By: Jeff Cooper

Hit and Run Morning Stock Report: 09/21/2022

Moment Of Truth On the Tape

The shorter-term cycle topped on August 16 and is still trending down with authority in alignment with the Primary Trend and

The Intermediate Trend.

As you know there is a confluence of cycles between September 29th and October 4th, which suggests they should exert their downside influence into that time frame.

We have not seen a Selling Climax yet.

We have not seen a spike in VIX or UVXY yet consistent with a Selling Climax.

Given that the first 6 months of the year were the worst 6 months of the year, on record, there is reason to expect that we will see a Selling Climax this year, and there is reason to expect it may occur into the end of the 3rd quarter which is seasonally ugly.

Fear should continue to build as markets decline taking out further support. The decline should accelerate as traders and investors eventually “want out” at any price.

The two big “targets” I’m looking for are the 3500 region and the 3100 region. There is a possibility one of those levels is reached into October 4th.

My expectation is when we do get a Selling Climax and bottom for this section of the Bear, we will then get a counter-trend rally into 2023.

BUT…today is likely to be very tricky in a take that is already wicked.

The potential for whiplash is present in what is bound to be a doozy of an FOMC Cha Cha Cha.

That is where you get THREE moves in opposite directions post-Fed.

While we have a pretty good idea that the Fed Statement will be uber-bearish because it is their credibility that is most important to them now after Mr. Bubble dropped the ball, big one-day rallies followed the May 4 and July 27 FOMC reports and pressers.

My point is not that we should expect markets to move sharply higher today. The point is that we cannot know how traders, investors, and Algomatics will react to the news.

It depends on many factors, most of which are unknown.

Among these are expectations and interpretations of the Fed’s intentions as to future behavior based on what they are hearing.

I believe there is just as high a likelihood that the reaction tomorrow will be the opposite of the last two…ie a very sharp decline as sentiment this week has been rapidly deteriorating: traders may continue selling hard on Thursday if the hoped-for “baked into the cake squeeze higher” doesn’t materialize.

If they’re not going up…they’re going down and all the trends are pointing down.

Don’t get whipsawed today: stay alert and use relatively tight stops