By: Jeff Cooper
Hit and Run Trading Morning Report - November 28, 2023
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The Market Is At A Major Crossroads
Let’s take a look at the SPX 3 Month Chart.
It doesn’t turn down often.
Right off the top in 2022 the SPX turned its 3 Month Chart down.
That set the tone for the Bear because the turndown came immediately of an all-time high.
It was a conspicuous change in the complexion of the trend,
The market then bounced turning the monthlies up in March 2022.
Every turn up of the monthlies thereafter defined a high soon in terms of time and price.
The 3 Month Chart turned up for the first time since the all-time high in June 2023 at 4231.11.
It led to a major high in July---following which the 3 Month Chart turned directly down.
So we have a turn up of the 3 Month Chart followed by a high (+-) July, and then a turn down of the 3 Month Chart which defined a low in October.
No one could have reasonably assumed we would see a rocket off the October low.
I don’t remember ever seeing 5 upside gaps in one month.
Since the drop from July 2023 was a clearly impulsive 5 wave decline, the November rally is either a wave 1 up of some degree which would be bullish OR it is an a b c corrective rally.
If it is bullish, we want to be buyers of the next pullback for a drive to 4800+.
The truth of the tape will be told on the structure and level of the next turndown.
In other words if the next turndown is corrective or impulsive. If the next pullback holds the 4340 region in the extreme and is corrective in structure then the likelihood is were going to the old high at 4800.
Since that would be the last ditch high from 2009, and 1932 I think we’ll get a Throw -Over of 10%.
In sum it means a crash is off the table--- for this year.
What we want to watch is if we get trade in December above November’s high.
This will put the SPX in the Monthly Minus One/Plus Two sell position.
In mid-November we flagged November 22 as a turning point.
So far that was the high for the move.
I went on to say that we could see a ‘basing period’ into January (probably early January---but perhaps late January 180 degrees opposite the July high and 90 degrees after the October low for an idealized High to Low to Low Cycle.
From there we should see The Surge… if we’re going to get one.
It will suck everyone in.
The party is the wildest before they call the cops.
It should be over by April /May…again if we get it.
It will be easy to see.
The alternative is we get a 5 wave decline that breaks support.
Where is support?
Well, we know that the 540 degrees up from low is 4497.
Above that seems to be signaling high ultimately.
Breakage below 4497 opens the door to a Technical Trifecta.
1) 360 degrees up from the October 2023 low is 4364.
2) The 50 day moving average is rising to the 4364 region
3) 4364 ties to a backtest of the Tops Line from the July peak.