Hit and Run Morning Stock Report: August 16th, 2022

By: Jeff Cooper

The Motherlode Is On Deck

NDX scored a weekly closing high on the week of November 15, 2021.

19 weeks later it struck a secondary high on the week of March 28th.

Another 19 weeks from the week of March 28 was last week.

If the NDX retraces 50% of the decline from the November 22, 2021 intraday high of 16,764 to the June 16, 2022 intraday low at 11,037, the NDX will top at 13,901…around 234 points above yesterday’s close.

That’s some pretty good symmetry to add to the long list of factors pointing to a top we’ve checked off over the past week.

There is very little guesswork that we need to do right now.

Whether the Hail Mary boyz can stampede the shorts and the underinvested to drive the SPX above its 200-day moving is of little consequence.

Whether the SPX can rise another 100 points before falling 500 to 1000 points is what I’m looking at.

All market indices are now close enough to the top of their reversal regions to make the risk to reward a compelling downside bet.

If a powerful Wave 3 decline is on deck, my projection is a drop to the region of the 2020 lows.

There is some interesting synchronicity here because that ties to an “approximate” 50% decline from 4400 SPX.

It’s ironic because sentiment seems to have extrapolated this move as to being the 2020 Express.

Of course, that’s Wall Street’s favorite sport…extrapolating the last big leg up to fit with what’s going on currently.

What that means is that this runaway move has gone so far and fast that all pullbacks will be viewed by the vast majority as a buying opportunity.

That’s exactly why the next wave down will be so dangerous.

Most investors/traders who have not been around for more than a few cycles, and have not studied market history, don’t appreciate the November 2021-January 2022 top that may well have been a Grand Cycle Top.

The last time we saw one of those was 1929.

So never say never.

Maybe that’s why a secondary top in this time frame is so elusive:

The harder the top, the bigger the drop.

I have been early. But I have been early before.

But this time around there is a chance that you have to “be there”…like 9/11…you had to be there.

September 16/17 is 90 days/degrees from the June 17th low. This is a candidate for a Low to Low Cycle.

Another candidate is mid-October which is 120 days/degrees from mid-June.

If a crash is on the table for October, that means the high should be 7 to 8 weeks prior to mid-October.


This is the Gann Panic Window of 7 squared days to 56 days.

Of course, this is the time pattern the Crashes of 1929 and 1987 followed.

At the same time, November 21 is 14 years (7 X 2) from the orthodox low in 2008.

Of course, November 22 was the all-time high for the NAZ in 2021.

So a drop into late November would satisfy a possible 360-degree high to low cycle.

It must be said the closing low for the 1929 crash phase was in November 1929. That was NOT the low of the bear market.

It was the low of the crash phase prior to a 5-month rally.

Likewise, the closing low for the crash phase in 1987 was early December.

In sum, you will recall that one of the reasons I said last year that “the market will get hit hard in January to kick off a bear market” is that January was 7 squared years from the January 1973 big top.

Interestingly, the 7th month from January peak is AUGUST.

The SPX has carved out a Rising Bearish Wedge or Ending Diagonal from its mid-July Trap Door buy signal.

The bottom of this Rising Wedge is at 4250ish.

Breakage below 4250 opens the door to lower.

And, as flagged on the Hit and Run Feed on Monday, the SPX MACD is as overbought as it was in early June 2021.

The SPX proceeded to drop around 8% in 4 to 5 days.