Indiscriminate Selling in Tech Validates Turning Point

“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 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 into this open gap followed by a test of highs.

Is suspect that the bulls will be lathered up to protect the gap at 4221 from June 2nd.”

The above paragraph is from Wednesday morning’s Hit and Run Report.

Wednesday morning ,the SPX rallied 15 points testing the 4299 (429 square-out on the Square of 9 Wheel) before reversing sharply, validating Monday’s signal reversal bar.

That said, the SPX just barely missed dropping below Tuesday’s low.

Consequently, we do not have 2 consecutive lower daily lows to set up my Plus One/Minus Two buy pattern as the Minus Two part of this Swing Method requires 2 CONSECUTIVE daily lower lows (while the 3 Day Chart is pointing up).

This means the clock must get reset now as if we have no lower lows.

It potentially opens the door to a pullback that takes somewhat more time---at the very least.

This is synchronous with the idea of an important square-out at this 428/429 (4290) SPY region.

To recap, 428/429 is a full 360 degree price cycle up from 349 (3490) the October 13, 2022 low for the decline off the all -time high of 4818 (481).

Importantly, 349 and 428 square October 13th for a Time/Price square-out.

The day of the low vibrated/squared the price of the low.
In the same vein, this 429 price region squares the October 22 low suggesting a high.

The normal expectation is for the SPX to at least respect such a square-out with a correction.

If the square-out is significant, it is the way the market pulls back, the structure of a pullback, that will tell us how important the square-out is.

In other words, if the decline from this square-out is impulsive (5 waves) the indication is an important top has occurred---potentially extremely important over the next 7 weeks, if the Gann Panic Zone is going to exert its influence.

I initially thought May 19th was going to be a turning point day.

Why?

This is because using the 481 (4818) all-time high aligns with May 19th.

However, get this, using the weekly all-time high close of 4766 (477) vectors/vibrates off June 6th. The high close for the year has been June 6th.

As well as offered earlier this week, June 6 “points to” the bear market low of 666 in 2009.

We also have a square-out on QQQ.

From the October 2022 low of 254 we find that 358 is a big deal: it is 540 degrees up, a true square.

So we have some good synchronicity with two indexes squaring out.

The internals are consistent with the idea of an Intermediate Top.

Mr. Market is perverse. At important junctures he can be diabolical.

Let’s take a look, While the SPX has made a new high for 2023 it is deceiving.

Seven stocks, META, AMZN, AAPL, MSFT, GOOG, TSLA and NVDA--- are up a combined 53% for the year through June 1 while the rest of the SPX 500 is basically flat.

There is a lot of clamor about IWM rallying 10% in 6 days pointing to healthy rotation and broadening out the market.

Actually it was just another record call buying ramp, this time in small caps mirroring the record NAZ call buying that lit the fuse on tgwo weeks ago.

The “rotation theory” is is no different than the AI hype…a narrative used to justify a last ditch of euphoric froth.

It’s late stage echo mania mirroring the Y2K relief rally in March 2000.

Earlier this week we show the following two charts of IWM projecting to 187.

IWM was magnetized to 187 yesterday right on cue.

This is consistent with the end of Intermediate Wave 2, a corrective rally from October 2022.
The return to normal narrative will be discredited this summer.

Yesterday’s indiscriminant selling in tech was a fractal of the what lies beneath.