By: Jeff Cooper

Hit and Run Trading Morning Report - August 25, 2023


“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 thru this morning’s gap will trigger a Jump The Creek sell signal (offsetting the gap up open).”

We wrote the above in Thursday morning’s Hit and Run Report

I’m using a chart below of the QQQ to show the price action Thursday.

A waterfall decline accelerated when the Q’s took out the up opening gap in tandem with a reversal back below a Bowtie of the 50 and 20 day moving averages.

The cascade produced another large range outside down day (LROD or Lightning Rod).

Not just any large range decline---it was the largest red candle this year.

Range precedes price so the presumption is the door is wide open to lower prices.

In yesterday’s morning’s report we went on to say that the QQQ and SPY 3 Day Charts turned up on Thursday and that if the trend were strongly bearish the turn up should define a high soon in terms of both time and price.

Soon turned out to be an understatement.

In a word, the market was ambushed from the opening bell.

News Reversals like Thursday don’t just “happen”. They are contemplated, organized.

Some big fund painted the tape  after NVDA’s blow-out report after Thursday’s close.

Stocks that had nothing to do with AI ramped on NVDA’s earnings coattails.

We wrote, “does it make one iota of sense that one stock rockets everything that can fog a mirror?”

Concentrated smart money sold right into the opening spike---across the board.

Checking the above daily QQQ it looks like Wednesday’s high was a little wave 4 high following the July high so we should make a new low below last weeks low soon.

That would produce 5 waves down of Wave 1 of Intermediate Wave 3 down.