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Critical Time And Price Resistance

The reaction to this morning’s CPI based on how markets close today will tell us whether last Thursday/Friday was indeed a critical reversal.

Thursday the SPX gapped down from two consecutive N R 7 Days.

Friday the SPX satisfied Phil D Gap and reversed sharply.

Monday the SPX fully tested its rising 20 day moving average and rebounded.

Yesterday a sharp rally on the runoff saw the SPX push back to Phil D Gap.

Did someone know something about the CPI to produce a last hour drive from 4417 to 4443?

Whether it’s the precursor to a breakout over big picture critical resistance or a kiss goodbye to Phil we will know by the end of the day.

What is that critical resistance?

Below is an updated weekly from the all-time high initially shown last week.

I connected the WEEKLY CLOSING low from June 2022 and the fall 2022 low.

I then paralleled a line off the all-time high.

The SPX first struck this line in mid-June.

Again, whether this is a Bull Flag or distribution we should know the verdict soon---if not today, within a few days.

The SPX recovery high is 4458.48.

On the Square of 9 Wheel, 446 squares July 22.

My expectation is drama plus or minus 1 week of July 22.

Interestingly, we get important natural cycles on July 22^nd: Venus goes retrograde.

My research has shown the vast majority of market downdrafts occur when Venus is retrograde.

Venus went retro in late December 2021 at the all-time high.

This retrograde cycle is a 40 day and night cycle, a Biblical cycle.

Remember it took 4 weeks for the market to rollover 8 weeks from November that year for the Matador to pull the sword.

The cherry on top was a false breakout in late December 2021 and a Key Reversal week the first week of 2022.

The current “flagging” in the SPX may be a fractal of the all-time high---especially as it’s occurring at the top rail of the aforesaid declining trend channel.

We have extremely stretched valuations in the generals at a time when interest rates are a headwind against this kind of extreme.

I have seen the kind of giddiness amongst short-term traders we have now across the twittersphere before.

It didn’t end well.

They were the summer of 2007.

The first quarter of 2000.

And, 2021.

Interestingly, from the March 2020 low to late December 2021 peak is 21 months.

From late December 2021 to the end of July 2023 is 21 months for a possible low to high to high cycle.

We have extremely stretched valuations in the generals at a time when interest rates are a head wind against this kind of extreme.

That’s a conspicuous difference between today and the prior valuation and giddy stretches.

There is another distinction.

The above prior extremes occurred as the market was at all-time highs.

That is not the current situation.

A peak and rollover here points would indicate a strong likelihood of  a secondary intermediate high, the top of Intermediate Wave 2 if you will…albeit as illusive as it’s been.

That said time is more important than price and the aforesaid 21 month cycle gets my attention.

In sum while I clearly did not expect Tuesday’s retest of the high of the range since last Thursday, it is not without precedent.

That said, there is something else that should get our attention.

What is especially telling in the four market days since last weeks high is the behavior of VIX.

VIX put in a bottom pattern just as it has at each market top since this Primary Bear Market began in January 2022.

The VIX closed at 14.84 which is 14.5% ABOVE its low of June 22, 2023---12 sessions ago.

When VIX and SPX move up together…bad things happen to SPX.

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