By: Jeff Cooper

Hit and Run Morning Stock Report: January 27th, 2023

The T Rex In The Bear Ointment

As offered earlier this week, nature abhors a vacuum.

The vacuum was the bombed-out techs that saw selling exhaustion with elevated tax selling when a Santa Claus rally failed to give a graceful exit leading to the 5th worst December in history.

When everyone that wants to or has to sell has sold into year-end, overhead resistance became scant.

The rally in many individual former darlings became vertical with money managers being underinvested in the former glamours.

Vacuums are an invitation for meltups.

It’s been a rocket to hell and crash to the moon, Alice.

How quickly the narrative changes.

Can we meltup to test the August highs…plus?

It’s possible. I think a lot will depend on where we go in the coming hours/days/week.

This is because of the 60-month cycle shown earlier this week with the first 60 months cycle back being the air pocket that started in late January 2018. It led to a year of whiplash punctuated by the Christmas Crash in 2018.

A daily SPX shows Ghost Lines (green) converging above 4300.

I connected the June low with the higher lows coming off that important low.

Then I did the same thing with the October low and the higher lows coming off that undercut low…the low for 2022.

My interpretation of the current structure is that Intermediate Wave 1 down ended in October.
That should be followed by an A B C corrective rally of Intermediate Wave 2 up.

In that context Wave A ended in early December and Wave C ended in late December.

Breakage above the lower horizontal red line validates the idea of a C Wave up in progress.

If Wave C is roughly symmetrical to Wave A it points to the 4300 plus region.

On Thursday the SPX closed meaningfully over the key 4013 region which is 360 degrees up from the December low.

Another 90 degrees higher is 4077.

Above that opens the door to 4141 which is 540 degrees or a “cube”, a true square, up from the December low.

We are flirting with 4077, a test of which is likely to elicit a pullback, but my expectation is that 4013 should hold and that a full 540-degree move off the December low is likely on the table.

A full 720 degrees up from the December low gives 4270, within shooting distance of the 4325 August peak.

There are no gurus, only cycles…despite Wall Street’s penchant for calling a cosine wave a flip-flopper.

There is a big cycle on my radar. It hits around March 20/21 which is the Vernal Equinox.

This is precisely 90 degrees square the December low which was on the Winter Solstice.

March 20 is the 23rd anniversary of the SPX top in 2000.

Checking a Square of 9 Wheel shows that the number 23 is square March 21st.

By definition that means 23 conjuncts on December 21st which was an important low.

So we have two important time windows to watch.

The first is this week, the 60-month anniversary of the January 2018 top.

The second is March 20/21.

There is a 3rd turning point on my radar. That is mid-February.

Allow me to explain.

The range of the bear market is 1327 SPX points.

On the Square of 9, the number 1327 aligns with mid-February.

As well, mid-February is 180 degrees/days straight across and opposite the important mid-August high.

Lastly, half the range of the bear market is 4155.

This ties closely to the aforesaid 4141 level which is 540 degrees up from the December low.

If the SPX should strike the 4155 region by the end of January or in mid-February (or theoretically March 20), that should corroborate the idea of an important turning point.

The T Rex in the ointment is that if the SPX makes more than a 50% Retrace (above 4155) and extends, it opens the door theoretically to the all-time high.

I have learned the hard way not to argue with moves that recapture more than a 50% retrace following a strong downdraft (2022).

Conclusion. On Thursday the SPX gave a 4th close over The Bear Line, the declining trend line from the all-time high. A Friday weekly close above the 4077 square and especially the lower red horizontal line at 4100 points us higher.