Morning Notes – 5/13/2022

Good Morning:

• Some relief is in order this morning, as market makers appear to be drawing the S&P 500 back to the WEM low around 3985.
• The bond market, leading the rout in stocks, bottomed Monday and started climbing out of its hole.
• There could be a short squeeze into the close today before the weekend.
• I might show up for that, but otherwise, with the open interest around the 4000 strike, I would expect the market to pin around that number today, which is why I rarely trade Friday expiration.
• The real action promises to be when the monthly expiration arrives a week from today.
• I have to believe that everything known is already priced into the stock market – and what is known is unpleasant for stocks.
• What worries me is what is not known. For example, the CryptoCurrency class is having its meltdown – as I knew it ultimately would. What else is hiding under the rocks with all the global currency turbulence?
• I will probably sit out today. A lot of the drawback to the WEM low has already manifested overnight.
• Look for support at 3975, then 3920. Resistance is at 4000, then 4020.
• The market is oversold, and a bounce is overdue. But it is a bear market nonetheless.
• It would be best to use rallies to cull your holdings down to the bare minimum that you are willing to hold through further and deeper declines into the fall (no pun intended).
• Make sure you are serious about holding, as you don’t want to change your mind and sell at the bottom.

Have a great weekend.

A.F. Thornton