By: Jeff Cooper
Hit and Run Trading Morning Report - September 14, 2023
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Small caps as defined by IWM, The Truth Teller, are leading the way lower which is often a bearish sign for the broad market.
IWM closed below a 3 point trend line (purple) yesterday which triggers an Angular Rule Of 4 Sell signal.
It is on the cusp of snapping the Neckline (red) of a Head and Shoulders continuation top pattern.
The projection for the Head and Shoulders is 165, which ties to the October low of 162/163.
Interestingly, 163 squares September 22 the Autumnal Equinox, Gann Day.
Can IWM crash to 163 around September 23rd or will that represent a pivot high prior to a free fall?
September 22 is the day that capital and commodity markets tend to top more than any other day of the year famously noted by legendary trader W.D. Gann.
Around that date the 1978 and 1979 crashes occurred, the rollover that started the ’87 crash and the ’97 Asian Contagion, and the collapse of Long Term Capital Management in 1998.
Great Britain’s Depression-era suspension of the pound’s link to gold and devaluation took place on Sept 21, 1931.
The Dow Jones Utility index peaked on Sept. 21, 1929, the last index to peak prior to the Great Crash.
A panic occurred on Sept. 21, 1873 forcing the closing of the NYSE.
There was a panic called Black Friday on September 24th, 1869 which revolved around gold scandal.
On September 22, 2001 stocks panicked into a low following the 9/11 attacks.
Lehman went bankrupt on Sept. 15th 2008 culminating in waterfall declines in October that year.
We are 15 years from that September which is ¼ of Gann’s Master 60 year cycle.
That underscores the potential significance of this fall.
The intraday high on the SPX in 2018 was September 21st and over the next 3 months, the market declined 20% with many stocks falling far more than that.
Gold peaked on January 21st 1980, but gold and silver stocks made their all time highs in that bull run on September 22, 1980.
Gold also struck a bull market top in September 2011.
The late market maven Paul Montgomery had many ways he ascertained certain cyclic phenomena in financial markets.
These cycle dates indicate the approximate TIME when market anomalies should present themselves.
The extend and duration of these anomalies depends on what Montgomery called “contemporaneous technical market conditions” such as patterns and sentiment.
Once you’ve established that all market turning points are cyclical and that cycles are psychologically based rather than fundamentally based, the idea of cycles exerting their influence is easier to grasp.
What causes changes in mass psychology is another question however the electromagnetic and gravitational forces on the planet are much greater during eclipses.
You have the sun and the moon in the same direction pulling at the tides, pulling at the Earth.
Eclipses also cause an emotional change/charge. It can cause a shift in sentiment.
He moon itself does not affect markets at all times. Every eclipse doesn’t affect markets. It’s only when there is a combination of factors.
It’s when there is an overconfidence or exuberance or depressed sentiment---that’s when the market typically reacts to the natural forces of eclipses.
That brings us to solstices and equinoxes that divide the natural year into 89 degree decrements.
W.D. Gann wrote that he considered the Spring Equinox the beginning of the year and an important point to measure from.
180 degrees straight across and opposite is the Autumnal Equinox which this year is Sept 22.
Notably the SPX stuck an important low on March 13, 2023. Yesterday was 180 days/degrees opposite that low for a possible turning point.
That can be a high this week, a low, or ACCELERATION.
March 23rd, 2020 was fa crash low, the Covid Crash low which was opposite the Autumnal Equinox.
That was 3 ½ years ago or a Biblical 1260 degrees…Time, Times and half Time…360 + 720 +180.
Of course 3 ½ years is half of SEVEN years, a major cycle.
Today is also day 49 or 7 squared days from the SPX July 27th secondary high.
This starts the heart and soul of the Gann Panic Window.
Does that guarantee a free fall?
No of course not.
The market can do anything.
But if one is going to occur this is when it would be likely, especially with a Hindenburg Omen on the clock.