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Navigator™ Signals for Day Traders

Morning Outlook – 4/29/2021

AF Thornton 0 Comment

The follow-through from Facebook and Apple’s blowout earnings, along with Fed Chairman Powell’s reiteration that it’s too early to talk about any taper of QE, has futures gapping up strongly and breaking out of a three-day balance/range. Balance rules apply.

This is the first day that we will be opening out of range/balance in a while, so there should be some shock and awe at the open. Gap rules apply. As the gap is large, keep #2 and #4 firmly in mind.

The potential is there for early trade (which is generally counter-trend first) on any true gap. Aggressive traders can short the first one minute low or any cross back down through the open should the opening drive be higher. Target yesterday’s high for the gap fill. This is a very advanced style of market play, and it’s not easy to pull off as per gap rules #2 and #4.

Any gap and go scenario must be characterized by extremely bullish internals with either a complete failure to fill the gap or partial fill. Often, the best trade is the cross back up through the open after any partial gap fill.

Due to recency bias, it can be easy to discount the potential for a look above and fail as per balance rules. Should the gap fill and acceptance be found back within the balance area, then there is potential for rotation to the opposing end of the balance (4166.75).

Key levels today are the all-time highs overnight (4207.75), yesterday’s high (4193.75), which is the top of the three-day balance area, the bottom of the three-day balance area (4166.75), and the top of the single prints (4160). You can pick up the same levels by analogy in the NASDAQ 100. I will publish some charts later this morning.

Good luck today,

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook 4/27/2021

AF Thornton 0 Comment

The last few sessions have had overnight distributions that have exhibited 45-degree line patterns or close to it. These lows (S&P 4176 and NASDAQ 100 14,000) have proven secure, and last night’s distribution is no different. Remember that traders do what works until it doesn’t, so assume these lows to be secure until they are not. 

Price made new all-time highs in the overnight session. Carry this forward as potentially less secure as auctions don’t usually end on an overnight session. We also have an extensive Time Point of Control in the S&P 500 at 4181.25 in yesterday’s regular session. Wide TPOC’s are more likely to be tested than more narrow ones. Early trade could easily revisit this area as it is not far from current prices. 

Remember to continue to carry forward untested and unrepaired structures from prior sessions. It’s easy to forget these when faced with a market that is trading very one-sided right now. That means the top of the single prints at S&P 4160 and NASDAQ 100 13,933 (from 4/23) would still be in your narrative. Then, should the tone change abruptly, you will have references at your disposal.

Use the prominent TPOC in the S&P 500 as a reference today and assume that the price will trade through it at some point in today’s session. Use that information for potential fades back to this level or rallies up to it when trading on either side.

On the S&P 500, yesterday’s profile distribution is very tight, and the range is small. There is also a lack of material excess on the top that corresponds with a prior regular session high. Assume potential for a long breakout above that area. By the same token, assume the potential for a downside breakout should yesterday’s low at 4173.25 be taken out. 

In either scenario, context is king, and internals are more important than ever when attempting a range breakout.

Good luck today.

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – 4/26/2021

AF Thornton 0 Comment
Volume / Time Profiles

Friday’s rally was strong enough to negate weakness from Thursday and also closed at a new all time high. Overnight activity is balancing around the volume point of control which indicates acceptance for now. The overnight range is relatively muted and balanced. There is negative divergence this morning between the NASDAQ 100 and S&P 500 futures. The S&P’s are currently flat and the Nasdaq 100’s are off 18. 

The divergence is minor but should be a carry forward in your narrative. It increases the odds of further balancing activity in the day session today when the indexes are fighting each other. Assume balance within the value area and no change in tone unless there is any acceptance below the single prints (about 4160 on the S&P 500 and 13850 on the NASDAQ 100). 

Structure (elongated and stretched) was poor on Friday. Carry that forward. The prevailing market narrative is typically stronger than poor structure unless that structure really starts to stack with multiple concurrent days.

Dropping down to a 2-hour perspective, the indexes have weakened further on this latest run out of the volatility ping-pong that was last week. The activity looks a bit like a “4” wave in Elliott parlance on the daily chart. That would allow for a final poke higher on one of the multitude of significant events this week; Biden tax proposals, Fed meeting and announcements, and monsters of tech reporting earnings. Keep these events and announcements on your radar so you are not lost in the weeds and caught off guard. As I have been harping, disaster stops are more important than ever.

We will be opening in balance, within the upper half of Friday’s range on both indices. Overnight inventory is slightly long on the S&P 500 and slightly short on the NASDAQ 100, though the overnight range is short and squatty in both indexes. All in all, there is little to guide us on the open, so it pays to let the index hem and haw a bit before taking a position. 

My overall bias is neutral to negative down to the 21 EMA on the daily chart where I want to see how the market reacts. Both the NDX cash indexes are trading below the 15-minute 21 EMAs, also a negative short-term.

With everything mostly in balance at the open and little to guide us, look to internals for your first cues. If the S&P 500 A/D line is between +200 and -200, and ticks are between +400 and -400, I look for a range day and responsive trading from both ends. Tension between the NASDAQ 100 and S&P 500 also tends to lead to range days. Range days also have a tendency to follow strong trend days such as Friday. If the A/D and ticks are tending to exceed those levels in either direction, a trend day is likely in the applicable direction. Don’t forget to run an early heat map to see what influence the big caps are having on returns.

Then, with my key levels in place, I evaluate the market as it tests each level, e.g. the overnight high and low and yesterday’s high and low. Are we dropping down below the open or coming back up through it. Watch your internals as we tap these levels. What are the ticks doing? What is volume doing? How is momentum? Where is the algo trigger? Did we make it through the level? Monitor for continuation or accept the failure and reversal and take your direction accordingly.

Finally, run a 15-minute chart on the cash indexes. Bring in the 21 EMA. On range days, it cuts through the middle of the price action. But on trend days – whether up or down – the 21 EMA is where you look to put on positions. Running a VWAP with a couple of standard deviation bands is also helpful on range days. Fade the bands and cover at the VWAP line.

 We are looking for 63 points up or down from Friday’s close for the Weekly Expected Move on the S&P 500. The number is 312 points on the NASDAQ 100.

Good luck today! I don’t trade Mondays, typically.

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – Friday 4/23/2021

AF Thornton 0 Comment

I don’t write the Epilogues every day. I like to use them to illustrate points that will help you improve your trading. Yesterday’s severe liquidation break on President* Biden’s tax announcements illustrates three important points.

First, you should always have a disaster stop. Where you set them is personal – more of an art than a science. I tend to use 15 points on the NASDAQ 100, which I trade most of the time. Tracking the Average True Range over the last 14 bars can also help you calculate a stop – perhaps one or two times the range. Believe me, my disaster stop has saved me from more than one news event over the years.

Second, yesterday illustrates the risk in the markets at this time. Biden’s tax proposal was just that – a proposal. It is likely the first volley by our current, Marxist ruling class. It is not the final number. But the markets’ knee-jerk reaction illustrates the delicate underpinnings at these levels. One should decide whether it is worth trading at all until a significant correction – maybe greater than 10% – presents. Such a correction is building right now, as there are many chinks in the armor already.

Finally, the market was saved once again by the Weekly Expected Move low. I mentioned this yesterday morning, not even knowing that such a liquidation break would present. Always have the WEM levels marked on your trading screen. Bailing out below that level yesterday would have been foolish. Perhaps one could make an argument that if the institutions had really pressed the gas pedal yesterday, the WEM low would have been obliterated. It wasn’t.

Another rule I follow, which is not hard and fast but also a savior yesterday, is that I don’t trade after lunch starts in New York. On exceptional occasions, I will take an afternoon drive trade around 2:30 PM EST. So I was not in the market to enjoy yesterday’s bloodbath. In fact, I was writing on these pages in the midst of it. And now I realize that I had not completed my description of the internals screen – which I will do later this morning.

The overnight distribution has a bit of a 45-degree angle to it. The overnight low is also very close to the volume point of control at 4127.75. While it’s not a day to trade near the bell, keep this level in mind as potentially secure in early trade and carry it forward as our line in the sand today for negative bias if it is breached.

Overnight activity since then has been bullish, with a very squat profile and balance squarely within the lower end of the value area. As traders extended the range, the halfback at 4143.50 is a key level and should be marked off as the line in the sand where an imbalance of those knee-jerk sellers from yesterday will start to feel some collective pain. Finding acceptance today above halfback should signal that the break was just short-term, rather than long-term, liquidation. 

I would also say with a bit less conviction, that holding below halfback for too long with value unchanged to lower implies that more selling could be coming. But the WEM low, which is about the same as yesterday’s low, is likely to cradle us. If traders could not breach the WEM low yesterday – it seems doubtful they could do it on weekly expiration today.

If the WEM low is taken out today, the 4100 roundie then comes into play which is also the 4/9 volume point of control.

As you already know, I don’t trade on Fridays, especially when we are skirting the edge of the expected move.

Good luck today – but I would not be surprised to see a slop fest trading near the expected move for a good part of the day. The overall bias is bullish as long as the S&P 500 stays above the 21 EMA on the 15-minute cash index chart.

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook 4/22/2021 – Update

AF Thornton 0 Comment


I thought I would take a minute this morning and share my market internals screen. I have everything tuned to 2-minutes for sensitivity, but anywhere from 5 to 15-minutes is also useful. I custom-coded this chart, so it is not publicly available. Send me an email at info@bluprinttrading.com if you would like me to send it to you with the custom-coded indicators built-in.

You see the New York Stock Exchange stats and broad NASDAQ markets in the upper left corner. Today, we see roughly 2:1 positive NYSE and NASDAQ breadth (there are 2 stocks up for every stock that is down). The NYSE is slightly weaker than the NASDAQ. Yesterday, when we were trending, it was more like 5:1. The candlestick chart below the stats is tracking up versus down volume. Today, we have more volume going into gainers than losers, but not by a lot.

The next chart below is up versus downticks. We have been mostly in the green today but slipped into the red over the past 10 minutes. Ticks can often diverge from price, giving you a warning of a turn during the day. They also give you a sense of tempo and strength, depending on whether they are hanging out above or below zero. The ticks have traded mostly above zero today, with the pullback now coming during lunch in Chicago and New York – typical behavior mid-day and not calling the positive trend into question.

The final chart in the sequence on the left tracks the advances minus declines for the S&P 500 index. You can see we are dancing around the zero-line today, but the A/D line has continued to improve throughout the day. That is classic “balanced” behavior, perhaps transitioning to an uptrend that will allow the markets to take out yesterday’s highs.

The screen then shows the S&P 500 index with 2-minute candles in the middle of the screen. Below is a histogram that monitors all four major indexes combined; the S&P 500, NASDAQ, New York Stock Exchange, and Russell 2000. The ticks are then broken down by individual index below at the bottom. Cumulative ticks also help confirm turns throughout the day, as well as strength or weakness.

Note also the readout of each of the 11 S&P 500 Sectors ranked in order of their weight in the index (also labeled) with a readout of the gain or loss for the day. I color code these red or green depending on whether there is a positive or negative gain. At one glance, I can sense the market breadth – like today when half are red and half green. That tells me at least that we are in balance and moving sideways.

But then, I look at the weighting of the greens versus reds. Clearly, the weightings are tipping in favor of higher versus lower prices. But the gains are only slightly above zero at this writing – so this tells me the market is still balanced, trying to tip towards an uptrend.

On-trend days, the sectors tend to correlate to mostly green or mostly red. Knowing the weight also helps me assess whether the large-cap tech and growth stocks can overcome the broad market due to their dominant cap weightings. I know the weighting of the large-cap leaders by heart, so I don’t need specific readings, but a quick heat map can resolve any doubts.

The heat map below shows me by square size, color, and sector what companies contribute to gains today up or down. I typically apply the heat map to the S&P 100 or NASDAQ 100 for quick reference. If the index is going to be range bound, the heat map can help you find a stock that might be trending.


Each morning outlook is based on our ongoing narrative, the previous day’s action, and the overnight trading in Asia and Europe. I am well prepared for the day ahead – based on considerable trading experience. Giving the NYSE about 15 to 30 minutes after the open to settle down, combined with a quick heat map, gives me the final information I need to know as to whether the probabilities favor the market trending up or down or a trading range. The trading tools and tactics are different for balance versus trending – as you would expect.

Tempo also adds confidence to the picture as it tends to be faster on trend days. Asking me to trade a slow day with a slow range is boring. I have to step down to a 1 minute or tick chart and trade some size to make it interesting.

I hope this helps you better understand when I mention “internals,” “tempo,” and “monitor for continuation.” What is monitor for continuation? We ensure that the internals don’t start petering out while playing a breakout or breakdown from a key level. The internals should be confirming the instrument’s progress.

We will emphasize these principles over and over in the new trading room – currently in beta test.

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – 4/22/2021

AF Thornton 0 Comment

It is hard to believe that we are almost through another week. 

Yesterday saw buyers recapture control, at least temporarily, but not to the level that we formed a full pivot higher on the daily chart. This morning will be a flat opening just inside yesterday’s range – in other words, balance. Overnight distribution is small and wide in the context of yesterday’s trending day higher. For now, overnight traders are accepting the higher prices associated with yesterday’s close.

The halfback at 4142.50 is my key line in the sand today for bull/bear bias. Buyers need to hold this halfway point in yesterday’s range. If they can hold above the overnight high at 4167.25 (also near yesterday’s high), so much the better. As a side note, halfbacks become important when there is a wide daily range, especially on a trending day supported by strong internals, such as yesterday.

On the upside, we have the overnight high and yesterday’s high at about the same level. That’s a visual and mechanical breakout point for many traders. Monitor for continuation on any break above there.

Do not be surprised if the market stays balanced and trades inside yesterday’s range today. As mentioned yesterday, we have tagged the expected move on the downside for the S&P 500, so that likely puts a floor underneath the market until options expiration tomorrow. Use the internals to guide you in this regard. Anemic ticks and an S&P 500 A/D line between -100 and +100 will be more supportive of balance than trend.

Acceptance of prices below yesterday’s halfback would change the tone back to negative, in my view. We are still holding Gold in the Swing Strategy, but my finger is on the trigger.

Good luck today.

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – Update 4/21/2021

AF Thornton 0 Comment

Market internals have been powerful today, supporting each break higher and past overnight highs. I will publish an illustration later. This is nearly a textbook day to illustrate how strong internals support breaks to higher levels. The NASDAQ 100 pattern is analogous to the S&P 500, but a bit weaker.

We will see if the afternoon drive (that should start in the next 15 minutes) can support breaks above yesterday’s highs. There is a better chance on the S&P 500 than the NASDAQ 100. If such a break does occur, we may have a pivot that could finish this leg from March 24th with a double top or possibly slight new highs. We nearly tagged the low end of the weekly expected move already, so the downside might be contained for now. 

As demonstrated in the chart published in this morning’s writing, price action might carry us into the May 8th topping zone, which I have identified as the “ideal” position for the 18-month cycle peak. “Ideal” is in quotes because it is rare that the markets deliver much that is ideal or to our precise liking. But as with horseshoes and hand grenades, close is good enough.

I am unsure that our gold position would buck a significant stock market downtrend – though I try to keep an open mind. I am trying to decide whether to nail our substantial profits at the close today so stay tuned.

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – 4/21/2021

AF Thornton 0 Comment

In my way of thinking, analysis of the market starts with the S&P 500 index. Think of it as the mothership. You can extrapolate to any other index, sector, or stock from that reference point. It is the most heavily traded equity index globally – and therefore reflects all known information at any given point in time.

The next level of my analysis begins with the price. I strip everything else off my screen. What is the price action telling me? In day trading, my price analysis starts with the daily chart. I think of it as my master chart – and I day trade in the direction of the daily chart (except at pivot points).

If I were to advise someone on getting started for day trading, I would require them to take a course like one of the courses offered by Al Brooks. Mr. Brooks has written three thick treatises on price action. Virtually everything else you see or hear about in technical analysis is a derivative of price. A derivative of price is just that – a derivative. To that extent, any indicator is somewhat secondary in reliability. An indicator is supposed to refine what the price action is already doing and telling us.

I would then want to understand the amount of time spent and the volume occurring at any particular price. I like to frame it in terms of what I call “value,” something I learned from one of my mentors, Jim Dalton. Value is defined as where the S&P 500 spends 70% of its time and experiences 70% of the volume. Often the information is similar for time and volume. The index typically spends the most time and has the most volume around the same price. When it doesn’t, that is important market-generated information. 

The markets are auctions. Price is merely an advertising mechanism when you consider the auction process more deeply. Analyzing where the S&P 500 spends the most time and has the most volume gives context to the price mechanism. Thus, it is more important to know if “value” is rising or falling than price. Is the Point of Control (where the most time is spent or the most volume occurs) rising or falling? Is it at the top or bottom of the day’s price range?

This morning, I am noticing that the S&P 500 price action on the daily chart is overlapping instead of impulsive. In other words, the daily candles overlap each other. Overlapping price action tends to be corrective in nature. Impulsive action – where the daily candle cannot get into the previous day’s range – tends to lead to a trend reversal. We don’t see that yet.

With that premise in hand, all we can say for now is that we are experiencing a mean reversion back to home base – the 21-day Exponential Moving Average. That average sits at about 4070 on the current month’s S&P 500 futures contract. That is a reasonable first target for the correction at hand. We will see how the index develops from there.

Many of my secondary indicators, such as the Rate of Change, S&P 500 Relative Performance to Junk Bonds. Investor Asset Flows, Corporate Bond Spreads, Trading Volume, and Market Breadth are still positive for the longer-term trend. But, as I said yesterday, every large correction starts with a smaller one.

The Navigator Algorithm, which combines the above-described variables and more, is in a sell signal. That is why our swing strategy remains 90% cash and 10% gold. Gold was the only green on the screens yesterday. Everything else was red.

The only question is whether these few days of index retreat are a simple mean reversion or the beginning of the nominal 18-month cycle correction. Likely, we are observing both. However, one more leg higher may still be possible.

Sequentially, you can count the S&P 500 as a Wave 4 consolidation, with a Wave 5 still to come. You can conclude this by looking at the chart of the S&P 500 index above and realizing that this latest advance is longer than the first rally proceeding from the March 2021 lows. If the wave was equal to the first, perhaps it could be considered complete.

This morning, we will be opening in yesterday’s range with a balanced, overnight inventory. We are currently in the middle of the overnight range. The short-term bias remains bearish, and there is no clear indication of direction at the open, so early trade is inadvisable.

Let the market settle in and follow the usual sequence depending on the direction the market first tests (e.g., overnight high or low, yesterday’s high or low, etc.).

The last two sessions have been characterized by sellers in control, with snap-back rallies later in the afternoon as sellers have been reluctant to accept further, lower prices.

Yet, prices are moving away from all-time highs and trading in a “void” of support structures out to the left, with plenty of distance left below to our key moving averages. 

This leaves us little to go on as far as where buyers should regain control. Always focus on the key levels in the 100 handle block when this presents. Focus especially on the 50-point increments.

Overnight activity is fully within yesterday’s range and fully enclosed within the value area. I am carrying forward that overnight prices were not able to make new lows. As such, yesterday’s low will be the key line in the sand today.

Good luck today,

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – 4/20/2021

AF Thornton 0 Comment

Another six inches of snow on my doorstep accompanies a true gap lower this morning, although we are not that far from yesterday’s low at this writing. I could not help but reflect that Global warming continues to blanket Colorado with spring snow, just like masks prevent the China virus from spreading. I ask you, what would global cooling do? But alas, I digress, and I better be careful not to question the current Marxist orthodoxy, lest these pages are canceled.

Although gap rules are in play, overnight inventory is actually balanced, muting a full stampede of panicked traders at the open. Current prices are ticking in the lower third of the overnight range, so the primary question is whether Traders will test the overnight lows or highs first.

Yesterday’s break did what it was supposed to do: repair the two recent weak lows and move towards the April 14th volume points of control. Overnight activity has tested that VPOC, but reliable repair doesn’t happen until regular session prices trade there.

In the bigger picture, yesterday gave us a lot of market-generated information in the way that sellers continued to try and press their bets into the afternoon but got little traction. That was encouraging. Although overnight prices are now lower, this is still a carry forward as the tone of yesterday’s session has a lot more weight than the overnight session.

However, to be bullish would require me to ignore the Navigator sell signals and sell trigger violations. There is little, if any, chance I would do so. As such, I remain neutral to bearish, with the caveat that stocks are priced for perfection right now. Some backing and filling would be healthy, but it would not take much to upset the apple cart. Context also tells me that the larger cycles are due to present at any time. Let’s face it, every major correction starts with a minor one, but longer-term conclusions are premature as yet.

If there has been one thing that frustrates me about the markets from time to time, a correction will start minor, fooling you into believing it is not gaining any traction, only to accelerate after a week or two. This is the other side of the coin of sudden downbursts that take out a few weeks of gain immediately. I have never been able to create an indicator to capture this in advance or give us an edge. That is why the context of the cycles and sentiment (to a lesser degree) can be so helpful. ANYTHING is possible here, in the context of a potential peak in the nominal 18-month cycle. Ignore that cycle at your peril.

As pointed out above, we are well off the overnight low, and overnight inventory is balanced. This gives us little direction for early trade. I will focus on whether or not prices can break back up into yesterday’s range. My bias would be long inside the range and short outside of it. Yesterday’s lows are the key bull/bear threshold for all of the major indices.

Any acceptance back within the range that looks to have legs (good internals and tempo) should point you to take your key levels sequentially and monitor for continuation.

Only acceptance below the overnight low would signal enough weakness for more tradable shorts to the downside. As always, monitor for continuation and pay close attention to see if the context is supporting.

Good luck today,

A.F. Thornton

Navigator™ Signals for Day Traders

Morning Outlook – Update – 4/19/2021

AF Thornton 0 Comment

Thus far today, we have put in a lower high and lower low on the daily chart, the first negative pivot since this last run started in early April. Add that to your narrative as negative. 

We are also tripping the Algo sell trigger, turning the daily candle red, as you can see if you click on the chart above. We also have solid Navigator sell signals independent of the Algo trigger (see red and yellow sell arrows). The polarity trigger is still holding, but I have to say that I am less than optimistic about its future. The trigger level for the polarity switch is 4127.41. The S&P 500 needs to close above 4151.76 to turn the Algo Trigger candle back to blue (blue encourages us to be long – orange is short).

The intraday chart looks like it is trying to wedge into a low. The price action is sloppy enough not to rule out another push down to Thursday’s low. That is where I will begin to cover my short positions for a nice gain. I should have done the shorts at the money – then I would be retired this morning. Oh well, I bank what I can. 

This is exactly what I have been warning about – a day that starts clobbering through previous gains like a knife through butter. It is too early to conclude anything beyond what the Navigator system communicated so eloquently – the market is super overbought, and the institutions are not interested in buying here. That puts the market on borrowed time until the price hits a level that attracts them. 

Whether this is the nominal 18-month cycle peak will take more price action and data to conclude with certainty. All we need to know for now is that it could be, and that gives us context to interpret the chart in front of us.

Perhaps more worrisome, the volume is picking up today – indicating that some institutions are participating – but they are selling, not buying. There is a slew of important earnings reports this week, and that may add to the confusion.

Maybe we should take the week off? Let it all sort out. It might be better to use options – stay with the bigger picture as I did over the weekend. Day trading could be treacherous in the current conditions. In either event, the winds are blowing south. Market leaders today are all defensive, underscoring a change in the weather.

Be careful!

A.F. Thornton

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