By: Jeff Cooper
Hit and Run Morning Stock Report: May 24, 2023
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Do You Really Want To Bet Against This Cycle?
The SPX is completing the rally from October 2022. This is Intermediate Wave 2.
For the past month we have outlined a preponderance of technical warnings in league with cycles pointing to May 17-19th as the potential top for the rally from October 2022.
The topping process started from a mid-April high which perpetuated a drop to the SPX 50 day moving average.
Another rally attempt to the key 4200 level followed in late April that was rejected with another test of the 50 day ma.
That double bottom on May 4h generated a new high for 2023 just above the key 4200 level.
Tuesday saw a solid reversal. The SPX knifed through the prior mid-April peak and is sitting on a trend line connecting the March and early May low.
Breakage below this trendline will trigger a Rule Of 4 Sell signal.
Importantly this trend line ties to the 4145-4155 region which is the Mid-Point of the Bear as well.
So downside follow thru here is a big deal.
A break of the double bottoms from late April to early May is another feather in Mr. Bear’s cap.
The initial April rally high is synchronistic to the April 1930 high where the DJIA rallied following the historic October 1929 crash.
The Great 90 Year Cycle is exerting its influence.
Once the rising trend line connecting the October 2022 low with the March 2023 low is snapped, a point of recognition will occur.
It will dovetail with a dramatic and powerful wave 3 of 3 down.
Ultimately, the structure of the market coupled with the cycles indicate a drop to the 2020 Covid lows….or lower.
The Covid low is 2190 SPX.
Tomorrow’s report will show a further confluence of Ghost Lines that point to 1900 to 2200 to derive this projection. My expectation is it will play out before 2025 is over.
As you may recall, one of the factors allowing me to identify the top in early January 2022 was the false breakout in January 1973 seven squared years or 49 years earlier.
There was a price low just prior to the end of 1975.
It took another SEVEN years from that time until a new bull market started in 1982.
Essentially we had a 10 year Decennial Cycle from 1972 to 1982 exert its influence over a secular bear market in league with the above chart.