Time Turns Trend (not price) and Time Is Set To Exert Further Downside Pressure

Gresham’s Law: “bad money drives out good.”

1)      Overvalued currency will tend to drive undervalued currency out of circulation.]

2)      He observed the effects of currency debasement during metallic standards

Stocks were chopped on Friday within the context of what remains an interim top last Wednesday.

The NAZ continued its outperformance of the last two weeks and is at an interesting juncture as we will show below.

Despite the rally of the important March 13 low,  neither the SPX or the NAZ have turned their 3 Day Charts back up. So far that’s a bearish indication.

We know that Wednesday’s reversal high was important: the NAZ struck a declining tops line connecting the August and February highs (black).

As well, the NAZ struck a Ghost Line from the November/December highs with the February highs being a false breakout.

Ditto the SPX. It reversed with authority Wednesday after testing a declining tops line from the early Feb high (red) which was a Pinocchio of the secondary tops trend line (black).

The SPX rallied on Friday following an undercut of a rising trend line (green) from the important March 13 low.

Friday’s low carved out a short-term 3-point rising bottoms line. Consequently, breakage below the green trend line will trigger a Rule of 4 sell signal.

Given that the current structure of the SPX shapes up as a continuation Head & Shoulders topping pattern,

Breaking back below this green trend line and especially Friday’s low opens the door to 3500 and the October 2022 low. This is the Head & Shoulder top projection if the Neckline around 3850 snaps.

We may see some upside follow thru today especially in the NAZ which is threatening a weekly declining tops line from last August. Bulls are buying into the prospect of an inverse Head & Shoulders on the weekly NAZ.

The Neckline is the 12,000 region.

Trade above Friday’s NAZ high will put the NAZ in the WEEKLY Minus One/Plus Two sell position at this important declining trend line.

This is because the 3 Week Chart is pointing down (-1) and trade above last weeks high (Friday’s high) satisfies the +2 part of my Swing Method.

A reversal from this weekly Minus One/Plus Two Sell position at key resistance should perpetuate a test of the rising red trend line near 11,000, breakage of which opens the door to 10,400. This is the Maginot Line connecting the October/December low instilling the notion of a double bottom with bulls.

The bulls perceive the key March 13^th benchmark low as a potential inverse right shoulder of a Head & Shoulder bottom formation .

Consequently, if the March 13 low is taken out, it will trigger my Blade Runner sell pattern.

This is a broken right shoulder, be it an inverse bottoming formation or H & S tops formation.

Fast moves come from failed patterns so failure below the March 13 low implies accelerated momentum to the downside.

Summing up we have a tug of war between a possible bullish weekly inverse Head & Shoulders on the NAZ versus a possible bearish Head & Shoulders topping pattern on the SPX.

Within the context of Hit and Run’s intellectually bearish outlook, we stated in October 2021 that “the market will get hit in January (2022) kicking off a vicious bear market”, we have been opportunistic knowing that some of the strongest rallies occur in the midst of Bear Markets.

That said, Hit and Run members capitalized on shorts last week in the following:

BILL shorted at 75.24, covered half for a 3.99 gain and half for a 4.83 gain.

SMCI short entry at 118.38, covered half for a 2.54 gain and half for a 3.69 gain.

CMA short entry 45.74, covered 1/3 for a 3.07 gain and 2/4 for a 5.59 gain.

TGT short entry 158.92, covered half for a 2.41 gain and ¼ for a 5.27 gain and ¼ for a 3.82 gain.

VLO short entry 134.37, covered for a 6.57 gain.

If you study the entries of the above shorts, you will get an inkling of our methodology.

 This week is the culmination of the Gann Panic Window counting from the early February top so fireworks could ensue given another failed rally attempt.

Two factors backstop caution:

1)      As offered above, neither the SPX or NAZ have turned their 3 Day Charts up from the March 13^th low. The underlying trend is down.

2)      In light of the banking crisis, the Fed has unleased $2 trillion into the system in the last 10 days and the market is not above the high of 10 days ago.

As Hit and Run has offered over the past month, whatever happens or doesn’t happen into the end of March and possible quarter-end mark-up, several cycles are set to dramatically exert their downside influence in April.

In particular, the SPX all-time high is 4818. Rounded gives 482.

482 days from the January 4, 2022 all-time SPX high is the end of April/beginning of May for a time/price square-out

As well, 349  (3491, the SPX October so-far low for the Bear Market) squares April 11 on my Square of 9, Time/Price Calculator.

Since Time Turns Trend (not Price), the expectation is for lower prices to be seen before April is over.

When you have bank failures unfolding, people will withdraw money out of caution. It is the same reason there are ancient hoards of coins. This is a purely rational human response to uncertainty.

Gold rallies on uncertainty. Our expectation that gold was on track for a new all-time high before the end of March is playing out.

Hit and Run positioned accordingly:

JNUG +3.93 (partial still open)

GDXJ +3.73 (partial still open)

GDXJ position 2, + 4.57 )partial still open)

GLD April calls from 1.43 (sold half for a 2.87 gain)

AGI from 10.65, + 1.11

UGL sold 1/3 for a 5.19 gain

MUX from 5.80 + 1.29 partial still open

GOLD from 16.14 partial still open

GLD shows an Island Bottom following its early March Breakaway Gap.

Since then, it has been in a fast move with no more than 1-day pullbacks.

The 168 l0w on February 24 projects 180 degrees up at 196

GLD’s all-time high is 194.44 in August 2020

However, a breakout over 192.50 signals GLD is coming out of a 12 year Cup & Handle.

Consequently, capturing 196 projects to 210 and then 224.