By: Jeff Cooper

Hit and Run Trading Morning Report - November 2, 2023

Mission Accomplished or Mission Impossible?

“…we know that the SPX 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.”

The above is from Monday morning’s Hit and Run Report.

We went on to say in that report: “Since Friday (October 27th) was 90 days/degrees from high it may produce a rally immediately if we do not get a crash over the next 2 days.

We got the rally as the SPX reclaimed the bottom of a declining trend channel from the September 1st high.

Yesterday the key 3 Day Chart turned up on a gap. The extension thru 4208 telegraphed continuation.

The rebound feigned failure twice intraday but ultimately was bailed out by Powell who was more dovish than he’s been all year taking what was as close to Victory Lap without lacing up some Nike’s at his presser.

I can’t help be reminded of President Bush’s “Mission Accomplished” proclamation shortly after the Gulf War.

With a mountain of debt service swamping the U.S. budget and fiscal buffoonery joined at the hip to the Fed’s inflation fight, Mission Impossible may be more appropriate.

But Wall Street is all about the short term and positioning…act first and ask questions later is the mantra from the Buy Side Conga Line.

When Powell was done speaking and no word bombs to be dropped, the bulls went into overdrive.

Mr. Bull’s mission: it’s now or never to kick start a year end rally.

A 10 min SPX shows the last hour rip synchronous with Powell off the Podium.

If November pulls the rug from under the October Seasonality Trough campers and the year-end rally Hopium hoodlums, the give-up could be consistent with a dramatic decline.

Tomorrow’s report will walk through a series of natural and market cycles that may exercise their downside influence.

In mid-October we wrote in this space that October would be ugly but may only be a prelude to a deluge in November.

Last week we offered that a rally into a confluence of cycles in to November 9-11 region could

Be a false all-clear for a year end rally just before the boom is lowered ala 2018…on the 60 month cycle.

In sum, yesterday’s continuation thru the key 4208 telegraphed a drive toward the 200 day moving average.

This morning the SPX is gapping up satisfying our initial  projection to 4240-4260.

Clearing and sustaining above 4260 opens the door to a backtest of the broken October 2022/March 2023 trend line.

We call a broken trend line that haunts future price action a Ghost Line.

There is a powerful synchronicity of levels based on the Principle of Squares 360 degrees up from the recent 4103 low and 360 degrees down from the July 4607 high which represents a potential magnet drawing price higher which will be beaucoup resistance.

Just as was the case in July when the bull case for 4800 was deafening, I suspect the song will be the same when and if we hit this upside projection---just before the rug is pulled, again.