By: Jeff Cooper
Hit and Run Morning Stock Report: January 12th, 2023
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Running Into Numbers
When we broke out through the 3950 resistance it put us in a bit of a no-man’s land.
Was it a Pinocchio of the 3950 square or did it pave the path to 360 degrees up to 4013?
It may be an expanded B wave high with a C wave to come.
Was this as likely a scenario if we were below 3950? No.
In other words, the wave 4 correction still does not look complete, but when the market took out resistance it create questions as to whether wave 4 could be done and if we’re headed north of 4000.
The reaction to the CPI will no doubt resolve the issue in an instant.
We are in a Leading Diagonal and the biggest problem with diagonals is that they look too much like corrective structures and it does not provide us with as much reliability when analyzing that type of environment.
As long as the SPX remains over the top of the triangle breakout at 3890-3900 the Line Of Least Resistance appears to be 360 degrees up at 4013.
Theoretically, however, breakage below 3850 that is sustained suggests a drop to that 3890-3900 region.
The bulls had the bit in their mouth this week with the dip being bought after Friday’s upthrust.
I don’t think they are going to grab defeat from the jaws of short-term victory on the back of today’s number.
In other words, any meaningful decline/reaction to the CPI may meet with buying.
So know your levels on the individual stops on your radar.
Tomorrow morning’s report will be another big-picture update on gold, as promised.
GLD is 360 up from low and caution is warranted.
If it blows through this level it will spike.