By: Jeff Cooper

Hit and Run Trading Morning Report - January 2, 2024

Why A Decline Should Kick In As 2024 Starts

“When things go wrong, don’t go with them.”
Elvis Presley

“And it feels right this time
On this crash course with the big time
Pay no mind to the distant thunder”
-No Leaf Clover, Metallica

In 1982, after  a stint at the famous Beverly Hills Drexel Burnham office, I went to work with my dad at his private hedge fund.

I went out on my own when my dad retired in the late 1980’s.

I have evaluated most technical indicators available and they don’t work most of the time.

They work just often enough to keep traders using them.

The problem is two-fold:

Most indicators are descriptive, not predictive.

The same indicator in a bull market will work differently in a bear market.

Most traders think the Hit and Run Methodology is based simply on day trading and swing trading, but I called it Hit and Run to differentiate it from Buy and Hold.

H&R trading hinges on determining the trend; so we focus a lot on overall market timing---the trend on multiple time frames.Just like indicators, the same patterns that will lead to explosive gains in bull markets will lead to false moves in bear markets.

False moves lead to fast moves.

The most important factor in determining the trend is Time  and cycles.

Most of Wall Street is addicted to price.

Yet the trend works out according to Time.

“Time is more important than price. When time is up price will reverse.”
-W.D. Gann

In reality, they are the same thing.

Allow me to explain by giving you one example.

The last Bear market low was SPX 666 on March 6, 2009 .

Moving the decimal point we get 66.

In accordance with W. D. Gann’s Law of Vibration, we should see a turning point of some degree 66 months later.

66 months from March 2009 is September 2014.

Let’s look.

At first glance a monthly of September 2014 doesn’t show much of a turn.

However, drilling down to the weeklies shows a 10% reaction in 3 weeks.

The Hit and Run Method for buying, selling and shorting stocks is a chart based method.

Other than moving averages and one proprietary price based indicator I call the Pocket Pivot Indicator, no indicators are used.

You’re next question is “what does that prove?”

Well another 66 months from September 2014 is March 2020. Another air pocket.

These market cycles “work out” on dailies, weeklies and monthlies, from highs and lows.

For example, 666 WEEKS from the March 6, 2009 low is the week of December 12, 2021.

The NAZ topped in late November 2021. The SPX topped on January 4th 2022.

Splitting the difference gives mid-December 2021.

The fact that this 666 week vibration from the Bear market low defined a significant high in late 2021/early 2022 suggests the current rally may be  a nominal new high in the NDX and the test of the all-time high by the SPX may be part of a B wave versus a new bull market leg.

This would mirror the B Wave nominal new high in October 2007.

Underpinning the significance of the 2022 top and immediate decline is that it overbalanced any other decline since the 2009 in both time and price.

This overbalance combined with the cycle vibration of the 2009 price low may be telegraphing a major top in 2024.

In December Hit and Run defined several factors pointing to January 2024 as  one of those potential turning points.

Let’s take a look at a few factors.

There is another “natural” market cycle at work pointing to January.

Allow me to explain.

The circle is 360 degrees. If you break it up into 30 degree increments you have 30, 60, 90, 120, 150, 180, 210, 240, 300, 330 and 360 degrees.

If you break each number down to a single digit then you have a pattern or symmetry working:

3 6 9 3 6 9 3 6 9 3 6 9.

“If you only knew the magnificence of the 3, 6 and 9, then you would have a key to the universe.”
-Nikola Tesla, 1931

The March 6, 2009 low reduced = 3 6 9.

The Christmas Crash closing low in 2018 was 12/24/18 or 3 6 9 when reduced.

The March 23, 2020 SPX price low was 2191.86.

2 +1= 3

9= 9

1+ 8 + 6 = 15 = 6

3 9 6

To mention a few examples.

There are many major highs and lows in the market and individual stocks that reduce to 3 6 9.

I can’t explain the mystery.

But it is not surprising as the market is ordered.

But let’s circle back to the 360 degree circle.

The SPX struck a high in early January 2022.
it struck a low in both October 2022 and October 2023.

Symmetrically speaking, this opens the door to a hit in January 2024---perhaps immediately.

Look at these 360 calendar day/degree hits starting from the March 24th, 2000 Bubble Top.

There is more synergy with the idea of a turning point in January.

1)      Time & Price square-out (balance-out)

The low for the decline off the 2022 top was 3491 SPX (349)

My Square of 9 Time/Price Calculator shows that the October 13, 2022 low at 349 was a Time/Price square-out. The SPX never went any lower. It has virtually retraced all of 2022 losses, rising 1300 points in 14 months…albeit erratic.

Notice that 349 aligns with/squares also squares out with January 9th.

This ties to the second anniversary (360 degrees X 2) of the January 4th, 2022 all-time high.

As well the new high in the DJIA dovetails with a 94 year potential Top to Top to Top cycle (1835 to 1929 to 2023).

94 aligns with points to January 11, which happens to be the anniversary of the false new high on January 11, 1973.

The SPX dropped with authority from July and now this same “94” square-out is due to exert its influence in January.

Additionally, let me share one other Time/Price synchronicity.

The chart below is a daily SPX showing a price channel.

The mid-June 2022 low to the October 2023 low is the bottom rail of the trend channel.

Paralleling a trend line off the important mid-August 2022 peak shows that the index struck the upper rail last week. The indication is a decline could start immediately.

Consequently, at the end of last week, on the Hit and Run Private Twitter Feed, we alerted to buy puts on the SPY and QQQ.

Both vertical rallies were 689 SPX points.

They are both NINE weeks in duration.

Remarkably 689 squares December 28th, the high for the move…so far.

It would be fitting for December 28th to mark the start of a down draft.

This is some remarkable Time and Price synergy underscoring how they can be one in the same.

While last week was a shortened holiday week, we did get an NR 7 Week---the narrowest range in 7 weeks. In fact it was the narrowest weekly range since the all-time high.

These NR 7 contractions are typically followed by expansions in volatility within a week.

My expectation is that a correction (at the very least) could start as soon as the bell rings to open 2024 and that given the persistency of the vertical run, it will likely be sharp enough to shake out the complacency and euphoria accumulated over the last two months.