By: Jeff Cooper

Hit and Run Morning Stock Report: 09/19/2022

Is History About To Be Made

Recently, we wrote of the convergence of geometric cycles:

1)      90 days/degrees from the June 17th low of the year is mid-September

2)      Late September is 180 days/degrees from the late March peak

3)      NINE months or 270 days/degrees from the January 4th all-time high is October 4th.

As well, using the August 16th secondary high, which was identified in time and price in this space by a cluster of historic Ghost Lines from prior important swing highs and lows, gives September 24th as the last potential rally in the context of the Gann Panic Zone.

In other words, September 24th ties to the last gasp of strength IF it materializes prior to panicky selling.

This ties to the last gasp prior to many historic waterfall declines, most notably those of 1929 and 1987.

Moreover, this year it ties close to Gann Day or the Fall Equinox which, as discussed this month, is one of the most important turns of any year in many markets.

So take notice of what these patterns and cycles are projecting for the next two weeks.

Maybe the patterns will fail and nothing spectacular will happen.

Market prognostication is based on probabilities, not certainties.

We approach market timing with a calculated risk.

That said, in October 2021 we stated that “the market will get hit hard in January kicking off a brutal bear market.”

The same cycle work that underpinned that call warrants extreme caution here.

Govern yourselves accordingly.

350 (for 3500) ties to a 50% retrace of the Covid low in 2020 to the January 2022 SPX all-time high and, interestingly, 350 is square October 4th.

As well the SPX has carved out a Head & Shoulders Top formation with a downside projection of 3500.

This is a lot of convergence pointing 3500 and there is a Time/Price synchronicity that this has a strong likelihood of occurring in the next two weeks.

We must also keep in mind that this bear market is potentially of a larger degree cycle that the top in 1929.

Consequently breakage below 3500 opens the door to a plunge to 3100.

As shown in a weekly SPX below, a drop to the 3100 region satisfies 3 drives to a low of some degree.

Markets like to play out in threes. Notice how the mid-August peak is the third point in a declining weekly trend line.

Fast declines often come from 3rd lower highs and last weeks high may have installed a 3rd lower weekly high.

In sum, the trend remains bearish with the SPX likely having commenced a powerful wave 3 of 3 last Monday leaving a large range outside down week.

Last Monday’s gap lower leaving an Island Top is consistent with the idea that we are in the heart of the storm-- a 3rd of a 3rd wave down.

Last weeks breakage of the June/July rising trend line triggered a Rule of 4 Sell signal (a break of a 3 point trend line).

This also underpins the potential for a violent decline.

This should be the sharpest drop of the bear so far.

This year’s bear has been relatively orderly. If my cycle work and patterns are correct, full-fledged panic selling should be on deck.