By: Jeff Cooper
Hit and Run Morning Stock Report: June 30, 2023
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Stocks closed mixed Thursday.
Techs were under pressure while the other major averages rose modestly.
The SPX turned its 3 Day Chart up on Thursday.
As you know this is not automatically bullish.
If indeed the market topped two weeks ago, this turn up in the 3 Day Chart will define a high soon in terms of time and price.
QQQ turned its dailies up on Wednesday and left an NR 7 Day yesterday.
Both indices turned their Weekly Swing Charts down for the first time this week in the Runaway Move and the normal expectation
From that turn down in the context of a runaway move would be for a rally attempt. We’re getting it.
Yesterday I showed a comparison between yesterday and January 12th, 2022, right off the top.
While that analogue did not see a down day yesterday, the market is not a fine Swiss watch and one day or so does not an analogue break.
That said, markets are up solidly pre-market today.
It will be interesting to see if it sticks…noting however, that today is both the end of quarter and a weekly Opex.
I say that because there is evidence that July could kick off with a strong downtrend after July 4th.
To recap a few of those reasons:
1) July 4th cubes the January 4th, 2022 all-time high. It is 540 days/degrees from the high.
2) 1929 was 94 years ago. 94 points to/vectors July 13th. July 13th is the high 33 years ago followed by a crash into October.
33 years before that is 1957 when a mid-July crash occurred.
3) We are 247 years from 1774. The number 247 points to/vectors July 4th. So this should be a pivotal point for the U.S.
4) 349 (3490) is the low for the decline off the all-time highs. 349 is 180 degrees straight across and opposite July 13th.
5) July 13th squares October 13th, the day of the low last year at 349.
If June 16th was a high and the market starts down in early July there is evidence that it could decline into August 8th + or -.
That is the Gann Panic Zone.
If this plays out my expectation would be for a bounce for a few weeks before falling sharply into January/February 2024.
That is based upon patterns and cycles.
In summation, the next few days/weeks should determine what happens from here.
If the bulls are correct, we could blow-off to 5500 SPX.
If the bears are correct, we are on the cusp of the elusive top of Intermediate Wave 2 corrective rally. That will be followed by a dramatic Wave 3 decline to the 2700 to 3100 region. If so that probably occurs by February 2024.
It should be easy to see which scenario is going to play out by the action in the next few days/weeks.
Does this pop after the decline from June 15th polish off the rally or does it burnish the path to new all-time highs? The question will be answered soon by the market itself.