By: Jeff Cooper
Hit and Run Morning Stock Report: October 3rd, 2022
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Runaway Downside Train
For months we’ve been pointing to the 3500 SPX region and early October as an important Time/Price zone.
To recap…
From the important March 29th SPX peak, 180 degrees out is September 29th.
From the January 4th all-time SPX high, 270 degrees or 9 months gives October 4th.
Projecting from the August 16th, Secondary High, October 6th is the edge of the Gann Panic Window.
This translates to October 15th, measuring from the August 25th Primary High in 1987.
The 1987 crash occurred on October 19th, 1987.
This translates to October 23rd, 1929 measuring from the September 3rd, 1929 all-time high.
The first of two crash days occurred on October 24th, 1929; the second historic crash occurred on October 29th.
October 6th happens to coincide with the next Bradley Date (sometimes these are pivot lows or highs---sometimes nothing).
Interestingly we are 93 years from 1929.
Checking my Square of 9 Wheel shows that 93 squares October 24th.
From my perch, that means that we may be vibrating off late October 1929.
In sum, if the market doesn’t plunge prior to October 11th, it does not mean the coast is clear.
The last week of October warrants caution based on the 93 vibrations with October 24th this year.
Actually, the market has been in the heart of a waterfall decline since Monday, September 12.
The SPX turned its 3-Day Chart up on Friday, September 9th , and pushed higher for one day before tanking.
The last time the SPX turned its 3-Day Chart up prior to September 9th was on July 19th-- the SPX rallied for nearly another month-- quite a distinction in character between the behavior subsequent to these two turn-ups in the 3-Day Chart.
This is why I always harp on the concept that speculation is observation, pure and experiential; thinking isn’t necessary, and usually just gets us into trouble.
We don’t try to think too much in this space by connecting the dots to the fundamental and macro world to the cyclical.
We adhere to the statement that W D Gann made that, “Time is more important than price.”
We adhere to the precept that the news breaks with the cycles-- not the other way around.
With the market in freefall since the September 13th, Breakaway Gap following a Holy Grail sell signal, we have seen that every turn up of the SPX dailies has defined a high and a reversal.
This is the very definition of a runaway move-- in this case to the downside.
A month ago we showed Ghost Lines converging at the 3500 region and lower.
3500 is intriguing for several reasons:
1) 3505 is the mid-point between the March 23rd Covid low and the January 4th all-time high.
2) Remarkably 350/351 is square October 3-- today.
You can’t make this stuff up.
It would not be surprising to see 351 struck today.
Markets seek equilibrium. With the breadth relatively strong on Friday creating a positive divergence--despite the new weekly close for the year, we have to be mindful of a Spike & Reversal from the 3500 region.
We also have to be on our toes for the possibility of the train coming off the tracks if 3500 buckles.
Alternatively, there is an alternative scenario for a 2 to 3-day rally into October 6th or so followed by a crash.
October will be the most important month this year…maybe in many years.