By: Jeff Cooper
Hit and Run Morning Stock Report: June 27, 2023
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Is The Top In?
Last week I tweeted “the top is in”.
After stocks experienced their worst week since the March 2023 bank failures, Monday provided more evidence to backstop my thinking.
QQQ rallied from the open striking a high after 50 mins into the session; however, the Q’s fell with authority after triggering a downside ORB. Long time subscribers know that stocks often find 1st hour highs in downtrends and 1st hour lows in uptrends.
In so doing the Q’s actually closed at 357.68, just below the rising 20 day moving average at 358.
The normal expectation in a runaway move is for tests of the rising 20 day ma to define support.
And, this is the first such test which almost always perpetuates a low of some kind---even if it’s only a feeble rally back towards the highs---assuming the June 16th was “the top is in”.
Of course, the market is not a fine Swiss watch and many pullbacks to the 20 day ma see it undercut.
In that vein, it must be said 90 degrees down from the June 16th high is 354.
As well today is 180 degrees straight across and opposite 351.
So theoretically we could see a deep undercut of the 20 day moving average before a rally attempt.
Alternatively perhaps the Q’s try to bounce right here off the 20 day and then Jackknife down to satisfy the 354-351 region.
If the Q’s drop to 351 over coming hours/days, it will clearly tie to the SPX satisfying a 180 degree decline to 4311 shown in the “squares chart” from Monday’s report.
That’s another day down like Monday.
If these two indices achieve (354 and 4310) their respective downside pivots, the normal expectation would be for a rally.
The synchronicity would be compelling.
If this occurs, we’ll look to cover shorts and observe the behavior and probably take some scalp longside tries.
That said as you recall from last week, we stated that while blow-offs don’t typically waterfall right off highs while Buying Panics can see vicious reversals right off their spike highs.
Additionally, the Q’s triggered our Keyser Soze sell setup on Monday.
This is because Thursday carved out an outside up day and Monday snapped Monday’s low.
Remember we tweeted that a Keyser can show up within a few days after a “sighting”…it doesn’t have to be the very next day, which in this case would have been Friday.
Friday was a textbook Paws Day (Pause Day).
When the Keyser’s in the house, he takes few prisoners.
Such was the case on Monday with TSLA, META and NVDA, three of the strongest performers in 2023.
Let’s take a look.
TSLA was downgraded before the open. It gapped down but the buy the dip cult held hands with the Teslarians buying it from the getgo eliciting a quick 8 point bounce in 40 mins.
It was all downhill from there.
The Time/Price vibrations in TSLA point to an intermediate term high…just as they pointed to the January 6th low.
Allow me to explain.
TSLA struck a high of 281 pre-market on June 21st leaving a large range Gilligan sell signal and a Key Reversal Day.
281 is 180 degrees straight across and opposite June 21st for a Time/Price square-out.
The square of 9 below shows how TSLA’s all time high on November 4th, 2021 is 180 degrees straight across and opposite the low at 102 on January 6, 2023.
Time points to price, price points to time.
Notice how the January 6th, 2023 signal reversal bar is a mirror image of the June 21st reversal.
As you know when a stock runs hard (up or down) into a potential square-out it burnishes the idea that an important change in trend is at hand.
To say TSLA ran hard into the June 21st square-out is an understatement.113 points in 5 weeks.
To say that the reaction to that square-out wasn’t a significant signal reversal bar is an understatement.
Let’s take a look at TSLA’s January 6th, 2023 low.
January 6th aligns with 279 which ties to TSLA’s pre-market spike on June 21st.
META hit a new recovery high of 290 on Monday’s open before reversing to close at 278.47 leaving bearish Train Tracks.
META bottomed at 90 on November 4th, 2022.
November 4th aligns with 290.
NVDA bottomed on October 13, 2022.
Often with high priced names such as NVDA we have to check the weekly closing highs and lows in addition to the intraday high and low.
NVDA struck a weekly closing high of 427 on the week of 6/12.
Checking the Sq of 9 Wheel shows that 427 is a direct hit with the low: 427 squares October 13th.
Happenstance? We just showed how three of the biggest winners in the rally reversed when Time & Price squared out.
“When time and price square-out, expect a change in trend.”
In summation, there is a very good possibility the long-awaited top for the Intermediate Wave 2 rally from October 2022 is in….
On the one year cycle from the orthodox low of Wave 1 down in June 2022.
This prospect aligns with the multiple major Time/Price signatures showing up for the overall market in July that we have shown in this space over the past month.
This is underpinned by 2 Ghost Lines that define all pre-crash highs and lows since the March 2000 top that we have reserved for members.