One More Thrust?

One More Thrust?

Good Morning:

— We are still in an uninterrupted buy signal from earlier this month. And another thrust higher into the red zone on the chart above is likely before we get a meaningful retracement. But recognize that we are in the nosebleed seats. The risk/reward ratio is heavily skewed toward risk, short-term.

— The problem is that short-sellers remain aggressive, but they contribute to their losses when the market fails to cooperate, forcing these traders to buy to cover their positions. It is a doom loop from their perspective. For now, we call “higher” the “pain trade.”

— The options market has been less than accurate lately but forecasts a 64-point range today (+-32 points from Friday’s close). The forecast for this week is 108 points (+-54 points from Friday’s close.

— Key levels and ranges are marked on the chart above.

— Year-to-date results have been excellent for subscribers to the room and our flagship, M-Squares Daily Strategy.

— On the zippy side of the scale, an account with a starting balance of $50,000 timely trading one Emini futures contract on the signals achieved a 174% return through Friday’s close.

— Slowing down the leverage, SPY options, or the Cash SPY reduces the return but still handily beats the market. 

— So what about the bear case?

— Let’s just say that the bears are hanging by a thread, as you can see from the chart above. Nobody can call an all clear unless or until the all-time high in January 2022 is beaten.

— How about the bull case?

— For now, it’s fair to say that the Bulls have the football. I tend to favor the bull argument but always keep an open mind.

— Even in the bull case, remember that the price will need to reach down for fuel occasionally. This could result in retracements of 24% to 50%.

— The M-Squares signals will guide us.

A.F. Thornton

AF Thornton


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.


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