By: Jeff Cooper
Hit and Run Trading Morning Report - November 14, 2023
IWM, The Truth Teller Speaks
One of the cycles I forgot to mention in Monday’s report was that we are 720 degrees from IWM’s
High in November 2021.
Here we are exactly 2 years later and the median stock as represented by IWM (the RUT 2000) is
This is one of the worst bear markets in history and many are talking as if we’re in a bull market.
All net flows coming into the market are going to passive systematic vehicles which translates into
The worlds dumbest algorithm is running the show: if you give me cash I buy, if you ask for cash then I sell.
It’s like my ex-girlfriend---she knew the price of everything and the value of nothing.
This means in a word the market can be very wrong…for a while.
They say price is truth.
Yes and no.
What’s your time horizon.
This is particularly relevant when PM’s are being forced into stocks for a year end rally?
If the year end rally thesis buckles with a December to remember, there will be indiscriminant selling.
IWM struck a picture perfect Time/Price square-out on October 27th.
Because its last swing high of 199 is 180 degrees straight across and opposite October 27th.
Synergistically, the square-out occurred 1 week shy of 720 degrees or 2 years from the all-time high on November 8th, 2021 at 244/245.
Notice how 244 squares 199 and October 27th.
Notice how 244 aligns with/points to late July when IWM installed a double top to its February 2023 high.
Notice the square-out with 159. Which has not been satisfied yet.
Let’s zoom into The Wheel to see the relationship between 244 and 159.
159 is a key cube down from 244.
A critical pivot.
There is a strong likelihood that sustained breakage below 159 sees accelerated momentum.
If we are still in a bear market which cycles indicate, that is the presumption currently.
There is a lot to learn from the Truth Teller, IWM.
Pulling back the lens to include IWM’s all-time high shows a 17 month wide and loose flat.
Notice the triple tops and triple bottoms.
These kind of lateral formations typically resolve in the direction from which they came…in other words, lower.
December will be the 18th month which is a perfected 540 degrees in time.
So December is 18 months or 540 DAYS/degrees in this “sideways line formation” and the 159/160 region is 540 degrees in price down from the 244 all-time high.
This is a big deal. Especially in light of the cycle from 1973.
Remember we forecast in September 2021 that “the market will get hit hard in January kicking in a nasty bear market” ---one factor being January 2021 is 49 years from the false high in January 1973.
That decline lasted until DECEMBER of 1974, two years later.
November 2023- January 2024 is two years from high.
We’re going to learn A LOT about the market in the next 60 days.
It is important to note that while October-December (a test low) was a price low, it was NOT the end of the bear market.
The Bear continued on until the 1980-1982 double bottom in a secular bear.
We haven’t seen a secular bear market since the 1970’s.
Is it possible we have years to go in a secular bear market?
IWM 160/ 159 is 540 degrees in price down from the 244/245 all-time high.The late October low is 161.67. Was that close enough for government work?
There is beaucoup symmetry at the 159/160 region as you can see.
Did we get close enough for government work?
If the recent lows break will it perpetuate a new leg down?
Or, will it be an Undercut low mirroring the Overthrow all time high in November 2021?
Breakage below 159- 160 opens the door to a fast move to the 147 region---360 degrees down from 199 high.
Be that as it may, as offered, you can see there is a lot of symmetry at 160 ISH.
Is IWM working on an Inverse Head & Shoulders?
Watch the overhead 50 day line. It ties to the Neckline.
In sum, in the lightest volume session since September, markets marked time Monday in front of today’s CPI.
The NYMO and NAMO showed very small changes on Monday which is often what is seen within a day or so of a large move.
Given the massive negative divergences across the board in breadth, IWM, percentage of issues over their 50 and 200 day moving averages, my expectation is the coming large daily change will be a drop…and that it will be this week.