By: Jeff Cooper
Hit and Run Morning Stock Report: March 24, 2023
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The Second Mouse Gets The Cheese For The Bear
On Wednesday, going into the Fed Report, we kept hearing on CNBC about how this week’s report would be the most important FOMC in years.
The Street waited to listen to it so they’d know what to do next.
But rather than calm the deep waters of uncertainty, the report accelerated uncertainty... which drives volatility. As seen in this SPX 15 min.
It was not your typical FOMC Cha Cha Cha Day with 3 reversals.
Wednesday had 4 extra “Cha’s” personifying how the Fed is fueling dislocation and uncertainty.
Markets go through this news ritual every time a significant report (NFP, CPI) hits.
Each time the media promotes the report as though it were the holy grail for market participants.
Each report produces the same arguments and increase in volatility and then The Trend continues as it had before the report.
Market trends and good trading decisions cannot be ascertained by listening to the news.
The Trend can only be understood by listening to the market itself.
To recast the expectation for what HISTORY shows The Trend has in store:
The NYMO close at -108 on Monday, March 13, 202 reveals powerful downside momentum within the context of a Primary Bear Market.
Had that reading occurred within a Primary Bull Market the expectation/signal would have led to a different expectation.
That is my point: the same signal in a Bear is different than the same signal/reading in a Bull.
Not all signals are created equal.
Hence, there was a strong likelihood that yesterday’s 72-point SPX rally was a sell-the-rally phenomena.
History says the powerful -108 March 13th, NYMO, means an INTERMEDIATE low will come AFTER that point of max downside momentum…by weeks.
We have described the Turning Points indicated by the Square of 9 Wheel for April.
As well, it must be said that the end of April is 481 calendar days from the 481 SPY all-time high.
April showers are likely.
To sum up, the first mouse following the FOMC got the squeeze on Thursday, the second mouse got the cheese for the bear.
In other words those who expected downside follow-through on Thursday… including me… got squeezed initially.
It was not fun.
But the rally carved out an HOURLY Minus One/Plus Two sell setup.
When the SPX casved below its 50 hour it hit/undercut a 3 point rising trend line from that important March 13th low.
This morning we are getting a GAP BELOW THAT HOURLY TRENDLINE.
Consequently, we are getting an hourly Rule of 4 sell on the important Friday closing basis with next week being the heart of the Gann Panic Window.