Morning Notes – 3/16/2022

Good Morning:

• I am updating these notes as the email link did not work correctly this morning, or at least I didn’t work it properly.
• Last night, China announced some significant “all in” stimulus (like our Fed did during Covid), and it sparked a massive overnight Asian rally, with the Hang Seng Index up nearly 10% on a single session.
• Then, a proposal for Ukraine to become a neutral country but retain its armed forces “could be viewed as a certain kind of compromise,” Kremlin spokesman Dmitry Peskov said Wednesday, hinting at possible progress in peace negotiations.
• And with that Kremlin statement, Pop went the Weasel – as the S&P 500 staged a 50 point overnight rally into Fed day. The rally brought the market into our resistance band at the 4300ish zone.
• The market is pegged in a 4315 to 4340 range, not atypical before the announcement on a Fed Day.
• More importantly, the price is bumping into the WEM high around 4318 or so, also the top of the falling wedge minor downtrend line and the 21-day line.
• That is a lot of resistance to conquer on a day where I am unsure what the Fed can do to please the markets.
• We shall see, but there could be a lot of short-covering, or the market could await quadruple witching on Friday when nearly 1/3 of all outstanding options expire.
• The expiring options also have a short-covering bias which could continue supporting the markets.
• Trying to call out key levels on a day like today is likely pointless. But here it goes anyway.
• The 4315-4340 area should continue acting as resistance until the Fed announcement.
• Above 4315 is the call wall at 4400.
• We peg downside support at 4220, with significant support at 4000 to 4050.
• Be careful. I may miss the low, but I am not anxious to get involved at the WEM high, given the odds. No guts, no glory – but losses are never better than patience.
• And if the market does turn higher here, we will all be amazed at the narrative shift, as usual. Is it the end of the world, or will everything come up roses?
• The market opened with a sizeable True Gap putting Gap Rules into play.
• There is potential for a trend change if the wedge trendline breaks, but the WEM high is a powerful draw into Friday’s close and expiration, even breached today.
• The primary downtrend line is the next significant level to conquer if higher prices are in order from here.

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A.F. Thornton