Navigator™ Signals for Day Traders Morning Outlook – 4/7/2021 by AF Thornton Apr 7, 2021 0 Comment Starting with a view of the daily chart of the S&P 500 index, we see a “Trend Reversal Imminent” label lighting up on the Navigator Algorithm panel, with an “E” signal on the chart itself – connoting trend exhaustion. We tagged the first dynamic channel line, indicating that a mean reversion is possible soon, though we could hug the top channel line for a while. When we add that we have the Weekly Expected Move high holding us back through Friday, longs need to be very cautious here in day trading. Remember, pigs get fat, and hogs get slaughtered – it has already been a good week. Why push the envelope? Liquidation breaks are possible as the market still needs to repair the single prints from Monday.One could short the moves above the WEM through Friday and cover back at the line. If the WEM high and the dynamic channel were not in the way, one could argue simply that a bull flag is forming to get us through the end of the week. One dynamic I have seen in wildly bullish weeks is that the futures spike after options expire at the Friday New York close – since the futures trade for a while longer and are no longer constrained by the weekly option market makers. That could be interesting this Friday, if the market remains this bullish. Be sure to review the cycles report coming out later today for further guidance on upside targets. Inventory from last night is mostly long, but we have a fat, squatty profile inside yesterday’s regular session range until a few minutes ago when we tested yesterday’s regular session low. This indicates balance, just as a similar profile did yesterday, but traders also consider prices fair here. If we open below yesterday’s regular session low, that would be slightly negative at the open, giving us a slight downside bias. Still, otherwise, there is little to be gleaned from overnight action to guide us in the opening drive. In the circumstances, it is usually best to trade later rather than earlier.On the upside, we were left with a poor high in yesterday’s regular session. We already got a little backing away from it towards the close yesterday. Today will be about how much more we get and whether or not it can repair. Continue to carry forward this high as in need of repair. For the S&P 500, key levels will be the Globex low currently at 4057, which is the top of the first set of single prints; then 4046, which is the top of the next level of single prints; and then the 4/5 low at 4037 which is also the top of the 4/5 gap. Any of these levels could provide support on the way down – and it is fine to visit them briefly. But acceptance at or below these levels could change the current, positive tone. Bigger picture, remember that the S&P 500 likes to progress in 50 point increments and stall – so 4050 and 4000 are key levels to watch. Any bounce off the 4050ish level back up into yesterday’s range should be considered bullish.I would trade the NASDAQ 100 by analogy to the S&P 500 index and levels. Keeping in mind that overnight action often dictates tone for the regular session, do not be surprised if we see more range-bound chop today. Wednesdays have a history of being choppy days anyway. I use the NYSE ticks, NYSE, NASDAQ and S&P 500 advance/decline lines, and advance/decline volume to help guide me as to trend. You typically need at least +250 or -250 advancers or decliners in the S&P 500 to trend in the applicable direction. Anything close to even indicates chop. The monsters of tech can distort the picture – so make sure you take a look at a heat map of the S&P 100 to determine what is driving the index. Best wishes for a fabulous day trading day! A.F. Thornton
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AF Thornton Website: https://tradingarchimedes.com A.F. "Arthur" Thornton is an expert in logic, risk/reward quantification, market fractals, pattern recognition and asset class behavioral analysis with 34 years devoted to developing algorithmic and quantitative trading systems. In addition to trading his own capital, Mr. Thornton designs custom algorithmic and quantitative trading systems for a small and exclusive group of exceptionally qualified traders.