By: Jeff Cooper

Hit and Run Trading Morning Report - August 4, 2023

Paws Day

Looking back over the beginnings of Intermediate Trend downtrends over the years and decades, we see similar early behavior to the recent break.

Typically, each IT downtrend begins with a couple of powerful down days, then two or three days of consolidation.

Some consolidation days were small down days like yesterday; some were no change days; others were small advances.

But the TRENDS all had in common that after several days of consolidation, a powerful downtrend returned with a new string of significant losses.

We will review some of these tops in Monday’s report.

This general pattern is what we expect here. If correct, today will likely be another day of small gain or loss, then starting early next week, a consequential decline will return in earnest.

That’s my expectation. Markets may surprises us in any number of ways. But what we believe will NOT be a surprise is that the Bear will show itself powerfully next week.

The VIX has broken out with authority in league with the idea of a Downtrend…confirmed by MACD and UVXY.

The McClellan Oscillator was -31 and the Summation Index is in a downtrend.

The McClellan and Summation readings for the NAZ were essentially the same.

In sum, I regard the current sharp high momentum break in the market as either the beginning Wave 3 of this Primary Bear Market or the beginning of a C Wave decline. In the latter, the decline from January to October 2022 would be an A Wave down with a B Wave advance from October 2022 to July 2023.

There are many reasons and Time/Price synchronicities for this outlined over the last month in this space.

We’ll go over in detail more reasons in Monday’s report why we believe the market is vulnerable.