By: Jeff Cooper
Hit and Run Morning Stock Report: May 1, 2023
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“It was a combination of a number of factors.
Valuations had gotten extremely overdone.
The dividend yield was down to 2.6% and the price/book value ratio was at an all time high.
Also the Fed had been tightening for a period of time.
Finally, my technical analysis showed that the breadth wasn’t there---that is the market’s strength was primarily concentrated in the high capitalization stocks, with the broad spectrum of issues lagging well behind. This factor made the rally look like a blow-off.” Stan Drunkenmiller on why he went bearish in 1987
-Take A Picture Of This, Don Henley
Throughout the ages, speculation has been one of man’s great fascinations.
While a brain surgeon will study for many years to master their profession, many will approach the stock market without studying its history. It’s easy to get into trouble in the markets; it’s much more difficult to extricate oneself.
The matters dealt with in the stock market can be the most difficult subject anyone could touch.
Therefore a successful approach to the market requires simple methods that have stood the test of history.
There are many indicators that have been applied to distill the markets.
However, in my experience most all indicators are descriptive, not predictive.
Most all indicators are based on time, price and or volume, therefore they are of second degree magnitude. Why not go right to the horse’s mouth---Time & Price.
What I have attempted to do over my 40 year career is to explain the ways to make money in markets by use of what may seem strange techniques but are natural and true cycles.
Legendary trader W D Gann wrote that Time is more important than Price.
The implication being that Time Turns Trend.
Gann went on to state that “When Time and Price “square-out” (balance-out) to expect a change in trend.
I have satisfied myself completely over the years that this integration of Time and Price drives markets.
There is no doubt that the market is symmetrical and geometrical. It is not a random walk.
The Square of 9 Wheel Of Time & Price is the only tool on the planet that integrates Time & Price.
Let me give you a few examples.
In late February 2009 we forecast the SPX should bottom on March 6th at 666.
The Square of 9 below shows how Time and Price squared-out with March 6 being 90 degrees square a price of 666.
In late September 2002, we forecast bear market should bottom in early October.
On October 10th the SPX bottomed at 768.
768 is 90 degrees square October 10th.
In early October 2007 we stated the SPX should strike a top.
The SPX topped at 1576 on October 11.
1576 is square October 7th.
Notice that the top in 2007 came at/near the anniversary of the bottom in 2002.
Many assume the idea of anniversary dates as voodoo, but W.D. Gann was a big believer in their significance.
Notice how the bull top in 2007 was virtually on the anniversary of the bear bottom in 2002.
It was 60 months (5 years) later.
Using this same geometry of the circle, this May 19th we are 180 months or 15 years from the pre-Lehman crash high in 2008.
Interestingly, May 17th is the anniversary of the founding of the NYSE in 1792.
At the same time, the all time high in the SPX at 4818 (481) vectors/vibrates off May 19th.
The bottom line in all these examples is that time points to price and price points to time.
There is an indisputable relationship between time and price at turning points.
Does this mean that the SPX will rally into the May 19th time frame?
Maybe but today is 481 days from the January 4th, 2022 all-time SPX high of 481 for a different kind of time and price square-out.
The SPX rallied to 4170 (417) on Friday. 417 squares May 19th.
It is also possible to use the numbers on the Square of 9 as years.
The words bring chills to anyone who has studied market history and looked at the pictures after the crash.
Remarkably 1929 vibrates off May 17th, the founding of the NYSE.
1987 is another picture that strikes terror into the heart of those that have studied market history.
1987 is 6 squared of 36 years ago.
36 is on the same vector as 1929 and May 19th.
From the crash of 1929 to the crash of 1987 is 58 years.
Multiplying 58 times a Fibonacci 1.618 gives 93.8.
93.8 years from September 1929 high is June 2023.
93.8 years from the late October 1929 crashes is late July 2023.
If we anchor the “zero point” on the Square of 9 Wheel to 93.8 it aligns with mid to late July 2023.
There is a lot pointing to the possibility of mayhem either taking place or starting over the next three weeks.
This week we get the Fed. If they do not capitulate using the banking crisis as an excuse, the market is vulnerable. Currently the market is pricing in rate cuts in the second half, which has fueled the tech rally.
If those cuts do not materialize, it’s downhill.
There are yet more synchronicities that underscore the significance of this time frame and when and where to expect the pivot.