By: Jeff Cooper
Hit and Run Morning Stock Report: October 5th, 2022
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“What happens today has happened before and will happen again.” Jesse Livermore
Markets crashed into July 2002 and rallied sharply before rolling over and undercutting those lows for a new low on October 10th, 2002.
The SPX reversed sharply from that new low on October 10th leaving an LROD, A Large Range Outside Up Day.
The index had spiked higher on strong breadth for two days in the beginning of October before rolling over to new lows.
The October low was roughly 90 degrees/days after the July low…roughly.
This is one of the factors that allowed us to nail the October 2002 Bear Market low within a day.
Interestingly, 60 months later, the SPX struck an important high in July 2007 and pulled back sharply before testing that high 90 days/degrees later for the final Bull Market high in October 2007.
Of course 60 months is a fractal of Gann’s important 60 Year Cycle.
You can’t make this stuff up.
No phenomena are carved in stone, the amplitudes of these patterns can surprise.
Such may be the case if we roll over here.
The presumption is if we do a test of the 3500 region is on deck.
However, given the vibrations off 1929, we cannot rule out a more historic slide…whether that occurs this month or in November.
IF we roll over here, my expectation is an undercut low to the 3500 region.
It is what happens after that that we have to watch keenly.
There are several market watchers looking for a trough in October.
If the market finds one and rallies with authority, by mid-October, it must be remembered that the low in 1929 occurred in mid-October even though the two crash days were October 24th and October 29th.
Another thing I’ve noticed is that the 1929 DAILY strongly resembles the 2022 WEEKLY.
Below see the 1929 daily.
The part of 1929 in the box matches what 2022 has carved out so far.
Many of the candle patterns are almost identical. If this ‘fractal’ repeats, we could see 1800 later this year.
The 1800 region ties to the early 2016 low where a two year persistent parabolic run commenced into January 2018.
Interestingly, 1800 is half the 3600 region that has been so key for the SPX since June and again in recent days.
Eclipses were a key to WD Gann’s coded novel Tunnel Thru The Air.
The Square of 9 Wheel proves this. But that’s not what this is about.
Suffice to say that in 1929 there was a Solar Eclipse on November 1st.
The two crashes that year occurred in the week prior.
This year a Solar Eclipse occurs on October 25th.
It will be important to see what takes place in the week prior.
The Lunar Eclipse on November 16, 1929 ties to the final slide that year.
This year there is a Lunar Eclipse on November 7th.
This is roughly 90 days/degrees from the important mid-August Secondary High.
These are the dates we will be focusing on if the market breaks down.
In sum, today the SPX 3 Day Chart could turn up. It doesn’t have to do so.
As it is, the SPX is in the Minus One/Plus Two sell position, but if it pushes higher into 3820 it will satisfy a Holy Grail sell setup as well.