Morning Notes - 3/10/2022 | Archimedes Methodologies

Good Morning:

Day 14 – where is Fauci?
The U.S. economy is already teetering on fiscal and monetary cliffs.
The risks are now compounded by the war in Eastern Europe and record-high (even understated) inflation.
In February, the Consumer Price Index for All Urban Consumers rose 0.8 percent, seasonally adjusted, and 7.9 percent over the last 12 months. The number is in line with expectations but does not reflect the parabolic rise in food, energy, and industrial materials over the past few weeks.
The Fed has only a few choices at next week’s meeting.
The first choice is to keep monetary policy loose and risk an intractable rise of inflation and the complete loss of confidence and credibility of the central bank.
The second choice is to tighten monetary policy enough to deflate the massive bubbles in bonds, real estate, and equities.
Batten down the hatches as either choice will end in disaster for the stock market and the U.S. economy.
The piper must be paid from the Fed counterfeiting trillions of dollars to distort and obliterate free markets.
The song “Welcome to My Nightmare” keeps playing over and over in my head.

Do I cover my shorts now, or wait until next week’s Fed meeting and options expiration? Things that make you go hmmm. Dealer’s choice?
I cannot think of a comparable negative moment in my 35-year career other than 9/11.
So, I am going to cash in my shorts now and hopefully, get to put them back on at higher prices before the Fed meeting next week.
I am always reminded that Pigs get fat and hogs get slaughtered.

There is little change to key levels. Resistance remains at 4300 and 4320 (SPY 430 equivalent). Support comes in at 4146. Consider long positions with a target at 4400 should prices find acceptance above 4300.
While I would still be very careful putting on shorts here, my first target would be 4170.
With high implied volatility, it doesn’t take much to spark violent rallies. But I am still viewing rallies as “short covering” and subject to reversals until the S&P 500 index closes over 4300.
A closing over 4300 could lead to a reduction in volatility, but below 4300 I look for price action to remain fluid.
4400 remains a brick wall, should we get there. I will consider more shorts at that level.
I will publish other key levels after the Open.

A.F. Thornton

Morning Notes – 3/10/2022