By: Jeff Cooper

Hit and Run Trading Morning Report - August 24, 2023

Intermediate Wave 1 Analogue To Intermediate Wave 3

Buffett said look at the game and not the scoreboard. The game is telling us the world is sliding into recession with stocks overvalued.

Gamble on AI and NVDA. Be my guest.

Does it makes one iota of sense that one stock rockets everything that can fog a mirror?

But the market was never about logic.

This morning the SPX will open at its 50 day line---backtesting this widely watched measure of price.

Below is an analog to 2022 and the Intermediate wave 1 down.

The 50 day resides at 4458.

The 20 day is just above at 4474.

As we know, 180 degrees up from last weeks low is 4471

The NDX is going to gap open above a Bowtie of its 20 and 50 day moving averages this morning.

It’s going to be critical to see if the NDX can hold above them.

Trade back through this morning’s up gap will trigger a Jump The Creek sell signal.

It will be critical as well if these indices pullback into this morning’s open gap to gauge whether

A Side Door Entry is on the table.

In the analogue to 1987 shown earlier this week, the SPX Pinocchio’d its 50 day moving average.

The key will be breadth. On that top day in February 2022 (the lower high on February 2), NYSE breadth was -381, even though the SPX was higher.

The next day NYSE breadth was -2100.

In sum, the 3 Day Chart in both the SPX and NDX turned up yesterday with 3 consecutive higher intraday highs.

Notice that this followed the gap down open last Friday with a close at/near session highs.

It was a gap down open to a new 60 day low with a close near the high of the day.

This satisfied the criteria for a Gilligan buy signal.

This move up to the 50 dma’s, 180 degrees up on the SPX is ‘par for the course’.

It’s what the market is going to do now that is critical.

If the trend is strongly down this turnup of the 3 Day Chart should define a high soon in terms of time and price… just as a turndown in the 3 Day Chart typically defines a low soon in terms of time and price in a strongly uptrending market.