By: Jeff Cooper
Hit and Run Morning Stock Report: June 20, 2023
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A Summer To Remember
“Listen to the engine, listen to the bell
As the last fire truck from hell
Goes rolling by.”
-Bob Dylan, Shooting Star
In this report I am going to outline some time and price harmonics between 1929 and 2023.
Most people think 1929 was a big rally year.
In truth the year was largely sideways---that is until May 31st.
On May 31st, 1929 the DJIA tested the low of the year made in MARCH.
From that point it triggered a Rule Of 4 Breakout in late JUNE.
Most people think the 1929 blow off into September 3rd was a Gann 90 day/degree move (late May into early September).
Actually, it consisted of two sharp rallies with a plateau in between.
In 2023 we have an important low in mid-March followed by a sharp rally, then a correction/consolidation followed by a second vertical move.
Theoretically, a 90 day/degree blow-off has been satisfied---from mid-March to mid-June, as was the case in 1929 and 1987 prior to that years October crash.
Interestingly, the blow-off in 1987 shows the same pattern: a surge, a plateau and a final surge.
Moreover, importantly, the advance is a Measured Move.
Allow me to explain.
From the SPX 3809 March 13th low to 4169 April high is 360 points.
Adding 360 points to the May 4th 4048 low gives 4408.
On Friday the SPX struck a rally high of 4448 before reversing to close at session lows at 4407.
In so doing the SPX left a Gilligan sell signal on Friday.
This is a gap up to a new 60 day high with a close at/near session lows.
As well the SPX has satisfied a Measured Move in time off the March low.
The SPX ran up 6 weeks from mid-March pulled back one week turning the Weekly Swing Chart down and
Ran up another 7 weeks into last week.
So we have a Measured Move in Price and Time at this juncture and an initial daily sell signal, a Gilligan ---in the context of a runaway market where many money managers have had to chase vertical stocks to be positioned for quarter-end.
What if somebody big decides to hit the bid and we get a rug-pull before quarter end?
There is another factor underpinning the idea of a major inflection point.
Let’s take a look.
The two most important turning points going into the January 4, 2022 all-time high are the February 2020 peak and the March 2020 crash low.
I connected the February 2020 peak and the January 2022 SPX peak (blue) and then paralleled a trend line off the March 2020 crash low (blue).
Notice that the SPX probed the low of this channel at the June 2022 low and then rallied sharply before diving below the bottom of the channel last fall…setting an October low.
Since that time, the SPX has carved out 3 rallies backtesting the bottom of big blue channel.
Friday’s high essentially tested the bottom of the channel before reversing.
I then created a trend line connecting the March 2020 crash low and the October 2022 low and the important March 2022 low (purple). Notice that I use the closing low weekly low of October 2022 because the next week was a massive upside reversal week.
The actual low in October Pinoochio’d this trend line on an intra-week basis, but the immediate major reversal proves the trend line.
Catching the March 2023 low further validates the trend line.
This trend line parallels the initial high off the March 2020 high as well as the September/October 2020 pullback lows.
Importantly this same trend line hits the significant August 2022 high, the high before waterfall decline into the October 2022 low.
Breakage below the bottom of the purple channel near 4000 opens the door to 3600.
3600 backtests the top rail of the declining channel (red).
The top rail of the red channel was backtested in March after a breakout at an intersection with the red trend line.
So this was a timing point based on the intersection of the trend lines.
Note how the August high was an intersection of the red and purple trend lines.
Breakage below 3600 opens the door to a crash to 2700 to 2800 region, the bottom rail of the red declining channel.
At the top of this report I said there were Time/Price harmonics synchronous to 1929.
1929 was 94 years ago.
On the Square of 9 Wheel 94 points to July 13th.
On July 13th, 1990, the market topped prior to a crash into that October.
That is 33 years ago.
33 vectors July 13th.
This July is potentially very eventful as we are 247 years from the Declaration of Independence in 1776.
In other words this July 4th vibrates off THE July 4th.
Notice how 1576 (blue) is on the same vector. 1576 was the peak in 2007 prior to the Great Financial Crisis which saw the SPX drop from 1576 to 666 just shy of 540 degrees (18 months).
This July 4th is 18 months or 540 days/degrees from the all-time January 4th, 2022 all-time high.
A cube in time.
The year 2023 is 6 squared years from another crash year, 1987.
Just as 540 degrees is a cube, 6 is a cube.
6 sides to a true square.
IF the market has topped here near the Summer Solstice, the Gann Panic Zone points to mid-August.
Above I mentioned that the crash in 1987 was 36 years ago.
Interestingly 36 squares August 17th.
The synergy surround mid-August is underscored by August 17th squaring the SPX all-time high of 482 (4818).
As you may remember in October 2021, we wrote that the market would get hit hard in January 2022 to kick off a vicious bear market.
The decline since early 2022 “overbalanced” the duration of every decline since the 2009 low.
WD Gann wrote that overbalances are a sign of a change in trend. In other words the market declined 10 months from January to October 2022.
This is the longest decline since the March 2009.
As well, the structure of the rally off the October 2022 low is not impulsive; rather, the structure looks corrective.
This summer is an important inflection point for the market. I think the next decline is likely to tell us a lot about how the market is going to behave over the next few years.
In short, hysteria follows euphoria in the market. As always, timing is everything.
And time suggests this could be a summer to remember.
The trend is bending. The first sign the bend is a break is trade below 4380 which is 90 degrees down from Friday’s high.
This ties to a rising hourly trend line from the May 24th low and the 50 hour moving average.
In summation, we are 94 years from 1929 and July 13 vibrates off 94.
The DJIA high in 1929 was 386 and 386 aligns with July 19th, the primary high in 2007.
33 years ago there was a high on July 13th (1990). 33 aligns with July 13th.
If a crash occurs, how far can we drop?
The chart below shows the Megaphone formation starting in 2018 and culminating with the Covid Crash.
Notice that a climatic top occurred after a Throwover.
Currently we have a small Throwover… the rising purple trendline.
Is it possible we get a Mega Throwover, a melt-up ala 2021 that clears 5000 SPX?
That is the wrong question. Anything is possible. Our job is to identify whether it is probable.
We had a meltup in 2021. We got a Head & Shoulders Top at the all-time highs.
That said if the left and right shoulder region at 4550 is cleared and sustained the door is potentially open to a melt-up.
A lot is riding on how the market reacts to the Time/Price synergies this summer.