By: Jeff Cooper
Hit and Run Trading Morning Report - August 7, 2023
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Down Goes Frazier
“Everything in the universe moves in a rhythm. Nothing happens at random. The underlying factors are, in their turn, subject to the same rhythms as the final product. The whole is not the sum of the parts, but both the whole and the parts labor under similar influences.”
-George Lindsay, Market Technician Extraordinaire
“I have squandered my resistance for a pocket full of mumbles.”
-The Boxer, Simon & Garfunkel
Last week the SPX closed below a prior weekly low for the first time since the week of March 6th.
The SPX never really followed through from the early March close below a prior week's low because there was a prior close below a prior weekly low on the week of February 20th.
So the market was already in a downtrend when the SPX closed below a prior weekly low on the week of March 6th.
But as you can see ,there is a different complexion currently: the SPX has been in a near vertical move since that early March low.
Consequently, last week's close below the prior week's low should see near-term downside follow through if not a larger change in trend.
August has come in like a lion. Since the August 1st NR 7 Day (narrowest range in 7 days), volatility has expanded exemplified by Friday’s “3 Plot Day”.
Allow me to explain.
The SPX gapped up but quickly rolled over triggering an Opening Range Break (ORB) to the downside triggered by trade below the 1st half hour’s range.
It turned out to be a Phil D Gap/ Side Door Entry with the index rallying to trigger Reverse ORB to the top side above the 1st half hours range.
However when the SPX knifed below the morning high it caved and accelerated to the downside when a 3rd ORB was triggered on the break below the morning low.
Since the Key Reversal Day on July 27th followed by the August 2nd Breakaway Gap we’ve maintained our stance for a “Fibonacci Air Pocket” to the 4450 region.
4450ish is where the Breakaway Gap to the topside occurred on July 12th above little double tops.
It also ties to a rising bottoms line from the March low.
As well, it must be said that we have a possible square-out in the SPY today at 442:
August 7th squares out with 442.
A daily SPY from our report last week warned of the recent reversal is validated by the Bull/Bear Pivot by virtue of a Ghost Line from the October 2022 low
Consequently, another early rally today may be a head-fake.
The market doesn’t fall far from the AAPL tree.
The worm turned after APPL’s earnings, leading to its worst week of the year after dropping below a bottoms line for 2023.
The break may be the precursor to a Financial Thrilla In Manilla into October on the one year cycle.
APPL’s fall from grace is a square out that may mark start of Intermediate Wave 3 down.
In other words, the Intermediate Wave 1 down was the drop into October 2022.
A corrective Intermediate Wave 2 rally played out into July 2023.
A powerful Wave 3 Down may be unfolding.
A Square of 9 Wheel image below shows AAPL rallied just shy of 540 degrees from low to high in 2023.
From 124 to 200 is 540 degrees or a cube, a true square-out.
As indicated in this space in June, a top in July is synchronous with the summer high in 1929.
This is because 1929 was 94 years ago and on my Square of 9 Wheel, 94 aligns with July 13th.
As well the July 8th, 1932 low was 91 years ago and 91 aligns with August 6th.
Moreover the structure of the 90 year span from the late 1920’s suggest the culmination of a potential Super Cycle Wave high.
Let’s take a look at 1929.
Notice that the market went sideways scoring a March low… like 2023.
In May, the market started a sharp advance…like 1923.
Notice that the DJIA bounced hard after testing a bottoms line off the March/May lows in 1929.
A March/May trendline in 2023 comes in at our aforesaid 4450 region.
When the Line Of Least Resistance was snapped in 1929, the market crashed.
The difference in the structure here in 2023 being that we are not coming off an all-time high in July but potentially a secondary high from the late 2021/early 2022 peak in the indexes.
That may underscore the idea that a Wave 2 Intermediate Wave high is in progress within the context of a Super Cycle High.
If so, we may get a financial Thrilla In Manilla.
Tomorrow’s Hit and Run Report will show what I believe to be the most important charts you may see in the next few year, mapping out where the market is headed and when.