By: Jeff Cooper

Hit and Run Trading Morning Report - February 2, 2024

METAmorphosis Of A Market

“The heavier I am, the higher I pull myself up.”
-Franz Kafka, The Metamorphosis

“And it feels right this time’
On this crash course with the big time.”
-Metallica, No Leaf Clover

Momentum markets are their own justification. They need no ‘reason’.
Their signature is different from the rest of market moves.

When you are in a momentum market you need to be prepared

For the extraordinary--- not just irrationality but stupidity.

It became a momentum market after the November 14th massive gap up.


That’s the day the SPX hit our projected 4497 target.

4497 SPX is a key 540 degrees up from the October  4104 low.

The index closed at 4495.70.
Essentially right on this upside pivot.

The normal expectation would have been a pullback.

The massive gap was, in hindsight, telegraphing a leg higher.

540 degrees is key because it is a true square, a cube.

This is because a cube has 6 angles of 90 degrees for 540 degrees.

Mid-November was the eye of the hurricane suggesting another leg up of 540 degrees (at least).

That next decrement of 540 degrees is 4908.

The SPX has eclipsed 4908 marginally this week but quickly plunged back below it on Wednesday.
On Thursday the SPX snapped back to towards 4908, closing at 4906.

The above chart depicts what looks like 5 waves up off the October low is culminating.

From the January 5th wave 4 low it looks like a 5th wave up is subdividing with Wednesday being wave 4 or 5.

Notice the SPX may be carving out a Rising Wedge or Ending Diagonal.

These two tranches of 540 degrees are among a host of time/price synergies.

That we’ve detailed in this space.

Even if the market is going to do a meltup to 5500  (POTENATIAL suggested by a chart shown in January).

There is a setup for a waterfall event over coming months.

In particular, April is 49 months (7 squared) from the March 2020 Covid Crash.

7 squared months.

In sum, Thursday was like Wednesday never happened.

I’m not a conspiracy theorist but as a friend and fellow trader said to

Me after META’s earnings, “They were leaked.”

Clearly the market seemed to think it knew something going into the bell.

It’s going to be interesting to see what the SPX does at Phil D Gap at 4908 today.

It will also be interesting to see if gold verging on a breakout inspires the miners to play catch-up.

On Tuesday we walked through a bullish setup on GDXJ.  

The miners started up on Tuesday but faded on Powell’s hawkish tone.

Ironically and typical of Mr. Market’s perverseness, the miners ran yesterday.

A weekly GDXJ including Thursday’s rally shows why it could be magnetized to 38.

Breakage above 38 triggers a Rule Of 4 Breakout…that should elicit further upside momentum.

In the short-term February 2 squares 37. So if we get momentum today, it could be a barn burner.

The stars seem aligned as GLD has a short-term Rule of 4 Breakout.

Thursday’s impulse is in the context of a 3rd higher low or what I call a Power Surge setup because

Fast moves often come from 3rd higher lows (and 3rd lower highs).

GLD has two series of 3rd higher lows.

We could get fireworks because  GLD is flirting with a breakout over a 4 year Tops Line.