Founder's Trading Journal Protected: Energy Stocks – Potential Buy Jan 28, 2021 AF Thornton 0 Comment This content is password protected. To view it please enter your password below: Password:
Founder's Trading Journal Protected: Buy ALERT Jan 28, 2021 AF Thornton 0 Comment This content is password protected. To view it please enter your password below: Password:
Founder's Trading Journal 0 Comment We have a Navigator Core Model Sell Signal which we just communicated to the Founder’s Group at 3851.50 on the S&P 500 mini futures. The market is struggling to hold the ground above 3850 today. Various breadth indicators are not confirming the recent run off yesterday’s lows. With the risks attendant to these levels, we think it best to return to cash for now with a nice profit from our last signal.
Founder's Trading Journal 0 Comment Navigator Core Algorithm Status Narrative There is not a lot to add to yesterday. Caution remains the rule of the day as defensive sectors led the markets yesterday. Sentiment remains giddy as retail investors continue their record call buying. A slew of earnings announcements will rule the remainder of the week. The companies reporting include Apple (AAPL), Advanced Micro Devices (AMD), Microsoft (MSFT), ServiceNow (NOW), Facebook (FB), and Tesla (TSLA).Yesterday’s morning swoon and volatility ended up attracting the institutional crowd by the end of the day, handily beating Friday’s volume. As I pointed out yesterday, what looked like a harsh distribution day taking shape in the morning ended up being a liquidation break and a constructive outside day for the Nasdaq composite and S&P 500.Miraculously, the Democrat States starting opening up right after last week’s inauguration. In an equally amazing coincidence, the CDC announced yesterday that Chinese Virus related cases and deaths had been overstated by ten-fold. If that is not enough good news for you, cases and deaths apparently peaked last week and are now falling dramatically. Even California and New York have announced that they are ready to march back towards normality. Next thing you know, we will hear that the Chinese Virus really isn’t much worse than the flu. Go figure.Despite all the great news, both the NASDAQ 100 and the retail sector (XRT) charts looked like blow-offs as prices threw over their top channel lines and reversed. Take a look at the retail sector below and the faint red spike from yesterday. Blow-offs lead to corrections – so we need to be careful here. In a sense, we are squeezing the last drops out of this latest run. I am looking to take profits around the 3890 level, assuming the S&P 500 can break through the 3850 resistance level that has been binding the index over the past few sessions.Meanwhile, we are still using a close below the 5-day EMA as our stop. A good stop level then is 3835.50 this morning.A.F. Thornton
Founder's Trading Journal 0 Comment Navigator Alogorithms - 100% Invested In life, it is said that you get to choose your friends but not your family. In the markets, I would adjust the axiom just slightly. You get to choose your moments but not your company. On any given day, we encounter all kinds of investors with differing objectives in the markets. There are the Warren Buffet and institutional types, dug in for the very long term. There are swing traders tuned to a more intermediate-term time frame. As an example, we designed the Navigator Core Strategy for swing trading. There are day, hourly, and even 1-minute time frame traders.For the most part, day traders are usually the weakest hands in the market. Typically, they are less adept, inexperienced, over-leveraged, and undercapitalized. On a low volume today, such as today, you can usually assume that the only players at the table are the day traders or weak hands. The NYSE volume was only 20% of Friday’s volume this morning and about half as I write this.So what happens next in these circumstances? Take a look at the red bars on the 5-minute chart below: Day traders get poorly positioned, a few hedge funds decide to have some fun, and the rest is history. This morning, that led to a 60-point sell-off in the S&P 500 for no discernable reason. Thus, a Liquidation Break is defined as “a sharp downward break in price that often seems to come out of nowhere and is usually short-lived. It is caused primarily by short term traders whose inventory positions are overly long.” The most recent longs with the poorest trade location usually initiate the sell-off then the vultures sweep in. The market typically recovers quickly, leaving behind a lot of frustrated traders.The risk of Liquidation Breaks, as I have been identifying in the daily narratives this past week, is another reason why I teach traders to “think” as well as use indicators and rules. This is also why, in most cases, we require a stop to be valid at the “close” rather than intraday.So now take a look at the daily chart below: While last the candle is somewhat faint, you see a spike tail with the open and close equal at this writing, but comfortably above our stop we discussed this morning at 3825.50.So unless the market closes below our stop this afternoon, we stay the course in the core, Navigator strategy. Notably, the market is healthier for the process after a liquidation break.A.F. Thornton
Founder's Trading Journal 0 Comment Navigator Algorithms – 100% Invested Typically in these pages, we are either in or out of the market depending on the Navigator Core Model and Algorithms. We set our buy and sell stop and move it up or down as appropriate. These are swing trading signals, designed to be slow going and fewer in aggregate (subject to market conditions). Our last buy signal came at 3812.25 on Wednesday morning near the open. Because we could not communicate the last buy signal beyond the Founder’s Group text alerts, I wanted to help everyone find a continuation entry point on a pullback. As communicated in the morning outlook. This morning was developing to be that opportunity, so we set up the morning plan and went forward. The continuation entry came close to the open and around 3825.50, so I communicated it. We set the initial stop at 3824.50 but realized it was a bit too tight for the morning volatility as the market rolled around to retest the morning and overnight low (and run everyone’s stops). I then widened the stop to 3822.50 and finally 3721.50, which remains the hard stop for the rest of the day. There was a typo in one of the alerts, which listed 3721.50 as the stop—apologies for being off a digit – but no harm, no foul. If you are in, the market looks solid for now. The nice thing is that there were multiple opportunities to get positioned this morning. As communicated in the morning plan, the key this morning was to hold the new ground above 3800. We did not even touch the old gap at 3811.25, something I identified would be a sign of strength. With the Weekly Expected Move high back up at 3849, my expectations for the rest of the day are that we hold the ground, prepared for next week. I don’t expect much in additional gains today, and certainly not anything above the Weekly Expected Move high for weekly options expiration this afternoon. Continuation trades are tough when you are not live. Flexibility is the key, as you may have observed. This morning has been a good opportunity to see the value of live trading, text alerts, and the supporting education I will be introducing tomorrow morning. I am not sure we will make continuation trades at this level in the future. They are better aimed at live trading. But at least those of you who missed Wednesday’s signal had a chance to get positioned. Don’t forget. The 2021 forecast is tomorrow at 10:00 AM PST. You will receive your invitation later today. A.F. Thornton