By: Jeff Cooper
Hit and Run Trading Morning Report - September 8, 2023
Need help? Check out the Hit and Run Success Guide.
Enter The Dragon
“In the middle of chaos lies opportunity.”
Since we showed what we deemed to be a Head and Shoulders top of IWM two days ago (above) it’s followed through producing two notable technicals:
1) It plunged to just shy of the 183 Neck Line (black).
2) In the process it triggered a Rule Of 4 sell on breakage below 185.
The presumption is a possible bounce on this 3rd test of the Neck Line…perhaps a backtest of the broken blue trend line currently around 184.50.
This is consistent with the idea of a minor wave 2 on the SPX described in yesterday’s report and private twitter feed.
IWM’s 3rd drop to the Neck Line sets up a potential powerful signal:
A Rule Of 4 sell on the 4th time through this 3 point trend line as well as a violation of the Neck Line.
The projection on such a break is the 175 region.
That’s a round trip to the March low.
On my Square of 9 Wheel, 175 vectors/vibrates off the end of September.
As you know Combo signals increase the odds of follow through so keep your eyes on this Neck Line.
September may live up to its rep in an epic fashion.
IWM is not the only H&S top pattern.
The SPX Equal Weighed Index also has a potential Head & Shoulders.
NVDA and AAPL tumbled again with NDVA finding support after fulling testing its 50 day line after undercutting the 458 square, 180 degrees down from the 502 top. (I mistakenly called it 456 on the twitter feed.
Be that as it may it’s rising to challenge a broken 3 point trend line into Phil D Gap.
Back below 458 keeps the pressure on.
Today squares 455 and 477.
Back below 455 opens the door to a test of Thursday’s low and the 450 strike for Opex.
Sustaining above the 460 strike theoretically opens the door to 470 and Phil De Gap…Wednesday’s close.
For its part AAPL had a massive Breakaway gap below its 20 day after a unequivocal plumb line drop through its 50 day line on Wednesday.
Thursday it basically tested its August lows so it is not surprising that it bounced but it has to contend with its overhead 20 dma smack in the middle of a formidable gap
The 180 strike looks pivotal.
Here are the AAPL squares:
90 degrees down from the 198 ATH is 184. So theoretically the 185 strike could be in play if they bought calls in China. J
However, 180 degrees down is 170 and that hasn’t been satisfied yet.
Below 175 keeps pressure on to 170 with the 3 Day Rule in play.
That’s 3 consecutive momentum days. Markets play out in three’s.
Notably AAPL rolled over on Wednesday following a Rembrandt, picture perfect failure from Phil D Gap. Can AAPL do an encore? Is there another rotten AAPL in the barrel?
A weekly AAPL suggest a drop to 158 region which is 270 degrees down from high.
This ties to a backtest of a Ghost Line where a Rule Of 4 Breakout was triggered in April.
It also ties to the 50 week ma.
Importantly, notice that AAPL went into the WEEKLY Minus One/Plus Two sell positon on Tuesday when it traded above last weeks high.
In other words the 3 Week Chart was pointing down followed by 2 weekly higher highs.
You think my Swing Method is powerful?
AAPL ‘assumed’ the position at 190 on Tuesday. q
Thursday’s low was 173.50.
The Swing Method, like my Square of 9 Wheel, integrates Time and Price.
AAPL satisfied the weekly sell scenario according to TIME not price.
When it traded above last weeks high.
In sum, NDX holds the key.
NDX left a Bull Trap at the end of August when it broke out of a declining tops line but quickly reversed back below it.
Yesterday it gapped below its 50 day line, bouncing off its 20 day ma.
It closed with a backtest of its 50.
Clearing its 50 day today opens the door to a possible push to the broken trend line in the 15,375 region.
That should be the whites of Mr. Markets eyes. If he starts to falter, we’ll deploy put options.
I’m sure it’s just coincidence that Xi delivered a one-two punch on AAPL during the cruelest market month.
Maybe he’s got a karate kick ready for TSLA on an announcement that government workers cannot drive Tesla’s to work?
In sum, the SPX shows a convergence of a tops line and bottoms line into Gann Day…the Autumnal Equinox, September 22.
Cycles should exert their downside influence into that time frame.
But I think any relief rally from that point will see a Hunt For Red October.