By: Jeff Cooper

Hit and Run Trading Morning Report - September 26, 2023

Black and Blue Market

“This is a logical place for the market to stage a rebound…IF IT’S GOING TO.
Surprises happen in the direction of the trend. Shocking surprises can happen in the direction of accelerated trends."

We wrote the above in Monday morning’s report

I added, “Sustained breakage below 4310 opens the door to 4208 which is 540 degrees down from the July high.”

Yesterday I stated that the October 2022/March 2023 bottoms line is around 4250 this week.

Checking again, it looks closer to the aforesaid 4208 region.

A unequivocal failure below 4310 could see the 4208 region lickety-split. That’s a technical term.

4208 is critical support not only because it is the Bear’s “bottom line” connecting the Oct 2022 low and the March 2023 low, but because it is 540 degrees down from the July 4607 peak.

Where do we go if 4200 is violated with authority?

A bottoms line from the March 2020 crash low and the October 2022 low comes in around 3980.

The short-term.

After much indecision on Monday, the SPX paid respect to the key 4310 level yesterday by ultimately rallying into the bell.

To recap, 431 (4310) squares out with Friday/Monday…Sept 22-25.

An hourly SPX looks like the “hook” was set for upside continuation with a Shakeout Bar as the last hour of the session began.

The SPX closed on session highs ripe for continuation.

However, it looks like “ripe” spoiled on the vine with the night monkeys.

Notice how the SPX rallied into the bell  to a Pinocchio of an hourly declining tops line which ties to the 20 hour moving average.

This morning’s selling  may be another shakeout prior to more of a rebound---after all the SPX hasn’t closed above a prior days high since September 14th.

However, notably, the index closed just shy of 4338---a key level as it is 360 degrees down from the 4607 July 27th high.

In sum, unless the SPX can convert this technical trifecta:

1)      The hourly declining trend line

2)      The 20 hour moving average

3)      The 4338 square (360 degrees down from the July peak)…

It’s not going anywhere.

On the close, the stage was set for an upside follow thru ATTEMPT--- for a possible rebound into Quarter-End but the actors, the stocks, may be on strike.

If we stay down for the count today we may get Quarter-End window “undressing” as money managers don’t want to own up what they’ve owned.

They can run but they can’t hide: their performance for the quarter speaks for itself even if they try to hide their red-headed stepchildren.

The SPX is set to challenge this 4310 region again this morning so the first hour is going to be critical.