Founder's Morning Notes - 3/2/2022 | Archimedes Methodologies

Good morning

We are now five trading days out from the 2/24 low at 4101.75. Five days is a typical retest pivot, and we are not near the low at this writing. Look for the next big move to begin soon.
Since the 2/24 low ostensibly and successfully retested the January low, a new, full retest is not necessary or probable. The price action likely is a consolidation to move higher.
With all the boxes checked for the 2/24 low to be secure, I am looking at recent price action as a normal retracement of the parabolic short-covering rally off the 2/24 low.
Fear indicators and short interest are so high that all we need is a match to light the shorts’ pants on fire.
Chairman Powell begins his congressional testimony at 10:00 am EST. Let’s see if he brought any matches.
Meanwhile, back in Ukraine, it is getting uglier, and so is the price of oil.

Just to show that our good Lord has a sense of humor, remember this from May 2020?

Some call it the Green New Deal war. The oil price dropped so low in May 2020 it distorts my chart scaling. It takes talent to go from -$10 to $111 in less than 18-months. Our enemies are getting rich while Americans get poor.
Stagflation anyone? 1st Quarter GDP Forecasts continue to be revised downward to and including zero, but rising oil prices ensure more inflation. Chairman Powell’s testimony today ought to be interesting.
Futures are up slightly to 4311.75, but well up from overnight lows of 4280. Little changed in the options landscape overnight.
The volatility estimate remains in line with that of the last several days: 1.17% max open/close move. Don’t forget to mark your open and calculate from it.
Resistance appears at 4350, then 4380. Support shows at 4310 and 4276.

Note that there is a cluster of support around 4275, including the WEM low. The support should hold. If it doesn’t, look out below.
Resistance is similarly strong at 4350.

Overnight trade is balanced again, and all of the price action looks like a consolidation of the recent gains before we move higher.
There is nothing in the overnight action to guide us for the open. Given Chairman Powell’s testimony at 10:00 AM EST, better opportunities will emerge later in the session for day traders.
Watch where value develops closely today. It’s been relatively unchanged for three sessions now.
The market continues to handle a lot of bad news well. I am surprised it is not lower. While volatile, the overall read is bullish from the 2/24 swing low.
The war between Russia and Ukraine is and will remain an unpredictable wild card. If it bothers you, this is a good time for an extended vacation from the markets. It bothers me and I am considering one. There will always be another train leaving the station.
If you want to participate, this is where you apply and hone your money management skills.

A.F. Thornton

Founder’s Morning Notes – 3/2/2022