Founder’s Trading Journal

The S&P 500 Index followed today’s plan, reversing higher just above 3900, which was slightly above previously identified support, including the (i) the 6/17 – 7/14 rising trendline, DEM low, Put Wall, and the bottom of our Fib Buy Zone (61.8% retracement of the 6/17 – 8/17 rally).

• Shorts should raise their Buy Stop to 4055.50.
• Short covering drove the rally, and I suspect lower prices await us soon.
• We continue to see spiking volume, perhaps underpinning today’s key reversal candle on the daily chart.
• Today’s candle also ended with a DeMark nine-count exhaustion bar – another confirmation to expect a potential reversal, even though any pivot higher may be brief.
• We could see the market rally for a few days up to the 5-day line at 3995, the millennial roundie at 4000, or perhaps as high as the 50-day line at 4023. 
• Tomorrow morning’s (Friday) August employment report could be the catalyst for some upside follow-through, assuming it does not stop the rally in its tracks.
• As a side note, population demographics reflect a materially decreasing U.S. labor force. As Boomers retire, there are fewer workers to replace them.
• Demographic changes place the economy in a unique situation where a recession may not lead to as much unemployment as typically experienced in past recessions.

Today will be my final publication until Monday. I am taking tomorrow off to enjoy a long weekend. In fact, I may take the next few weeks off – so stay tuned.

As a side note, I will be revamping the Blog to a shortened format, and there will be fewer commentaries available to non-subscribers as we convert our site and channels almost exclusively to private membership.

I hope you enjoy your long weekend as I plan to. If it gets too hot, turn off all your appliances, unplug your electric car, and buy a nice fan. Before air conditioning in Arizona, people dipped their sheets in water before bed and slept on the wet sheets to keep them cool overnight. Those were the days before air conditioning.

Oh, and don’t worry about your smart meter or thermostat. As many people learned who joined the “voluntary” discount program with the power company, the electric overlords have taken control of your thermostat. The “Outer Limits” comes to mind when the lords of electricity take, then later return your household temperature control after the heat wave. At best, you won’t be able to turn your temperature below 78. Jimmy Carter is envious – he had no such tools in the 1970s!

And, of course, if you try to override the power company – you will be arrested as a threat to Democracy!

A.F. Thornton