By: Jeff Cooper
Hit and Run Morning Stock Report: June 13, 2023
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SPX generated another new high to kick off the week, fully satisfying the 433 square-out.
To recap, 433 is 180 degrees straight across and opposite June 12th for a potential Time/Price square-out.
Let me say something to be clear:
As WD Gann wrote “all important tops and bottoms are related in time and price.”
He also wrote, “when time and price square-out expect a change in trend.”
Gann did not say it guaranteed a change in trend.
Not all square-outs are created equal.
Setups are only setups. They must validate by their inherent price action.
As I often say, speculation is observation, pure and experiential. Thinking isn’t necessary and often just gets us in trouble.
Gann also wrote that the most money is made in the end moves, up and down.
Fast moves tie to easy money.
When it gets this “easy” trouble is almost always around the corner.
Some corners are bigger than others, but we’re on the block.
The chopping block.
On Monday’s new recovery high net advances were just + 87 for the NYSE and the McClellan oscillator fell by -2.77.
A handful of mega-caps continue to carry the cap-weighted averages to new highs as markets are completing this Wave 2 corrective advance prior to a dramatic Wave 3 decline.
Pundits have made much of the 20% advance in SPX calling this the beginning of a new bull market.
The same talk occurred in 2001 just before Wave 3 down and in 2008, also just before the Wave 3 decline began.
20% is meaningless.
The market did not top out on May 19th square-outs as expected.
When that did not play out, the market was talking.
It was saying that QQQ 358 was on deck.
Yesterday 358 was more than satisfied.
That may indicate that the agenda is yet higher.
But the normal expectation is that the Q’s should at least respect that level with a correction.
It is the nature of that correction and any ensuing rally that will tell us if the leading Q’s have more lampshades on their dancing heads.