By: Jeff Cooper
Hit and Run Trading Morning Report - November 10, 2023
Bulls Snatch Defeat From Jaws Of Victory
Stocks showed sharp losses on Thursday---worse than the 35 point SPX decline suggests.
Worse than the first day down following a 5 day rocket and 8 day win streak.
A 10 min SPX shows the textbook pattern of a reversal.
1) First there is a break of a short-term trend line. Notice the signal reversal bar at the high that telegraphed lower.
2) Following a micro trend line break the SPX backtested the broken trend line before
3) The rollover
4) Then came accelerated momentum perpetuating a drop below Wednesday’s lows.
In sum, the action produced the first down day since the October 27th low.
While the SPX was magnetized to its 50 day ma, it has a date with 90 degrees down from Thursday’s high.
Indiscriminant selling marked the tape.For example:
TSLA broke down, failing to reclaim its 20 day moving average.
TGT (one of Hit and Run’s short positions) knifed lower, losing its 20 day.
MODV (another Hit and Run swing short) shed 4 points.
To mention a few.
After the open we pinged TWLO setup for an Earnings Reversal.
It nose-dived, squandering an initial 4 point gain.
After the close, TTD collapsed 22 points to 55 on earnings.
There were Topping Tails across the board from stocks that had spiked higher in the last week.
With TSLA limelight as a speculative icon souring, NVDA should be a big Tell.
Let’s take a look.
A daily NVDA from May shows what I call a Triangle Pendulum pattern.
NVDA topped at 502 leaving a Gilligan sell signal on Augusst 24th.
It broke triple bottom support in late October.
The undercut did not follow thru; instead, NVDA triggered a Jackknife buy signal from a low of 392.
The false breakdown from the bottom of the triangle followed by a breakout above the top of the triangle this week issues a Triangle Pendulum buy signal.
In a bull market, it suggests a leg higher.
In a bear market the strong likelihood is it’s a Trap Door.
That premise would gain credence on a failure back below the 462 region (the blue Tops Line).
Breakage back below the red line again triggers a double Triangle Pendulum sell.
Let’s see what the Square of 9 Time/Price Calculator reveals.
First of all the 502 top was a Time/Price square-out.
Because 502 is 180 degrees straight across and opposite August 24th…the day of the all-time high.
A 360 degree price cycle down from high is 417.
Another 90 degree “undercut” gives 397.
NVDA struck a low of 392 on October 31st and reversed leaving a Lizard buy signal and closing at 407.
So we had a 90 degree undercut of an idealized 360 degree price decline with NVDA knifing back thru the bottom of the Triangle.
It hasn’t see a down day since, albeit NVDA left a signal reversal bar on Thursday…from a high of 482.
360 degrees up from the Oct. 31st 392 low is 475.
NVDA Pinocchioed 475 pushing to 482 but reversed with authority closing below 475 at
The square of 9 below shows that NVDA may have carved out an important high on Thursday.
483 squares out with today.
NVDA’s high yesterday, 482.30.
In sum, November 2nd was an O’Neil Follow Thru Day.
A Jump The Creek sell signal offsetting the open gap from November 3rd opens the door to the Follow Thu Day buy signal being reversed.
Breakage back below the Nov 2 low of 4268 is a conspicuously negative development that warrants caution.
This region ties closely to the 200 day moving average.
Taken together rolling over below the 4268 region would resemble the failed attempt to reclaim its 50 day moving average in late August.
That failed attempt ushered in 450 SPX drop in 8 weeks.
The market is in a vulnerable position.
The SPX buckled from a WEEKLY Minus One/Plus Two sell setup in mid-October that perpetuated new swing lows.
As warned earlier this week, the SPX could mirror that same pattern:
The 3 Week Chart is pointing down (-1) and this week satisfied 2 consecutive higher weekly highs.
The SPX has reversed on cue.
Breakage below the Maginot Line opens the door to a crash to 3500.
Allow me to explain.
A weekly SPX shows a trend line connecting the October 2022 low and the March 2023 lows.
This trend line was snapped in late October and then recaptured.
Presently this trend line resides at around 4295.
Losing this trend line again indicates the second mouse will get the cheese for the bears.