By: Jeff Cooper
Hit and Run Trading Morning Report - October 30, 2023
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Editor's Note: there are two reports today. Please scroll down to read both.
Will The Market Crash Going Into 2024?
“In the study of technical conditions…I found that the most important factor was the trend of the market and that the overbought or oversold condition of the market had the most to do with the immediate direction of the next swing.”
Last week’s decline produced a second confirming close below the Bottoms Line connecting the two significant lows of the bear market---the October 2022 low and the March 2023 low.
The breakdown opens the door to a Bottoms Line connecting the March 2020 low to the October 2022 low.
These are the two most significant low in the last 3 ½ years.
This is the Maginot Line for the market. This week it sits at 4040.
As well, as we know, the SPX also cracked the key 4208 “square” (540 degrees down from the July 2023 top), closing below it on the important Friday weekly closing basis.
However, as is often the case, once the market tips its hand and a point of recognition is revealed to the vast majority, sentiment will sometimes produce a countertrend move.
There is an idealized region for such a rally to unfold. That price is the 4040 region…but we cannot discount the possibility it could occur immediately.
404 (4040) is square the July 27,2023 high.
It is also square (180 degrees opposition) October 27th.
Since Friday was 90 days/degrees from high it may produce a rally immediately if we do not get a crash over the next 2 days.
4078 is 180 degrees below the key 4208 level.
4070 is the Head & Shoulder projection from the July 2023 top.
So you see that a break below 4070 opens the door to this critical 4040 region.
It would be ideal if the SPX satisfied a drop to 4040 before staging a rally but Time is more important than Price.
So we may see a rally here and it could extend for several days.
That said breakage below 4040 is a Get Out Of Dodge sell signal: the Wheels can come off below 4040.
Could the SPX drop 60 to 70 points early this week to satisfy the above possible Time/Price square-out?
The last two weekly bars were hard down so theoretically we could see the 3 Period Rule play out with downside continuation this week satisfying 3 large range weekly bar declines.
That would be an idealized setup for an interim Selling Climax and a possible rally phase.
The next few days fall in the + or – range of this possible square out window.
If the market doesn’t drop hard soon, the odds are it will attempt a rally prior to a waterfall decline in November.
It is not uncommon to see a rally into the Mars/Uranus Crash Window opening.
More on that in tomorrow’s report.
Many of the stocks we watch felt like they were washed out for the moment.
Names include ANET, CRM, AMD and TXN to mention a few.
At the same time The Truth Teller, IWM, has a potentially major downside pivot at 159, as flagged last week.
You see 159 is 540 degrees down from its November 8th, 2021 all-time high of 244.
November 8th is just a week away.
If IWM should drop to the 159 region coincident with a drop by the SPX to 4040-407 over the coming week my expectation would be for a counter-trend rally.
You can see that this IWM 159 region is critical.
Not only is it 540 degrees down—a cube---from the record high, but this price square-out shows a possible time component for late last week.
There are two interpretations:
IWM may see a rally from an Undercut low that is close to a Time/Price square-out
At any time.
However, breakage below 159 that is sustained is crash potential.
Right now IWM, The Truth Teller may be speaking with forked tongue.
In sum we have our time and price parameters for the near term.
We are 90 days/degrees from high setting up a possible turning point for a countertrend rally this week.
This could occur after a drop to 4040-4070; however trade above 4143 opens the door to a rebound to 4208.
This is because 4143 is a 90 degree undercut of the key 4208 level.
Reclaiming 4143 ties to recapturing the bottom rail of a declining interim trend channel.
Friday the SPX close virtually right on the bottom rail of the purple declining trend channel
The bottom of a larger declining red trend ties to the aforesaid 4143 to 4150 region.
Only a move above 4208 opens the door to a push higher.
Let’s keep in mind that the broken October 2022/March 2023 trend line resides at 4240-4250 this week.
A rally that backtests this trend line into November 9-11 warrants caution.
This is the timeframe when the Mars/Uranus Crash Cycle opens.
Rallies that occur going into that cycle often see a rug pull and fast decline.
However the brunt of this cycle remains active for a year.
Price wise, a sustained break below 4040 is a warning that the SPX is on a fast track to 3828.
This is the target given last week which is 2 cycles of 540 degrees down from the July high.
However below the aforesaid square-out of 4040 and this week strongly suggests that we are on a direct route in a Wave 3 decline to below 3500, last October’s lows.
3 cycles of 540 degrees down from the July 4607 peak is 3465.
That represents an undercut of the October 2022 low.
Such an undercut could set the stage for a strong rally phase---especially as it coincides with 3 cubes of 540 degrees.
Since a cube itself is 3-dimensional, there is some interesting synchronicity with the ideal of 3 cycles of 540 degrees being 3 cubes.
Rembarkably, 346 (3465) is 180 degrees straight across and opposite July 27th, the Secondary High.
If the Wheels come off going into 2024 that is a viable projection..
It is worth noting that 346 and July 27th (the secondary high) square out with January 23rd.
Conclusion. If the market is going to crash going into 2024, a failure below 4040 is a blaring siren of such a potential crash.
Bonus Report: Gold Validating Surge To Record Highs
Following a long and tedious arm-wrestling decline, on October 9th GLD gapped up off lows struck a few days earlier on October 5th.
It was the signal we’ve been waiting for leading us to write for the Hit and Run October 10th morning report.
In the subsequent sessions we followed up with:
Since striking a low at 168.30 on October 5th, GLD has exploded quite literally to 186.36 in 16 sessions---18 points in 16 sessions.
The cluster of upside gaps in October reflect urgent buying
Some would like moar conversation on the Hit and Run Private Twitter Feed.
Rockets speak for themselves.
Speculation is observation, pure and experiential.
Whether we like it or not we’re in the pattern recognition business, not the indicator recognition business.
Most all indicators are descriptive not predictive.
The Square of 9 Wheel is predictive.
The last few hours on Friday were a fractal rocket of the prior 16 sessions.
The above daily shows GLD closed at a Cheetah pivot entry.
This is a pivot that defines where most of the topping action occurred versus the actual swing high.
It is a “cheater entry” for stocks coming out.
From the 2023 October 5th 168 low, 182 is 90 degrees up.
180 degrees up is 196.
168 and 196 “point to”/ vibrate off November 12th.
Notice that October 5th is 180 degrees straight across and opposite 150.
150.57 was the November 3rd, 2022 GLD low.
This time/ price synergy is one of the factors leading us to look for an explosive rally from early October mirroring the advance off the November 2022 low.
A similar move as the one off the November 2022 low would see GLD hit 200 within two months.
Given the momentum of the current liftoff either 200 will be seen much sooner than two months or GLD will achieve substantially higher prices before year end..
Let’s see what the Square of 9 Wheel has to say.
We already flagged the 196 level above.
Clearing and sustaining 196 opens the door to a full 360 degree move up from 168.
The early November 2022 low was 150.57.
Continuation targets 360 degrees up from 150.57.
In sum, GLD may pause here but momentum above the 186 key upside pivot this week and into mid-November to our initial upside projection on the Square of 9 Wheel will offer a lot of information as to GLD’s dynamics and structure going forward.
The Hit and Run Private Twitter Feed has posted upside gold projections for November.