By: Jeff Cooper
Hit and Run Trading Morning Report - January 30, 2024
4900, Breakout Or Pinocchio
“We forget the place we’re in
‘Cause we love you” W
-We Love You, The Rolling Stones
In a rise that started slow and picked up momentum later in the day, the SPX closed above 4900 for the first time on Monday.
SPX 4900 is a key level (70 squared..7 being the fatal number).
Half 70 is 35.
35 squared is 1225 (SPX).
This is the low in 2006 prior to a roughly THREE HUNDRED AND SIXTY point run to the October 2007 high.
It was rational euphoria all over again.
The initial high was in July 2007, one year (360 days/degrees) as he index tested its all-time high from March 2000 and the market responded by a sharp selloff.
90 days/degrees later the SPX struck a momentous new high in Octobear.
It was a Pinocchio.
SEVEN months from the Oct 2007 peak the GFC Crash started in May.
The crash ended in November 180 degrees later in November 2008.
Yesterday we showed the square-out of the SPX range from the 2000 low to the 2002 high to now indicating a crucial time this week.
This week The Mag 7 earnings start.
And we get Geppetto Powell, the Puppet Maser.
The market has moved up in anticipation of a litany of rate cuts and beats.
Is this week going to be the Mother Of All Sell The News setups?
If the economy is really doing so well why would the Fed cut rates.
With the vertical binge in M & M, MSFT and META….they’ll have to do more than just beat, guidance will have to hit it out of the park---otherwise they too may be the mother of all sell the news.
As offered in yesterday’s piece, continuation above 4900 opens the door to 5200 to 5500.
A monthly log chart of the SPX from the 1987 low shows the trend channel on the table.
Yesterday we covered 13 year overlapping cycle progressions.
13 years from the fall of 1987 is the fall of 2000. While March 2000 was the all-time high at the time,
The Secondary High was in the Fall of 2000, September 1st.
Markets like to test.
Another 13 years from the fall of 2000 is the fall of 2023 and we got a big turning point.
But I can’t help but wonder whether like the 90 day/degree July to October 2007 playbook, we’re getting a 90 day/degree Buying Climax here 90 days from the Oct 2023 low.
The above chart tells us a few things:
Continuation targets the 5200-5500 region.
It also suggest that if that is the agenda, it will occur sooner than later because the to of the channel is this years business.
The monthly SPX also depicts a smaller red trend channel which intersects with the top rail of the black channel in 2024.
Another message from the chart is that following a top, a bear leg eyes 3300, the lower rail of the red trend channel.
Of course this is a move below what little children in Katmandu think is the Bear Market low in October 2022.
Checking The Truth Teller, IWM, shows it is in the WEEKLY Minus One/Plus Two sell position.
This is because the 3 Week Chart is pointing down and now we have 2 consecutive higher weekly highs.
IWM closed at 199.41 yesterday.
198 squares January 29th/30th. Consequently, a drop back below 198 opens the down door.
Tomorrow’s report will walk thru the 85 square-out in AMD which reports today.
And NVDA’s 130 square-out. NVDA reports in 3 weeks.
The DJIA struck a high of 36,952 on Jan 5th, 2022.
369 squares January 5th.
Yesterday the DJIA hit a new historic high of 38,343.
383 is opposite January 29th.
Let’s see if love is love or fades away.