By: Jeff Cooper

Hit and Run Morning Stock Report: September 13th, 2022

The Setup

This morning’s report is brief and to the point.

Last week we mentioned that every time NYMO dropped below -100 in a bear market nearly every market rebound lasted for 1 to 3 days.

There were a few in 100 years that lasted over a week.

In no case in history that fits the above criteria for a setup does the SPX not follow through to deep new lows once the NYMO turns down again-- confirmed by a downtrending Summation Index.

Monday was day 4 in the rebound.

Where might we expect this rebound to end?

Last week we noted that 360 degrees up from the September low is 4140.

Monday the SPX pushed to 4119.

Remarkably it sits just below 4140 as we are in waiting mode for today’s CPI.

There is no way to know the market’s reaction to the number, but it would not be surprising to see the market sell-off on a tame number given how far it’s come in four days.

Indeed the SPY is at a Time/Price square-out on Monday’s close.

If one anchors the mid-June low of the year to the “zero point” on my Square of 9 Wheel, you see that it squares 412.

Monday the SPY struck a high of 411.73.

So we have two levels of importance here: 4140 SPX and 412 cash lining up.

In sum, markets have bounced 4 days and should be stretched given the historic study of NYMO behavior.

As well, today’s action in UVXY signaled that the rally should be close to complete.

UVXY gapped down finding a first-hour low and then triggered an upside ORB (Opening Range Breakout).

A follow-on short-term buy signal occurred when it offset the Monday’s gap down triggering a Jump the Creek buy.

This should be a “tell” for Tuesday.