By: Jeff Cooper
Hit and Run Morning Stock Report: June 22, 2023
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Did We Just Make An Historic Top?
We showed the hourly SPX below in Wednesday morning’s Hit and Run Report.
We wrote, “An hourly SPX shows a Rule of 4 Sell signal will be triggered on a break of the blue channel.
Breakage below the blue channel opens the door to the bottom of the green channel (from March 13th). The bottom of the green channel is in the 4260 region.”
A daily SPX shows the rally from mid-March was topped off with a false breakout above 6 month tops line.
Fast moves come from false moves and the reversal back below the tops line was telegraphed by a Gilligan sell signal on Friday.
This is a gap up to a new 60 day high with a close at/near session lows.
Throughout the last month we’ve outlined analogues and time/price synchronicities with several historic crashes.
These include the blow off’s in 1929, 1987 and 1990.
What we have seen play out over the last 90 days however is more of a Buying Panic than a blow-off.
The difference is that a Buying Panic is underpinned by a narrative, a story. Players panic that the train is leaving the station without them and they have a fear of being left at the station.
The distinction in the aftermath of their climax runs is that markets don’t typically crash right after blow-offs.
They roll over and accelerate usually 7 weeks after the top.
A Buying Panic on the other hand can hit Air Pocketism soon after the top is in.
We’re all familiar with how markets can “V” off waterfall declines; well markets can “V” down after Buying Panics exhaust themselves.
If we are still in a bear market, then the structure indicates that last week's high was the top of Intermediate Wave 2.
In other words, Intermediate Wave 1 down culminated in October 2022 and the subsequent advance has been Intermediate Wave 2.
The implication is that a powerful, dramatic Wave 3 decline is on deck.
This is consistent with the action of the generals.
Let’s take a look at three of them, TSLA, NVDA and CRM.
Each of the above amigos exploded higher late Tuesday.
Indeed TSLA continued higher pre-market Wednesday trading up to 281.
We posted on the Hit and Run Private Twitter Feed that TSLA should be magnetized to 265.
A 10 min TSLA shows an immediate swan dive to 265 before two failed Snapbacks to 265.
TSLA clearly knows this 265 number.
There’s some good synergy pointing to TSLA’s reversal on Wednesday.
It struck the top rail of a trend channel for 2023.
Notice that a mid-channel line ties to 233 and Phil D Gap.
NVDA also exploded into the bell on Tuesday, made a nominal new high early Wednesday before being taken to the woodshed.
CRM also exploded late Tuesday, extended on Wednesday morning before getting clobbered.
This price action is not an accident. The Jackknife was a Highjack.
It has the whiff of a Buy ‘Em To Bang ‘Em play.
Coming just before quarter-end it looks like a big fund took offers promiscuously and then hit bids indiscriminately.
The move puts the cherry on top of a strategy to force their competition to chase and then catches them flatfooted holding the bag serving to improve the instigating funds performance in the quarter.
Be that as it may, with the vast majority of market participants fluffed up for continuation of a buying panic into quarter-end window dressing wouldn’t this be a ripe time for an old-fashioned rug pull?
Above we showed what looks like Trap Door/false breakout over a tops line in the SPX.
Now let’s complete the picture by filling in a bottoms line
Now we are presented with a Bearish Rising Wedge. A conspicuously bearish pattern.
This is consistent with the idea of the onset of an Intermediate Wave 3 decline.
Notice the undercut of the bottom trend line in late May versus the throw-over of the tops line.
As above so below.
The message is that fast moves come from false moves: the thesis for a “V” down following a Buying Panic is compelling.
It must be said that even if Air Pocketism to the downside does not show up immediately, that does not mean the coast is clear this summer. If an historic top is in and a slide is on deck, the Gann Panic Zone can exert its influence through the summer.