Good Morning:

• Futures were quiet overnight with a slightly negative bent. Price is trading near 3925 at this writing.
• The key levels we are watching remain unchanged, with the one-day implied move at 0.95%.
• Support shows at the WEM low at 3930, then 3910 (SPY 390) – 3900, with key resistance at 3950-3960 (SPY 395).
• Resistance above there is at 4000.
• Overnight traders are testing prices below yesterday’s low, which casts a negative pale at the open, should prices find acceptance at these levels.
• But Dealers should also defend 3930, and prices below that number should be out of the question for the rest of the week.
• Woulda, coulda, shoulda, right? The WEM range has been less reliable since the MEME and DTE crowd stepped in, but we will note the projected WEM low for the record.
• For decades now, arbs run the market up before the first week of the last month of the calendar quarter and then short S&P 500 index products for a week or so.
• Add tax selling to the equation in a down year like 2022, and you can see the ensuing pattern of a dip into mid-month.
• This year, we have the Fed Meeting uncertainty and monthly/quarterly options and futures expiration to add to the picture.
• So regardless of anything else, the market will likely follow the December script it has tracked since the late 1800s and laid out in these pages last week.
• In my view, it simply started a few days early this year.
• So do we get the next bear leg – taking us to new lows?
• That depends on whether the longer, 60-year cycle has already bottomed.
• We cannot know that yet for sure. The “scheduled” bottom was October 22. But we can continue to respect the 12/1 Navigator Swing sell signal until the next buy signal paints.
• In the meantime, let’s follow the December pattern and patiently await Santa, who usually shows up around December 15.
• I will be in the trading room again tomorrow. In the meantime, the live charts are up.

A.F. Thornton