By: Jeff Cooper
Hit and Run Trading Morning Report - November 9, 2023
The Stock Whisperer
Markets communicate their intentions to those who are listening and have learned their language.
But the language of the market is equivocal.
Allow me to show the logic of market communication thru signals.
Starting on October 30,2023, we got 8 consecutive up days.
In the first five of those eight sessions, net advances on the NYSE produced a positive number (more advances than declines).
In those first five, the NAZ moved higher and closed the session with a gain.
Ditto the SPX.
Then on the 6th day, while the SPX and NAZ closed higher, net advances on the NYSE and NAZ were negative )more declining issues than advancing issues) and the NYMO closed lower.
The 7th day produced the same result as the 6th ie, higher SPX and NAZ but net advances were negative and NYMO (the NYSE McClellan Oscillator) closed lower.
The 8th day yesterday, produced the same result as the 7th--- higher SPX and NAZ. Yet, the net advances were negative and NYMO closed lower.
What is the message of all this?
1) While the direction of the short-term trend remained up, the driving force for the market (breadth via net advances, NYMO and NAMO) turned negative. This suggested that the price trend can be expected to turn down shortly.
2) On the seventh day, while the short-term market trend remained up, the driving force for the move (breadth via net advances, NYMO, and NAMO) turned MORE negative. This suggested that the price trend is more likely to turn down shortly.
3) On the eight day, while the short-term market trend remained up, the driving force for the move (breadth via net advances, NYMO and NAMO) turned MORE negative.
This suggested that the price trend is even more likely to turn down shortly.
Since the above signal occurred not just once but three times, logically, the likelihood of a short-term trend change from up to down should be higher than with just one such signal.
Consequently, the probability of the trend turning down is quite elevated.
The overriding message here is less about any specific trading signal that follows the current market than the general concept of trading signals---how markets communicate.
The negative breadth and falling NYMO and NAMO are nonetheless important and underpin the probability of a significant trend reversal from last weeks strong rally.
Natural cycles unfold in November as the Mars/Uranus Crash Cycle starts November 9th.
That does not mean the market has to crash, it means if it’s prone to this is where it becomes vulnerable.
As well, here in November we are aligned with the center of the Milky Way.
The expectation for dangerous energy defines this month but massive divergences, highlighted by IWM, indicates a divergent peak.
January 2024 is set to be a big turning point. The question is will it be a low or a divergent peak.
Either way cycles conclude that another decline is in the offing in 2024---one that could match or exceed the magnitude of the 2022 decline.
One factor in determining whether we get a continued year end rally into January 2024 is the weekly swing chart.
The SPX is in the WEEKLY Minus One/Plus Two sell position.
In other words, the 3 Week Chart is pointing down while it has traced out 2 consecutive higher weekly highs.
As well the SPX is backtesting its declining 20 week moving average.
This is the same position the index was in on the week of Oct 16 when it carved out a large range outside down week. The next week saw a 115 point SPX decline into the October 27th low at 4104.
180 degrees up from the October 27th low is 4233.
The SPX turned its 3 Day Chart up and closed at 4237 on November 1st, right at the 200 day moving average.
The next session the SPX gapped above the “square” and the 200 “whispering” higher.
360 degrees up from the October 27 low is 4364.
That level was struck on November 3 with the SPX closing just above its 50 day line.
This week the SPX has closed above the 4364 level three times,
Not by much, but it could open the door to a 540 degree run if we don’t pullback soon.
540 degrees up from the October 27 low is 4497.
Essentially 100 points higher from here.
Rounding gives 4500 or 450 to work with the Sq of 9 Wheel.
450 squares December 31st. This is the same date of the market’s crash low in 2018---an important time period of 60 months or 5 years.
Interestingly the 410 low (October 27th) squares December 27th.
So we have an array of time/price pivots pointing to the end of the year.
Will be rally into it or drop down into it.
A lot will have to do with the behavior if the SPX turns its 3 Week Chart up and holds up.
A lot will have to do with whether it turns its monthlies up, be that in November or December.
The SPX Monthly Swing Chart will turn up in November on trade above Octobers high of 4393.57.
Yesterday’s high was 4391.20, a scant 2 points away.
It would be unusual to come so close and yet not turn the monthlies up give the momentum kicking off November.
That seems to be the agenda.
If a rollover occurs the 3900 to 4000 SPX region squares-out at the end the year.
Remember that the SPX failed to satisfy its Head & Shoulder projection at 4070.
Maybe it’s unfinished business. Maybe it’s just that the market isn’t a Rolex.