By: Jeff Cooper

Hit and Run Morning Stock Report: February 8, 2023

Mr. Market Assumes the Position

Tuesday was a Powell Mini Me FOMC Cha Cha Day…an echo of Fed Day volatility.

If there is one thing that is predictable in the markets it is the wild gyrations that accompany Fed Chait Speak.

Whether it’s the Algomatics or something else in the market’s own DNA or market participant psychology or a combination of the above is anybody’s guess, but volatility ramped yesterday.

But, the extent of Tuesday’s intraday swings covering 88 SPX points just in the last 3 hours of the session had to be a surprise to all observers.

Even the intraday NYMO swing was extreme Tuesday as the oscillator dipped below -33 and closed just above zero.

That said, the truly remarkable takeaway from yesterday’s whiplash is that the SPX adhered to the principle of the 3 Day Chart.

While the SPX breached the key 4100 region tweeted yesterday, in so doing it turned the 3 Day Chart down.

That turn down defined a low and more importantly and explosive low---leaving an outside up day.

Many stocks also turned their 3 Day Charts down in tandem with the index.

These include NET (played Tuesday) and CYBR to mention a few.

Check out how CYBR exploded after ASSUMING THE POSITION.By “assuming the position” I mean, as soon as the 3 Day Chart has turned down the item goes into the position.

But, a reversal or an explosion in the opposite direction isn’t necessarily immediate as it was yesterday.Not all Turn Downs in the 3 Day Chart are created equal

The fact that yesterday’s came on the heels of recent upside momentum AND two big  breakouts (the breakout over the horizontal 4100 level and the Angular breakout above the trend line that defined the bear market from January 2022).

So somewhat in hindsight, the break below Monday’s lows on Tuesday should have been a table-pounder pivot.

Be that as it may, we capitalized well on the text book Plus One/Minus Two, Holy Grail, Phil D Gap setup in BIDU buy not waiting for the setup to trigger, but by front-running it and taking it overnight on Monday.

Sometimes that works, sometimes it doesn’t.

Trading is as much art and anticipation as science…if not more so.

Conclusion. Just when it looked like the die was cast for a trip to the 4000 region, the bears snatched defeat from the jaws of the bull.

For the moment.

But, the reversal opens the door for a trip north of 4200 and 4325 region, the August high.

Mid-February will be 180 days/degrees straight across and opposite the key August high from which the market fell out of bed.

And, as we know there are several other factors we’ve noted over the last week or so flagging that time frame as a turning point.

The harder the market runs into a potential turning point, in my experience, the more viable and the more respected it should be.