By: Jeff Cooper

Hit and Run Trading Morning Report - August 10, 2023

Helter Skelter

Since August 7th, when the market threw a Fitch Fit, the SPX saw a Breakaway Gap from 4520 to 4498.

The it gapped up on August 8th, grinding to the aforesaid open gap.

Yesterday the index dropped to undercut the prior day’s low which perpetuated a run to the prior day’s high. Then came a Late Day Swan Dive on the runoff to the low of the range for the week.

The SPX has traded in a 60 point range for five days, consolidating the losses since the July Key Reversal.

In other words, 5 days ago the SPX closed below its 20 day moving average at 4514.

The subsequent 5 sessions have drifted lower in a seeming consolidation to yesterday’s new low close for the decline at 4467.

This morning’s rally is likely produced by the fact that the SPX entered the open gap from 7/12.

Yesterday’s low was very close to the idealized 4450 projection region.

Full Phil D Gap is 4439.

That said the SPX did tag the little double tops from June/July yesterday.

Be that as it may, there was conspicuous breakage of support in darlings like CRM and TSLA below their respective 50 day lines.

The recent high on the SPY was 459.

90 degrees down is 438, which represents an undercut of the 50 day line.

459 points to August 19th and 438 is square August 19th.

The A O A, Angle Of Attack to the downside off the high implies we will see 438 at least over coming days by August 19th if not sooner.

It would be a fool’s errand to predict what will occur in the short-term today because the trading activity will immediately react to the CPI report.

That reaction will depend on:

1)      The level of inflation AS REPORTED

2)      Trader and pundit interpretation of what those reported numbers will mean for the economy and the Fed.

Importantly, the numbers will not reflect the recent gush in oil.

So it would not be surprising to see another rally sold.

The Intermediate Term TREND in the market, however, is very different from what markets do in the hours following one economic report as reported by a fiscally corrupt government.

And apparently not fiscally so. But that’s another story altogether… but not for Fitch, is it?

While markets will continue on the Volatility Roller Coaster of the last few days and react as they will,

Nothing contained in today’s report has any chance in my opinion of changing the Trend In Progress, TIP.

Tomorrow’s report will walk through the Mother Of All Bull Traps planned for today.

It will also discuss the coming impact of a year and a half of an inverted US Treasury yield which has produced five recessions in the last 43 years.

No stock market cycle has every bottomed BEFORE an oncoming recession.

This one is no different.

In hindsight, it would have been smart to do more covering into yesterday’s Gap Window and test of the little June/July double tops with the loss of momentum as that occurred…. but then on the runoff, we looked smart.

Pre-market before the CPI…not so much. For the moment we will do as Jesse Livermore did and “sit tight”.