Founder's Morning Notes - 3/7/2022 | Archimedes Methodologies

Good Morning:

I will go easy on you this morning having spent a lot of time on the Navigator Oracle Weekly Forecast.
I will make up for it this afternoon – as I still think we are living in an alternate reality.
Because we remain in a trading range until further notice, I am long from 4200 or below and out (or short) above 4400 for now. The technical, granular balance levels are 4275 and 4414.
We tagged 4239 overnight, so if we retest that level in the regular session, I would be looking to go long on a pivot.
We were slated to open with a gap down, with Gap Rules applicable. But we are back inside Friday’s regular session range at this writing. Use Gap Rules if we open with a True Gap down.
Overnight inventory had been net short, but it appears that profit-taking has already taken place pre-market.
Absent the Gap Down, the open is slated to be neutral so it may pay to let the market settle down a bit before taking any positions.
Don’t forget to mark the open.
Today’s range is slated to trade between 4271 and 4383, based on today’s expiring options.

Open interest changes from Friday show the net closing of puts that had been greater than or equal to 4350, with 20,000 calls added to 4400. This served to shift many key options influence levels lower.
The Zero Gamma level is now 4460, and the Volatility Trigger is now 4325.
4325 is important because above the Volatility Trigger is resistance, along with the 5-day line, but above it the market shifts more towards mean reversion. Dealers will start buying dips and selling rallies rather than selling into dips and buying into rallies. Ranges and volatility will start to contract.
At Zero Gamma, options will have less overall influence on the index.

Last night was another Sunday night negative overnight session that did not grip. There is potential for early strength today in the sense that the overnight trade looked below 4275 (which I peg as the technical Balance Area low) and failed.
Per Balance Rules, that could move us back to the Balance Area High which pegs at 4414.
Technically though, Balance Rules don’t apply to overnight trade but note the data point in your narrative.
Opening in the middle of the range (near the half point at 4344.50) is unhelpful. Look for pullbacks to be buyable on pivots as long as prices hold above the balance area low.
Note the nuances above of the small gap and the 4360 VPOC from 3.3, both of which would be short-term targets.
Any test of the balance area low changes the tone considerably. Monitor for continuation.

I am leaning toward early strength. Good luck today.

A.F. Thornton

Founder’s Morning Notes – 3/7/2022