Archives 2021

Founder's Trading Journal

Pre-Market Outlook – 6/2/2021

AF Thornton 0 Comment

Things have perked up in the last hour, and we will open with a small gap higher, but not a true gap as we are still well within yesterday’s range. Gap rules are not in play, and the higher odds trades are likely to develop later rather than earlier in the session.

Yesterday’s activity represented a “look above and fail” as per the balance rules. The rule portends potential for rotation to the opposing end of balance which is roughly at 4173. Remember that potential is not certainty and the 5-day EMA is powerful support above that level.

We have a 45-degree line overnight, and 4198 is the wide part. The 45-degree line is at odds with the balance rules thesis that we should move to the low end of balance. The 45-degree line is a sign that sellers have painted themselves into a corner near the lows of the session and creates the potential for an upward reversal in the next session. The 45-degree low at 4191.75 should be viewed as secure. A move up through 4210 (the single prints) would signal strength for long bias.

On weakness, watch the 4198 area to see if we can get any acceptance below there. The odds of moving to the ONL at 4191.75 increase with acceptance below 4198. The low end of balance at 4173 lies as the next support below 4191.75.

As always, don’t discount the potential to hold within balance. This would be signaled by range-bound trading that doesn’t find acceptance above or below any of the key levels listed above. Watch for confirmation from strong internals on a break above, or weak internals on a break below.

A.F. Thornton

Founder's Trading Journal

View from the Top – 6/2/2021

AF Thornton 0 Comment
Arogostoli, Cephalonia, Greece

Well, my view has been different recently – coming from a small island in the Ionian Sea. I have been here for a while and likely will remain another month or so. It has been a sad journey, tending to the untimely and Pandemic-related death of my father-in-law.

Traditions here are pretty different. As one example, the church bell rings in the village when someone dies. I guess I never understood the meaning of “For Whom the Bell Tolls” until now. Then, posters go up all over the village announcing the death and funeral – like the lost and found signs we see on telephone polls at home. The funeral occurs within 24 hours, as there is no embalming. It does not seem enough time to grieve and let go. But it is what it is.

Talking to people on my travels in and around here, the views of most Europeans have been disheartening. They believe that the United States has lost its footing since Trump left office. Some say the country is over as we knew it. It is a perspective unsurprising to someone like me who studies the trends, but it is nevertheless alarming to hear it in person. 

In the U.S., the news media led us to believe that the Europeans disliked Trump and his policies, but clearly, that was an elitist view. Regular people seem to embrace populism similar to the Trump movement in America. The wealth gap is at the heart of the problem here, just as it is at home. Anyway, it is always helpful to get different perspectives. 

When the relics of the Pandemic are in the rearview mirror, we are likely to get a more balanced view of the post-pandemic world. Hopefully, policies will focus on long-term solutions to helping families at the bottom of the ladder achieve lasting progress toward a good and decent standard of living.

So we ended May with a price candle called a “hanging man.” As the name might indicate, it is not a bullish candle. It would portend a few months of consternation ahead, just as we are expecting.

I would put yesterday’s action in the WWSHD (When What Should Happen Doesn’t) category. The first day of a new month should be strong. It wasn’t, save for energy, basic materials, real estate, and financials. Those sectors tend to be late-cycle. Financials are on thin ice, as the critical spread between 10 and 2-year treasury rates has been narrowing lately. The banks make money on the spread, so the preference would be that it widen.

Perhaps more importantly, in the S&P 500 index, we had another “look above and fail” per our balance rules. As pointed out in yesterday’s pre-market outlook, we expected the holiday and Globex traders to fade the gap and take profits (old business) and hoped the new monthly inflows (new business) would buy the breakout above balance. That didn’t happen. But for the daily 5-EMA support, the market would have rolled down to the balance area lows around 4179. That could still happen in today’s session.

That leaves us with a 50 point trading range in the last six sessions roughly bounded by 4180 and 4215. You could also define it loosely by going back to April, with a southern boundary of 4120 and 4220 to the north. What is more certain is the importance of the trendline coming up from the March 3rd low and connecting the lows from May 13th and May 19th. The trendline also tracks the 50-day line reasonably closely at the moment.

As Edwards and McGee pointed out in their seminal work on technical analysis, when a trendline is touched once, it might be chance, twice it might be a coincidence, but three times and it becomes a good pattern.

The Founder’s Group is still focusing on the daily 5-EMA as our line in the sand for the Navigator swing strategy. Partly, that is due to our leverage in the S&P 500 futures contract. For non-leveraged, very long-term portfolios, a close below 4120 would be my maximum tolerance. The 50-day line and the trendline mentioned above congregate there. A compromise might be a close below the 21-day line – smack in the middle between the Founder’s Group line in the sand and the unconditional support at 4120.

For the moment, then, financials, metals/materials, real estate (XLRE), and energy are leading the charge. These sectors help drive the IWM (Russell 2000 ETF) higher. Crypto is still bleeding, perhaps forecasting trouble. Commodities (check out the DBC ETF) hit new highs yesterday – energy undoubtedly boosted the gains. I am still buying Freeport-McMoran (FTC) and PAVE (infrastructure ETF)on dips to the 21 or 50 – as the charts dictate.

I am continuing to keep leverage at a minimum unless I am right in front of the computer.

As a side note, Apple (AAPL) looks like it could be forming a head and shoulders topping pattern. Keep an eye on it. It is hard to imagine the broad market gaining much without Apple.

There is no big move to defensive sectors yet, just the continued rotation from growth to value style stocks and back.

The SKEW index is still historically high, so there is a significant premium to be had for premium sellers. In part, that is causing the trading range to become self-reinforcing. Market makers fight prices above the range to keep the premiums they have sold to retail investors.

Candidly, if you don’t need the money, this is an excellent time to put everything on the shelf and do something else. I am not an enthusiastic buyer, but it is a bit early to get aggressive on the short side.  Again, never discount the possibility of a trading range for the summer, finishing in a fall correction.

A.F. Thornton

Founder's Trading Journal

Pre-Market Outlook – 6/1/2021

AF Thornton 0 Comment

While the market (as measured by the S&P 500) has not progressed much since mid-April, my weekend review found the market internals constructive. As the market consolidates around a center point such as 4200, it builds a lot of energy for an eventual, significant move. Though the direction is not readily discernable, it is reasonable to conclude that the market will move toward the prevailing trend, which currently points higher.

This morning, oil is hitting new post-pandemic highs, and we will see if the higher auction prices are accepted by traders today. That would bode well for the XLE (Energy ETF). While interest rates have been behaving of late, some inflation reports mid-week, not to mention the monthly employment report on Friday, have the potential to rock the boat. Higher rates will benefit the XLF (Financial ETF). If both the XLE and XLF are moving higher, that boosts the IWM (Russell Small-Cap ETF). The IWM has significant exposure to energy and financials.

Meanwhile, the SMH (semi-conductor ETF) has been moving up nicely from a three-month consolidation. Semi-conductors can be an excellent leading economic indicator, just as transports tended to be in the past. Nevertheless, I still think semi-conductors and technology (e.g. the NASDAQ 100) are good candidates for a trading range when they reach their prior peaks. Only time will tell.

Gold, copper, and silver have been moving higher out of consolidations, with gold breaking its recent downtrend. I am keeping an eye on FCX (Freeport-McMoran) as a proxy for copper and GOLD (Barrick Gold) as a proxy for gold. The relative strength (vs. the S&P 500) has been there for FCX but is still somewhat anemic for GOLD. I am not interested in something that does not outperform the market. Gold is also rising at the expense of the U.S. Dollar. The dollar has weakened once again as lower interest rates make it less attractive than foreign currencies. Lower rates are a picture show, however, that is enjoying popcorn at intermission.

Bitcoin has not been around long enough, but I am pondering whether or not it might be a leading indicator in the risk-on/risk-off analysis. Its recent struggles may portend that an intermediate correction will present soon in the financial indices. It had another challenging weekend, remains down 50%, and may have more downside ahead of it. 

Given that we expect an intermediate correction anyway in the 18-month cycle peak, it makes sense to lighten up on risk when presented with good rallies. I am reticent to put on much leverage here and always on guard for liquidation breaks. 

The volume would indicate that we are more likely trading with the weaker hands of the retail crowd at the moment. The institutions may already have hedged their bets. The SKEW – one measure of such hedging activity – index is off the charts – so the demand for OTM puts is at an all-time high – perhaps signaling a “black swan” event ahead. The SKEW has a mixed forecasting record, however, and has remained persistently high all year.

Morning Trading Plan

We will open with a true gap and breakout from a few days of balance, and that puts gap rules in play with balanced inventory from Friday (we ignore yesterday’s Globex holiday session). Of course, old business comes before new business, so there is potential for a fade early which would be the overnight inventory correcting itself (old business). Then there is also potential for rally (either after a full gap fill or partial) because the new business may come in and buy the breakout from balance. Balance rules then also apply – as we are breaking out of the value area highs, which are virtually identical in the last five trading sessions.

On any strength (be it in opening drive or after a fade), target the overnight high at 4228.25 first and then the all-time high at 4238.25. As always, monitor closely for continuation. There could easily be new money coming into the market (new business) on the first of a month that may take us higher.

 Any fade that doesn’t stop at Friday’s high (4215.50) should target the prominent TPO POC first at 4209.50 with the clear understanding that there is potential for a rotation to the lower end of balance (balance rules).

Welcome to June – the time flies.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 5/28/2021

AF Thornton 0 Comment

Climbing the Wall of Worry

I thought the title best described where we are in this latest rally segment that began in early March. The froth has been off the market, and some healthy skepticism has returned. But the market seems to want to go higher for now, and the pace is less frenetic as one might expect at current levels. Three pushes define a typical rally segment, and we are in the third push.

Though largely rangebound since Monday’s nice surge, I think there is a possibility for range expansion today, at least back up to the old high on the S&P 500 around 4238. That would put a nice cap on the week (and the month as this is the last trading day with Monday’s holiday). 

Regardless of any other issues at hand, always remember that the last trading day of the month can be a little tricky, as will weekly options expiration today. The reward will come next week, as the first few days of a new month are typically positive, with payroll contributions rolling into 401(k) plans. And then there is the summer rally, if we get one this year. 

As you will see in the chart below, we still have the 18-month cycle to contend with sometime mid-year. We keep that in mind for context, but the landing spot is not precise enough for us to definitively trade the mark. The computer algorithms are now projecting a July 10th low, but in my experience we are more likely to see the market peaking in late July, with the correction into the more usual bottoming months in the fall (e.g. September / October). 

S&P 500 Cycle Forecast - Yellow Whisker is 18-Month Cycle Range

The shorter cycles have been lengthening a bit lately, and that is not unusual. No doubt, all the proposed spending keeps the market propped up a bit. Interest rates have been behaving of late, but they will be back asserting full force soon. After all, deficits don’t matter.

Meanwhile, we are on the borderline of opening with a true gap higher (above 4211.50 would be a true gap). As such, gap rules would apply. Should the gap continue to manifest into the open, it is not so large to prevent a gap-and-go scenario – though I will be lightening up my long-term positions at 4238 (the old high) for the long weekend.

Overnight inventory is 100% long, so the initial profit-taking fade (as overnight traders take their winnings) is likely – though it appears they have already done so prior to the open. Don’t forget WWSHD – if there is no fade, that would be extra bullish. If the fade turns at yesterday’s regular session high, you can repurchase the first bar through the open or a break above the first one or five-minute bar. Just keep in mind that much above 4238 you will be fighting the market makers today – so don’t be too greedy.

Beyond the indexes, there are still many good stocks breaking out of bases and into new highs. Growth stocks and tech are seeing some resurgence, as are entertainment, travel and leisure names, but rising rates could put the kibosh on best-laid plans. Use a good stop, such as a close below the 5-EMA, to lock in your profits. We will continue to use the line on the Navigator Swing Strategy – which remains 100% invested in S&P 500 futures,

Enjoy the holiday weekend.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 5/27/2021

AF Thornton 0 Comment

The major indices presented more trading range behavior yesterday – no surprise. We set the range Monday, finished at the bottom Tuesday, back towards the middle yesterday, and open towards the top today. 

So until options expire tomorrow, it continues to make sense to buy pullbacks one or two standard deviations below the 4200 level and sell when you are back at the level. If we break up above it, fade the upper bands back to the line. A great way to do this is to plot the volume-weighted average price (VWAP) with both sides of the standard deviation bands engaged. Anchor the VWAP to the Globex open. Perhaps you could anchor another VWAP band to the New York open after a few hours of data. I typically run it on a 5-minute chart.

S&P 500 Futures - 5-Minute Chart with VWAP and Standard Deviation Bands

Key levels above are the top of the single prints at 4214 and the all-time high at 4238. Key levels below are the overnight low and settlement at 4185. The 5-day EMA also sits at 4185 or so at the open. Acceptance below 4185 would be a potential tone change. For the Navigator Swing Strategy, a close below the 5-day EMA for more than a few hours would trigger our stop to lock in profits.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 5/26/2021

AF Thornton 0 Comment

As expected, the Weekly Expected Move high on the S&P 500 (4206) is the proverbial brick wall, assisted as it were by 4200, a more typical obstacle as most ‘100 point markers turn out to be in a climb. Overnight traders accomplished little to nothing, and so we remain inside Monday and Tuesday’s ranges.

Current price and range tells us little about how early trade will react even though overnight inventory is 100% net long. That could mute any potential fade.

The overnight failure to move below settlement should be taken as bullish and day timeframe traders can assume a “buy on pullbacks” stance given supporting context, exercising caution around the 4200 and WEM high. Only acceptance below yesterday’s low at 4185 has potential to change the tone.

As June closes, the summer doldrums lie ahead. The all-time high (in the overnight market) at 4238 could be tagged on some strength, but I would fade it back to the WEM high. A trading range into the summer is a likely scenario, bounded between 4250 and 4050 with a sell-off finishing into early fall.

A.F. Thornton

Founder's Trading Journal

Pre-Market Outlook – 5/25/2021

AF Thornton 0 Comment

Yesterday was impressive with tech and consumer cyclicals leading the charge. However, we have bumped up against the expected moves already on a Monday. These are important lines and difficult to cross as you know. An interesting strategy for the remainder of the week would be to use the lines as a midpoint, and buy a few standard deviations below and short a few standard deviations above. But progress is likely to be limited for the rest of the week.

I will send out a deeper dive tomorrow, but for now it still makes sense to stay cautious, keeping position size and leverage on the lower end of your trading scale given the context of where we are in the cycles.

A.F. Thornton

Navigator™ Signals for Day Traders

Pre-Market Outlook – 5/24/2021

AF Thornton 0 Comment

Not a lot has changed since Friday. Friday’s high at 4185 (also the weekly high) is the upside breakout reference for the S&P 500, and 4150 is still important downside support, as are all ’50 point references. The overnight low at 4140 will be the line in the sand today for a negative tone change.

I have already pointed out the put/call ratio flashing enough fear for a short-term bottom. While not at an extreme, the CNN Fear/Greed index supports the put/call ratio findings from an even broader perspective. With the Bitcoin froth worked off and fear rising, a lot of the giddy sentiment is out of the way.

Overnight inventory is mostly long, and while traders were able to take out Friday’s low and test the top of the single prints at 4140, they brought the market right back to the top half of Friday’s range, which is where the market will open. But since we are opening inside of Friday’s range, it is usually best to let the market prove itself and take a position later rather than earlier.

Looking under the hood, the sectors began correcting in early April, falling one by one beginning with the Russell 2000, then tech, etc. So the market has been in an ongoing correction for six weeks. The math is such that the S&P 500 does not reflect the magnitude of some of the underlying damage. All of this appears to be part of the 80-day cycle, which appears to have bottomed and means the market is ready to launch a new run.

The problem may be that with the larger cycles still peaking from above, this next run may be labored and may also peak early. That is what we need to be prepared to assess in the coming week. Already, some of the up days have below-average volume. So it is still a tough call at this point.

As always, stay tuned.

A.F. Thornton

Founder's Trading Journal

Pre-Market Outlook – 5/21/2021

AF Thornton 0 Comment

The process of learning to invest and trade can be daunting at first. For many of us, it starts out as a search for the holy grail. Book to book, indicator to indicator, guru to guru – you are always just one step away from trading Nirvana. It is not unlike a search for the pot of gold at the end of the rainbow. And yes, mischievous little Leprechauns are everywhere.

For most of us starting out, the answers had better come quickly because our capital is rapidly disappearing. And if you are anything like me, it is not likely the first round of capital on the journey. There is no experience that compares to being forced into margin liquidation. Tuition – as we affectionately reference it. I have been there more than once on my journey – and we will leave it at that.

One complication of the learning process, however, is that your head can be stuffed full of minutia. The next thing you know, you overlook the obvious – the signal buried in the noise.

In the trading world, everything starts with price action. The rest – no matter what it might be or the claims of promoters – is context. The price is doing x, but momentum is waning. Momentum is context. The price is potentially peaking on the nominal 18-month cycle. The cycle is context. Obviously, context can be ranked in its level of importance but that is a discussion for another day.

Periodically, I will strip everything off my charts and just look at price and price alone. Price is the signal – the rest is noise. First I look at the line chart, then a bar chart, and then a candlestick chart. Sometimes I turn the chart upside down just to trick all my biases. Then I add in some volume. For these purposes, I keep it simple.

Over the past year, with the most aggressive Fed action I have experienced in my career, dips (when they occurred) lasted barely a nanosecond. We have seen a lot of “V” bottoms. V bottoms are the exception. The important pivot lows normally involve a two-step process. The market puts in a low, then retests it about a week later. The safest entry is on the retest.

There is no retest on a “V” bottom. Instead, the price just touches and goes – hence the “V.” You end up waiting for the retest with your hat in hand. Any hesitation and the market has already left you in the dust.

If you ignore all the noise, we just experienced the kind of bottom as they used to be. Likely, this will be more to the norm as we carry on from the giddiness of liquidity, Fed-driven markets. So it would be wise to add this one to your notebook.

So let’s examine this bottom in simple terms:

As you will see from the chart above, we bounced where we should on the trendline. There were other supports there as well, but I don’t want to clutter the graph. That is part of this exercise – keeping it simple.

Note the volume spikes below the first low. Volume typically surges like this when traders are churning indecisively at the low. If you look back to some of the other pivot lows this past year, you will see the same phenomenon.

Then we move on to the Tuesday retest, coming right on cue about a week later. Volume spiked again, but this time it spiked less than at the first low. A spike with slightly less volume tells us that the selling intensity was abating. The fact that sellers could not drive the market into the first low was another tell. The index left a long tail (the close was close to the open) on the day, as traders realized that the bears had lost control. From there, it becomes a matter of follow-through. That is where we find ourselves now.

There was another tell confirming the lows – namely fear. In the circumstances, it is a good time to measure trader anxiety. Fear accompanies reliable market troughs.

The first shorthand for measuring that fear is the CBOE put/call ratio. It tends to spike just like the volume. Too many shorts pile on at the lows, just like too many longs pile on at the highs. But it is at the lows, when the ratio spikes, that we can more accurately predict a bottom. I replaced the put/call ratio for volume in the chart below so that you can visualize the point.

The other fear indicator that is useful at important lows is the VIX (volatility index). Volatility peaks at lows, and diminishes at highs. Like the put/call ratio, the VIX tends to be more accurate at picking troughs than peaks. I replaced the put/call ratio with the VIX index in the chart below so you can visualize the point.

All in all, these simple clues gave us a low-risk entry point for longs. If an uptrend is defined as a series of higher highs and higher lows, and a downtrend a series of lower highs and lower lows, then a reversal is when the process ends, as here. We had a short-term series of lower highs and lower lows until Tuesday, when the progression to lower lows ceased. The process ceased at the trendline, one time frame higher, where the series of higher highs and higher lows has maintained the intermediate uptrend.

In Globex last night, we are breaking the short-term downtrend line (see charts above). We need that confirmed in the regular session today. If we can then clear the high bars from last week to the left on the chart, it should be clear sailing to the old highs. From there? Who knows, but the easy trade is over.

With this market, new highs are possible. It would seem that tech is moving again. Somewhat lost in translation is the fact that tech and growth stocks generally have been correcting for five weeks.

Ultimately, it comes down to math in a capitalization-weighted index. The stocks going up must contribute enough to the index to carry it higher. That is why the stalwart FANGMAN+T stocks are so important (Facebook, Amazon, Apple, Netflix, Google, Microsoft, Nvidia, and Tesla). They may be a handful of stocks out of the 500 member index, but they contribute 25% of the weight.

What I will be watching now is the progression of each daily candle. How far is the price invading the previous day’s candle? That tells you something right there. Is the volume supporting price progression?

And what about the nominal 18-month cycle? It requires an entirely separate discussion. But if we bottomed all of the cycles all the way up to 9-years in March 2020, and this is the first 18-month cycle in that series, it is likely to peak late in the curve. Also, the probability is that the correction will not be a crash – but likely something around 15% to 20% at most. The trough is due the first week of July, give or take a few weeks on either side. That is why we can’t trade it.

The peak is not predictable, as with all cycle peaks. And while the trough is more predictable, there is too much variation. Sure, one could say that we are 75% through the cycle and I will just go to the sidelines until the correction finally presents. While it is not my preference, that is a perfectly legitimate approach. For me, the context of the cycle helps me adjust the risk I am willing to take at this point. But it does not keep me out of the market,

Today's Day Trading Plan

Yesterday, the narrative changed, shifting back into a more bullish tone by breaking downtrends on the NASDAQ 100 and S&P 500 futures. As overnight trade is higher this morning, I will latch on to the more bullish stance.

Options expire at the close, which can hold prices more where they are, especially in the afternoon. That is why I typically don’t day trade on Fridays.

The triple candle peaks out to the left (4179.50) mark the next breakout. The level also marks the 10-day point of control. Conquering that level is the next link in the chain, but it might not be achievable on a Friday with the volume concentration there.

On the downside, and there could be some profit-taking at the open on extended overnight inventory, there should be support at the beginning of the single prints at yesterday’s regular session distribution. They begin at 4142.00. I would also keep them in mind as the area where there is potential for change in tone.

Carry forward that the overnight low came right down to the settlement (4153.50) and not further down in range, closer to those prints.

Always remember the market’s affinity for climbing in 50-point increments. If the index level is on the 50 or 100 point increment, it is likely to stall a bit as it works through or finds support or resistance at that level. If nothing else is relevant on the day, traders like to test the overnight high or low and yesterday’s high or low to find the path of least resistance. So go with the flow, and look for confirmation. Strong internals in either direction often telegraph success or failure at the crucial level.s

If I were trading today, I would give the market 30-minutes and see how it breaks from that candle. In an uptrend, I like to buy dips into the 21-EMA on the 15-minute charts for both the S&P 500 and NASDAQ 100. Let’s see if the NASDAQ 100 can maintain its leadership position from yesterday.

Have a great day and a wonderful weekend.

A.F. Thornton

Founder's Trading Journal

Pre-Market Outlook – 5/20/2021

AF Thornton 0 Comment

This morning, my dominant thought is that there are many issues at hand and so little time to discuss them. Suffice it to say; we are dealing with a lot of distortions related to how governments around the world reacted to the Pandemic – shades of “the cure was worse than the illness.” Deflationary pressures related to innovation and productivity are ever-present, perhaps even accelerating. Deflation surely will follow the bursting of the corporate and sovereign debt bubble.

Yet government action, shutdowns, trade deals, and the like have created bottlenecks and shortages, leading to price hikes all over the place – hurting low-income consumers who can least afford it. Are the price hikes temporary? Are they transitory as the Fed would have us believe?

There is only one way to reliably answer these questions, and it is the only thing that matters in trading – follow the money. What are prices and prices alone telling us? Everything else we discuss in these pages is nothing more than opinion and speculation that attempts to give price behavior some context. Frankly, my opinion is wrong often enough that even I would not trade on it. That is why we have objective algorithms and place so much emphasis on Market Generated Information. We call it M.G.I. I even like to refer to it as Magic – because when you consider M.G.I. over the talking heads, it seems to work like Magic.

Asia was on board with the bulls last night, but Europe fed the sellers until about 6 am EST. By the way, nine times out of ten, whatever the S&P 500 futures have been doing overnight, the market will switch direction at that hour. It did so this morning as well.

We will open with the futures mixed again, but with the Nasdaq 100 strengthing over the S&P 500. This is a carry forward of M.G.I. The S&P 500 futures overnight activity is balanced around the settlement, so the odds don’t favor early trading like they did yesterday.

We have nuances above and below that are of note. On the upside, we have the bottom of a small gap where the overnight high stopped. That is a long breakout point for the full gap fill. On the downside, the overnight low is a weak low as it stopped right at halfback, which is a visual and mechanical reference. But do not lose sight of the 4104 Weekly Expected Move low. Market makers have to hold that level until tomorrow’s close.

At a minimum, expect a balancing day and responsive trading. Most days are balancing days with responsive trading. That is the default day trading day. What I want to see is a follow-through from the successful retest low. Don’t lose sight of the fact that the NASDAQ has been correcting for five weeks – the longest stretch since 2012. It may be ready to take a trip back up, at the very least to establish the top of a new trading range.

As always, keep an eye on the 10-year treasury rate – it still holds the keys to the castle.

A.F. Thornton

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