By: Jeff Cooper

Hit and Run Morning Stock Report: May 18, 2023

The Terminator

“Any fool can believe the truth. It takes a genius to believe a palpable lie.”

Wave 1 down of the Bear Market ended in June or October depending on how you want to count it.

Wave 2 on the NDX has retraced 50% of Wave 1 and rallied into the gap from August 16-17.

As tweeted on Wednesday, 1363 is opposite May 17th.

The NDX high on Wednesday was 13,608. Moving a decimal point to work in the Wheelhouse gives 1360.

Yesterday the NDX staged a Throw Over of a large bearish Rising Wedge from December.

A Stab and Stick back below the top of the Rising Wedge is a bearish phenomena that suggest exhaustion and a terminal event.

Fast moves come from false moves so if the NDX should rollover below the Rising Wedge, the ensuing drop could be quick and sharp.

The bottom of the Rising Wedge is 13, 185 which could be stuck quickly if a reversal is on deck.

The NDX has closed below its 50 day moving average once in 2023---on March 10.

So a false breakout and reversal back through the bottom of the Wedge could see a quick drop to 50 day at 12,900---we’re overdue.

From a reversal back through the top of the Wedge at around 13,460 to the 50 day moving average is around 700 points or apx 5%.

This represents a 180 degree drop.

With 180 degrees down aligning with 13,623 on May 17th, I can’t help but wonder if we see a downdraft to 12,900 and the 50 day ma for Opex on Friday.

The fact that stocks rose sharply on our theoretical May 17th turn date underpins the idea that this is a top.

When stocks move sharply up or down into a turning point day it reinforces the indication that it is an inflection point.

As a point of context, a Rising Bearish Wedge is a very reliable forecasting pattern. It is know to be a “terminator” when it shows up at the end of strongly rising trends.

Contrary to Arnold’s character in The Terminator, if this pop out of the Rising Wedge fails, Mr. Market won’t be saying “I’ll be back.”