Archives 2021

Founder's Trading Journal

Facebook and Twitter get Gabbed

AF Thornton 0 Comment
Navigator Algorithms – 100% Invested

First, a couple of housekeeping items. I am operating from a hotel this week as I am working on a couple of California projects. Some of the security firewalls are blocking my automation. Stay tuned to the website at www.BluPrintTrading.com just in case something does not make it through. For now, I am sending links through Mailchimp.

So Gab.com is adding nearly one million users daily as it has become the “Big Tech Proof” alternative for the 75 million Trump “Deplorables.” The Christian family who runs Gab was way ahead of their time and saw this day coming. This is the first evidence that the eco-system for the other half of the country is well underway. Meanwhile, the political establishment is well on their way to squashing the Trump movement. It is not likely to work, seems unwise and may even strengthen the movement. Twitter (TWTR) and Facebook (FB) have jumped over the cliff – well-deserved for everyone but their shareholders.

The market is yawning at most of this, though it remains lofty. Today, we will get a peek into the Biden economic plan. That might give the market some further direction. We are in around 3801.25 on the S&P 500 futures with an initial target of 3830. We will continue to use the 5-day EMA as our stop and that sits around 3798 this morning.

It has been quite a week. Slowly but surely, things will settle down and we will get a better idea as to where the market wants to focus. Volatility will remain higher than normal until an intermediate correction finally presents.

Stay tuned,

AF Thornton

Founder's Trading Journal

Red, Blue, or Green?

AF Thornton 0 Comment
Navigator Algorithms -100% Cash

Published this morning.

Despite Washington D.C. and the establishment’s dogged determination to stomp out and criminalize nationalism, populism, and any speech that supports it, the financial markets remain amazingly resilient. Buyers are piling in every time the S&P 500 index tags 3775, but they disappear at any price much above 3800. Economically sensitive sectors like energy, transportation, and small cap stocks continue to attract relative strength.

Meanwhile, the Democrat Washington D.C. Attorney General is considering arresting President Trump, Donald Trump Jr., Rudy Giuliani, and Mo Brooks for inciting a riot. Another impeachment is underway. But as indicated yesterday, the market lives for green – not red or blue. The “elephant” in the room is not Republican but is more attuned to stimulus, liquidity, normalization, and Governor Cuomo’s stunning reversal to open New York back up. The “donkey” (asses) in the room are the spiteful politicians. 

Seemingly, these politicians lack self-awareness. China Virus deaths hit another record yesterday if the statistics are valid. Small businesses and a lot of regular people need help.

It is not easy to sort through all of this, but the algorithms move closer to buy alerts as the market moves sideways. Just like me, the market is sorting through new opportunities as the dust begins to settle. And even if we reenter the markets, we have to monitor positions in light of valuations and attendant risks.

What I do like is investing in the face of consternation and fear. The recent giddiness has abated, albeit for reasons not directly related to the markets. Let’s see what the day and the rest of this week brings.

In the meantime, my unsolicited advice to the spiteful, arrogant, “morally superior” Globalists hellbent to crush the voices of ordinary people – “what you fear you create.”

A.F. Thornton

Founder's Trading Journal

We Hang the Petty Thieves and Appoint the Great Ones to Office

AF Thornton 0 Comment

Navigator Algorithms – 100% Cash

As discontent reaches fever pitch, I have now scrapped my 2021 outlook video for a second time. It is a moving target, and that is why I lead with Aesop’s famous quote in this morning’s title. As all of you know, I disdain politics unless it impacts the markets, as is occurring now.

Short-term, the handful of market leaders that saved the stock market in the aftermath of the China Virus (and disproportionately influence the S&P 500 and NASDAQ 100) are in as much turmoil as these companies have foisted on the rest of us with their draconian attacks on the First Amendment. 

This morning, Twitter is universally condemned by nearly every world leader who imagines themselves as its next victim. It is not a good idea to offend nearly every important policymaker in the world. Wokeness is for the little people – not them. 

Moreover, it may be fun to watch the leftist class action lawyers now devour one of their own as they seek shareholder retribution for Twitter losing $5 billion in stock value yesterday. By the way, Jack, your fiduciary duty is to your shareholders, not you’re arrogant, woke contemporaries. Not to get too personal, but if you dawned a turban with that ridiculous beard, it would look like Osama Bin Ladin is running Twitter. Things that make you go hmmm.

It would not be too bold to suggest that Big Tech may have just sewn the seeds of their own destruction. Facebook and Twitter might never see their recent all-time highs again. Hey, Facebook, do you remember MySpace? Dozens of knock offs will now flood the marketplace to serve the other half of the Country that Facebook hates.

So the challenge in completing my 2021 plan lies in forecasting the new conservative/nationalist eco structure that will rapidly replace the current tyrannical tech architecture bowing to the left. Opportunities abound. One other quick piece of advice to the radical voices attempting to overthrow the country; Wall Street is not red or blue. It is green. It will eat you up and spit you out for a buck. Plain and simple. So Wall Street will cater to many of these new start-ups as the Nationalist Eco Structure unfolds to compete with the Globalist Eco Structure before our eyes in real-time. I love the competition. One small solace to Big Tech – you likely won’t have to worry about Anti-Trust lawsuits very soon. There won’t be much left to break up.

In fact, 75 million Trump voters may stop shopping at Walmart, Amazon, and Amazon’s Whole Foods. I have to figure out what all of this will mean. Will we see a slide back to low tech – e.g., half the country will have their own storage devices rather than rely on the “lefty” cloud? Will the U.S. mail experience a resurgence? Will people actually get together and meet instead of being glued to their smartphones? Will half the country, or even half the world, ditch Apple? Where are the opportunities in all of this? Who benefits and who loses? This will be fun.

Anyway, I think you get the point. I will take another shot at the 2021 update by the weekend. Of course, all of this noise tends to distort the rising risks of inflation and a potential currency crisis leading to a depression of sorts. Just a couple of ancillary, minor points to be considered, right?

Meanwhile, thanks to the fact that there are more stocks in the market than a handful of Tech Monsters run by monster egos, the market traded rather balanced yesterday. The market could not attract sellers below Friday’s low or buyers above Friday’s high. It could have been worse, that is for certain. Nothing has really changed in terms of the narrative; the lofty sentiment and valuations may continue to lead to a sell-off and a chance to reposition around these new themes. As always, it is day by day. 

Being in cash is fine for now, but it will pay to capture the fever pitch frenzy around the inauguration. Hopefully, the peak in strife will lead or accompany a broad sell-off. I always like to zig when the crowd is zagging.

One more small piece of advice offered with sincerity in the midst of this somewhat dystopian information warfare. The situation is intense, to be sure. But never underestimate the good sense of the American people. We have far more in common with each other than the issues that separate us. The US Constitution has endured through worse.

Put away your smart device. Take a break from Social Media. Realize that Information warfare is designed to exaggerate our differences. Trust your instincts and think for yourself. Listen to the genuine concerns of the other side. Use the shoe on the other foot test. You might be surprised what we can learn from each other,

Finally, ask yourself this question: Why are they trying to divide us? The answer is simple. If we got together in our commonality, we would vote the politicians and their corruption out of office. Now we can’t have that, can we?

AF Thornton 

Founder's Trading Journal
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I thought I would be able to watch the election strife this morning, but alas there is no rest these days. The algorithms flipped a buy signal at 3728.50 on the S&P 500 index, which we communicated to the Founders group first and are now publishing. The signal can also be executed on the NASDAQ 100, which is running a bit behind the S&P 500 this morning. We will be using the 5-day Exponential Moving average as our stop as usual, just in case the rally fails to hold. More on this later today.

Founder's Trading Journal
0 Comment

Navigator Algorithms – 100% Cash

早上好

Translated, that means good morning in Mandarin. Of course, I am just kidding, Comrades, but given last night’s Georgia Senate election results, I wonder if we should learn to read and write Mandarin. Through the Chinese Progressive Association, much Chinese money went into the Democrat Georgia races and Stacy Abrams’ voter registration efforts. Trevor Louden does the best job in the country of tracking the Chinese money, and you can judge for yourself in his latest interview with American Thought Leaders here.

What a tangled web the Covid-19 virus has woven. From capitalism to socialism in less than a year. Let’s see what all of this brings us in the real world.

I think last night’s apparent sweep by the Democrats of the Georgia senate seats promises to elevate the importance of the Biden Electoral College certification today. I fully expect Biden to be seated, but who can really be sure of anything in these Covid-19 times. Rumors abound of a big reveal today by the Trump administration. It has become difficult to separate fantasy from reality these days – but I will keep an open mind.

As to the stock market, yesterday’s prescription applies to today as well – so I don’t have a lot more to say on the technical details and encourage you to review yesterday’s pre-market discussion. 

Following yesterday’s pre-market script, the S&P 500 index rejected lower prices but did not convincingly reconquer 3700. In an interesting twist, the overnight stock futures action looks almost identical to yesterday’s action. The overnight Globex S&P 500 Index futures briefly looked above yesterday’s high of 3717.50 but handily rejected the higher price. At this writing this morning, we are looking to open in the middle of yesterday’s S&P 500 range at 3709, just slightly above 3700 and down about 11 points from the close. 

On a positive note, the Dow Jones Industrial Average futures are positive by about 33 points, and the Russell 2000 is slated to open up 2.7%. Yet the NASDAQ 100 and monsters of tech are decidedly negative this morning, down 1.43%. This indicates rotation – in addition to some selling pressure. Rotation is good – a correction only gets draconian when broad-based selling kicks in.

Yet, I led with the chart of the 10-year US Treasury yields above for a reason. As you will see, interest rates are gapping higher this morning. While the yields are still meager, the yield gapped 7 basis points, well above the key 1% level this morning. In percentage terms, that is an overnight jump of 7% in the yield, hammering treasury bond prices this morning. The interest rate trend is what matters, and this jump in rates is both alarming and telling. We had better keep a close eye on this.

Rates matter – plain and simple. When our country had $4 trillion in debt, the annual interest was about $500 billion. We have $20 trillion in debt, but the annual interest is about the same because rates dropped significantly over the past few years. It does not take a math wizard to figure out what happens if rates rise. Tick by tick, the deficit spins out of control.

The election results last night give us a one-party rule in Washington. Generally, markets like divided government. However, in this unique case, Democrats seemingly favor the globalist agenda, which may be just fine with Wall Street’s equity side – at least in the short-term. 

Wall Street cares about profits more than any domestic socialist agenda. In fact, they would sell us down the river for a buck. That is the dark side of capitalism. Other than some portfolio shuffling to align with the Democrat agenda, I do not see the election results or seating a Biden administration as immediately negative for the financial markets – already in the midst of a correction of sorts. In fact, Democrat, one-party rule could even be a net positive once portfolio managers make their adjustments. Democrats are globalists – and Wall Street loves globalism.

I will have a lot more to say in the upcoming 2021 video. Still, I want to see how the day goes in Washington DC with the Electoral College certification before publishing and finalizing it.

Let me at least tease you with this one tip I will cover in detail in the video. I am calling it my Guns and Gold strategy. One of the most important things you can do this year is to buy small denomination gold and silver coins. Having an independent, non-tracked currency will be very important in the future. If Defund the Police takes hold nationally, make sure you have a gun too. 

We are about to see rapid change, and not all of it good. I have some difficulty assessing timing, so the sooner you can start accumulating coins, the better.

Gold prices may or may not skyrocket, as Central Banks around the world will work to keep precious metals prices down until they are ready to reset into a non-cash system with digital currencies. My recommendation is not so much a play on gold or silver prices – though I believe both metals are undervalued. They may or may not rise short term, which makes accumulation easier. This is more about maintaining your independence in a rapidly changing world.

As always, stay tuned. Share this with your friends and family. Forewarned is forearmed.

AF Thornton

Founder's Trading Journal

1/5/2021 Pre-Market

AF Thornton 0 Comment

Navigator Algorithms – 100% Cash

Pre-Market Outlook

Translation

We thought the market was too high, so we took all our profits in December and had been waiting to buy stocks when they went back on sale again in a correction. There were just too many dumb people excited about the market to make us comfortable.

The stock market looks like it is finally coming back down to earth, selling off a bit yesterday. It is a bad omen to have such a lousy day in the markets on the first day of the New Year, but so be it. Let’s face it; there is always something to worry about.

We think the market might sell off some more, and there might be some good deals out there on our favorite names when it settles down. So we are not going to be the first back in.

Let’s give the market some time to convince us that the correction is over. Then we can deploy our cash and repurchase everything cheaper. The elections and certification over the next few days could also influence the mix we would want in a 2021 portfolio. The 3600 level on the S&P 500 index looks like a good level to target for now – but we need to stay flexible.

Navigator Core Algorithm Status

ETH Daily ES - Where We Are

We went into the first trading day of the year yesterday in a 100% cash position, having identified and acted upon risks associated with the rising index wedge patterns, momentum divergences, and various breadth indicators. Additionally, broad investor sentiment indicated a frothy market with significant attendant risks as the Dumb Money Confidence Index remained stubbornly high into year-end. We had also been in cash for several weeks, operating on an early Navigator sell alert in December and allowing me a few days on the sidelines for a year-end vacation.

After a vicious sell-off yesterday right to the mean on attendant high volume, the daily trend is now neutral to negative. The Navigator Algo dashboard (appearing above) indicates that the uptrend is stalling, price strength is waning, and all stop triggers remain in short mode. It would take a close above 3723 to initiate short-covering (or long entries) at a minimum. 

Yesterday, after briefly tagging an all-time high at 3773, the S&P 500 index nose-dived into support at the half-roundie (3650), then flipped higher to close at 3696, slightly above the mean (3684), trendline support (3684), and the Weekly Expected Move low (3673).

Also, keep in mind that all of this price action rejects the megaphone top channel lines we had been keeping our eye on over the past few months.

ETH Daily ES - Where We are Headed

Normally, the Weekly Expected Move low at 3673 should contain the damage for the full week, as options market makers defend the price ahead of this Friday’s weekly options expiration. If the low is materially breached, the selling will accelerate as the options market makers are forced to sell futures to neutralize their portfolio deltas. So today will decide whether yesterday’s sell-off was another “weak hand” minor liquidation break or the start of an intermediate correction. I tend to favor the latter interpretation, but we will let the market tell us in the next few sessions.

In the daily time frame, the key issue today will be whether the mean will hold at the 21-EMA, retest yesterday’s low, and/or continue below the mean to further support at the 50-day SMA. Notably, the daily price mean shares an approximate coincident low with the Weekly Expected Move low at 3673. In a veritable sign of weakness, the S&P 500 moved right to the Weekly Expected Move low on a Monday on the very first trading day of the year, eating up the entirety of its 84 point downside range.

Cyclically, yesterday’s price action breached the nominal 20 and 40-day FLDs, indicating that a nominal 80-day cycle reset likely is underway, and we are slightly more than halfway to a projected minimum low around 3600.

RTH 30-min ES

The 30-min ES is trading below the mean, with a buy-stop around 3695. Until that changes, it will likely be advisable to look for short-trades from the mean, using the 5-minute chart for entries and exits. In other words, follow the 30-min short from its mean at least until a test of yesterday’s low is resolved. We do the opposite if the 30-min can join the daily price chart and climb above its mean.

Narrative

Dominant market themes include a vaccination supported, broader-based economic recovery now supported by the stimulus package. We remain in the strong seasonal strength period for stocks, which occurs from October through April. Tech profits continue to be rotated into prior, underperforming sectors. Although Congress recently took some of the punchbowls away from the Fed in main street lending, Fed policy remains favorable. 

Election issues loom, still seeming to favor seating the Biden administration. Critically, however, markets like divided government. If the Democrat party gets full control of the government with today’s Georgia Senate races, the market will need to adjust to a projected scenario of higher taxes and regulation. Perhaps that realignment has already started with this market hiccup right out of the gate for 2021.

Investor sentiment remains a concern. Excessive optimism abounds as manifested in record margin debt, confidence surveys, options speculation, stocks vs. GDP, and record IPO issuance. 

The frothy sentiment exposes weaker hands, keeping the index vulnerable to almost daily news liquidation breaks – and that may be all this early January sell-off is/was. Yesterday’s negative price action did little to move the sentiment needle. There is some solace in the CNN Fear/Greed index returning to neutral at 52. The Put/Call ratio closed at .60, in the upper end of its recent range, but not yet demonstrating an extreme level of fear.

In an astounding move, the New York Stock Exchange decided late yesterday to defy President Trump’s recent executive order. They are now refusing to delist three Chinese telecom companies associated with the Chinese Communist Party, the Chinese Military, and Chinese Intelligence. Besides their nefarious affiliations, these companies shield their finances and do not comply with listed company audit rules.

Comrades, this is not a positive development. Given the CCP’s broad and growing influence in the U.S., We may all need to brush up on our Mandarin. Oh, and did I mention that President XI put the Chinese military on alert for war yesterday? Let’s hope this is related to the 100th anniversary of the Chinese Communist Party and not anything less desirable.

 

Volume Profiles

As identified yesterday, the key day-trading issue would be whether traders will accept auction prices above the three-day balance area high of 3750. When prices looked above and rejected, the price drifted back to the balance area low. Yesterday, the balance area low was around 3714.

I had also identified the vulnerable gap area between 3714 and 3700 in several past writings. Generally, prices move fast through gap areas if the gap fails to provide support. A rapid fall through the gap area also manifested yesterday. 

We are now back into December’s balance area range between 3623 and 3700 or so. The 10-day Point of Control (volume at price) peaks out at 3694 and tapers off from there almost symmetrically in both directions. The value area high is approximately 3700, with the value area low at 3650. Think of those two levels now as the battle lines for day-traders. 

These battle lines are not atypical. The S&P 500 index, from the most basic, macro perspective, tends to migrate in 50-point increments using the 50 (e.g., 3650) and 100 (e.g., 3700) handles as battle zones in its travels north and south. 

Key Economic Reports

Yesterday saw reports confirming construction spending a bit higher, but in line with expectations. Today, ISM Manufacturing’s Purchasing Managers Index will be reported. The forecast is for the index to come in down slightly from last month but still at a positive 56.6. The OPEC meeting today could also exert some influence on the markets. 

Morning Plan

Overnight inventory is balanced to slightly net long, and we are slated to gap down (not a true gap) and open in the third quartile of yesterday’s range, also at the 10-day Volume Point of Control. Accordingly, there is not much market-generated information to guide us this morning, and it will be better to trade later than earlier today. Be patient and let the market show its hand.

Yesterday’s settlement was 3692. As the Shadow Trader often phrases it – “screens go green” for everyone worldwide above the settlement. If we continue to lower finding acceptance at or below yesterday’s price low of 3652, this would likely attract more sellers. We may then move lower to the projected 3600 price target, perhaps testing the 3596 swing low from December 21st.

Any counter-trend rally with legs will have to take out the overnight high at 3705 and move aggressively into the single print areas approaching 3733. We would need to be convinced of real buying versus short-covering to trigger daily chart Algo buy signals up in this range. 

Acceptance of price back up in the range above 3714 makes the reverse of yesterday’s price action possible. Having rejected lower prices, there is the potential to move back to the top of the value area around 3750.

We often think of markets in terms of up and down trends. Yet, markets often move sideways. A quick visual of the daily S&P 500 index price chart shows a sideways trend since November, with a slight, upward tilt. Currently, the range is about 100 S&P 500 points, pegged between 3650 and 3750. With volatility contracting into a tight squeeze, a big move could lie ahead. Unfortunately, we cannot forecast which direction the move will take. If yesterday is any indication, down appears more likely than up.

Either way, we will stay alert and flexible.

A.F. Thornton

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