By: Jeff Cooper

Hit and Run Morning Stock Report: May 31, 2023


As this budget debt limit negotiation and legislation work their way through the political system, markets continue to be alternately encouraged and disappointed as the process approaches and then pulls back from successful completion. This push and pull on equity markets will continue until this process ends after the passage of legislation by the House, then the Senate, then a signature by POTUS.

This is the backdrop juxtaposed against the AI narrative that provides the rope to climb the Wall Of Worry… or as it may turn out over coming weeks ,the rope by which speculators who chased the hype the rope they hang from.

It is reminiscent of the run for the roses into March 2000 after market participants celebrated that Y2K was an empty threat.

That was 23 years ago. On the Square of 9 Wheel, the number 23 points to June 21… due north …much like it squares March 21, which ties to the SPX high of March 24th in 2000. The NAZ topped earlier that year on March 10.

As you know the numbers that are due North, South/East, West on the Wheel are considered to be more significant numbers of support/resistance.

As well in the current time span, we had the December 21st, 2000 Jupiter/Saturn conjunction.

This is Gann’s Time Factor, a 20 year cycle.

It occurred weeks before the Roaring Twenties bull market started in the summer of 1921.

It occurred 3 times in 1980-1981 that set the stage for the Great Bull Market of 5 years into 1987 and 20 years into 2000.

Let’s look at the recent ‘squares’ to December 21, 2000 in Time.

270 degrees/days prior was the Covid Crash low on March 23, 2000.

720 degrees prior was the Christmas Crash low on December 26, 2018.

The bull market ATH came in November 2021/January 2022 for the NAZ/SPX respectively. Split the difference and you get December 2021---360 degrees from the Jup/Sat December 21, 2020 conjunction.

So this June which we are on the door step of is an important time frame.

In the meantime though, we have detailed the pressure on equal-weighted markets that traders and professionals do not generally appreciate or consider.

They chose instead to discuss only the capitalization-weighted SPX and QQQ stock averages which have been hitting new 52 week highs each session recently, as the top frame of each array below shows:

In addition to the fact that today which SPX and COMPQ each set new 2023 highs, NYMO and NAMO are bot BELOW ZERO, and the Summation Indices for each the NYSE and the NAZ are in decline.

But beyond that fact, it is particularly alarming to see that new yearly lows each day are outstripping new yearly highs, despite the nominal new SPX and COMPQ new yearly peak levels.

New yearly lows exceed yearly highs daily, even as SPX and COMPQ print new highs for the year.

New yearly lows are delivering day after day the same message that the McClellan Oscillator and the McClellan Summation Indices are producing. And that message is this:

Markets are in a decline, and that decline is accelerating.

Yet we hear nothing about that in the MSM as the “experts” run down and explain each day’s activity and “what it means.”

In summation, markets overall have setup up for a significant decline into summer months. Fireworks await to be lit.

It must be said that this July 4th is 540 days/degrees from the SPX ATH of January 4, 2022.

In the short-run QQQ got close to the important 358 square yesterday.

To recap, 358 is 540 degrees up from the 254 October 2022 low.

QQQ gapped open striking a high of 354 before dropping to settle at 348.53.

In so doing it left a Gilligan’s Island sell signal.

This is a gap up to a new 60 day high with a close at/near session lows.

The Q’s are gapping down this morning installing a possible Island Top if it stays below this morning’s gap.

My expectation is that having exploded above the 340 square, this pullback will perpetuate a push that satisfies the 358 square.

The normal expectation is that the aforesaid 340 square will act as support if we get that low.

But follow thru below 340 implies an important spike high has been struck.