By: Jeff Cooper
Hit and Run Morning Stock Report: 09/15/2022
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Is This It?
After Tuesday’s historic plunge, which kicked off a wave 3 of 3 down, the market carved out what looks like a Pause (Paws) Day.
Once this pause is complete, which may already be the case, there should be a persistent plunge…a waterfall decline.
If not already complete, the market could back and fill until the Fall Equinox and September 21.
The SPX has carved out two separate Head & Shoulders Top formations--one with a downside target of 3 700, the other with a downside target of 3500.
As we said earlier this week: risk is what you don’t see coming.
These are initial targets. As you know there is a target near the 3100 region, which ties to the pre-Covid crash peak.
This makes sense because prior resistance becomes new support.
However, there is a projection on the SPX to the 2,600 region by the end of September to early October…early October being NINE months from the January 4th, 2022 ATH.
So as tempting as it may look to buy dips, for anything other than long side intraday scalps, I think it warrants letting this wave/cycle
A similar NDX projection aligns with the 9,000 region by early October.
Maybe the cycle will fail, maybe the patterns will fail and nothing major will happen.
The methods that lead me to these projections are geometric and cyclical and based on history and probabilities.
That means they are not certainties…but they have served us well since 1987.
Why is such a Motherlode Crash a potential?
We must keep in mind that this is not a Cub Bear, but a Papa Bear market of Super cycle degree.
The is a distinct possibility that the degree is larger than that from 1929.
Keep in mind that the crash then came from the Primary High whereas we carved out a Secondary High in mid-August.
Theoretically, this is a weaker pattern.
Using the Gann Panic Zone from mid-August creates a crash window through early October…which fits the above short-term cycles from the ATH and 190 days/degrees from the important Maarch 29th peak.
There is a large cluster of cycles hitting late September/early October.
In sum, Tuesday’s decline wiped out $1.75 trillion of wealth from the U.S. economy in one day.
This is on top of the Fed hammer.
So a significant contraction is underway.
We are in the ballpark of 90 days/degrees from the low of the year which was a waterfall decline so it would synchronous if we got a waterfall decline into the weekend/Monday.