One Last Thin Mint?

One Last Thin Mint?

Comparing Peaks

Good Morning:

— I have always been a Monty Python fan. And I recall the scene where the fat guy gorges a table full of food, asks for one more thin mint, then blows up. 

— And that reminds me as to where the S&P 500 Index finds itself at the moment. It has had a great run from the correction low.

— The Magnificent 7 Generals led the charge, and the Soldiers now need to follow. And we have seen some positive rotation lately.

— Otherwise, the bulls will have to pass the football, and that could get unpleasant with the weak structure (open gaps and VPOCs) all the way down to the October lows.

— In that vein, we reduced our equity exposure in both the Daily and Hourly Strategies from 50% to 25% at 4655.50 on the March 2024 Futures Contract this morning.

— Recall that we had previously reduced our exposure from 100% to 50% at 4645 at the end of November.

— The price action here looks eerily like the price action around the July peak.

— Prices need a rest, and while the consolidation in early December is helpful, it may not be enough to entice further buying without a meaningful pullback.

— Far be it from me to tell the market what to do, and the possibility of one more thrust higher to the 4734.50 summer peak remains on the table. But a pullback of at least 25% of the rally may be required to refuel the tank.

— We have monthly options expiration and the December Fed meeting next week. I don’t think there will be any surprises, and the market has already incorporated good news.

— So I am looking at this fabulous run as a “buy the rumor – sell the news” rally. The news is the Fed decision next week – likely to be the usual vague reference to incoming future data.

— Incidentally, these are some of the longest swing signals we have held lately. But all good things must come to an end.

Have a great weekend and stay tuned.

A.F. Thornton

AF Thornton

Website: https://tradingarchimedes.com

A.F. "Arthur" Thornton is an expert in logic, risk/reward quantification, market fractals, pattern recognition and asset class behavioral analysis with 34 years devoted to developing algorithmic and quantitative trading systems. In addition to trading his own capital, Mr. Thornton designs custom algorithmic and quantitative trading systems for a small and exclusive group of exceptionally qualified traders.

Subscribe!

Free Blog content and videos delivered to your email.

Health and Wealth Podcast Coming Soon!

We value your privacy, never sell your information, and detest spam!