Where is the Crash?

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


AF Thornton

Website: https://tradingarchimedes.com

A.F. "Arthur" Thornton is an expert in logic, risk/reward quantification, market fractals, pattern recognition and asset class behavioral analysis with 34 years devoted to developing algorithmic and quantitative trading systems. In addition to trading his own capital, Mr. Thornton designs custom algorithmic and quantitative trading systems for a small and exclusive group of exceptionally qualified traders.


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