By: Jeff Cooper
Hit and Run Trading Morning Report - August 29, 2023
Need help? Check out the Hit and Run Success Guide.
3 of 3 Down On Deck/ Synergistic With The Gann Panic Window?
The corrective rally in the SPX that started last week is either complete or very nearly so.
Monday’s rally carried over from Friday when the index went into the Plus One/Minus Two buy setup: the 3 Day Chart was pointing up followed by two consecutive lower daily lows on Friday.
If you check back to the 1987 analogue you will notice that the SPX made a couple of attempts to reclaim its 50 day line before it relinquished it irrevocably.
So the key level for the bearish potential is last Thursday’s 4458 high when the SPX buckled from the opening up spike.
The decline off the July 27th peak counts best as a wave 1 decline with the current upward correction looking like an A B C within the context of a wave 2 corrective rally.
Consequently, it would not be surprising to see a push just above Thursday’s high and the 50 day moving average.
Pulling back the lens on the SPX from the January 4th all-time high shows a near vertical rally started on March 13th at a Convergence of declining and rising trend lines.
This March 13th pivot low was 3809 SPX.
Remember that 540 degrees up from that pivot low is our old friend 4187.
After the March low we stated that above 4187 opened the door to higher prices.
Notice the lower horizontal black trend line: 4187.
This forms a pivot with the rising blue trend line.
Another 540 degrees up or 1080 up from the low is 4586.
The closing high for the move has been 4588.96.
You can’t make this stuff up.
1080 degrees is 2 cubes (540 X 2).
This is a master time/price factor.
Which I go into with those wishing to explore the Square of 9 Wheel in depth.
The above daily SPX is my count of the structure from the all-time high.
Intermediate Wave 1 down ended last October 13th.
The market be lovin’ itself some “13’s”.
5 months from the October low is the March low.
Another 5 months from the March 13 low gives August 13th.
August 13 was a Saturday. The previous Friday saw the SPX test its 50 day line for the first time since the blow-off move started.
The next session, August 14th, the index snapped its 50 day moving average and accelerated lower over the following 3 sessions.
Last Thursday the SPX gapped up to test that August 13th Time/Price Pivot and exploded to the downside leaving the largest decliner of the year.
You can’t make this stuff up.
5 months out from August 13 is January 13th.
This should be an important Time/Price Pivot.
It will tie to the 2 Year Cycle or 720 degrees in days from the January 4th, 2022 ATH.
This will be an important high or low.
Checking the above daily shows following an impulsive 5 wave decline into October 2022 followed by a corrective A B C countertrend rally.
C Waves can be crashes---UP or DOWN. The SPX crashed up into late July.
The top of the C wave most likely completed Intermediate Wave 2, a countertrend rally.
The upper horizontal black line ties roughly to a Head & Shoulders Neckline.
Breakage below the Neckline projects down to 4073.
It looks like losing the 4187 pivot described above opens the door to 4073, near the May lows.
But more importantly breakage below 4187 breaks a Time/Price Pivot and a Bottoms Line from last October.
Theoretically that opens the door to a plunge to the 3500 region…last October’s low.
What’s remarkable is that 350 (3500) is square the first week of October.
This ties to the anniversary of the 2007 bull high and the 2002 bear low.
As well, 350 aligns with/vectors January 4th on the Square of 9 Wheel.
This is why the SPX bottomed at 349/350 last October.
In sum, below the Neckline around 4330-40 opens the door to our key 4187 Maginot Line.
Below the Maginot Line opens the potential for a waterfall decline or at least a persistent decline …
Probably into January 2024.
Caution is warranted if the market has begun Intermediate wave 3 down.
Drilling down, it is possible that the SPX is installing a “little” right shoulder which is a little wave 2 countertrend rally following the wave 1 down off the July peak.
That implies the next decline will be a 3rd of a 3rd wave down.
3 of 3’s are dramatic.
This would be occurring into the Gann Panic Window open until around mid-September.