By: Jeff Cooper
Hit and Run Morning Stock Report: April 17, 2023
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If the Market Discounts Everything, Why Does It Move?
“There is a Time in the Price of Certain Products and Commodities, which, if Take by Men at the Advance, Leads on to Fortune; and if Taken at the Decline, Leads To Ruin.”
W.D. Gann stated that stocks make important changes in trend every 30, 60, 90, 180, 240 and 360 days or degrees from any important top or bottom.
April 20 is 120 days or 120 degrees from the December 22 low.
The SPX accelerated to the topside on January 20.
April 20 is 90 days/degrees from January 20.
April 13 is 180 degrees from the October 13, 2022 low.
On Wednesday the SPY found support at the 407 square-out level (407 conjuncts April 12th).
407 is the big pivot. It ties to a rising trend line from the March 13 low coincident with a 20/50 moving average Bowtie.
We have been focusing on April 11 + or - as a turning point for a month.
The SPX left a Key Reversal Day on April 12 but reversed back up to make a new high for the move the next day. Friday saw a gap down and a test of Thursday’s lows before another Friday stick-save.
One of the most important time periods is 540 degrees (1 ½ revolutions of the circle).
May 2023 is 540 degrees from the NAZ all-time high in November 2021.
It was in doing research for my DVD course, Unlocking The Profits Of The New Swing Chart Method which details all the major SPX swings from 1941 to 2004, that I realized the significance of 540 days/degrees in both Time and Price.
WD Gann wrote that when time and price square out (balance out) expect a change in trend.
Well, a true square is a cube.
A cube has 6 sides or 6 angles of 90 degrees. 90 X 6 is 540 degrees.
So a major square-out is 540 degrees.
My expectation is sharp downdraft starting soon lasting thru May/June.
Let me give you one big example of 540 degrees or 18 months in time.
The SPX topped in October 2007 and crashed into March 2009.
The Monthly Swing Chart turned up in April, 18 months later.Checking the monthly SPX below shows the monthlies also turned up in April/May 2008 but didn’t “stick”.
The monthlies also turned up in August 2008 and rolled over. The sign of the bear.
The monthlies turned up in January 2009 and left an outside down month.
It took until November 2008 until the 3 Month Chart to turn down.
This was the internal low.
The March 2009 low was a test/undercut.
The important thing to notice is that the turn up of the monthlies in April 2009 was different---it led to a turn up of the 3 Month Chart in June 2009.
Look what happened after that. The Monthly Swing Chart turned down in July 2009 and immediately found low reversing to install a large range outside up month. This was the Sign Of the Bull.
How does the pattern at the 2008/2009 bear market low compare to the 2022/2023 bear market?
The SPX topped in January 2022. It turned its 3 Month Chart down in June 2022.
Similar to 2009, the index undercut the prior low, the June low, in September/October 2022.
However, the SPX has not yet turned its 3 Month Chart back up.
It went into the Monthly Minus One/Plus Two sell position in early December which perpetuated a sharp downdraft into late December.
Theoretically constructively, the SPX did not follow through to new lows after the Monthly Minus One/Plus Two sell setup.
Instead it found support at the region of the June low—where the 3 Month Chart turned down.
That is a critical price point. That number is 3810.32.
The December 2022 low was 3764. The December 2022 low close was 3783.
More importantly, the monthly December close was 3839 ABOVE the level where the 3 Month Chart turned down in June on trade below the May 2022 low.
The May low was 3810.32.
Consequently, 3810 is the Maginot Line for the Bull.
Moving the decimal point to work with the Square of 9 Wheel we get 381.
Let’s take a look at the Square of 9 to see where Time vectors the number 381 (3810) to give us a potential Time/Price square-out and turning point.
381 is a corner number on the Square of 9.
Corner numbers are natural squares or half-squares and are deemed to be stronger.
Likewise the numbers on the Cardinal Cross, those numbers that are due north/south and east/west are stronger natural support and resistance.
Remarkably 381 or 3810 is the March low.
381 is square May 5 when we get a Lunar Eclipse.
W D Gann showed that eclipses can magnify turning points.
And we have one because 381 is a Hidden Pivot. It is where the 3 Month Chart turned down in June on trade below the May low.
And, 381 is square May 5.
What else do we know?
We know that May is 18 months from NAZ November 2021 all-time high, the internal high for the SPX.
Why was late November the internal high for the SPX?
W D Gann said to key off the Weekly Swing Chart.
Checking the weeklies from November 2021 shows the SPX left a Key Reversal Week on the week of 11/22/21.
The index then rallied to a new all-time high in early January where it reversed leaving a SECOND Key Reversal Week.
The second mouse got the cheese for The Bear.
It took the SPX to rally to 4818 (481) to satisfy a square-out with late November to put the nail in the bull’s coffin.
As a reminder we know that this time frame is critical because 349 (3491) squared-out with the October 13 low for the decline off the high. Since mid-April is 180 degrees straight across and opposite mid-October, 349 also squares mid-April.
Importantly the aforesaid 481 all-time high aligns/vectors May 17 -- the anniversary of start of the New York Stock Exchange.
This is an indication that 4818 may be an historic high.
In summation, the SPX broke out of a near term triangle last week. The top line of the triangle currently ties to 4100. Below 4100 is a yellow warning.
The bottoms line of the triangle ties to the 4070 (407) square.
Breakage below 4070 is a red warning sign.
Breakage below the aforesaid 3810 region is a blaring siren of a potentially massive decline.
An early warning of such a decline would be a failure below the bottoms line of a larger triangle.
That line is at the 3900 region.
So these are the dominoes for a waterfall decline.
4070, 3900, 3800.