Archives April 2023

Moment of Truth – Part III

S&P 500 Master Cycle Update
S&P 500 Master Cycle Update

Good Morning:

 — For the third time, the price is testing 270 degrees of the trend from October 13, 2022, at 4175. Will persistence beat resistance?

 — This third trip counts November and January. And the location also happens to be at the top triangle consolidation line from August 2021. We have discussed this line over the past few weeks.

— Indeed, this is a critical moment for bulls. As we come to the end of the week, the price action nearly matched last week’s candle. But traders were not quite able to drive to last week’s low yet tested slightly above last week’s high. Does this give the bull’s a slight edge?

— Yesterday’s price action brought the daily and hourly strategies into a buy signal at 4131.50. We lightened up the positions at 4175, keeping half adorned with the usual caveats that the price maintains the five-day line and the machines keep buying there.

 — I continued to be surprised by the bullish price action since last October, especially given the headlines. But what doesn’t surprise me is that the Master Cycle predicted as much.

 — We had the Master Cycle prediction in our toolbox for a long time. We could publish a roadmap for the next five years. But the path ahead is not something to ponder if you want to hold down your food today. So we will keep the future under wraps.

 — But in the shorter term, the Master Cycle has predicted good things and continues to do so. Why? Your guess is as good as ours. History rhymes and the current period seems to track both the 1960s and 1920s. Both of those decades did not end well, and neither will this one.

 — The Master Cycle did fall to an 80% correlation on the latest banking crisis, but it is back to 85%. If it does drop below 80%, we will consider the possibility of an inversion. Nothing can predict an all-out collapse at these debt levels.

 — Subscribers get the information they need in real-time. Consider a subscription if you want to know when to buy and sell. It is a prescription for success.

A.F. Thornton

It’s a Schism-Based Stock Market

S&P 500 Cash Index Big Picture - Monthly Candles - Click Chart to Enlarge
S&P 500 Cash Index Big Picture - Monthly Candles - Click Chart to Enlarge

Good Morning:

 — Our algorithms brought subscribers back into the stock market (S&P 500 Index) beginning at 4113 over a week ago. But the Archimedes’ Hourly strategy tripped a sell signal at 4132.50 overnight, and the Daily strategy also tripped a sell signal at 4121 in Globex as I am writing this. We have been rotating some of the position when it is overbought and picking it back up at the 5-period line. But the weight of the evidence calls for a short-term turn today, which appears to be coming earlier rather than later.

 — We accumulate on the 5-period line in both strategies until it stops working. Price discovery much below the 5-period line triggers our stops. While it may seem somewhat of a conundrum, subscribers understand the approach.

 — The big picture in the Monthly Chart above shows the schism between a rising market since last October and the black swans circling above prices. A wide range of inept policies by political and financial institutions brought us to this point in only two years. Note the 2000-2002 bear market out to the left side of the chart with our M-Square framing. It is a close analogy to the current market.

 — “C” waves are dreaded. But as we saw in the March 2020 China Virus crash, they don’t always present. But carry the risk forward in our narrative because price reached the top of the consolidation triangle at the April 4 high, around 4138.

 — And when today is a short-term turning point on the daily chart as can be seen below, caution is elevated.

S&P 500 Futures Daily Chart - M-Square and Archimedes Turn Point Today - Click to Enlarge
S&P 500 Futures Daily Chart - M-Square and Archimedes Turn Point Today - Click to Enlarge

 — So if the machines fail to buy on the five-period line on the daily chart, and price discovery drops below Thursday’s low at 4121as is happening in Globex, cash is king once again, and shorts become attractive.

 — Our hourly strategy already stopped out in Globex at 4132.50 and may lead the daily time frame lower.

S&P 500 Index Futures - Hourly Chart Sell Signal Tripped (Clicked to Enlarge).

 — Supporting lower prices, the measured move from the last turn major turn point in early March is complete. So there is no reason to ignore this turn in the other direction.

 — And today’s turn date also shows up on the Master Cycle, though it is not forecast to be a major turn as yet. Only time will tell.

A.F. Thornton

Where is the Crash?

The March Monthly Chart for the S&P 500 Index Achieves a Bullish Cross of the 5 Month over the 21 Month (Monthly Mean)
The March Monthly Chart for the S&P 500 Index Achieves a Bullish Cross of the 5 Month over the 21 Month (Monthly Mean)

Good Morning:

 — Where is the crash? We have been asking this same question since we called the October 13th bottom last year. While the market has been volatile and perhaps challenging to trade, the wheels are still on the bus.

 — And we got the March turn we expected within a few days of where we had been forecasting since last fall. If anything, the turn came higher than we originally anticipated. We allowed for the market to put in a new low in March or retest the October low.

 — In the final analysis, March delivered a normal, 20-week Hurst Cycle low. In so doing, the price action sealed October 13th as the 18-month cycle trough. More importantly,  March helped confirm that the Gann Master Cycle forecast has been correct all along, staying above an 80% correlation. The small probability inversion we feared has yet to materialize.

 — Breaking above the triangle consolidation on the Monthly Chart would be another green light favoring the bulls. We expect the upper supply line to be challenged this week.

 — And while the Master Cycle flattens out beginning in May, it calls for a rising market through year-end. But we won’t get too far ahead of ourselves.

 — For now, note that the calls for a crash have been just as inaccurate as last fall. Contrary to the call of the bears, April is usually the best month of the year for the stock market.

 — For our part, the Founders Group has continued to cycle trades in the Archimedes Hourly Strategy profitably.

 — In the Daily Strategy, the Founders Group began scaling into the market last week at 3994. We began scaling out late Friday afternoon at 4107.

 — We are cautious as the price has risen uncomfortably above the mean, as the bears ran to cover their short positions. We look to buy on the 5-day line and the mean on the daily chart. We would like to see some mean reversion before we jump back in with both feet on the Archimedes Daily Strategy. We will take the hourly strategy as it goes.

 — But the important takeaway from March is that the market is improving, and to continue forward, the price must take out the top of the converging triangle. Then we might be convinced to ride this new leg higher. For now, the velocity/angle is not sustainable for much longer without a dip back to the 5-day line, mean, or some sideways consolidation. The market has been unable to deliver more than four up days in a row for quite some time.

 — And why is the market climbing in the face of all the negativity? Inflation and deficit spending. Plain and simple. Whether one attributes the spending to War, the Green Dream, or Democrat pet projects, deficit spending keeps the economy afloat. There will be an unbelievably high price to pay later. 

 — But even with this interim strength, the 54-Month Hurst Cycle (also the Presidential Election Cycle) promises to clip the wings of the bulls later this year, so be careful.

 — In the interim, enjoy the Trump arrest distraction while Russia finishes humiliating the collective West with a sound defeat in Ukraine. The arrest should also distract from the demise of the U.S. Dollar as the world reserve currency. More and more nations are joining Russia and China and moving away from the West, including Mexico, to our south.

 — We will look at this moment with sadness as the culmination of unwise policies by the collective West – including weaponizing the U.S. Dollar and confiscating Russian assets at the U.S. Treasury. The chickens are coming home to roost.

A.F. Thornton



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