January 2023

The last swing high on the SPY was 410.50 on December 13^th.

On the Square of 9,  410.50 is square December 24^th which is Saturday.

That makes today pivotal.

180 degrees down from 410.50 is 370.50.

Yesterday’s low was 374.77 (375)

If the market tumbles again today we could hit 370/371.

If.

It’s a big if because an hourly SPY from the December 13^th high shows 5 waves down.

On Wednesday the SPY gapped up. On Thursday, the SPY gapped down, in effect carving out a little Island Top.

Phil D Gap from Thursday is 385.24.

IF.

If the SPY can offset and clear this open gap it is a feather in the bulls hat.

However, just above 385.25 is the wave 4 high in the 387 region and the declining 50-hour moving average at 386.

Above the 4^th wave opens the door to higher prices, validating the completion of the 5- wave declining structure.

So there is a trifecta of technical resistance between 385 and 387.

Consequently, advancing and sustaining above 387 validates the idea of an important square-out at Thursday’s low

Notice on the above hourly SPY that a declining trend line from the December 13^th high ties to 383.50.

So, north of 383.50 opens the door to the trifecta of resistance between 385-387.

The presumption is this convergence of technical convergence will magnetize the SPY higher.

Recently, we’ve mentioned the 49-month cycle from late 2018 and the Christmas Crash.

That is either set to mark a bottom here counting from when the brunt of the crash started at the beginning of December 2018 or it is set to mark a big high at the end of January.

Yesterday I mentioned I would show a “line-only closing chart” from the 2009 low.

Below is that monthly SPX.

You see a structure with a line-only chart that you would not necessarily see with a candle or bar chart.

There is a clear 5-wave Elliott decline into October or late September.

That forms Intermediate Wave 1 down.

From there we got an A wave rally of Intermediate 2.

We are in the B wave decline of an A up, B down, C up.

C up should play out from late December thru January.

I think there is a strong likelihood for this to play out not just because of the clear-cut structure but because it is illogical that wave 1 down took 10 months and wave 2 (October to December) took around 2 months).

In sum, if correct, a rally in January will have The Street shouting about a bullish January Effect just at the wrong time.

And the Bear will pull his greatest trick-- making you think he didn’t exist.