By: Jeff Cooper
Hit and Run Morning Stock Report: December 9th, 2022
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NET: Anatomy Of A Killer Trade
On Tuesday Hit and Run members covered a short in NET as it left an hourly Train Tracks buy signal.
All trading is contextual and the hourly reversal led to the Lizard buy signal on the dailies.
However, the main factor underscoring upside potential in NET is it continued to grind higher on Tuesday in the midst of selling pressure in the overall market. NET closed on its high on Tuesday leaving a Lizard buy signal. This is a new 10-day low that leaves a Bottoming Tail---a close near the open after driving lower and striking a new 10-day low.
Notice that Tuesday’s “tail” occurred in the region of two prior lows---for a possible triple bottom.
In so doing NET carved out a potential inverse Head & Shoulders bottoming pattern.
I have drawn a declining trend line (blue) from the August high.
The presumption was NET could be magnetized to a backtest of this trend line in the 50 region.
Following is a walk-thru of the blow-by-blow from the Hit and Run Private Twitter Feed of how we capitalized on NET’s reversal to the topside.
Powering over 47 opened the door to the next decrement of 90 degrees higher which is 55.
Notice on the above daily NET that I have drawn a shorter declining trend line from the September high that converges with a “Ghost Line” which is a broken rising trend line from the October low (lower purple trend line).
In sum, NET has pushed to the 50 strike. Clearing and sustaining over 50 triggers an Angular Rule of 4 Breakout which should perpetuate a drive to the 55 region.
This morning we get the PPI. No one knows (well maybe some) what the number is or what Mr. Market’s reaction will be; however, the futures this morning are trading higher than Thursday’s high putting them in the Minus One/Plus Two sell position.
This is because the 3-Day Chart is pointing down (3 consecutive lower daily lows INTRADAY) and now we have 2 consecutive higher daily highs (INTRADAY) at least on the futes. This is the Plus Two.
As well, the SPX has rallied up to its 20 day moving average for a possible Holy Grail sell signal.
The T Rex in the ointment is that the 20 day ma is not downtrending…it is pointing up.