We lost the five-day line overnight, so our stops were triggered and the Navigator Swing Strategy is back to cash. And since all we did was give up gains from earlier in the year on this stop, we are officially done for the year at roughly a plus 635% gain, if you took every trade with us at the close of the day the trader was communicated. Our original $10,000 account is now worth $63,561. It wasn’t a bad year, but not as good as our 900% plus return last year.
Absent an exceptional opportunity, we will not be taking any further swing positions until after the first of the year. That is also when we will also formally launch the Trading Post (new trading room) and other new services.
We get the Fed announcement tomorrow, then quadruple witching expiration on Friday. I don’t recommend day trading on those days. After that, we roll into the holiday week. After Friday, I will not be publishing again until the first business day of the year – Monday, January 1st, 2022. That is also when all the new services, including the Trading Post, officially launch.
Swing Traders
Depending on what the Fed does tomorrow, we could see a melt-up or a meltdown and your guess is as good as mine. What I do know is that high inflation and zero interest rates will continue to make stocks one of the few attractive asset classes, as overvalued as they might be.
But it is a dawn of a new day. I have been trading disinflation my entire professional career. Trading inflation is an entirely new game, especially with constant fiscal interference from Washington D.C. It will be a transitional market, and inflation trading like the 1970s is something I intend to study extensively over the next few weeks. 2022 promises to be a challenging year for all investors.
Day Traders
Reverse yesterday’s script. Gap Rules and Balance Rules both apply but in reverse. We will gap down below the balance area low. If the market fails to find acceptance, we can roll back above balance. If so, we roll back up to the range top again.
Both the Russell and the NASDAQ 100 will open below the 21. Without the NASDAQ 100, we lose the generals. In fact, the NASDAQ 100 will gap open below the 21 and 5-day lines. Today is all about whether and where the markets find acceptance before tomorrow’s Fed announcement.
The lack of follow-through from last week also means that last week’s gains can be attributed to short-covering. That does not mean that there isn’t money set to deploy tomorrow, depending on what the Fed decides.
Today’s plan is to follow the gap and balance rules, but your key line in the sand on the S&P 500 is the 21-day line at 4637, with the Algo Trigger line at 4624. We rolled into last week’s gap overnight so also watch for the complete gap fill around 4600.
I am a bit under the weather this morning, so I will not be in the Trading Post until Thursday.
A.F. Thornton