Good Evening:

We went back to cash in the Navigator Swing Strategy this morning, mostly due to the magnitude of our short-term profits. In part, though, the decoupling of the S&P 500 and VIX indices today concerned me. And volume has receded on each successive day of the four-day rally. Today was the 4th lowest volume day of the year in the broad market.

Tomorrow’s pre-market CPI report looms large. I think the markets will likely react to a lower number than expected. But the bad news is baked in if the number stays in the 8% range. The number is an understated lie, as most of us who live and pay in the real world already know.

Tomorrow’s DEM is set for a 100-point range, from 4088 to 4188, with the upper edge exceeding the WEM high set this week at 4160. That should make tomorrow interesting. Learn more about the DEM and WEM, how we use them, and the tolerance for exceeding the WEM upper range boundary here.

The current bull run can go as high as 4158 (61.8% Fib Retracement) and even 4240 (78.6% Fib Retracement at the extreme) and still be in “ii” of the “3” leg of the intermediate bear. Refer to Sunday’s update for a deeper dive into the market issues, as I don’t plan any more elaborate discussions this week.

Suffice it to say that the markets and our Country sit on a powder keg. You already know that. There are many concerning data points besides inflation: e.g., worker, food, power, and water shortages. Then there is the political instability, lately including the criminalization of any opposition to the U.S. Democrat party and the breathtaking entrenchment of Xi-backed lockdowns in China soon to affect supply chains again.

I return to my favorite saying, “Cheer up; things could be worse.” I cheered up, and sure enough, they were…

Stay tuned,

A.F. Thornton