By: Jeff Cooper
Hit and Run Trading Morning Report - August 9, 2023
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Magic Trend Lines Tell The Big Picture
An SPX monthly shows what I think is the preferred structure from the 1982 low.
Notably, the SPX actually bottomed in 1980 making a nominal new low in AUGUST 1982.
On the Gann 20 year cycle, the SPX found a high in 2000... 20 years after the 2080 low.
22 years following the 1982 low the market struck a bear market low in 2002.
40 years from the 1980 low the SPX plunged in 2020.
Two years later in 2022---40 years from 1982, the market tobogganed.
Underpinning the idea of a significant top in early 2022 are the mirror image 13-year advances from the 1987 low to the 2000 top and from the 2009 low to 2022.
These two Measured Moves in time are separated by a large A B C decline from 2000 to 2009.
As well we see synchronicity between the 18 year low to high cycle from 1982 to 2000 and the 18 year period from the 2000 peak to the important January 2018 inflection point that marked an outbreak in volatility.
There is always an alternate scenario in markets that must be respected.
But it’s a stretch. It means considering the advance from 1982 to 2000 as Wave 1.
However, that would make that advance much larger and longer than what would be Wave 3 from 2009 to 2022.
In either case, of the January 2022 high marked a Wave 3 high should be followed by a much larger red Wave IV.
In other words the bull case suggests an a b c and the c wave should play out with a drop to the 2900 region.
Let’s take a look at another SPX monthly from 2000 to see if it validates the 2022 peak.
I connected the 3026 and 2020 lows---49 Gann Panic months aprat.
I paralleled a line from the March 2000 top and it hits the January 2022 all-time high precisely.
Where can the bear market go if 2022 was a Super Cycle Top?
I paralleled another trendline off the 2009 low and we get the 1400 region.
Why did Wave 1 down stop at 3490 in October 2022?
Notice the Ghost Line (red) starting in March 2022 to the Volatility Pivot in January 2018.
Extending it gives the October 2022 low.
Notice that the January/February 2020 pre-crash high was a B Wave Pinocchio.
Could we get such a B Wave Pinocchio above 4800?
The takeaway is that a drop below 3500 opens the door to 2700.