out today but will notify you of anything material if it were to develop.
• Our illustrious leaders bring us closer to Nuclear War every day, so a few wildcards are floating around. Use your stops if you go long.
• Pre-market we have Retail Sales, Consumer Confidence, and NY Fed Manuafacturing reports.  
• Some Fed Governors speak right after the market opens to keep the morning interesting.
•  Recall that there is now speculation about a full 1% rate hike at the next Fed meeting on July 25th. 
• The Fed tried to talk that rumor down yesterday, which turned the market back north after it struggled in the morning..
• The market took out yesterday’s high in Globex, so that could mean that a formal pivot higher is on the table.

A.F. Thornton