By: Jeff Cooper
Hit and Run Trading Morning Report - October 26, 2023
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We’ve Never Been Here Before---Except Once
“The world breaks everyone, and afterward, some are strong at the broken places.” -Ernest Hemingway
October 24, 1929 is often referred to as “Black Thursday”.
It is a crucial date in the history of the stock market crash of 1929 which was a major factor leading to the Great Depression.
On Black Thursday, the NYSE experienced a significant and sudden decline in stock prices.
The day started with heavy selling pressure and as panic set in, the market continued to plummet.
The DJIA opened at 305.85 on October 24, 1929. Almost immediately, the market started to decline sharply.
Black Thursday was marked by panic selling with many investors trying to unload their stocks as quickly as possible to avoid further losses. The selling was widespread and intense, contributing to the rapid decline in price
The volume on Black Thursday was extremely high reflecting the frenzy of activity on the trading floor.
The sheer number of shares changing hands added to the volatility of the market.
By the end of the trading day on October 24, 1929, the DJIA had fallen by about 11% from its opening level.
This was a significant drop, but was not as severe as what would occur a few days later on Black Tuesday,
The crash of 1929 played a central role in triggering the Great Depression, a decade long economic downturn.
Black Thursday and Black Tuesday are remembered as two of the darkest days in the history of financial markets. They serve as reminders of the dangers of speculative bubbles and the potential consequences of financial crises.
Notably the DJIA was down 11% at the low on Black Thursday and then rebounded sharply closing down around 3%.
It looked like a “flush-out”.
Genuine panic set in when it proved not to be a Selling Climax.
Not all Selling Climaxes are created equal.
Interestingly, everyone remembers October 29, 1929 as the big crash; however, Monday October 28, 1929 saw a 13% decline. Black Tuesday, October 29, 1929 was a 12% decline.
In reality there was a Black Monday in 1929 just as there was in 1987.
Look closely at the decline from the top around October 16th in each of 1929 and 2023
Yesterday, October 25 looks equivalent to October 23rd 1929.
Theoretically, today approximately matches up with October 24, 1929, Black Thursday.
Since July Hit and Run has been warning of the Time/Price synchronicity between 1929 and 2023.
Specifically, 1929 is 94 years ago.
On the Square of 9 Wheel 94 squares-out with October.
94 is precisely 90 degrees from October 16th.
Again, look closely at the decline from the top around October 16 in both 1929 and 2023.
Using the number grid on the Wheel as years, it must be said that the year 1929 vibrates/vectors
481, (4818) the all-time SPX high in January 1929.
Taken together these two synchronicities warmed of the coming storm when we warned that July would mark a Secondary Top followed by a powerful downturn.
CORRECTION: taken together these two synchronicities telegraphed the coming storm and we warned that July would mark a Secondary Top followed by a powerful downturn.
Like 1929, neither of the historic crash days marked the low of that phase of the Bear.
The interim bottom did not occur until November 13th.
That is pertinent to 2023.
Earlier this week we flagged the Mars/Uranus Crash Cycle.
That cycle hits on November 11 in 2023.
Interestingly, on the Square of 9, the year 2023 “points to” November 10/11.
The bottom line is until the market can hold a low for at least 3 days and make at least 3 consecutive higher daily highs---turning its 3 Day Chart up---and continue higher, then the coast is not clear.
Any buying should be scalping until proven otherwise.
Where could the SPX drop to in a real crash?
A monthly SPX Bottoms Line connecting the 2009 Bear Market low and the 2020 Covid Crash bottom resides in the 2700 region going into 2024.
Importantly, following the break of a rising trend channel (magenta) in June/October 2022, a secondary rally traced out 3 Drives to a Test of the all-time high.
This is a fractal of a similar 3 Drives to a Test of the March 2000 high on September 1, 2000.
The difference being the current pattern is much larger.
The October 2022 low tested a Ghost Line (green) from 2018-2020).
That backtest perpetuated the rally into July 2023.
Breakage below our key 4208 region opens the door to a drive to test the green Ghost Line again, now at the 3600 region.
Breakage below 3600 and the wheels can come off on a drop to 2700.
Here are the levels I’m watching.
90 degrees down from the key 4208 square-out is 4143.
180 degrees down from 4208 is 4079.
This ties to a Head & Shoulder tops projection to 4060-4070.
Breakage below 4070 opens the door to 3828.
This is a second revolution down of 540 degrees (a cube or true square-out) from 4208.
In other words, 1080 degrees down from the July 4607 peak.
The 3800 region represents a complete retracement of the 2023 rally.
Notice the close below the October 2022 and March 2023 Bottoms Line (green).
This opens the door to 4000, the Bottoms Line connecting the Covid Crash low and the October 2022 low.
Below the 4000 region points to the aforesaid 3828 level.
I think that is last ditch support. Below 3800 could see the SPX magnetized to the black Ghost Line from the all-time high projecting to 3300 region into 2024.
Parallel to the black Ghost Line is a Bottoms Line (red) pointing to 2600 going into 2024.
Never say never.
In sum, there is blood on the tape as the generals flee the battlefield: the Magnificent 7 are becoming the Maleficent 7.
META spiked sharply higher after reporting Wednesday; however, following the conference call where they warned that geopolitical uncertainty was hurting ad-spend it METAstasized the entire market.
When the paddy wagon comes, they take the leaders too.
No one can know if history will repeat going into the end of October, but so far the rhyme is spooky.