By: Jeff Cooper
Hit and Run Morning Stock Report: June 23, 2023
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The Trend Is Your Friend Until It Bends At The End
The uptrend hasn’t broken, but it’s bending.
Yesterday the SPX and QQQ turned their 3 Day Charts down and rallied.
This is the normal expectation in the midst of a runaway move to the upside.
The Q’s are the clear leader and this is the FIRST turndown in its 3 Day Chart since the runaway move started in early May.
In fact, the Q’s left an outside up reversal bar on Thursday.
Consequently trade below Thursday’s low will trigger a Keyser Soze sell signal-- A Reversal Of A Reversal.
Markets are down sharply this morning but the QQQ low on Thursday is substantially lower.
Be that as it may, this gap down with a failure to follow thru to the topside is not the normal
Expectation is a roaring runaway move.
It speaks to the idea that the trend is indeed bending.
The market is speaking and we need to listen if indeed it takes out Thursday’s low over coming hours/days.
90 degrees from the 372.85 high is 354.
353 is 180 degrees straight across and opposite June 16th, the high day for the move---so far.
This 353-354 region should act as a magnet over the next week.
Interestingly, this is the level where this runaway move started from June 9th.
354 is opposite June 9th.
So there is a lot of synergy at this 353-354 region and my expectation is that QQQ gets magnetized to this level in keeping with W D Gann’s Law Of Vibration.
Importantly, the QQQ 20 day moving average currently resides at 355.67.
The Q’s have not tested the 20 day moving average since breaking out in early May.
As well an hourly QQQ shows a Head and Shoulders top pattern with the Neckline around 360.
The Right Shoulder if that’s what it is, was installed with yesterday’s rally.
So pick your poison: we either have an upside reversal from the context of a first 1 2 3 Pullback in the Q’s
Or a Keyser Soze is on deck on trade below Thursday’s low.
Yesterday I stated that I thought we could see a solid drop with a reversal to the green.
The drop wasn’t much of a drop…so I can’t help but wonder if we get that playbook today.
IF that turns out to be the agenda then my expectation is that we should see markets stabilize early next week and then
Get hit hard.
Keep in mind that this is the important Friday weekly close and the bulls will fight tooth and nail to keep the market
From painting an ugly picture for the weeklies.
If instead, we close at/near session lows and down with authority, it speaks to the idea of the market bending.
On NYSE volume about equal to the lowest session of 2023, markets were highly mixed on Thursday’s session.
While the SPX was nominally higher by 16 points courtesy of a last hour rally, the equal-weighted SPX was down by about -30 points, the DJIA was – 5 points, leaving an NR 7 Day.
The NYSE Comp was – 70 points.
Breadth was negative despite the rally mirrored by the fact that the McClellan Oscillator closed at -18.12 and the NAMO at -15.09.
The Summation Index for each the NYSE and NAZ is negative and in a downtrend.
Overall the numbers are clear, showing markets are transitioning from an uptrend to a downtrend.
Specifically, markets have been in a Bear Market Rally since the October 13, 2022 Wave One bottom. It may be that a corrective Wave 2 ran from October 13, 2022 to the June 17th, 2023 Wave 2 top.
This is the picture shown below from our analogue from the March 2000 Buying Panic Top.
That Buying Climax was followed by a more than 10% drop in weeks before a countertrend rally.
Markets can Jackknife sharply after a Buying Climax as flagged in yesterday’s report.
