Morning Notes – 8/25/2022

Good Morning:

• Let’s stick to the plan – but let me add that we are coming into the ideal location for the nominal 80-day cycle low and turn tomorrow.
• This could bolster the bull case in the very short term.
• I added the cycles to our plan chart above.
• The nominal 80-day cycle is important but definitely not one of the largest.
• 2nd Quarter GDP was revised upward this morning by a few ticks but remains negative at -0.06.
• The jobs report came out a little better than expected this morning, but the employment picture continues to deteriorate, with half of all companies expecting to lay off more employees.
• In addition to the Fed Chairman’s key speech at Jackson Hole tomorrow morning, we will also get a look at the PCE inflation report, which is said to be a key barometer for the Fed.
• President Orwell’s unconstitutional order to forgive student loans yesterday continues to be vigorously debated this morning. I can hardly bring myself to comment.
• When you carefully examine the issue, the true cost is $1 trillion over the next five years.
• One positive – students get a discount on their commie indoctrination.
• Overnight futures were positive, and they crawled back inside the WEM low at 4145. That is encouraging for the bulls.
• The futures gave back some gains after the morning report so that the market will open with a Gap higher and close to a True Gap higher, so apply Gap Rules.
• The DEM is 45 points plus or minus yesterday’s settlement at 4142.75. 
• Resistance first lies at the overnight high (4188) and then at 4200, with a pivot area at 4160 (SPY 415) to 4150. Support lies down at 4110 (SPY 410). 
• The 21-day line at 4180 also remains an obstacle. The WEM low at 4145 also remains key now that Dealers are defending it again.

Stay tuned, tomorrow is the key, and the market is hanging tough at “X” marks the spot.

A.F. Thornton