By: Jeff Cooper
Hit and Run Morning Stock Report: May 15, 2023
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The Big Picture
A monthly SPX from the 2000 top shows a Rising Wedge and a parabolic blow-off into the January 2022 peak.
Following the March 2009 low the SPX traced out a 5 wave advance with the 5th wave unfolding after the March 2020 crash low where on the day of that low at 2191, we forecast a spike to 4000 plus. It exceeded our expectations. Be that as it may, my call for a near 100% rally unfolded on cue.
The Covid Crash undercut of the bottom of the Rising Wedge and perpetuated a vertical throw-over which is consistent with blow-offs. The 1st quarter 2020 crash pulled the rubber band back.
The red vertical ellipse is drawn from the January 2023 ATH to the bottom of the purple Rising Wedge.
The implication is a mirror image foldback is on deck for the second half of 2023.
The green ellipse is created from three points: the breakout point in 2021, the all-time high, and the October 2023 low.
Notice how it ties to the top of the purple ellipse in the 3700 region over the next few months (as these are monthly bars). Breakage below the green/purple confluence imply a drop to the 3100 region by around year end.
Notice that this 3100 region is also where a larger black ellipse ties to the red ellipse and the bottom of the Rising Wedge.
The presumption is an equal and opposite waterfall to the one year rocket will play out after this mid-point consolidation: a dramatic, inexorable Wave 3 decline.
Drilling down to a monthly SPX from the internal high shows the orthodox Primary Wave 1 low in June 2022.
An A B C corrective rally followed with October 2022 carving out a B Wave low.
We are in the midst of another A B C corrective rally.
Notice how the August 2022 rally was defined by a Pinocchio of the 20 month moving average and that May 2023 also shows a reversal from a Pinocchio of the 20 month moving average.
Last week we wrote a report, Timing Is Everything where we wrote a summation of why the turning point for a second half downdraft was on deck.
Some of those factors include:
481 days from the 4818 (481) all-time high is April 30, 2023.
481 vectors/vibrates with May 17th on the Square of 9 Wheel.
May 17th is the anniversary of the start of the NYSE.
It ties to the start of the Lehman Brothers collapse 15 years ago in 2008.
15 years is ¼ or 90 degrees square W D Gann’s Master 60 Year Cycle.
On the above square of 9 image, notice that same ‘vector’ goes through 1929, an historic top and crash (using the numbers on the grid as a year versus a number).
On the same vector is the number 36.
36 years ago is 1987 when there was an historic crash as well.
Both 1929 and 1987 saw momentous blow-offs prior to crashing.
I can’t help but think that we may have a low to low to high cycle with May 2023 being an important high given the above synchronicity.
Conclusion. The SPX 3 Month Chart turned down in June 2023. It you look back through history you will see that this does not happen often.
June will be 360 days/degrees from the June 2022 orthodox low. The normal expectation is that this is when the Bear, if he is going to growl, will exert its downside influence.
Since the March low we’ve projected 4187 as a level of lore because it is 540 degrees up from the March 3808 low.
On May 1st the SPX struck a high of 4186..92.
Our pivot date of May 17th squares 418 (SPY) on the Square of 9 Wheel.
You can’t make this stuff up.
April traced out an N R 7 Month, the narrowest month in 7 months.
These contractions typically see an expansion of volatility within 1 to 2 months.
The market should start down with authority no later than June.
Last week the SPX carved out an NR 7 Week. This followed a Weekly Plus One/Minus Two buy setup the week before last.
So far we have no upside follow through.
Failure below the low of the outside up week from of May 1st at 4048 will trigger a Keyser Soze sell signal -- a Reversal Of A Reversal.
On Friday, the SPX saw a small change in the McClellan Oscillator which often is a precursor to a big move.
The SPX is sitting on a daily 3 point trendline from March 13th low.
The big picture stars align with the short term technical this week.