By: Jeff Cooper

Hit and Run Morning Stock Report: June 7, 2023

Why The Next Top Is So Crucial

1929 saw a blow-off and an historic crash followed by the Great Depression of the 1930s. The price low occurred on July 8, 1932, but the bear market lasted until 1942 and by some measures, 1949. The stock market of the 1930s was what in Elliott Wave terms is defined as a Supercycle wave four down.

Based on the structure since the 1982 low, this bear market is a level higher. It should last a decade or more, like the 1930s and the 1970s. Those were 40 years apart, and the 2022 top is 40 years from the major low in 1982.

The rebound following the October 1929 crash lasted into April 1930. The rebound from the October 2022 crash low has lasted longer than the rebound into April 1930. Perhaps this is because this is a larger degree bear market.

We are 94 years from 1929. On my Square of 9 Wheel, 94 points to July 12. This is straight across and 180 degrees opposite 428, the current range of the SPY.

Could the rally extend to July? Yes. As I offered last week, I think this week will tell the tale on that.

Interestingly, the market struck an important high on July 13, 1990. It crashed into October. It was a war cycle with Iraq invading Kuwait on August 2, 1990. That top was 33 years ago. Remarkably, 33 also points to July 12/13.

Of course, July 4 is 540 days/degrees from the January 4 SPX all-time high.

The SPX and NDX are winding through the final throes to complete the rally from the October 2022 low. The last segment of that rally is a Rising Bearish Wedge from mid-March 2023.

The small caps rose sharply yesterday, surging into a critical pivot at 185/187. Interestingly, 187 points to…you guessed it, 187.

July 13 squares October 13, the important 2022 low.

The SPX reversed from 4299 on Monday. Often the day following a signal bar reversal sees a Pause Day. So it will be important to gauge the price action today to see whether we take out Monday’s high or take out Tuesday’s low. Of course, a drop below Tuesday’s low will put the SPX in the Plus One/Minus Two buy position.

If the index cannot rally from that setup (or a turn down of its 3 Day Chart should that play out this week), it opens the door to lower. If the SPX offsets the open gap from June 2 at 4221 triggering a Jump The Creek sell signal, it validates the idea of a Buying Climax having played out.

That said, we could see a quick drop into this open gap followed by a test of highs. I suspect that the bulls will be lathered up to protect the gap at 4221 from June 2.

While this week vibrates off 666, the 2009 low which vectors June 6, at the same time June 13 is 90 days/degrees from the important March 13 low at 3809.

The bulls are charging. But bulls always charge The Matador. The Matador is set to draw his sword this summer.