By: Jeff Cooper
Hit and Run Morning Stock Report: December 23rd, 2022
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The last swing high on the SPY was 410.50 on December 13th.
On the Square of 9, 410.50 is square December 24th 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.
It’s a big if because an hourly SPY from the December 13th 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 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 4th 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 13th 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.