An FOMC Cha Cha Squared

Yesterday we showed a daily SPX with a declining tops line from the February 2 top that intersected with a rising trend channel from the March 13^th low.

The index rallied up to where these two converged and got crushed.

The bottom rail of the trend channel is around 3900.

Earlier this year we noted that over the last 100 years when in a Bear Market, the NYMO bottoms under -100, weeks later, a cycle low for the SPX is struck.

This pattern is like clockwork. Momentum explains why.

Upside momentum for a rocket or downside projection for a tennis ball projected downward into will peak BEFORE the rocket or the tennis ball reaches its maximum height or depth.

This is physics.

Market momentum produces the same price effect as physical momentum on a projected object.

NYMO qualifies breadth momentum for a market trend, upward or downward.

Peak price (up or down) follows peak momentum.

The NYMO close at -108.28 on Monday, March 12, 2023 revealed powerful downside momentum in this Bear Market.

But the SPX low comes AFTER that point of maximum downside momentum by several weeks.

Consequently, the expectation is that in this bear, a move below -100 will NOT be the bottom for this intermediate decline in this cycle.

We can expect the intermediate-term low sometime in the 2 to 6 weeks later.

We should be 2 to 6 weeks away from the SPX low for this CYCLE.

This makes our April turning point compelling.

The expectation is that the SPX will bottom for this cycle 10% or more BELOW the 3855 low of March 13, 2023 -- bounces notwithstanding.

To sum up, the SPX reversed with authority from our Minus One/Plus Two sell setup after tagging confluence of trend lines.

The index crashed thru its 50 day ma much like it did on March 9, leaving a Large Range Outside Down Day (LROD or Lightning Rod).

The SPX continued lower snapping its 20 day ma for a Grail Fail.

Then it offset the open gap from Tuesday triggering a continuation Jump The Creek sell signal.

The normal expectation is to see downside follow through.

Despite this morning’s rally.

As well, usually (not always) upside reversals from a big sell day come from down opens---not up opens.

This morning’s rally has the fingerprints of the Working Group to relieve embarrassment over the drop after Jerry’s press conference.