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Our sell stops triggered a nice profit at 436.50 on what looks like a look above and fail per Balance Rules. Trick and company tried a fake-out at the open, but the markets have been in a non-stop Gamma sell spiral since.

I am out for a few hours but will keep checking in for more opportunities. If we have to return to the bottom of the range, it is 4275. More negatively, the failure of this rally to follow through above the daily mean is a bad omen.

As always, I will keep an open mind. Even with fear indicators at correction highs, they are not at panic levels, which may be what is required to take us any higher.

A.F. Thornton

SPY stops are now 434.50, Emini stops are now 4245.25.

This morning, the Founders Group took a 50% long position at 433.25 on the SPY for Swing Trade Accounts. We used an S&P 500 Emini Futures at 4326.50 for leveraged accounts. Stops are set at 431.50 on the SPY and 4315 on the Futures.

We have Navigator Algorithm buy signals, the first of which came at 4267.50 on 2/25. As we would have been holding over the weekend in the middle of the Russia/Ukraine conflict, we waited for an entry on Monday. We took a position Monday, but we were stopped out just above break-even in yesterday’s volatility.

We now have a secondary buy signal this morning, and we will try once again. We will move our stops to break even as soon as possible.

The market is volatile and tricky and not for the faint of heart. From a psychological standpoint, the buys are among the most difficult of my career. That is why we affectionately call it the “puke point.” Stops are our saving grace.

A.F. Thornton

We are out on the S&P 500 Swing Trade at 4320 for a small profit. This morning, the market is increasingly hostile as oil hits $108 per barrel. As we approached the European close a few minutes ago, the market started breaking down – obviously due to the Europeans bailing. Risks are increasing across the board.

The Founders Group has taken a swing buy, long call spread at S&P 500 Futures 4315.25. We are targeting 25% for the position. More on this signal later tonight.

There is no perfect vacation for a trader. So let me drop a quick note.

The trading range I had expected is well underway. And we did bounce on the “Options Expiration” pivot I talked about on Sunday night.

The Navigator shifted back to a buy signal at 4531.75 on Monday morning. You can see the turn on the daily chart above, and we saw some follow-through yesterday and today. Here is a granular look at the buy signal and turn:

The Founders Group is on vacation, so we are not partaking in the run these past few days. As we say at the office, there is always another train leaving the station.

We are now at the top of the trading range – or close to it. Given the brick wall that we have seen at 4700 these past four weeks, it is doubtful we will see a breakout. Also, we are near the Weekly Expected Move High of 4708 on the cash index.

That we might not break out is just an opinion, of course. But the statistical probability of a breakout failure is 80%. We will see how it goes, but I would not be surprised to see another loop back down. Price action always rules opinion anyway.

A lot of this price movement is short covering. Sentiment got too negative for further declines, as I pointed out last Sunday. And we always have to be mindful of manipulation in light, holiday volume. So it is not advisable to jump in at the top of this range.

Perhaps the market is in the process of forming an ascending triangle.

We know from history that when Fed policy begins to shift, the market tends to stall into a trading range. Markets don’t typically roll from bull to bear immediately. Usually, a trading range precedes the transition.

Anyway, this market has yet to violate the recent bull uptrend and may find support again on the trendline if we loop back down. Therein lies your makings of an ascending triangle.

The bullish price action belies all this talk of crashes and such that I read. Nevertheless, I fully expect considerably more volatility in 2022 than we have experienced recently.

I hope this quick update keeps you alert as we get ready for the new year.

Again, Merry Christmas and Happy New Year

A.F. Thornton

I know I said I wouldn’t, nor did I want to monitor anything over Christmas, but the Founders Group is back to a 40% position in each of SPY, and DIA January ATM calls for a total of 80%. As Chairman Powell spoke, we entered the calls when the SPY was 463.73, and the IWM was 356.25, respectively. As I had suspected, the Fed was a bit more aggressive than anticipated, so the market is happy for now. Welcome, Santa Claus!

Since this is a swing position, you can enter at the close today or even on a small pullback tomorrow. The market is racing on short-covering at the moment, so it makes sense to wait for the short-covering to calm down. You may be able to enter in the morning.

I am hoping we can hold these positions for a few weeks. With the Fed meeting out of the way, there is not much negativity between now and year-end.

A.F. Thornton