By: Jeff Cooper
Hit and Run Morning Stock Report: February 3rd, 2023
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Buying Panic, Exhaustion or More To Go?
“When you appear to be right, you should always follow up. When a boxer in the ring finally has an opening and lands a powerful punch, he must always follow up his advantage…if he wants to win.” William Neil
Retail trading as a % of the total just surpassed its early 2021q meme stock peak.
As well the SPX just had the best January performance since 1987.
Ultimately that outperformance had a historic reversion to the mean in October.
The Buying Panic is prevalent in bombed-out techs into elevated December tax selling when a Santa Claus Rally failed to show up and offer a graceful exit.
Here’s what we said on the Hit and Run Private Twitter Feed on Thursday:
My Square of 9 Time/Price Calculator nailed the October 13, 2022, low, indicating an important potential turning point at higher levels likely due in mid-February.
That is when the Gann Panic Zone culminates theoretically.
That said we closed back below 4155, the 50% retrace of the bear market.
If we get two closes back below this 4155 region especially on the Friday weekly closing basis today, it opens the door to lower and the possibility that we saw a Buying Climax Thursday.
So a lot rides on today’s jobs report at this technical crossroads.
It is the Big Enchilada.
We went on to tweet the significance of 4195.
Yesterday’s high, 4195.
As I write Friday morning, the SPX pulled back sharply from that level and is down around 4140.
That is 360 degrees up from the December low.
Breakage below 4140 opens the door downtown.
Conclusion. Today is important. The rally from the October low is 704 SPX points.
On my Square of 9 Wheel, 704 aligns with/vectors on February 2nd.
So we have a square-out with the range.
Does this square-out indicate a Buying Climax in a Bear Market rally or initial resistance in Breakaway Momentum (BAM)?
One way to determine the trend and avoid emotional decisions is to buy on the daily charts and sell by the weeklies.
The daily price action shows when a stock is breaking out, but the weeklies, with the help of my 3-week Chart Swing Method, help put the Intermediate Trend in perspective.
Mr. Market likes to Miss-Direct and confuse. His job is to deceive as many players as possible.
W D Gann wrote, “Key off the Weekly Swing Charts to determine the trend.”
As the analogs below show, this market is at a crossroads and has something for bulls and bears.
Keying off the weekly charts will help separate the trading wheat from the speculative chaff.
Finally, in tandem with the above technical and squares, the dollar (DXY) left a Gilligan buy signal on Thursday.
This is a signal I created that does a good job of identifying bottoms.
It is a gap down to a new 60-day low with a close at/near session highs.
If the dollar is turning up, that’s a headwind for stocks.
And, the action in gold and the PM miners, as offered, since last week, has been suspect.
Yesterday GDXJ left a Hook, Line & Sinker sell signal.