Founder's Trading Journal Interim Alert – 7/27/2022 Jul 27, 2022 AF Thornton 0 Comment The S&P 500 is already at the top of the Daily Expected Move and up 1.24%. So be careful on longs after the Fed announcement. The market has already moved higher ahead of it. On the bull side, there is still plenty of headroom up to the WEM at 4070. Yesterday’s low at 3913.25 is the line in the sand to resume the bear.
Founder's Trading Journal Morning Notes – 7/27/2022 Jul 27, 2022 AF Thornton 0 Comment Good Morning:The stock market wants to go up and usually gets what it wants.In that sense, it may not matter what the Fed does today. Professional money managers are holding a lot of cash and lose clients if their relative performance suffers.I can see a rally up to “X marks the spot” 4070 by the end of the week.A rally up to 4180 is conceivable by next week.At 4070, I want to reevaluate.There is a lot of support under the market here, including the 5-week line and the daily 5,21, and 50-day lines. We also have the highest “volume at price” node in the region, around 3910-3920, the pivot point from yesterday. The level should provide considerable support.So a close below yesterday’s low negates the bullish scenario. But if the index maintains yesterday’s low and preferably moves above 4000, it bolsters the bullish case up to 4070 and beyond.A climb higher is not about improving fundamentals – it is simply a bounce in an otherwise oversold bear market until proven otherwise.A.F. Thornton
Founder's Trading Journal Morning Notes – 7/26/2022 Jul 26, 2022 AF Thornton 0 Comment Good Morning: We expect another low volatility day, with the expected move at about 70 points. The range is projected between 3930 and 4000, much like yesterday. The WEM sits roughly between 3860 and 4070 for the rest of the week. Volatility will pick up tomorrow with the Fed Interest Rate Decision. Many major tech companies are also reporting this week, and we get our first look at 2nd Quarter GDP on Thursday. In the midst of this, the market has been in a weak rally attempt off the June 17th, Nominal 40-week cycle low. There is multiple time frame moving average support below the market, along with the Volatility Trigger at 3950. The first hurdle above is 4000, where the most option strikes and Gamma congregate. The second hurdle is 4070, the top of the WEM, bear channel, rally channel, and multiple time frame moving averages. There is a Fib Fireline at 4100. 4180 is the next obstacle, should we be lucky enough to approach that level. My best judgment is one more thrust to 4070, our “X” marks the spot level, and then we will see. However, overnight Bitcoin contagion (the Globalists are bound and determined to destroy Bitcoin), combined with negative forward guidance from Walmart after yesterday’s bell, threatens the already weak rally attempt. I covered the details in this morning’s recording of the live notes linked above. A.F. Thornton
Founder's Trading Journal Morning Notes – 7/25/2022 Jul 25, 2022 AF Thornton 0 Comment Good Morning:Review the Sunday night video above for details of our weekly plan.We should continue to categorize rallies as short covering and subject to failure.4,000.00 is significant overhead resistance.3,900.00 is the pivot above which volatility should decrease.3,800.00 is major support below, and there may be an accelerated sell-off if we breach that levelWe should experience larger ranges following the July 15 (equity) and July 20 (VIX) options expirations.Implied volatility will likely rise as we approach the July 27, 2022, FOMC event.Call positions are finally starting to build overhead (Call Walls > Absolute Gamma Strikes).The MOVE Index, aka “Bond VIX” is breaking lower, but I have an eye on a falling wedge pattern in the VIX itself which could trigger higher volatility and lower prices for the S&P 500 Index.Futures have recovered Friday’s losses, back to 3982.Today, resistance remains heavy in the 4000-4010 range (SPX/SPY Call Wall). Support shows at 3973, then 3950.Two forces could keep markets contained just under 4000 into FOMC:The 400 SPY & 4000 SPX large gamma strikes create resistance/pin areas into which the market may bounce and then mean revert, particularly if breached to the upside.The equity tailwind from volatility sellers has largely dissipated since last week’s expiration.Generally, we view declining volatility as fuel for market rallies. Watch the falling VIX wedge.While 4000 is important for today’s trading, it remains the critical put/call (or bull/bear) pivot line through FOMC.An extended rally is possible after the Wednesday Fed announcement. See the Sunday video and reference the parameters above.Put positions (negative gamma bars) are very light at strikes >4000.Based on the facts above, we mark 4000 as the transition from a put-driven market to a call-driven market.Good luck today!A.F. Thornton
Founder's Trading Journal Afternoon/Morning Notes – 7/22/2022 Jul 21, 2022 AF Thornton 0 Comment Good Morning: This is a very important video. Do not skip it. We are looking for the market to pin at 4000 or ping pong between the WEM high at 3964 and 4000 at weekly expiration today. 4000 is the key Gamma strike on the board and formidable resistance in and of itself. As with all expected moves, the dealers will lose a fortune if the S&P 500 Futures close above 3964 today, so they will fight to bring it back into the WEM range. The Daily Expected Move would allow for an intraday move up to 4040 before rolling over. As with this morning’s video and the one referenced above, “X” marks the spot between 4070 and 4180. There is considerable resistance from about any angle you can imagine starting at 4070. Think of it as Grand Central Station. The 4070 level could also be the end of an Expanding Flat pattern, leading to a reversal and resumption of the bear market. Any such reversal would indicate an unusually weak launch and left translation for the 40-week cycle. I have never seen one reverse this soon, but it is not impossible. As usual, I doubt I will trade tomorrow as it is weekly expiration – but keep your phones on for any alerts. We are back to cash in the swing strategy, selling our calls yesterday when the futures hit 3980 for some excellent gains. Spike Rules loosely apply at the Open today (not the biggest spike I have ever seen), so be sure to review the rules. There is nothing in particular to be gleaned from the Globex action last night. The market will open near the top of yesterday’s range, which is bullish but with the caveat that the WEM may pull it south to 3964 before the close. We could also seee some pinning action around 3950. SPY and SPX Options Strikes - Note that 400 and 4000 have the largest Open Interest Enjoy your weekend!A.F. Thornton
Founder's Trading Journal Morning Notes – 7/21/2022 Jul 21, 2022 AF Thornton 0 Comment Good Morning:We picked up another 15% in August Monthly SPY calls when the S&P 500 Futures dipped into 3840 yesterday, bringing our total position to 40%.We exceeded the top of the WEM yesterday to tag the top of the Daily Expected Move, then came back inside the WEM range.Since we are at the top of that range, and the market has behaved more orderly lately, I don’t expect much more in the way of gains this week.But when we do reach higher, and even though there is a Rocket Pocket above us beginning at 4375, we will encounter considerable option strike and Gamma resistance at 4000 (the middle of the Rocket Pocket).Then, there is that “X” marks the spot thing.A picture tells 1000 words: Truly – if 4060-4075 were Grand Central Station – all the trains meet there. So that is our target for this rally. We will see how the market reacts when we get there. Meanwhile, the daily 5-EMA is our stop threshold to maintain the rally and current swing positions. The 21 and 50-day lines, as well as the 5-week line, will provide support along with our proprietary Algo Trigger. This is covered in more detail in the Live Session recording earlier this morning (linked above). By the way, the European Central Bank raised interest rates by .50 basis points. The rate increase is their first in 11 years. Wow, wait for a recession, then raise rates. They could get a job at our Federal Reserve with that Resume. Awesome! A.F. Thornton
Founder's Trading Journal Morning Notes – 7/20/2022 Jul 20, 2022 AF Thornton 0 Comment Good Morning:Sorry to be running a little late from the live show this morning. I am learning that this is all a lot to pack in before the New York Open, especially when I am on the West Coast and have to get up in the middle of the night to meet all the deadlines.The good news is that the scenario I had been forecasting since the June 17th low at 3639 has finally come to fruition – or perhaps better said, the forecast has been confirmed.While Monday’s action nearly fooled me, we hung in there and got a 25% position in SPY August monthly calls on the Gap and Go trade per Gap Rules live in the trading room yesterday morning.Consider joining us. While the past does not necessarily predict the future, we notably realized 20 points in futures trading in the room yesterday that we closed out and booked before the end of the day. And that is in addition to our SPY calls, which continue to build gains from our entry.Twenty points in the Emini is $1,000, significantly more than the $297 monthly subscription costs. Since we started the room two weeks ago, we have achieved several thousand dollars in gains using both S&P 500 futures (micros and minis).But the most important issue on the table now is that yesterday confirmed that the important 40-week intermediate cycle low is the suspected 6/17 at 3639. We now have a projection up to 4200 or so.However, the futures encountered the WEM high at 3964 overnight, which may dampen further gains through weekly expiration on Friday.But once we get through the overnight high, just above the level we enter the previous capitulation, Rocket Pocket. All else being equal, I expect the market to fly through that zone – roughly beginning at 3986 and ending at 4042. The next major resistance we will encounter sits at 4062.The Weekly Expected Move high may cause some backing and filling, leaving the big move for next week. There is a 70% probability that the 4064 WEM high will hold for the week, but we need to let the market guide us by carefully monitoring the auction. At the very least, we are back to the “buy the dip” mode.Note that we have a daily and weekly bullish pivot now on tap.Also, every major near-term moving average has now been conquered, including the 5-week and the 5, 21, and 50–day lines. All of these moving averages should now provide support. We will look to the 5-day line as our trailing stop on our SPY calls.Note that the index broke above the 6-month opening range line at 3922. The level should now provide support, and any move back inside the range is negative for the rest of the year.And by the way, we crossed instead of kissed on the moving average front – another major accomplishment for this market.I covered all this with charts in this morning’s live notes linked above.Let’s enjoy some positive gains while they last. There is a Fed meeting in two weeks, and the consternation may return ahead of the date.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 -7/19/2022 Jul 19, 2022 AF Thornton 0 Comment Good Morning: It is best to refer to yesterday’s discussion for key levels and targets, as not much has changed. Everything seemed fine as the market traveled north to grandmother’s house yesterday, but then… They closed the gates at the brick wall – 3805-3830. And so it remains the obstacle to conquer. How do they coordinate this? I often wonder. As the market hit 3905, Apple came out with their earnings warning {along with Russia announcing their “Force Majure” contract termination cutting Germany off from future energy). It is like they were waiting to block and tackle yesterday. And on the other side, the Fed’s plunge protection team seemingly picked up the rear guard. It was almost as if the spin backward was as well-timed as a ballet and so was the rescue. And the triangle now formed on the daily chart is normally a “2” or a “4” continuation wave pattern – rarely a bottoming formation – but the news anomolies make the pattern somewhat contrived. And the pattern forces us to consider the possibility of one last down thrust before this particular “leg” of the bear completes. We believed that the down leg completed at the June 17th low.But a retest assumes the “powers that be” affirmatively derailed yesterday’s rally attempt. It might only have been briefly interrupted by the news, and could resume its course today. And the truth is nobody knows for sure, but a retest of the June 17th 3639 low is at least on the table, and that has not been my preferred view up through yesterday.. And if you project a “measured move” from the 3850 triangle apex (about 180 points), you can forecast a move to 3670 – slightly higher than the June low. But if the rally resumes – you can also project north to 4030 – up and through the air pocket discussed yesterday. Meanwhile, Gap Rules are in order this morning – so apply them, and we will see how it goes. As per this morning’s live show, We will be in the Trading Room about 30-minutes after the Open. AF. Thornton
Founder's Trading Journal Morning Notes – 7/18/2022 Jul 18, 2022 AF Thornton 0 Comment S&P 500 Index Continuous Futures - Daily Candles with Navigator Algo Buy and Sell Signals Good Morning:Like thieves in the night, our Asian and European cousins were buying like crazy from last night’s Globex Open and never looked back.The S&P 500 Futures are already up 37 points this morning, almost a full percentage point and slated to Gap Open in New York at this writing.Gap rules will apply if the rally continues. Click on the Chart above for the Algo dashboard. A third buy alert could paint depending on whether today’s candle closes above the Algo trigger.I find it better to use the 2-hour chart to take Algo Buy signals against the trend, and it has been supportive since Thursday. The overnight buying follows on the heels of something I mentioned Friday morning – the market stopped declining on bad news.Normally, this behavior would be a sign that the sellers are exhausted short term.I remain cautious, however, as nearly $1.4 trillion in notional options expired Friday, and dealers will continue to adjust their books this morning. I thought it better to wait for the options’ influence to wane before drawing any definitive conclusions. Expiration could have propped the market up – fooling us into thinking that bad news is good news.Moreover, the market is at a proverbial brick wall.While the S&P 500 Index is trading above the 21 and 5-day lines in Globex (it closed on the lines Friday), it is now facing the recent downtrend line, the 50-day line, a lot of higher time frame moving averages and the highest volume node in the neighborhood at 3910-3930 or so. S&P 500 Continuous Index Futures - Macro Volume Profile Map And with a convergence of multiple moving averages in the same zone, I raise the question as to whether all of these averages will kiss or cross, the latter being supportive of the rally. Kissing is what the averages tend to do in a bear. This daily chart of the S&P 500 Futures highlights the resistance to further advance ahead. So here is my love letter to the bulls:You came this far; will you turn south from the top of the hill? Ridiculous!Precedence permits a retracement to 4150 in this period – 7-8 months after a bear is underway.That 6/17 low came on a rigorous, relentless, gapping down move – a mini-capitulation by any other name. The 6/17 low is important and marks the low of the 40-week cycle. Can’t you put a little gas in the tank before the left translation?And you don’t care about bad news anymore.Hey, you took the five and 21-day lines; what is a 50-day line among friends?You will have to conquer these lines someday; why not now?You have a Rocket Pocket on the other side of the hill, and you can rest then…And to the bears…You suckered them in during July seasonality – trap the bulls, then dump them!That 200-week line at 3525 is calling you! This bear is the most fun you have had in years! Don’t stop now. Even if you feel sorry for the bears, remember how unmerciful the bulls have been since the Covid Crash!Just one more thin mint – one more leg to crush the bulls! Take them up just a little bit, then wack-a-mole. S&P 500 Continuous Index Futures 15-Minute Chart- Today's Sandbox Try not to get dizzy looking at this week’s and today’s sandbox. There is a lot of stuff on our windshield this week.But keep it simple – we either get through this resistance or not. If so, we head towards 4000. If not, we will head towards 3500.The only way I know to monitor this is to watch the auction as it develops in real time – it will tell you whether prices are being accepted or rejected in the zones.The options / Gamma strikes are unusually compacted this week, so there is not much to glean there except that the Volatility Trigger is at 3850 – and below that, selling pressure and volatility intensify.As you know, I have been expecting the market to resolve higher since the June 17th low. We have captured some nice, short-term gains on the rally attempts.I am still ever so incrementally bullish on a retracement north and up to 4000, but willing to change my mind. And the market has been trying to find its footing. Nevertheless, the cardinal rule has not changed. Traders and investors should resolve all doubts in favor of the existing trend – which is bearish. Experts I respect are extremely concerned about domestic and world events.But connecting current events to the market is a fool’s game. The market looks ahead. Whatever is coming out now, regardless of what it is – news, interest rates, and global events – is already baked into the indexes.Good luck today, and be patient. If we pay attention, the market will tell us what it wants to do.Watch today’s video for more detail on how I set up the week and built the charts above. I will have the footage polished and out in a few hours.A.F. Thornton