Founder's Trading Journal Door Number Two – Up, Up, and Away Nov 30, 2022 AF Thornton 0 Comment S&P 500 Futures, New Navigator Buy Signal -- Hourly Chart Good Afternoon: This morning I mentioned the rising wedge pattern on the daily S&P 500 Futures chart – I guess we could call it “Door Number Two.” See the chart from this morning for more detail. “Door Number One” was the crash promoted all over the internet lately. And while I cannot say I thought higher prices were the most likely scenario, I have been beating the “Door Number Two” drum lately about a final leg up to at least 4075 before another meaningful correction ensues. The price closed today at 4087. I also mentioned the Door Number Two, “Pain Trade,” this morning. Call it whatever you want, but Murphy’s law usually kicks in when the crowd is lopsided, and one part of them is poised to lose a lot of money. In other words, I ask myself every day how the market could ^&&* the most people simultaneously. Today, we observed the “Pain Trade” in all its glory, punishing the short sellers. Call it instinct, but I never joined the “crash crowd.” Recall our video “Where’s the Crash?” at the October 13th low? The footage looks downright sentient now. Fading consensus isn’t easy, and the timing has to be right. As then, everyone thought they had this one figured out today. But I had one of those gnawing feelings that the crowd was about to get a surprise. Of course, I don’t operate from feelings. I use objective algorithms because they work. The algorithms took us out on 11/24 at the recent high and got us back in on the trendline, weekly, and daily means today near the low. The signals were nearly perfect, as seen from the hourly chart above. Even more helpful is the fact that the new algo predicted a turn at 3947 in the 10:00 am EST hour today. But the prediction was made in advance several days ago. The price, timing, and turn practically hit on the nose; 3942.75 during the designated hour. Additionally, two traditional Navigator Algorithm buy signals painted this morning – a few hours before the market reacted to Fed Chairman Powell’s speech. You can see the signals in the chart above. Honestly, taking the cues was tough, but the rest is history. I will cover more of this in tomorrow’s outlook, but I wanted you to see the power of the new day-trading algorithm – even as applied to the hourly chart. The biggest challenge now is that price has traveled nearly to the top of the pattern in a single day. But it has room to go higher, depending on whether the rising wedge pattern completes or we morph into a normal uptrend. We will evaluate the subdivisions of the rise for more clues in the coming days. And, of course, a lot of this is short-covering. We need real, follow-through buying to confirm the rise. The Founders Group has already sold half of our leveraged position, and we are holding the other half as a runner to see if prices can increase. And this move is more confirmation that the 10/13 low may mark the middle of the four-year-cycle and mid-term election pause and perhaps even the bottom of the 60-year cycle. Still, the last third of the 60-year cycle, including its 20-year and 18-month components, show downward pressure on prices into March. But when the price bounces out of a low like October with this kind of velocity, you can be sure that larger cycles are at work. I will produce a video on all of this soon. Have a great afternoon. We learn to enjoy days like this because it all starts over in the morning, and the battle begins anew. A.F. Thornton
Founder's Trading Journal Another Calm Before the Storm? Nov 30, 2022 AF Thornton 0 Comment Good Morning:Futures are quiet, trading near 3970. A multi-day string of key data points begins today with pre-market GDP revisions, then Fed Chairman Powell speaking at 1:30 PM ET.Mark primary resistance at 4000, then 4048.Support starts at a band near 3960 (SPY 395) to 3950, then 3890 (SPY 390 and the Put Wall).Today likely sets up a strong directional move into the 12/14 Fed announcement, coinciding with the 12/16 monthly options expiration.On a breakout higher, we are looking for a target of 4200. A close above 4000 is bullish, as 4000 should invoke strong support.On a break of 3900, the major support line is the 3600 Put Wall.Gamma flips materially negative below 3900, likely to coincide with a large implied volatility spike.Lower equity prices and higher implied volatility would invoke a reflexive feedback loop wherein dealers exacerbate declines by selling futures into dips.Meanwhile, all Navigator Algorithm timeframes are either in cash or short. We formally closed out the 10/13 swing buy signal on Monday. However, swing accounts were already in cash or short from the hourly sell/short signal on 11/24.This morning’s takeaway is that the range of possible prices is sharply skewed to the downside.But – and it is a big but (no pun intended) – you will see a rising wedge pattern still visible on the chart above, predicting one last burst higher, possibly into that 4075-4200 target area set back in October.I would call that the “pain” trade for now because nobody expects the market to continue higher.As the market currently sits on the lower wedge boundary, there is not much tolerance for lower prices today other than a few stop runs.A rally had been underway Monday until Fed Governors hit the speaking circuit to talk the market down. The Fed does not appear to want the stock market to go up.So even if the rising wedge pattern gets a final leg higher, the rally will be short-lived before the market rolls over on the Nominal 80-day cycle.Don’t forget that today is the last trading day of November – so not always ideal for day trading. And the market is not likely to do much until Powell’s speech is published later in the session.We had an exceptionally good day in the trading room yesterday. I will be in the room again on Thursday.You have to see the enhanced day trading algorithm to believe it. It is an awesome new tool for our arsenal.I have also carried many of the improvements and concepts into the swing algorithms.The main improvements make the algorithms use artificial intelligence to predict future prices and turns.In other words, we know the time and price level where the buy or sell signals will likely paint in the future. Then we look for price action (HOLB or LOHB breaches) for final confirmation.The algo can predict patterns up to a year in advance.After seeing the new algorithms operate, my wife commented that she would be pleased to see my brain improve, as she currently views it as artificially intelligent too.A.F. Thornton
Founder's Trading Journal Battling to Retain 4000 Nov 28, 2022 AF Thornton 0 Comment Monthly Chart Comments - S&P 500 Continuous Futures Weekly Chart Comments - S&P 500 Continuous Futures Good Morning: Futures gapped down in Globex, pinning around 4000 most of the night. Unrest in China, plus all the other global troubles, put traders in Asia and Europe in a bad mood. Gap Rules are likely to apply this morning, though I wrote this an hour and a half before the NYSE Open. Today, major resistance remains at 4050-4060 (SPY 450). Support shows at 3960. 4000 remains a “fair value” pivot area for the S&P 500, given a large amount of balanced gamma (i.e., calls + puts) tied to that strike. For today and tomorrow, look for more pinning at 4000 as we see traders “buying dips” and “selling rips” around this “strike spike” with most of the current open interest. The WEM range for the week is 3967-4100. We have Fed speakers all week, including today. Also, new monthly economic reports come out as we step into December on Thursday. Volatility is likely to pick up towards the end of the week. I have included the Monthly and Weekly charts above with notations. We are 11 months into this bear. We don’t want to be lulled into complacency on the seasonal tendency for stocks to rise from the OCtover lows. Bad things still happened from here in the last two bears, as you can see from the monthly chart above. And, needless to say, the current rally is getting “long in the tooth,” as the saying goes. Fear and Greed sentiment is back to bullish (which is bearish). It is not extreme, but the bullish level counsels us to be careful here, Still, the market is holding up remarkably well if we simply look at the price. The latest rally does not have a lot of volume backing it, and the next 20-week cycle low comes in February 2023. While this rally checked the boxes for a trade, it does not look like a solid bottom or end to the bear as yet. I am not with the crash crowd, unless there is a black swan catalyst. But I believe we will set the market back down for some kind of retest of the October lows in February/March time frame. If so, this bear would look more like the typical mid-cycle pause (though about twice the normal percentage dip) we encounter in most mid-term election years. And that would be notable too. We are in the middle of the four-year cycle. And that would mean that the biggest part of this bear, or its cousin, still lies ahead. The four-year cycle correction is the largest we typically encounter and the penultimate low would come sometime in 2024. So the meat grinder will be on for a while, regardless of what the market does in the short term. Since we are already 1/3 of the way through the 20-week cycle and “dancing near the exit,” caution is warranted. We carefully watch our stop and trigger lines as they could beat the algo to a sell signal. Note that the rally has taken a bearish, rising wedge shape, and we are in the third push, which typically ends this first leg, I still think we will tag the 200-day line and previously mentioned price targets beginning around 4075, but we cannot take anything for granted. I will tee up the new day trading algo to beta test it in the room later this morning. Tomorrow is the day we trade it. Be there or be square. A.F. Thornton
Founder's Trading Journal Should We Dance Near the Exit? Nov 25, 2022 AF Thornton 0 Comment BluqQuant Day Trading Algorithm as Applied to Wednesday's S&P 5600 5-Minute Intraday Chart Good Morning:I hope everyone had a wonderful Thanksgiving holiday. Time with friends and family can be an amazing cure for the ills surrounding us this year.For the markets, we now have two closes over 4000 for the S&P 500 under our belt. The 11/15 intraday high near 4050 and the 200-day line around 4075 are within reach.If those levels are achieved, our longstanding “C” = “A” rally target comes into sight at 4126.50.Futures are off slightly to 4035 on this holiday-shortened trading day. The Call Wall for the SPX/SPY is now in sync at 4050-4060 (SPY405), which is the major resistance area for today. Support shows at 4024 and 4000.We must prepare ourselves for a highly volatile December with another Fed Meeting looming on December 2. Paradoxically, a gigantic reversal pattern to potentially take the market up near the former highs is forming on the S&P 500 Index. Is such a reversal even possible? Or are we dancing near the exits, tempting fate? A late-year market recovery would catch many people off guard – another so-called “pain” trade. Only time will tell.For now, as long as the market holds the daily 5-day line and the Navigator Algo trigger, the 10/13 buy Navigator buy sIgnal retains its validity, even though it does seem long in the tooth. And good, bad, or indifferent, we have passed the midpoint of the nominal 80-day cycle, and we should see this wave peak soon and chart a path into a mid-December trough.As always, we will let the Navigator Algorithm do the work while we continue to work the hourly chart signals.I am excited to introduce the new BluQuant day-trading strategy and algorithm in the trading room next Tuesday. I will have all the written rules out to subscribers on Sunday night. Wednesday’s 5-minute chart appears above. We will do a dress rehearsal on Monday in the room, but Tuesday, we will get serious. I will have the chart in the room today so you can watch it in motion. Watching this system paint the buy/sell signals is a wonder as it structures the trading frames in real time, predicting each turning point. The algo proves that we live in some matrix governed by ascertainable mathematical rules.I wish you a joyous holiday season!A.F. Thornton
Founder's Trading Journal Here Comes the Crash? Nov 22, 2022 AF Thornton 0 Comment The S&P 500 Cycle Analysis Gives Us One Last Thrust Out of the 20/40-Day Trough Before the 80-Day Peak and Decline into December 18th Good Morning:Overnight traders did their best to drive the index below yesterday’s low but failed.So we will see if today’s crowd can take us up and out of what appears to be a bull flag.Instead of obsessing on a crash, investor energy might be redirected to how well the S&P 500 and Dow are holding up under the Crypto crash and other negatives. The S&P 500 - Notes on Cycle Analysis So my outlook has not changed. We have a couple of short-term cycles to transit until we begin our journey to the 18-month cycle low in early spring.And who really cares about wild market calls anyway? It is all ego. We are here to make money.We will work both sides of the market as it presents.We continue long from the 10/13 Navigator Algo buy signal, working it through the hourly charts until we are stopped on a serious poke below the 5-day line.Granted, we have come close several times, but close only counts in horseshoes and hand grenades.The next event is the November Fed minute release tomorrow. Either they will continue their hawkish stance (expected) or soften the rhetoric (rally ahead).Let’s continue the ride. You know the framework – 4000 resistance, 3900 support, and 3950 neutral.Don’t forget, parachutes from 3900 to 3600.I will be in the trading room about 30 minutes after the open.A.F. Thornton
Founder's Trading Journal Rush Limbaugh Calls It and Other Monday Musings Nov 21, 2022 AF Thornton 0 Comment Wake the Hell Up and Realize What We are Up Against – 1/11/2021 Good Morning:Just a little January 11, 2021 antidote from Rush – he saw it all coming just as we did. But like most of you, we did not want to believe that we had lost our country to psychopathic, European, communist, authoritarian, eugenicists – but it has happened. And the brain-dead President Orwell is a corrupt World Economic Forum tool, sadly worshiping at the feet of WEF leader Klaus Der Wienershnizel (the real Dr. Evil).And while President Orwell pursues the WEF Utopian fantasy (which doesn’t include you), China, Russia, and the other BRICS nations are methodically and justifiably plotting our undoing.With two more years at the helm and help from the RINOs, the Orwellians will solidify their permanent, authoritarian control of the USA – the biggest prize communists have sought since the 1950s. That should be just in time for the onset of World War III. By the way, for my fellow gray hairs, wasn’t Joe McCarthy, right? He doesn’t look so crazy now – does he?Step one – Last week, the G20 Surveillance State Association approved vaccine passports for all G20 countries. Can the passports be printed before the recipients drop from the shot?Did you hear about the G20 framework approved for reparations to third-world nations? Your treasury is about to be robbed again. After the Orwellians and their supporters take their corrupt cut (think FTX), the rest will be stolen by the despots that run these third-world (communist) regimes, Folks, we are talking trillions here! Patriots – we blew it. The midterms were our last chance. There will be no going back from here. Strap in because it all needs to burn down before we even have a prayer of restoring the Republic. This must be what it was like in the final days of Rome.Emma Goldman once observed that the elites would ban voting if voting worked. Embedded in her observation about voting is the true contempt of those in power for you and others they rule.The saddest takeaway from the midterms is just how many of our fellow citizens, especially young people, drank the Kool-Aid and share this contempt. They think joining the cool kids club and pushing the Skinner Box button on election day will save them from the Orwellian elites’ tyrannical impulse. Good luck with that.So should we be upset that the Fed might burn Europe down with higher interest rates? I am cheering for the Fed now. The more Europe, the U.S. Treasury, and the United Nations squawk at our Fed, the better.Even if we burn our economy down with higher rates, it may be our only chance to reboot the country we once loved.So what is your Plan B? Time to dust it off.Meanwhile, back at the ranch, futures are down slightly to 3950 ahead of the Thanksgiving Indigenous Peoples holiday-shortened week.Our updated forecast shows lighter volatility today, with a 1% implied move plus or minus the open.Both 3900 and 4000 are in play this week.4000 is where we see heavy resistance, with lighter 3975 resistance in between.To the downside, we note a support band from 3960 (SPY 395) to 3950. Beneath, there is more significant support at 3900. Below is another air pocket – let’s leave that alone for today.We see option market positioning as very neutral in the 3950 – 4000 area.Our default view is that markets want to revert into this zone, particularly the 4000 strike. Until further notice, we are in a balance/consolidation zone, still digesting that huge candle from over a week ago.We likely need a trigger to push markets significantly in either direction, and Wednesday’s 2 pm ET Fed Minutes appear to be the nearest data catalyst.Our base case is one more push higher before we set the nominal 80-day wave down into the early December Fed meeting.After that, the market should try to launch a new nominal 80-day wave which is likely to fail early as the market winds down into the 18-month cycle low scheduled for February 2, 2022.Oh, I forgot to mention that the February projected low is likely the mid-cycle “pause.” The next 18-month cycle low is scheduled for 2024 on the nominal four-year Presidential Election cycle, which might be the one that blows everything out of the water, just in time for World War III to commence.I will be in the Trading Room tomorrow only.Happy Holidays Comrades. Long live the State!A.F. Thornton
Founder's Trading Journal The Bear is Resting, Onward and Upward, Then? Nov 18, 2022 AF Thornton 0 Comment Good Morning:The market closed above our daily trigger lines yesterday, though it was a close call.Other key levels held, while our lower support line at 3904, also near the Weekly Expected Move low, acted as the pivot zone.Yesterday’s close managed to keep the 10/13 Navigator Swing Buy signal alive.If today’s market closes above yesterday’s high at 3990.25, I am still looking for that last push up to the 200-MA and other conjunction of targets/resistance around 4100 and possibly as high as 4150.As stated before, the 20-week wave usually runs up 6-8 weeks, even in a bear. We are in week six, so it is getting close to the danger zone. We will take it day by day.I have been up all night to catch the next hourly buy signal, which finally manifested around 3:45 am EST at 3957. We will trail a stop under the hourly Algo trigger, but the daily 5-ema also works well.Since I have been up all night, I won’t be in the trading room. Tom or Rose will cover.I will try for Rose, but her direct feed is not working. That means I have to manually mic here through the speakers. We will give it a go.Key levels have not changed, and the pullback looks acceptably healthy enough to buy for now.I have been spending quite a bit of time trying to assess the impact of these “meme” players controlling 40% of the outstanding options that are purchased and expire within 24 hours. It increases the risk of flash crashes, at minimum. Sure, we all like a 5-6% short-covering day like we had last week. But the mirror image of that day lies in our future as well.Mind your stops.Stay Tuned.A.F. Thornton
Founder's Trading Journal Bernie Madoff with his Clients’ Money / FTX’s Bankman-Fried his Clients’ of their Money Too – 11/17/2022 Nov 17, 2022 AF Thornton 0 Comment S&P 500 Continuous Future - Navigator Algo Sell Signal on Hourly Chart Good Morning:Tuesday’s sell signal on the hourly charts has morphed into a Navigator Swing sell signal overnight, triggering at 3942.Of course, today’s candle needs to close below 3942 to validate the signal. I will keep you posted on that front.A pullback from the meteoric short-covering candle on the daily charts a week ago today is to be expected.Nevertheless, we must be careful in the current environment, and the downturn is a rejection of the 200-day moving average on the daily charts.Also, we may be peaking the second of two nominal 40-day cycles in the first 80-day cycle slated to trough in mid-December.In short, it is too early to tell whether the 20-week cycle wave has peaked. We will know in due course. This may be a healthy pullback on the way to our original 4100-4150 target.But the reason we have been working the hourly chart signals rather than the daily ones is precisely what we are encountering this morning: waking up to a big sell-off.The FTX contagion grows, as do the global recession risks continuing to plague the markets.Futures are lower to 3945, down from overnight highs of 3990.Our key levels remain largely unchanged, with resistance above at 3960, then 4000. Support below is at 3904.For today, do not be surprised if the S&P 500 stages a rally today back into 4000, and with our volatility estimate of 1.03% we do not see a move down through 3900.That possibility is markedly higher for tomorrow and into next week.Yesterday there were very large volumes at the 4000 strike. The call activity, which is likely call selling, adds to resistance at that level.Conversely, there was clearly a lot of put activity below, which translated to an uptick in open interest at 3900 and 3950.We think these are likely short-term put sellers.With the algo in decidedly negative territory, we assign an edge to the downside after OPEX.We will watch the 4100 Call Wall area as resistance into month end.The Call Wall lines up closely with the widely watched SPX 200-day Moving Average mentioned above and hovering near 4080.A.F. Thornton
Founder's Trading Journal Klaus Will Own Everything and Be Happy; How About You? – 11/16/2022 Nov 16, 2022 AF Thornton 0 Comment Good Morning;The only thing scarier than the U.S. elections is the World Economic Forum that is behind it all. Here is yesterday’s message to the G20 from the WEF fearless leader, Dr. Klaus Evil.And just to keep it interesting, the FTX Crypto scandal promises to swallow Joe Biden and more Democrats whole.Apparently, FTX and its fearless, fraudulent leader, Sam Bankman Friedman, or SBF as he likes to be called, was the successor to the Jeffrey Epstein Operation. Oh, what a tangled web awaits us. Would somebody please wake me up from this veritable nightmare?As they say, I want a new timeline in the quantum world.Meanwhile, back at the ranch, Our models continue to point towards mean reversion into the large 4000 strikes through Friday’s OPEX. , with resistance at 4024 and 4040 and support at 3960.A little consolidation is needed before we push to the final target for this 20-week cycle at 4100-4150.From there, we travel to the 18-month cycle low next spring.The next turn dates are November 22nd and December 3rd.The 11/22 turn looks to be from lower to higher and vice versa on December 3rd.These are the minor waves, but the biggest wave down is still in front of us as we head into the nominal 18-month cycle low.Tom will be in the trading room to start the day, and I will be there in a few hours – watch your text alerts.We are still in the macro Navigator swing buy signal from 10/13 as long as the S&P 500 continues to close above its 5-day line.However, the Founders Group continues to work the buy and sell signals on the hourly RTH charts. That chart rolled into a short-term sell signal yesterday at 4028. Look for a buy signal soon.A.F. ThorntonA.F. Thornton
Founder's Trading Journal Inflation is over, the Orwellians retained Power, and Everything is fine, Dear… 11/15/2022 Nov 15, 2022 AF Thornton 0 Comment Good Morning:I overslept this morning in a rarity so infrequent I cannot remember the last time it happened.I have been burning the midnight oil on several breakthroughs in our algorithms to automate day trading and will have some exciting announcements soon.Futures have bounced back toward 4420 (440 SPY) on a less negative (than expected) wholesale inflation report (PPI).Likely due to the anticipated report, our current volatility estimate today is high at +/- 1.54%. Further, there remains a heavy negative gamma position in both SPY & QQQ. The 400 SPY and 4000 SPX are the interim floors we are watching now as support. Resistance holds at the 4050 line.The abovementioned levels remain the main feature of the S&P 500 index layout through Friday’s expiration.If my crystal ball continues to serve us well, we still see the market moving up to 4100-4150 before the next trip down to the valley at 3000 or so.For now, the market is short-term overbought, but the options complex gives it a slight bullish edge through Friday’s monthly expiration. Look for pinning around 4000 for the rest of the week.After Friday’s expiry, what should we expect? Well, one only needs to ask voters:More crime,No more prisons or prisoners,Skyrocketing energy prices,Skyrocketing inflation,A recession followed by a depression and ravaging deflation,No more free speech,A disastrous withdrawal from Ukraine in favor of War with China over Taiwan and war with North Korea, Iran, and Russia,Nuclear War (don’t worry, it is survivable, Lol),More plandemics plus untested and mandatory shots to kill people,A false flag EMP attack (the same people who rehearsed the plandemic a month before it hit have been rehearsing an EMP attack),A shortage of candles, Weber Grills, wood, and charcoal,More oppression of small farmers and centralization of food and water supplies,More cricket sandwiches,More altered plants and food,New models of horses and buggies,Abandoned cars converted to housing,New non-farting horses,Open borders,More corruption, including a corrupt judiciary, DOJ, and FBI,More surveillance state,Less free speechMore attacks on those terrible domestic terrorist parents,More grooming and sexualization of children,The return of serfdom and slavery, Reducation camps,An indictment of former President Trump,Indictment and jailing of that troublemaker Elon Musk,World War III, and many more issues I have likely forgotten.I know the majority wants all of this, and they voted for it. But apparently, I don’t run in those circles because I have never met one of these voters. Nevertheless, I look forward to meeting these comrades and learning more about how this works for the greater good.I know I am carping, but learning that the Orwellians funded their midterm elections with American taxpayer money laundered through Ukraine to Sam Friedman and the fraudulent FTX Crypto Exchange – only to come back to the Democrat Party in the form of $40 million in midterm campaign contributions set me off this morning.No trading room today, as I need to get the video done and out. I will be in the room every other day this week, beginning tomorrow.A.F. Thornton