Morning Notes – 6/9/2022

Good Morning:

• In this market, it seems everyone gets their turn at bat – or getting battered.
• Tuesday, the shorts took it in the chin. Yesterday, the longs were taken to the woodshed.
• Yesterday was an inside day, not resolving anything.
• And that leaves us with the balance range (4070-4200), with Balance Rules still applicable. The range is now complicated by a converging triangle and there is even more to the story.
• May inflation numbers will be released Friday morning. Ostensibly, the longs got clipped yesterday because the Biden Regime announced mid-day that Friday’s inflation numbers would be elevated again. Of course, the downtrend line stopped the price action too. 
• Nor did it help that Secretary Yellen said there was little they could do about inflation due to “Putin’s Price Hike.” Talk about BS…
• Of course this is not true. If the Biden regime really wanted to stop the Ukraine war, they would stop funding it. The military industrial complex just keeps moving their tents. First Iraq, then Afghanistan, and now Poland and Ukraine.
• If they wanted to stop Putin, they would simply pump oil and gas until the price plunges again (destroying Russia’s oil/gas windfall profits). Everything else will fall into place.
• I always remind myself that things are the way they are for a reason. There would not be a Ukraine war if the Globalists didn’t want it. Nor would we have an open border if they did not like it.
• I mention this because oil is climbing to $125 per barrel, and I expect it to hit $150.
• Everything Russia sells continues to skyrocket in price – lining Russia’s pockets. And are the sanctions working to prevent him from selling? Have any sanctions on any country ever worked? Of course not. Why would Russia stop the war – it is the most profitable thing they have done in years?
• As to our military industrial complex (employing half of Washington, D.C.), what is their incentive to stop the madness? Ukraine is another cottage industry and laundering operation for government bribes.
• Besides, Washington D.C. has more important things to do like taking our guns away, likely right before Russia or China invades us. Do you see how this all works?
• Let me diatribe on one more point. Watch Iran and Israel. Everything else is a distraction. These two countries are headed to war over Iran’s attempt to secure nuclear weapons which they will not hesitate to use. Remember “Death to America” and “Death to Israel?”
• Meanwhile, back at the ranch, with the (i) inflation data coming tomorrow, (ii) the Fed meeting and VIX expiration coming Wednesday, and (iii) $3.5 trillion in quarterly options and futures expiring a week from today, perhaps a trading vacation is in order? But if you like volatility…
• If you are going to trade, stick to the plan outlined all week and apply Balance Rules. The balance range has not changed (4070 to 4200).
• The Balance Range projection is double the range if it breaks. Sometimes the first direction it breaks is usually the pros running the stops to take it in the opposite direction. Keep that in mind.
• Back to the ranges, it is 4070 to 4200. But the range is compressing into a triangle. Why? Pay attention to the weekly down trend line and the daily uptrend line. 
• Also, the five and 21-month lines on the monthly time frame are binding the price action.
• Note the rising trendline connecting the March 2020 and May 2022 lows. If the balance range breaks lower, and you are looking for a full retest of the May low, this rising trendline could prevent it.
• Rising or falling trendlines can catch you off guard if you don’t draw them in from the higher time frames.
• The daily price fell below the 5-day line again yesterday (negative). At least the line is flat rather than downsloping.
• Price remains on the 21-day line (mean) support at 4100. We find the Navigator Algorithm sell trigger line there as well. In fact, there is a lot of option support holding the market at 4100, which is why the level is short-term critical.
• In addition to the top of the balance range sitting around 4200, we also find the 50-day line there.
• Sentiment remains pinned at bearish levels (which is ordinarily bullish). Perhaps this is the exception to the rule. Negative sentiment may stay pinned in a bear market just as bullish sentiment stays pinned in a bull market. Or, God forbid, they could be right…
• The bottom line is that the S&P 500 is ready to make a 100-point move (at minimum) projected from the top or bottom of the balance range.
• A fake-out might lead to a 200-point move up through the other end of the range to target.
• The current flag chart pattern typically forecasts a move higher. But escalating oil prices (approaching $125 per barrel) and 10-year rates (popping over 3%) are exerting negative influence, chart pattern be damned.
• At this writing, the overnight range (4102 to 4145) has already tested both ends of the compressing triangle. Use those as your bull/bear boundaries today. As I advised yesterday, stay alert for fake-outs. I would not be surprised to see the market stay inside this range all day.
• Likely, we need tomorrow’s inflation report as a catalyst to move the needle. Brace.
• The daily price action is a bit more complicated than usual because the price may first break the compression triangle, but hold at the Balance Range boundaries. To me, that is your best case today. It might be worse.
• To be successful in this price action, you must combine all the multiple time-frame issues. I have already published detailed marked charts for subscribers this morning. Consider a subscription. It quickly pays for itself.
• Initial jobless claims were higher than expected this morning, perhaps confirming that the economy is slowing. The index sold off on the news.

I doubt I will try to trade this unless something exceptional presents.

A.F. Thornton