2022 | Archimedes Methodologies

Founder's Trading Journal

Morning Notes – 7/8/2022

Jul 8, 2022 AF Thornton 0 Comment

S&P 500 Futures Daily Chart

Good Morning:

We had another good day in the Trading Room yesterday, earning 16 S&P 500 Futures points in the first few hours of the day. While it is a personal decision, Day Trading continues to be preferable to swing trading with the current tape.
Clearly, it is not easy to swing trade in this environment. Holding overnight can hold many surprises the next morning. We all have to sleep. right?
In spite of the challenges, we managed to establish a 10% position in August SPY Monthly Calls a week ago today (7/1), when the futures were at 3748.50.
We brought the position up to 50% live in the Trading Room on the morning of 7/6 at 3816.25.
Our target has been the WEM high at 3925 or so. As we discussed yesterday in the Trading Room and given the risks related to this morning’s Unemployment Report, we sold half the position yesterday afternoon at the top of the intraday wedge pattern when the futures were trading at 3910.
We are holding the other half in hopes of reaching a bit closer to the target. We moved our stop on the remaining half up to 3858.50.
The Employment Report was much stronger than expected this morning. Will this be more good news on Main Street is bad news on Wall Street?
This is a hard needle to thread. It certainly allays some of the Recession narrative, but ensures another 0.75 Bps Fed rate hike at the end of the month.
We will see how the market reacts.
Meanwhile, here is today’s Trading Sandbox for Day Trader Subscribers:

I recorded a video showing how I created this chart which I will post after I edit it.
Today’s key will be how the market handles the June jobs report (remember, the data is already stale).
3930 is a formidable hurdle to climb for many, many reasons.
If the market does manage to get on the other side of that mountain, it opens the door to next week to 4000 and maybe 4150.
Until proven otherwise, however, the Narrative remains:
- Rallies are categorized as “short covering” and subject to failure,
- Volatility should remain elevated until/unless the market closes above 4000, the largest Gamm options strike, and major resistance.
- 3850 is our line in the sand into monthly options expiration.
- Due to large equity and VIX expirations, July 15th and 20th are important dates to mark.
- July 27th is the next key Fed rate decision.

Have a great weekend! See you Sunday evening live on Rumble and YouTube at 5:00 pm EST.

A.F. Thornton

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Founder's Trading Journal

Morning Notes – 7/7/2022

Jul 7, 2022 AF Thornton 0 Comment

Good Morning:

While the S&P 500 followed through yesterday after the release of the Fed Minutes, it hesitated at the 21-day line which is the next big hurdle.
We will raise our stop to 3953.50 on our 50% August Call Position on the SPY
We have formidable resistance at the 21-day line at 3868, a downtrend (supply line) in the same vicinity, and a high volume hurdle at 3910 or so.
If the market can get through these areas, then it enters an air pocket with scant resistance until the 4000 area.
On the downside, there is good support around 3825, and the bull/bear trigger line remains at 3754.
The expected move range today is 3797 to 3897.
See you in the Trading Room!

A.F. Thornton

Founder's Trading Journal

Morning Notes – 7/6/2022

Jul 6, 2022 AF Thornton 0 Comment

Morning Notes Live Recording

Good Morning:

I have to cut it short this morning – but everything is thoroughly covered in the live recording from this morning posted above.
We had a good day in the trading room yesterday, picking up about 18 points on the S&P 500 Micro Futures and everyone had some good practice.
We also brought the Swing Trader strategy up to 50% invested in August Monthly SPY calls near the morning lows. We moved our stop up to an hourly close below 3788. We averaged in at 3748.50.
We have some economic reports out at the top of the hour so be careful. Fed Minutes also come out at 2:00 pm EST. I don’t expect any surprises.
Balance Rules apply to the range roughly between 3840 and 3740. The last three daily bars may also be forming an expanding triangle, which is also a breakout pattern.
I am still looking at the June 17th low as an intermediate, Nominal 20-week cycle low. While we are still in the throws of the bear, the cycle low should give an extra boost to this rally.
Use the balance range to project your intitial targets.
Always remember, we don’t know what comes next. Nobody does. This could very well be the bottom of a “cyclical” bear for all we know. I sitll believe that the bear has more to go – and this is a reprieve. But anything is possible.

A.F. Thornton

Founder's Trading Journal

Morning Notes – 7/5/2022

Jul 5, 2022 AF Thornton 0 Comment

Morning Notes Live - Building Your Sandbox

Good Morning:

As always, monitor the Current Market Thesis for the big picture – it hasn’t changed since January.
Some of the dicussion below is repetative, but that is what a “Narrative” Is all about.
I will be publishing a video later today that is focused on the Macro Thesis and big picture.
Until otherwise negated, this is a generational, mean-reverting bear market that will take us to the middle of the 100-year channel (SPX 2500) over time.
The first bear leg (January-June) appears complete – It is a leading diagonal into the June 17th low at 3639 on the futures, behaving somewhat similarly to the 2000 bear market top.
The S&P 500 is now in a retracement rally, with the potential to retrace about half the January to June decline. The 2007-2009 bear is a good analogy for a similar retracement that occurred at this stage and time after that market topped.
The retracement has bounced in a cradle trade as of Friday. The short-term market structure on the daily chart is ambiguous. That puts the Algo line at 3735 as a line in the sand. Any close or sustained price action below that line shifts the short-term picture back to bearish and raises the issue of whether the this intermediate down leg is complete.
The unique and challenging aspects of this bear are the plethora of exogenous, global events typical of a “Fourth Turning.” Any of these events can stop a rally dead in its tracks.
When you think about it, the 2000-2003 bear was primarily about mean reversion from a bubble. The 2007-2009 bear was primarily driven by a financial shock. The current bear market we are experiencing has both bubble and financial shock characteristics.
In other words, there is something to be learned by carefully studying both of these bear markets.
But for now, do not get married to any particular scenario or outcome. When in doubt, favor the bear trend.
This retracement rally is aligning with the seasonally strong summer rally period. The next 9-trading days are typically the strongest and most often repeated uptrend days of the year.
This week, the WEM Sandbox is 3728 to 3828 on the futures. We are in negative gamma which means high volatility.
The relevant lines in the sandbox this week are the 5 and 21-day lines. In addition, there is the formidable resistance from 3810 to 3830. There is strong breakout support underneath us from 3775-3788. Draw your trendlines and high volume nodes too.
The Navigator Algorithm remains in a buy signal on the daily chart – and we took a 10% swing position at Friday’s close. We purchased August monthly (at-the-money) SPY calls. The futures were trading at 3748.50 on our entry. The buy signal is still intact, and we would like to scale into more calls if the stop holds today. The stop is at 3734.50 this morning,
We have a factory orders report coming out 30-minutes after the open, so we are unlikely to take any day or swing positions before that.
Overnight trading is a bit complicated due to the July 4th Holiday. It appears that the Globex traders took out the stops above Friday’s highs, then rolled back down into the range. We are slated to open in the lower half of Friday’s range at this writing.
I don’t see an opening trade, and I would wait until after the Factory Orders report at 10:00 AM EST to ponder positions.
We will be in the trading room this morning until about noon EST.

Have a good trading day.

A.F. Thornton

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Founder's Trading Journal

Afternoon Notes – 7/1/2022

Jul 1, 2022 AF Thornton 0 Comment

Good Morning:

Score one for the good guys! After plunging in the wake of a weak ISM Manufacturing Report this morning, the S&P 500 recovered its losses. It confirmed the day’s historical reputation as the calendar year’s most consistent and reliably bullish trading session.
And the Cradle Trade lives too, with the market pivoting right from the Algo line discussed the past few days.
The price even managed to squeak out a close slightly above yesterday’s high and the 5-day line – triggering another swing buy signal and pivot – at least if you had the fortitude to buy into a three-day weekend.
10-year Treasury Note rates also nose-dived on the ISM report (I think interest rates backing off is good?) – as the bond market begins to price in the recession already underway.
I wonder if the Biden Regime will cook the second quarter books to eke out a slight GDP gain, just to keep them from getting tagged with a recession before the mid-term elections? Care to take any bets?
Importantly, the market had every chance to take out the 3639 June low today but didn’t. So the case for a rally (we have patiently awaited) scores another checkmark in the win column today.
Naturally, because it is Friday, the pivot stays just a few ticks above the confirmation line – enough to keep us in the game – but not enough to motivate us to back up the truck to load up long on futures and options.
I will have more to say over the weekend.

As a side note, I am moved to tears to learn of the death of Dr. Zev Zelenko from cancer yesterday. You will find his last words (the day before he died) at the link in the prior sentence.

He truly touched my heart. This brave 48-year-old doctor’s early and sensible protocols (Ivermectine (then Quercetin), Azithromycin, Hydroxychloroquine, Vitamin C, and Vitamin D (with just the right amount of zinc to deliver it) saved thousands of people (including me) from Covid-19 and certain death. I still take his daily formula to keep my immune system strong and healthy.

It is noteworthy that Dr. Zev’s formula was curing people long before the clot shot started killing people. Of the thousands of patients Dr. Zev personally saw and treated for Covid-19 in early 2020, only a single patient died throughout the Pandemic. His protocols saved millions.

His reward? Big Pharma and the Big Biden Regime viciously attacked him. They tried to take his medical license and destroy his life. And they did the same to the other small number of doctors and medical professionals brave enough to fight back against the evil regime and its narrative.

There are many unsung heroes like Dr. Zev, but it seems there are not as many as there used to be when I was growing up in this great nation of ours. History will treat them kindly, depending on who gets to write it.

I am happy that Dr. Zev lived to see his protocols fully vindicated – though it would never have mattered to him as much as it did to do the right thing by his patients. He also had the opportunity to see many of his colleagues (though not enough) apologize for drinking the Biden and Big Pharma Kool-aide. Of course, the plethora of leading doctors, hospitals, and newsrooms that Big Pharma bribed will never speak out or apologize for the vaccines.

I don’t know what has happened to our country such that this Orwellian nature of things has come to dominate our work, lives, and body Politik. I shudder to think of the long-term consequences.

This nation’s fine and decent people, so busy and distracted by working hard for their families and communities, must wake up before it is too late. If you haven’t noticed, a creepy, silent coup is underway to dominate, conquer, and force our nation and its people to submit to global, authoritarian rule and a very unfamiliar way of life. And the regime is about to drag us, our children, and grandchildren into another unwinnable world war.

The Pandemic and vaccines are symbolic of the silent coup. And I can personally attest to the effectiveness of Dr. Zev’s Covid-19 treatments. May Dr. Zev’s memory be a blessing. And may Dr. Zev Zelenco rest in peace with my mother, father-in-law, and so many others who have and will unecessarily die from the establishment’s ill-conceived clot shot and its purposely-hidden side effects.

And may Big Biden, Big Tech, Big Media, and Big Pharma eventually go up in flames! And while I am on the subject, the World Economic Forum can take their “Great Reset” and put it where the sun doesn’t shine!

Thanks for letting me rant and honor this fine and brave man. He will always be my inspiration to try to do the right thing – even when the going gets impossibly tough.

Enjoy a wonderful holiday weekend with the ones you cherish in your life as we honor the birth of this great, though imperfect, nation. Let’s focus on what binds us together and celebrate (rather than scorn) our differences.

A.F. Thornton

Founder's Trading Journal

Morning Notes Live -7/1/2022

Jul 1, 2022 AF Thornton 0 Comment

Founder's Trading Journal

Morning Notes – 7/1/2022

Jul 1, 2022 AF Thornton 0 Comment

Good Morning:

What can we say about June, the second calendar quarter, and the year’s first half?
It was the worst start for the general stock market in 50 years and the worst for the NASDAQ in history.
And what does that tell us about the rest of the year? Absolutely nothing!
We know that the next ten trading sessions are typically the most positive of the year, at least based on the last 21 years of data.
And it would be so easy to trade the left side of our charts…
Unfortunately, we must trade to the right.
As you can see from the chart above, the market reversed from the cradle yesterday, as we have been expecting all week.
But to confirm a pivot (and swing trade) higher, the market would need to close above Wednesday’s high at 3840.
The market needs to stay above the cradle trigger at 3736 to keep the setup alive.
If it can close above 3840 in this favorable seasonality, the market would then be able to enter the air pocket above 3910 for a quick trip to 4000 and possibly beyond.
Otherwise, the market will likely retest the 3639 June low and eventually tag 3400 or so before starting the next rally leg.
Nobody knows what comes next, so we will let the price action lead us where it wants to go.
Rallies should still be categorized as “short covering” and subject to failure unless otherwise noted.
Volatility should remain elevated until/unless the market closes above 4000, the price at which we see the next major resistance.
Also, note that the 6/30 expiration removed large put positions and may expose the market to further downside into July unless hedging picks up in the next few sessions.
July 15th and 20th will be important dates to mark on your calendar due to large equity and VIX expirations into the July 27th Fed meeting and interest rate decision.
And be prepared for a slew of economic reports next week when we return from the three-day weekend.
And then comes quarterly earnings…
Note 3400 as significant long-term support (the February 2020 pre-covid crash high) and also where JP Morgan Chase has placed a sizable option collar position.

Have a great holiday weekend!

A.F. Thornton

Founder's Trading Journal

Afternoon Notes – 6/30/2022

Jun 30, 2022 AF Thornton 0 Comment

Good Afternoon:

I mentioned the “Walk Away” trade in the Morning Notes – refer to them for the details.
And right on cue, the market peaked at lunch and sold off the rest of the day.
I cannot believe that the trade still works. I started taking this trade 25 years ago.
Even with all the computers, and the sophistication of today’s modern trading world, I guess money managers are still people, and they don’t change.
Speaking of tendencies, for the past 21 years, tomorrow (the first trading day in July) has far and above been the most consistently bullish day of the year.
And the good news is that the bullish tendencies typically spill into the next nine trading days. You may have heard this referenced as the “Summer Rally.”
And if we are lucky enough to have it present – the rally may be the last clear chance to avoid the accident promised this Fall.
When you have witnessed multiple crashes in September and October over the years, one begins to believe that it is called the “Fall” season because of the stock market – not the leaves.
But even the “Summer Rally” requires context. We are still in a bear market.
I found it more natural to take a short trade on the “Walk Away” today, but going long on a seasonal tendency is a bit more difficult. It does not seem to fit the current narrative.
And if the market waxes and wanes in the next ten “reliably bullish” sessions, that tells us something too.
Whatever your setups may be, never forget WWSHD (When What Should Happen Doesn’t). Always treat the failure of a high probability setup as an indicator in and of itself.
The average trader gets mad and starts yelling at her computer screens.
The master trader immediately recognizes the contraindication and fully reverses the trade, rather than just abandoning it in frustration.
We had another good day in the Trading Room today. We took two very conservative trades, given the distractions of month-end and quarterly options expiration.
We started with the gap-and-go trade (per Gap Rules) and then aligned with Money Manager window dressing leading up to the Walk-Away trade.
They always say, “If you can’t beat ’em, join ’em.”
We picked up 19.5 S&P 500 points before closing shop after the first two hours.
Room Members got the text alert when I decided to buy a put option at the Walk-Away peak on the chart above.

I will have more on how we will prepare for next week in tomorrow’s AM live session at 8:30 AM EST on YouTube and Rumble. I think it fair to say that we closed out June with an ugly monthly candle.

The point I will make is that you need to put your big boy/girl/whatever pants on next week as it will be a wild ride when we return from the three-day weekend on Tuesday.

Stay Tuned, and Well,

A.F. Thornton

Founder's Trading Journal

Morning Notes Live 6/30/2022

Jun 30, 2022 AF Thornton 0 Comment

Founder's Trading Journal

Morning Notes – 6/30/2022

Jun 30, 2022 AF Thornton 0 Comment

Good Morning:

Review yesterday’s Morning No tes again as not a lot has changed.
As highlighted yesterday afternoon, the market pinned at the WEM low for one of the narrowest trading range days of the year.
What worries me this morning is that Dealers were getting out of their WEM positions early yesterday as the market has been pummeling them with 2-Sigma moves four out of the last five weeks.
Since we already had a 2-sigma move on the daily chart Tuesday, I am not surprised the Dealers might be running for cover.
But will Dealers still defend the WEM levels – which expire as they normally would tomorrow- instead of with the rest of the options today?
It is the last day of June, the last day of the second calendar quarter, and the day monthly and quarterly options expire (with the weeklies still expiring tomorrow).
Today is not a good day to day trade – but here is today’s Sandbox if you choose to try:

Note that the market will open below the WEM, and the options market priced the DEM at plus or minus 57 points today, for a range between 3669 and 3788.
You would think that the options market could get it right on a day with so many options expiring – but the overnight market at this writing is already trading at 3760.75 – below the DEM low!
That is also why I have built a Gamma adjusted database that calculates an expected move from the regular session open rather than yesterday’s close.
I would set the Sandbox at plus or minus 50 points from today’s regular session open.
I am not vouching for my sanity, but in the old days, we used to place the “walk-away” trade at the end of the calendar quarter.
On the final calendar quarter trading day, the portfolio managers tend to run out of money after window dressing and marking up stocks in the morning.
So, by noon to 1:00ish Central (Chicago) Time, the S&P 500 is susceptible to declining into the afternoon.
We would look to set up a short position in the early to midafternoon as the professional money managers “walk away,” leaving the equities market ready for an afternoon fade.
As with many trading setups, one still has to be aware of this tendency in context.
And the context here is a rapidly deteriorating bear market – with a full retest of the June 17th low (3639) a bit more probable now than the potential “C” wave higher I discussed yesterday.
I put the 2000-2003 bear market at the top of this writing to illustrate that leading diagonals, such as we see on the chart now, don’t always lead to big rallies.
Here, our oversold market could stage a successful retest of the June 17th 3639 low and rally to 4000 from there, but bear markets are difficult to predict.
I will be in the Trading Room for the first few hours today calling balls and strikes – but it is unwise to day trade today – unless something obvious slaps us in the face.
Like the walkway trade?
Today’s Red Letter economic reports will complicate matters – look for unemployment claims, consumer spending, consumer income, and the PCE inflation statistics (Fed Chair Powell’s favorite inflation gauges) all pre-market.
Wait until next week! We return from the July 4th holiday weekend into a cluster of June reports sure to keep the volatility high. More on that tomorrow.
Overnight trepidation about these reports may have set the tone for a Gap down at the open.
Of course, any potential Gap down at this writing could easily reverse higher on one of these reports.
And just to trip up any opening trade, the Chicago PMI comes out 15-minutes after the open.
And, speaking of the open, overnight inventory is net short, and the market would open with a True Gap down at this writing, triggering Gap Rules this morning.
There is a time to go long, a time to short, and a time to go fishing. If I did not need to spend a few hours in the trading room today, I would be going fishing.

A.F. Thornton

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Archives 2022

Morning Notes – 7/8/2022

S&P 500 Futures Daily Chart

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Morning Notes – 7/7/2022

Morning Notes – 7/6/2022

Morning Notes Live Recording

Morning Notes – 7/5/2022

Morning Notes Live - Building Your Sandbox

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Afternoon Notes – 7/1/2022

Morning Notes Live -7/1/2022

Morning Notes – 7/1/2022

Afternoon Notes – 6/30/2022

Morning Notes Live 6/30/2022

Morning Notes – 6/30/2022

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