Founder's Trading Journal Morning Notes – 6/23/2022 Jun 23, 2022 AF Thornton 0 Comment S&P 500 Index Continuous Futures Good Morning:Whether or not we are in a bear market boils down to one question: Is the Fed friendly or not? We know the answer. All we can try to determine is whether the market is washed out enough in the short term to give us a short-covering rally. By most measures, it is – virtually on par with the March 2020 Covid Crash lows.We can also determine that there can be a bullish bias going into the end of the calendar quarter a week from today—more on this below.And that has put us back into another 200-point balance range between 3642 and 3843 on the S&P 500 futures contract. Balance Rules apply to the range. In other words, a breakup puts a target of 4042 in reach, and a breakdown brings 3442 into view.The market probed the range in both directions yesterday, closing in the middle. The overnight range is in the middle of yesterday’s range, but the market has steadily increased since Europe opened. The market may open in the top third of yesterday’s range this morning with an orthodox gap higher. Though not a True Gap, you may still use some Gap Rule principles to guide you. Most important is how the market handles the morning Gap if it materializes. Does it fill right away (negative), or does the market move away from the Gap with impunity (positive)? The Gap serves as an initial sentiment indicator.Fed Chairman Powell’s congressional testimony yesterday and today likely has a lot of money sidelined until his testimony is over.The bottom line is that we should treat rallies into June 30th options expiration as “short covering” and subject to failure.The best case is “positive drift” into expiration – perhaps allowing us to break the upper end of the balance range and move higher. I give slightly better odds to a breakup than a breakdown.In that case, I would use 4000 as the short-term goal, with 3600 as significant downside support into June 30th. Remember that the June 30th expiration removes important put positions and may expose the market to further downside into July.Getting a bit more granular, and focusing on the downside, recall that the market broke out from the pre-Covid Crash highs at roughly 3400. So carry that number forward in your narrative as well.Also, carry the following numbers forward related to the retracement of the Covid rally and extension of the January to February decline; (i) the .382 Fib retracement at 3550, (ii) the 1.618 Fib extension at 3435, and (ii) the .50 Fib Retracement at 3235.Recall that our intital target for this down leg was 3500, and our ultimate target for this bear market low is 2500 (and rising with time).For now, use the balance range and Balance Rules to project targets. Spike low support below us is in the 3400 range.A.F. Thornton
Founder's Trading Journal Morning Notes – 6/22/2022 Jun 22, 2022 AF Thornton 0 Comment Good Morning:S&P futures are trading near 3705, having reversed most of yesterday’s gains.Support lies at 3700 followed by 3620. Resistance shows at 3755 (SPY 375).Fed Chairman Powell speaks today at 9:30 AM. EST.Much of today’s consternation may be anticipating Powell’s remarks.Yesterday’s action did little to support the idea of a sustained bounce.Both volume and conviction were lacking. The retest I discussed, which normally comes on the fifth day after a new low, could result from Powell’s speech.So while caution may be the rule of the day, it would not take much on a positive note to send the shorts into panic mode.A.F. Thornton
Founder's Trading Journal Morning Notes – 6/21/2022 Jun 21, 2022 AF Thornton 0 Comment Good Morning:Options expiration has cleared the decks, expanding the range boundaries to 3600 as the Put Wall on the downside, also near the WEM low for this week set at 3575.The upper boundary now sits at 3900, but the price will first encounter the WEM high this week at 3795.Today, the options market priced the range (from Friday’s close) at 3617 to 3750. The market already tagged 3750 in the Globex sessions (from Sunday night through the holiday and into this morning).Using a Gamma calculation, it might be better to set the range from the open this morning at plus or minus 37 points.The ranges have been less accurate recently, as the options market has been running inefficiently, punching dealers and other premium sellers in the face.Last week, we saw one of the largest sell programs in history, the second-largest week of shorting the market in history, and four days of 90% breadth participation in the downdrafts.As usual, a lot of the action occurred overnight, leaving U.S. traders with gap and crap ranges to daytrade.At this writing, the market will gap higher this morning, if ever so slightly. If it is a True Gap, Gap Rules will apply.Today’s sandbox includes the 5-day line at 3745, already overnight resistance, and where the market broke down from Thursday. There is good support at 3725 and then 3688.The pattern since March has been for each short-covering rally to cover less ground than the last, with the market rolling over sooner.The chart looks like the market is possibly curving down into an eventual waterfall decline and capitulation.From a macro perspective, 3688 is in the middle of two volume air pockets on the daily chart.The overhead air pocket has 3900 as its target high, with a few bumps on the way there. The underside air pocket has 3370 as its target low, with a few bumps along the way lower.At this point in the 2000-2003 bear market, which I am using as the base model, the market still had more left on the downside, and the lower target is where the bear staged its first major rally. On the other hand, with the market extended this short and other signs of a sustainable low, 3900 is more than possible.Don’t forget that important lows usually require a retest about five sessions later.Also, remember that the shorts have been making money and are not likely to abandon ship easily. We are in a “3” wave down in Elliott Wave jargon, which tends to be vicious, as we saw last week.If the market can close above the 5-day line at 3745, that would be the first good sign of a sustainable trip north. Still, be careful. The sell programs have clobbered the previous short-covering rallies.Any close below last week’s low at 3639 would hit the eject button and require a parachute down to 3370.From a Gamma perspective, daily volatility should be declining to about 1%. But the options market is still pricing in a lot of volatility considering it is a shortened, four-day trading week, so be careful today.A.F.Thornton
Founder's Trading Journal Morning Notes – 6/17/2022 Jun 17, 2022 AF Thornton 0 Comment S&P 500 Cash Index Bear Channel Good Morning:Yesterday was brutal, though not a surprise to subscribers. It was a gap and pin day, with a balancing range of plus or minus 40 points centering around 3670, also the bottom of the S&P 500 index channel. I am still viewing 3700 as a support/resistance “pivot” line, with further support at 3670, 3650, 3620, and 3600. Resistance sits at 3755 and then 3800.The overnight range is in the upper half of yesterday’s balancing range, but still well below yesterday’s gap.The market is stretched like a rubber band 3-ATRs under the daily mean and is due for a snapback/short-covering rally at any point. Shorting here is unwise unless one is absolutely convinced the market will crash here. The better strategy now is to patiently await a long buy signalThere were few puts cashed in yesterday, so a lot of puts will expire or get rolled today, and that should provide some taiwinds for the market.But the options market is only one piece of the puzzle. Strong institutional selling has been dominating the markets recently.I still see signs of an interim low develping. We are at the SPX channel bottom. Junk Bonds have not confirmed the S&P 500 and NASDAQ lows. I am tracking the JNK hourly. There are Demark price decline exaustion signals. Positive momenum divergences continue developing across a broad range of sectors. Breadth indicators join sentiment indicators at bearish extremes (which is bullish).It escaped my attention that Monday is the new Juneteenth holiday commemorating the end of slavery. Domestic financial markets will be closed, except for Globex.I am already wondering how the holiday might affect Quarterly Expiration today. Even after expiration, dealers must reconcile their books, usually the following Monday. Now this will occur Tuesday.Tuesday is typically when the market resumes its trend. Maybe now it will be Wednesday.With everything moving forward a day, it could make today all the more interesting.Trying to day trade during Quarterly Expiration is unwise unless you have a specific strategy (e.g., a pinning strategy) or exceptional, long-term trading experience.And pinning does come to mind. As I have pointed out over the last week, 3700 has the largest open interest and Gamma expiring today and has already drawn the market back up overnight. This is a chart of the S&P 500 Options Gamma by Strike Price. The light gray shading represents the portion of the options Gamma expiring today. So the most probable case for today is a balancing market trading around the 3700 S&P 500 strike. Worst case is the decline continues, but since we are at the bottom of the down channel, I am giving that outcome less probability. Best case is that there are enough dealers left to draw the index back up to the WEM low at 3800. It is not unusual to see a positive lift going into a holiday weekend. Again, quarterly expiration complicates any forecast because expiration often leads to random, unpredictable results. The projected range today is 63 points plus or minus yesterday’s close, leaving elevated volatility on the table. Keep in mind that projections are less useful in the current environment. The options market has mispriced volatility for nearly three weeks in a row. What I worry about is next week, is that all of the SPX-related puts and VIX calls expire. It leaves the market vulnerable on the downside until more protection is placed next week. Have a great weekend. You will receive an invitation to our Monday evening “Start the Week” series where our community briefly gets together to plan the week ahead. A.F. Thornton
Founder's Trading Journal Morning Notes – 6/16/2022 Jun 16, 2022 AF Thornton 0 Comment S&P 500 Index Futures - Long-Term Support Good Morning:The market reacted somewhat favorably to the .75 bps increase yesterday, though short-covering likely drove the gains.Given how short the street is going into quarterly expiration tomorrow, I was surprised that there wasn’t more short-covering of the rip-your-face-off variety after the Fed announcement.So like a drunken spree the previous night, everything looked good at the time. The Fed is aggressively fighting the inflation they caused!But with the morning hangover, everyone asks, “How high are mortgage rates again?” “How high is inflation?”The answer on mortgage rates is – 5.54% on average, double the rate from January. The response on inflation? 20% under the old calculation and 10% under the new formula.So the market (S&P 500 Index) tested new lows in Globex at 3695, erasing all of yesterday’s gains.Recall that 3700 is short-term armageddon headquarters. It is our “Put Wall,” and It is preferable to maintain that level through tomorrow’s expiration.Given the open interest at 3700, there is at least an even chance of pinning there. There is a longer-term support structure at 3688 to give the market some breathing room, but 3620 is the next stop after that.On the upside, it gets complicated around such significant options/futures expirations. Out-of-the-money puts from yesterday are suddenly profitable this morning.Even if investors roll the puts ahead of tomorrow’s expiration today, the exchange creates an imbalance for Dealers. It forces them to buy futures, thus triggering a move back to resistance at 3800 up to 3850.Don’t forget that the WEM low can still draw prices back up to 3800 as it did yesterday.On the other hand, dealers may have already taken the last clear chance to avoid catastrophe by hedging at 3800 yesterday.If prices stay below 3700 for long, volatility increases, and sparks could fly.It all depends on the confidence of the shorts. If the shorts are making money, their incentive to cover wanes.I don’t typically recommend trading around Fed Meetings, especially when combined with quarterly expiration. Distortions can arise through dealer rolling and hedging activity.The best time to position will likely develop late Monday or Tuesday morning after the dealer books clear.Keep in mind that the market may be temporarily vulnerable on the downside as the hedges come off tomorrow through Tuesday.If the S&P 500 decides to follow the NASDAQ 100 down into a 50% retracement, the next significant support is at 3400, which is (i) the highest volume node below us, (ii) where the Covid Rally from March 2020 had fully recovered from the crash and broke out to new all-time highs, and (iii) lies smack dab in the middle of the 38.2% and 50% retracements of the entire Covid Rally.That would be a 30% decline from the peak.Stay nimble. We remain in cash.A.F. Thornton
Founder's Trading Journal Morning Notes – 6/15/2022 Jun 15, 2022 AF Thornton 0 Comment Good Morning:Considering the wholesale inflation report was as bad as the consumer report yesterday, the stock market barely reacted.And there were many other positive divergences (e.g., momentum and junk bonds failing to follow the S&P 500 index to new lows), demonstrating that the market is trying to put in a (temporary?) bottom at 3700.The chart pattern also showed a bullish falling wedge into 3700, which is THE critical level to watch in the next few sessions. 3700 is where the most strikes and negative gamma concentrate. Falling wedges typically lead to reversals higher.In brief, the market wants to rally, and we even saw a small short-covering rally start into the close.The futures are positive this morning. The overnight range barely tagged the halfback from yesterday and has stayed in the upper half of yesterday’s range. Bulls and bears were evenly matched overnight, much as they were yesterday.So it does not take much for the market to take out yesterday’s high and end the brutal one-time-framing lower bear candles of the past few days on the daily chart.Today is Fed day, and the street has baked 75 bps into the price cake.And as I have been saying for a few days, the street is incredibly short, and it won’t take much to send the shorts on a relentless buying spree.Recall that the WEM low sits at 3800 for the S&P 500 futures (3804 on the cash SPX and 380.40 on the SPY).The WEM low target is still in reach as a magnet to draw the market up for the few Dealers who did not bail on Monday’s significant breach of the level.The volatility range for today is roughly 65 points in either direction from yesterday’s SPX close at 3735, so it will be a wild ride as usual. I usually don’t trade until at least an hour after the announcement, if at all. I think framing the market on days like this might be pointless. But price acceptance above yesterday’s high at 3782 and the overnight high at 3783 is the most bullish outcome. Dropping sustainably below the overnight low at 3739 would cause me to question the bullish case. Acceptance below 3700 is bearish. Given the strikes sitting at 3700, there is also a case for pinning at the level on Friday, which may draw the market back after some short-covering. Pinning at 3700 is a very low probability but keep the possibility in mind.And don’t forget that sometimes statements at the news conference can reverse the market’s initial reaction to the rate change.My best guess is that the stock market is poised to start a short-covering rally at a 75 bps or higher rate increase.The market could continue lower if the Fed comes in at 50 bps or less without reasonable justification.The rally could be the beginning of the end of the bear if it is cyclical and not secular. I doubt it, but keep that possibility in mind as the crowd would least expect it.Also, the street is short and expecting a short-covering rally into the quarterly options /futures expiration on Friday with some Vanna tailwinds. I am inherently suspicious when too many traders and investors agree on the same thing.The magnitude of options expiration cannot be overstated. We only get options and futures expiring simultaneously four times a year.If the market topples further here, it will be on the Fed’s forward guidance, not today’s rate increase.Using the original CPI calculations before the government tried to put lipstick on them after the 1970s, inflation is running very hot at 20% – almost hyperinflation by any other measure. As far as the street is concerned, the Fed cannot be aggressive enough.The problem is that much of this inflation is deep and structural, unlike “Happy Days are Here Again,” consumer-driven inflation. So the interest rate cure may be worse than the ill.Higher rates cause more consumer suffering. Demand destruction will not likely stop the structural inflation caused by (i) deglobalization (nobody’s fault) and (2) extraordinarily poor and unwise Biden administration energy policies.Until events check the rise in oil prices, there will be no inflation hope on the horizon. It is not as much a demand problem as anti-energy government policies and insane, ineffective global sanctions.Let’s see what the day brings. Good luck today!A.F. Thornton Click to Learn More About Navigator™ Trading Subscriptions Share with Friends and FamilyWord of mouth is crucial for growing our trading community and providing education and support for your trading decisions. Please feel free to share this with your friends and family if you find the information beneficial. Facebook Twitter Email LinkedIn
Founder's Trading Journal Morning Notes – 6/14/2022 Jun 14, 2022 AF Thornton 0 Comment Good Morning:I am fortunate to have a great business partner that helps keep my feet on the ground. I think of him as my business wife. I am lucky to have a real wife that does the same thing.My business partner and I discussed some of my macro concerns yesterday, and he said, “don’t put that in the Notes; you will sound crazy.” I promised I wouldn’t, as I had similar concerns.But then we had to remind ourselves that when we first discussed the Davos crowd, their “Great Reset,” and their video, “You Will Own Nothing and be Happy,” we thought that was crazy too. It was hard to swallow. That was two years ago.We discussed then that this group of prominent government and corporate leaders at the World Economic Forum wanted to crash the economy, take control of the food and water, and eventually price us out of single-family homes and energy as part of their Climate Agenda. This Davos crowd also wanted to push us to get chipped and convert to digital government currencies to firmly establish their social credit system and surveillance state.Of course, my partner told me, “no way that will happen here – this is America! I saw his point, and I wanted to believe him. I needed reassurance. But I knew what I knew. I read voraciously, and I have well-placed global contacts. Most importantly, I know how to connect the dots.Neverthless, my business partner and I are still shocked by what has transpired, even though we saw it coming. It is like a bad dream.Did you know that Bill Gates now owns 80% of farmland in our country? What is the current price of a single-family home? What is the interest rate on a new mortgage? How much is gasoline per gallon now? By the way, how is Bitcoin working out as the new Gold? Isn’t it proof that you can sell ice to Eskimos? I think I will stick with the old Gold. In the end, Central Banks will steal Bitcoin and blockchain technologies for their purposes, just as they suppress the price of Gold so as not to interfere with their worthless paper currencies.Then we ask ourselves, with the Great Reset well underway and the “new” economy coming, should we be accumulating Gold Coins or bullets? I wonder which one will have the most value for bartering in the coming collapse? You know what they say, “diversify!”No, I am not watching too much “Infowars” and Alex Jones. Though I must say, Jones now looks like a seer. And you know we are in trouble when Alex Jones has become an excellent mainstream news source.Anyway, how is everyone enjoying the “Great Reset?” How about the “Fourth Turning?” I am sorry that everything I had predicted and worse has come true. And it will get worse before it gets better if it can ever get better. The rest of this decade will be difficult – so prepare yourself.Meanwhile, back at the ranch, yesterday was brutal for the indexes, though expected. The overnight futures market has not taken us to new lows, which is at least slightly encouraging. Of course, it is possible nobody is showing up until New York opens.On the charts, the overnight S&P 500 futures traded in the middle of yesterday’s price action below the gap, having no success at even tagging either end of yesterday’s range. And it would not surprise me to see the market move into rotation as it awaits the Fed decision tomorrow at 2 pm EST.So the overnight range is a suitable bull/bear breakout threshold today. As upside resistance, the top of the overnight range is at 3807, then the Gap from yesterday begins at 3820.On the downside, support lies at the bottom of the overnight range at 3750, with additional support at yesterday’s low, around 3735.Interest Rates are climbing fast. In less than 24 hours, the consensus has gone from 24% to 95% of economists expecting a 75 bps hike tomorrow. Partly, this is due to the Fed’s favorite leaker at the Wall Street Journal floating the trial balloon.Some rumors even circulated yesterday that the Fed would go to 1%. In the meantime, mortgage rates climbed to 6.1% yesterday, double the level from January. Consumer Confidence hit the lowest level ever recorded last Friday. Yet, Uncle Joe is mystified by his low approval ratings, the lowest recorded for any President at this point in his term.As we wander the next few sessions, don’t forget that the street is incredibly short here, so we are looking for the short-squeeze coming from tomorrow’s rate announcement. But we could easily see panic and a spike low before the squeeze kicks into gear. But the shorts will not panic buy and cover when they are still making money, as they did yesterday.I would put “panic” spike-low support at 3250, near the 50% retracement of the entire Covid rally from March 2020. That was where the market broke to new highs from the 2018 to 2020 expanding triangle and consolidation. It is also where the most volume congregates since the March 2020 lows – the so-called high volume node as identified in the chart yesterday.I fully expect we will flirt with 3250 and eventually 2500 before this bear ends, but it does not necessarily need to happen now. It is simply the case that 3250 has a good chance of catching the S&P 500 in a panic. I hope I am not being too conservative in the estimate because the next macro high volume node is at 2700, with the largest node over the past few years at 2100.Would someone tell me how George Orwell saw this coming so many years ago? Is this all life imitating art? Or is George Orwell’s “1984” where the Davos crowd and World Economic Forum got their ideas in the first place?A.F. Thornton Click to Learn More About Navigator™ Trading Subscriptions Share with Friends and FamilyWord of mouth is crucial for growing our trading community and providing education and support for your trading decisions. Please feel free to share this with your friends and family if you find the information beneficial. Facebook Twitter Email LinkedIn
Founder's Trading Journal Morning Notes – 6/13/2022 Jun 13, 2022 AF Thornton 0 Comment Good Morning:Heading into this pivotal week, futures are down 2% to 3800. We look for high volatility today, with initial support at the 3800ish May 20 low, then 3700. Resistance (should we be lucky enough to encounter it) is at 3900, then 3950.High-volume nodes stretching out to the left above (shaded across the chart in grey) are where the market will likely find support. Low-volume valleys (also marked across the chart as the dark black background areas) tend to be “air pockets” on the way down.Price can slide through the air pockets quickly, but where the valley contracts the most can also provide support.So the price will move from each peak to valley until it finds the price the institutions are willing to pay in the circumstances.Over the next few sessions, the S&P 500 will be testing the May 20 low. It has been a long time since we have seen “spike” lows, with accompanying panic and fear. But that is what I am expecting over the next few sessions.If the retest fails, and failure is more probable than not, the subsequent high volume nodes from here start at 3400.3400 down to 3200 is the likely support for any spike lower today through Friday, as the market wanders through the next Fed meeting and VIX expiration on Wednesday, then quarterly options/futures expiration on Friday.Our subscribers are sitting on substantial year-to-date profits and remain in cash. We will proceed cautiously as the market searches for support. When we think an intermediate low is in place, we will share it with the public on these pages.If you review our Current Market Thesis on the menu to your right, the market is right on track to confirm the projections. Amazingly, the thesis has not changed since January, though we are always keep an open mind.We recently communicated that the consensus for a continued bear market rally was too high – so the market rolling over is not a surprise.But the fact that the rally stalled so early could be ominous. We are in a “3” wave down – generally the most significant decline in a series. And it could also be the case that this is the “3” wave in the first wave down. S&P 500 Index Elliott Wave Analysis courtesy of Daneric's Elliott Wave I hope I am wrong, but we are still very early in this bear when one overlays the bear markets of 2000 and 2007 and projects them proportionately into the future. The 2007-2009 bear was even quicker in pace, but no less damaging over time.Today’s retest would have been successful if this were the 2007-2009 bear, and the market would rally up into July/August before rolling over again. Of course, nobody knows what comes next, though I do my best to lay out the roadmap. Again, I try to keep an open mind. I always chuckle to myself when we are required by the SEC to say that past performance is not a prediction of future results when all we do is study the past to try to predict the future. In addition to every other negative, rumors are floating that the Fed could hike rates by 0.75 basis points on Wednesday. If so, the market might view that positively as a tough and committed Fed. The S&P 500 Index closed at 3840.25 on the day the Biden Regime was sworn into office. So, in addition to every other negative record broken by this incompetent administration, the stock market is now lower than when they took office.Also, if the S&P 500 Index closes below the May 20th low, the index officially joins the other indexes in an official bear market (-20%). I have never experienced or observed such purposeful destruction of a prosperous economy. As frustrating as Trump was, I would take him back in a heartbeat over the current regime. I will save an analysis on the Friday options expiration and its potential influence for separate writing. Don’t forget VIX options expiring on Wednesday. As we are opening with a solid True Gap lower on 100% net short overnight inventory – Gap Rules are applicable. The 100% short overnight inventory adds to Friday’s bearish close. Be on alert for some profit-taking on shorts (buying) near the open—more on that below. Ten-year yields have made a fresh new swing high overnight (well over 3.25%) which I’m sure isn’t helping. Key Levels should be marked off today as the overnight range is extensive but has two prior VPOCs within it. As the overnight activity has breached the May 20 swing low from 5.20, although the price is trading somewhat above this level, the level will be pivotal today. Shorts may have gotten ahead of themselves below that low, and some may be feeling the pain of poor location this morning. I would not be surprised to see a fade move early if markets open above the swing low. Today’s focus should be on the 3800 level and whether price action is above or below it. Remember that today is the first official day that the new “U” contract is trading. The contract change was moved up from Thursday in an announcement from the CME last week. The Value Area data is still on the “M” contract today and will reflect the new contract in tomorrow’s report. Be careful if you are going to trade this today, A.F. Thornton
Founder's Trading Journal Morning Notes – 6/10/2022 Jun 10, 2022 AF Thornton 0 Comment Good Morning:The wait is over as the S&P 500 and all if its cousins broke the downside of the Balance Range yesterday and it was hardly a fake-out. It just broke and went.And the inflation rate did not disappoint this morning either, coming in hot again at 8.6%.The core rate, which tends to fluctuate less, came in at 6%.The S&P 500 is trading at 3958 at this writing, which is well below the 4050 WEM low, and well into negative Gamma. It would take a miracle for the Dealers to bring the market back to the WEM low at 4050. They can do it, and they have done it before, but it will be tough on a Friday.The best short-term hope for longs is the trendline coming up and connecting the March 2020 low (2174) to the May low at 3807.50. S&P 500 Weekly Chart As usual, I will have more to say on the weekend. The Fed Meeting next Wednesday is most likely to bring the next tradable low.A.F. Thornton
Founder's Trading Journal Morning Notes – 6/9/2022 Jun 9, 2022 AF Thornton 0 Comment Good Morning: In this market, it seems everyone gets their turn at bat – or getting battered. Tuesday, the shorts took it in the chin. Yesterday, the longs were taken to the woodshed. Yesterday was an inside day, not resolving anything. And that leaves us with the balance range (4070-4200), with Balance Rules still applicable. The range is now complicated by a converging triangle and there is even more to the story. May inflation numbers will be released Friday morning. Ostensibly, the longs got clipped yesterday because the Biden Regime announced mid-day that Friday’s inflation numbers would be elevated again. Of course, the downtrend line stopped the price action too. Nor did it help that Secretary Yellen said there was little they could do about inflation due to “Putin’s Price Hike.” Talk about BS… Of course this is not true. If the Biden regime really wanted to stop the Ukraine war, they would stop funding it. The military industrial complex just keeps moving their tents. First Iraq, then Afghanistan, and now Poland and Ukraine. If they wanted to stop Putin, they would simply pump oil and gas until the price plunges again (destroying Russia’s oil/gas windfall profits). Everything else will fall into place. I always remind myself that things are the way they are for a reason. There would not be a Ukraine war if the Globalists didn’t want it. Nor would we have an open border if they did not like it. I mention this because oil is climbing to $125 per barrel, and I expect it to hit $150. Everything Russia sells continues to skyrocket in price – lining Russia’s pockets. And are the sanctions working to prevent him from selling? Have any sanctions on any country ever worked? Of course not. Why would Russia stop the war – it is the most profitable thing they have done in years? As to our military industrial complex (employing half of Washington, D.C.), what is their incentive to stop the madness? Ukraine is another cottage industry and laundering operation for government bribes. Besides, Washington D.C. has more important things to do like taking our guns away, likely right before Russia or China invades us. Do you see how this all works? Let me diatribe on one more point. Watch Iran and Israel. Everything else is a distraction. These two countries are headed to war over Iran’s attempt to secure nuclear weapons which they will not hesitate to use. Remember “Death to America” and “Death to Israel?” Meanwhile, back at the ranch, with the (i) inflation data coming tomorrow, (ii) the Fed meeting and VIX expiration coming Wednesday, and (iii) $3.5 trillion in quarterly options and futures expiring a week from today, perhaps a trading vacation is in order? But if you like volatility… If you are going to trade, stick to the plan outlined all week and apply Balance Rules. The balance range has not changed (4070 to 4200). The Balance Range projection is double the range if it breaks. Sometimes the first direction it breaks is usually the pros running the stops to take it in the opposite direction. Keep that in mind. Back to the ranges, it is 4070 to 4200. But the range is compressing into a triangle. Why? Pay attention to the weekly down trend line and the daily uptrend line. Also, the five and 21-month lines on the monthly time frame are binding the price action. Note the rising trendline connecting the March 2020 and May 2022 lows. If the balance range breaks lower, and you are looking for a full retest of the May low, this rising trendline could prevent it. Rising or falling trendlines can catch you off guard if you don’t draw them in from the higher time frames. The daily price fell below the 5-day line again yesterday (negative). At least the line is flat rather than downsloping. Price remains on the 21-day line (mean) support at 4100. We find the Navigator Algorithm sell trigger line there as well. In fact, there is a lot of option support holding the market at 4100, which is why the level is short-term critical. In addition to the top of the balance range sitting around 4200, we also find the 50-day line there. Sentiment remains pinned at bearish levels (which is ordinarily bullish). Perhaps this is the exception to the rule. Negative sentiment may stay pinned in a bear market just as bullish sentiment stays pinned in a bull market. Or, God forbid, they could be right… The bottom line is that the S&P 500 is ready to make a 100-point move (at minimum) projected from the top or bottom of the balance range. A fake-out might lead to a 200-point move up through the other end of the range to target. The current flag chart pattern typically forecasts a move higher. But escalating oil prices (approaching $125 per barrel) and 10-year rates (popping over 3%) are exerting negative influence, chart pattern be damned. At this writing, the overnight range (4102 to 4145) has already tested both ends of the compressing triangle. Use those as your bull/bear boundaries today. As I advised yesterday, stay alert for fake-outs. I would not be surprised to see the market stay inside this range all day. Likely, we need tomorrow’s inflation report as a catalyst to move the needle. Brace. The daily price action is a bit more complicated than usual because the price may first break the compression triangle, but hold at the Balance Range boundaries. To me, that is your best case today. It might be worse. To be successful in this price action, you must combine all the multiple time-frame issues. I have already published detailed marked charts for subscribers this morning. Consider a subscription. It quickly pays for itself. Initial jobless claims were higher than expected this morning, perhaps confirming that the economy is slowing. The index sold off on the news. I doubt I will try to trade this unless something exceptional presents. A.F. Thornton Click to Learn More About Navigator™ Trading Subscriptions Share with Friends and FamilyWord of mouth is crucial for growing our trading community and providing education and support for your trading decisions. Please feel free to share this with your friends and family if you find the information beneficial. Facebook Twitter Email LinkedIn