Analogue Of Euphoria

For 5 months from  late August 2017 to January 26^th, 2018, the market experienced a Runaway Advance that produced one of the smoothest, least volatile rallies in history.

3 months into that move the advance got steeper (blue).

4 months into the move the advance went vertical (magenta).

The  2872 SPX high on January 26th was a Time/Price square-out.
287 is square August 21st, the low prior to the advance in 2017.

Markets walk before they run and run before they sprint.

The rally ended with a large range, high tick close spike 48 trading days from the mid-November acceleration.

On the 49^th trading day, the beginning of the Gann Panic Zone the SPX turned down.

Gann wrote that 7 is the number of time and the number of panic.

A cycle of  7 squared is 49 days or trading days.

The stretch perpetuated “free money” for those selling volatility.

2 days after the top the market gapped down starting Volmegddon.

There was no Graceful Exit.

The SPX plunged 440 points or approximate 15% in two weeks.

As importantly, it marked a reversion to the mean that would define all of 2018.

Arguably, it marked a reversion to the mean where volatility reigned for two years thru March 2020.

Let’s compare the above Runaway Advance with the move off the mid-March low in 2023.

In September 2017, the rally accelerated. The top was apx 4 months, 120 degrees, later.

We are currently 4 months from the March low.

2 months into the current run, in late May, the rally got steeper (blue).

The last leg of the advance starting in late June has run 15 trading days.

This compares with 18 day rip in January 2018.

Notice that the last ditch run in January 2018 was 6 days. On the SEVENTH day the market turned down.

The high day on January 26, 2018 was a large range high-tick close day.

Similarly, yesterday was the 6^th day of a surge marked by a large range high-tick close day.

Will yesterday mark a climax to a Buying Panic mirrored by the spike into January 26^th, 2018?

Here’s what I’m watching.

Notice that the SPX left a signal reversal bar on January 16thm 2018. A Gilligan’s Island sell setup.

The index went sideways for two days before exploding for 6 days into the January 26^th “cherry on top”, a Buying Exhaustion.

When the Gilligan sell was offset, the market spiked. However, the second mouse got the cheese for the bears with the Breakaway Gap to the downside on January 30^th, 2018.

This year we got an Island Top on July 6^th. The Island Top sell signal was offset on July 11^th.

Yesterday was the SIXTH day of the current run…mirroring the 6 day top in January 2018

Breakage back below the Island Gap from 4440 region opens the door for the second mouse getting the cheese for the bears here in 2024.

Alternatively, if the market holds up, as flagged since May, we may get a 90 day/degree blow-off from the May 26^th, 2023 point of acceleration mirroring the May lows in 1987 and 1929.

Those May lows perpetuated blow-off moves of 90 days or so followed by historic crashes.

At the top of this report we showed the Time/Price square-out with the January 26^th, 2018 high

squaring with August 21^st, the date the advance started.

The SPX has been rallying since March 13^th, our last major low.

March 13^th is straight across and opposite 453/454 (4540).

The current advance has broken several square-outs.

It must be said that while all important highs and lows are square-outs,

Not all square-outs are important highs and lows.That is why I always say, speculation is observation, pure and experiential.

Thinking isn’t necessary and often just gets in the way.