There is no rest for a trader -as the saying goes. I have been advising Swing Traders to keep their powder dry for the past few weeks, and the Navigator strategy has remained 100% cash. We have restricted our activities to day trading. It was not worth trading if we could not put it away at the end of the day. Today is an example of why we took this approach.
The Dow has been down as much as 1,000 points overnight, with all significant indexes experiencing a similar plight. Fears of an African Covid variant are driving the overnight bear surprise bar. And, of course, the hype arrives in the middle of light holiday trading. Go figure, right?
I don’t want to get into the latest Covid conspiracy and the ridiculousness of this latest fear-mongering. Put it this way, I understand the science behind variants, and it does not support these fears. But I don’t believe in coincidences either. The Globalists were beginning to lose the narrative—time to bring in ANSER. If you don’t know about ANSER, you should study up. They shape the narrative for the Intelligence Community and Covid.
It doesn’t matter the reason; there is always a catalyst to take down a vulnerable market. More importantly for us, the Navigator algorithm has given us multiple sell signals since November 8th, depending on the index. I have posted a chart of the Dow signals above.
Nothing at this location indicates that this should be anything more than a news-related flash crash. Maybe we could say that this is the Black Friday sale for the stock market. We have a half-trading day today, so it promises to be interesting.
The pleasurable nature of being in cash is that I don’t have to do anything today except lament if I miss the opportunity. My detailed comments, then, will be published Sunday afternoon.
I will leave you with this thought: if you cannot buy in these declines, when does it make sense to buy? Just don’t deploy all of your cash at once.
We have the mother of all Gaps this morning, so Gap Rules are on the table. The NASDAQ 100 is outperforming the other indices, confirming that the stay-at-home trade is still kicking. The NASDAQ 100’s relative outperformance also affirms the news-related origin of the decline.
I will be looking at everything over the next few sessions. Today, it would be necessary for the market to hold the overnight low at 4597 as a first test. However, bear bars like this morning do a lot of damage to short-term psychology. Don’t forget; there are a lot of newbies with weak hands in this market.
I will have some significant announcements on Sunday.
Stay tuned!
A.F. Thornton