By: Jeff Cooper
Hit and Run Morning Stock Report: December 6th, 2022
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An Angle Of Attack To the Downside
December 1st was 49 calendar days from the October 13 low for the year.
49-55 days is the Gann Death Zone…be it counting down from a high or up from a low.
These often time mark panic tops or bottoms.
In this case we’re talking about a top on an advance up from a low.
55 days from low gives December 7th.
So far, the SPX/SPY high for the move up from October 13 occurred on December 1.
The SPY dropped sharply on Monday and is down 12 points (120 SPX points) from last Thursday’s recovery high.
As we know there was a Time/Price square-out at 407.5 (4075 SPX).
This is because 407/408 is 180 degrees straight across and opposite October 13th…the low of the year.
This is proof that the stock market moves remarkably in an orderly fashion according to the Principle of Squares.
The angle of attack off last week’s highs speaks to the significance of this Time/Price square-out.
Mr. Market talks if you have the tools to listen.
As you can see on the above dailies, the SPY is approaching a rising 3-point trend line coincident with its rising 20-day moving average.
It should be easy to determine what the market’s direction here is going to be over the coming hours by virtue of the price action of this perfected support (hitting all lows since October 13) and the 20-day ma.
A failure here below the 20-day (Holy Grail Fail) in conjunction with an Angular Rule of 4 sell signal (break of a 3-point trend line) is in complete antithesis with December seasonality-- especially with so many anecdotally loaded for a Santa Claus Rally. They may get a sleigh ride from hell instead with money managers dumping stocks lest they drag performance down further in an already year of dire straits.
Interestingly, January will be 49 months from a December crash-- in 2018.
Remember that January 2022 is 49 years from the false breakout top in January 1973.
There was a Bradley Model turn date for Sunday, December 4th.
It looks like that turn date exerted its downside influence yesterday.
The SPY is in the daily Plus One/Minus Two buy position near well-defined support.
A lower low today will turn the 3-Day Chart down.
If the market can’t get traction on a turn down of the 3-Day Chart at this clear support level, my expectation is an ensuing downdraft could be dramatic.
In sum, the rally from the Sept 30/Oct 13 double bottoms has shaken out the vast majority of shorts and drawn in a great deal of longs.
This is the mission of typically dramatic Bear market counter-trend rallies. Mission accomplished.
The Bear wants everyone to lose.
Yesterday, we stated that trade below last Wednesday’s 120 SPX point Powell Ramp opens the door to downside momentum.
A failure below last Wednesday’s 393.48 SPY low may finally indicate that the elusive 3rd of a 3rd wave down may be in progress.