By: Jeff Cooper

Hit and Run Trading Morning Report - December 22, 2023

Editor's Note: there are 2 reports below - scroll down to see the second one.

Sign Of The Matador?

A Key Reversal Day is a one-day chart pattern where prices sharply reverse during a trend.

In an uptrend, price opens to new 52 week highs and then closes below the previous day’s close.
The wider the price range on the key reversal day and the heavier the volume, the greater the odds that a genuine reversal in the trend is taking place.

On July 27, 2023 we got a Key Reversal Day which was followed by two days that were inside the range of the Key Reversal Day.

A continuation of the decline followed.

The pattern from Wednesday’s KR Day mirrors the KR Day from July 27th on the SPX.

Notice that the KR Day in on 7u/27/2023 was followed by 3e days that were inside the range of the KR Day.

Then came a continuation of the decline.

I call this The Fuse. In other words, once a potentially significant signal is given,

Often markets will trade sideways for 1 to 3 days before the signal exerts its influence.

Of course in late July that influence was exerted with authority after 3 days.

During those 3 days those players who dismiss technical analysis did so at their own peril.

Thursday, yesterday,  was inside Wednesday’s Key Reversal Day range.

The 3 day consolidation is not a critical factor; it could just as easily been one day or two days.

The critical factor is that:

1)      A trend should continue in the direction of the Key Reversal Day. In the case of July, down.
In the case of Wednesday, December 20…down.

2)      The other critical factor is that the 3 Day Chart should turn down relatively soon following the Key Reversal Day.

In the chart from July we see that the SPX gapped down following the 3 inside days and immediately turned its 3 Day Chart down.

Next week is going to be a big reveal.

In sum, yesterday we stated the prior high at the 4700 region (from July) should act as a magnet drawing price lower once price broke.

Prior resistance typically acts as new support…especially in a Runaway Move.

I did not know nor did anyone else that the SPX would rebound sharply off 4700 (which was also 90 degrees down from the

Last week we wrote that Mercury goes retrograde on December 13.

We noted that a change in trend can occur when the retrograde period starts, when it ends (January 1, 2024) or at the mid-point which ties to Dec 21.

Today could have been part of a B Wave rebound.

We also wrote about a Fibonacci turn cluster of dates running thru this week…in particular that Dec 18 is 144 Fib calendar days from July 27, 2023 top.

Given the pattern ala late July, will the bulls be able to  rage higher into January or was Wednesday

The Sign Of the Matador?My expectation is Thursday was a B Wave and a C Wave down to at least 4650 plays out]…prior to a further rally into late January.

In sum, if you look back at the parabolic move into March 2000, the bull survived several encounters with the Matador before the bull succumbed.

Bonus Report: Gold and Silver on the Launching Pad

GLD closed at a new monthly all-time high in November.

Often following big breakouts you get a check back.

GLD pulled back from 192.39  to 183.15 in 6 days.

On the 7th day it carved out an NR 7 Day…the Narrowest Range in 7 Days suggesting a resumption of the advance was on deck if the impulse off the early October low and the following early December breakout were the real deal.

GLD exploded following the NR 7 day.

These contractions are often followed quickly by expansions in the direction of the underlying trend.

So the ramp on December 13th was a bullish omen for significant new highs in GLD.

Regular readers will recall that we target the 233 region this past summer…measuring from the November 3rd 150.50 low.

In sum a breakout above the December 1st high of 192.39 will be a classic case of “the second mouse getting the cheese” indicating at least the first half of 2024 will see gold (and silver).

Few have any idea of how high the metal can scale the golden wall of worry.

WD Gann likened a major breakout to water rising  above a levee after basing for a long time.

Once it’s breached, the water becomes a powerful force---unlike when it was “damned”.

Drilling down to the hourlies shows a fractal of the above big picture monthlies.

GLD has been working on a triangle.

It is on the verge of an hourly Rule of 4 Breakout…a breakolut over triple tops.

There are no quadruple tops.

Govern yourself accordingly if you think GLD will fail once it “comes out” again.

Notice the entire hourly setup is a Bull Flag in the context of the impulse from mid-December.

Notice GLD has cleared the Tops Line from early December.

Once GLD offsets the open gap from early December (black elipse), a Jump The Creek continuation buy signal will be triggered.

The Second Mouse Will Get the Cheese.

Typical legit runs in gold see the junior miners ramp. That is where the leverage is.

A daily GDXJ shows it is on the launching pad.

Today is an OpEx and it looks like there is an agenda to tickle the 40 strike.

As well GDXJ is sporting an mini inverse Head and Shoulders pattern (bullish) that projects to 42 region.

Checking a daily GDXJ from July shows a larger inverse Head and Shoulders that projects to 48-49 once the Neck Line at 39.50 is cleared.

A 60 minute GDXJ shows the late November breakout and a picture perfect backtest (magenta) followed by another impulse to the topside.

GDXJ is coiled in a Stein & Handle (a cousin to the Cup & Handle pattern).

As you can see north of 38.80 opens the door for 40 + today.