By: Jeff Cooper
Hit and Run Morning Stock Report: June 29, 2023
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An Interesting Comparison
Today’s report is brief.
We will let the tape tell its story at this critical juncture.
We believe the next days/week and this region will decide the rest of the year.
Either we have or are finishing Intermediate Wave 2 off last October’s low or
This is merely the first pullback since the breakout over our key 4187 level in early June.
Markets often exhibit similar behavior coming off important highs and there is an interesting comparison between
January 12, 2022 and yesterday, June 28, 2023.
In each case, markets were coming off a high.
The pattern is the same in the internals, and momentum.
The SPX turned its 3 Day Chart down directly off its high in January 2022.
The index traced out two consecutive higher highs putting it in my Minus One/Plus Two sell position.
From there the SPX dropped 500 points in SEVEN days.
From the high on January 4th to the initial low on January 24th the SPX had shed nearly 600 points into January 24, 2022.
We have outlined a period of time/price synchronicity due in mid-July.
It is interesting that 540 degrees from the crash low on January 24, 2022 is July 24, 2023.
Of course this July 4th is 540 degrees from the all-time high.
From the high on June 16, 2023 the SPX immediately turned its 3 Day Chart down---mirroring the action off the January 2022 top.
Yesterday the index carved out 2 consecutive higher daily highs putting it in the Minus One (the 3 Day Chart is pointing down)/Plus Two sell position.
One difference between the two periods is that the SPX snapped its 20 day moving average coming off its high in January 2022.
Currently the pullback has found support at its 20 day moving average.
That said markets are more like Picasso’s than Rembrandts.
That is to say patterns are not precise.
You get the picture.
If the June 16th top was significant the way to look at it is to turn the chart upside down.
If it was indeed a Buying Climax, then it will be opposite of the Selling Climax into late December 2018.
Above I said we are at a critical juncture.
A monthly SPX depicts this crossroads.
The best count for the move off the 2009 low is that a Wave 3 high was struck in late September 2018.
The market crashed into late December 2018.
The market just ran up 90 days from the March low.
Following the B Wave Trap Door high into February 2020 we got a C Wave Crash into March 23rd, 2020.
It must be said that there is an alternate pattern of tops.
Look back at the January/February 2020 top.
The 3 Day Chart turned down right off the highs in late January but traced out a Throw-Over high.
How do we know when we’re getting a Throw-Over?
The market knifed back below the prior high with authority.
When the SPX took out the 3 Day Chart low again it collapsed.
Going back to the above monthly SPX, from the 4th wave low in March 2020 we got a 5th wave blow-off.
I connected the important 2015 peak which is the mid-point of the move from the 2009 low to the 2022 peak time-wise, to the January 2018 high and the February 2020 high and extended it.
Note the parallel blue bottoms line that catches the October 2022 low, proving the geometry of this channel.
As you can see the market has eclipsed the line…theoretically opening the door for a move to test/exceed the all-time high.
However, not so fast. There is another channel that may be the final arbiter.
The top rail of this second purple channel connects the September/October 2018 pre-crash high with the February 2020 pre-crash high.
So this line has something in common: crashes.
Extending the purple line shows the SPX kissed it at the June 2023 high.
I paralleled a line off the March 2020 low (purple bottoms line).
If the market has struck a Wave 2 Intermediate high, then the low 3000 region is the projection.
Interestingly, the decline off the January 2022 high to the October 2022 low was apx 1300 SPX points.
If we just saw a significant top in mid-June, then a mirror-image 1300 point decline takes us to the 3100 region…the bottom rail of the purple channel