By: Jeff Cooper

Hit and Run Trading Morning Report - August 11, 2023

The Outlook

Over the past two months we’ve detailed our outlook and shown big picture charts supporting that view

Following one of the largest bear market rallies in history (NINE months) markets topped in July synchronous with the July 1990 top and the July 2007 top anniversaries.

This includes the Time/Price synchronicity between 94 pointing to mid-July---it being 94 years since the 1929 Super Cycle top.

Additionally 94 vectors 386/387 the DJIA price high in 1929.

There is a small potential for a rise into late August to test the highs: the acceleration for the last leg up started in late May mirroring the blow-off moves in 1987 and 1929.

The odds for this rely upon the SPX reversing with authority from our 4450 pivot which has essentially been struck.

However, the decline off the highs has been an impulsive 5 waves so any rally should be countertrend and suspect.

In addition, the SPX shows 3 large Charlie’s Angels sell patterns.
This is 3 Topping Tails in close proximity.

They are the large range Key Reversal Day on July 27, the high day.

The August 4 large range Holy Grail sell from the 20 dma.

The August 10 large range reversal.

The 50 day line looms at 4432.

Interesting, 445 (4450) squares the high day , July 27th.

So this is a big pivot: the normal expectation is for a rally ATTEMPT from this region.

If it appears, it may turn the Weekly Swing Chart up.

Breadth this week has been exceptionally weak, confirming the downtrend.

The Summations for the NYSE and NAZ (NYMO and NAMO) are in clear downtrends.

The Inverted TSY Yield Curve imports these facts:

Since 1980 every recession has been preceded and predicted by a TSY Yield Inversion by 6 to 24 months. The average lead period has been about 12 months.

We are 18 months into the current inversion between the 2 year and 10 year TSYs.

Recessions average about 15 months in length.

Once a recession BEGINS, the bottom of the stock market cycle bottoms an average of 6 months before that recession ends.

If the averages above are repeated, we can expect the recession here to start at any time now but before January.

Based on the above, the average would suggest the stock market would bottom for THIS LEG of the Primary Cycle in about the third quarter of 2024.

But a Super Cycle Bear could last a decade or more.

A PRICE low could occur around October 2024.