By: Jeff Cooper

Hit and Run Trading Morning Report - February 5, 2024

Once In A Generation Top

“Well, it’s too late tonight
To drag the past out into the light ”
-U2, One

The market has made it to the end of January which was an intermediate cycle potential turning

Point for us.


Markets often play out in geometric  cycles of 90 degrees in time and price

Late January is 180 days from the late July 2023 significant top and  90 degrees from the late October 2023 significant bottom.

The SPX struck an all time high on January 29th 2024 and puked two days later.

However courtesy of META and AMZN, the SPX blew past Wednesday’s Breakaway Gap closing at yet another all time high.

Offsetting last Wednesday’s gap triggers a Jump The Creek buy signal which is exactly as it sounds— price jumped the gap.

Now however we have the theoretical prospect of a reversal signal.

If the SPX should knife back down below 4931  high from last week and stick it will trigger a Soup Nazi sell.

This is a reversal back through a new 20 day high but with at least a 4 day interval between highs within the 20 day look back.

It is derived from the Turtle’s trend trading that buys new 20 day highs and shorts new 20 day lows.

When there is a reversal from these 20 day “breakouts” I call it a Soup Nazi as in “no soup for you.”

It does a good job of defining Bear Traps and Bull Traps on various time frames.

Of course right now there is no reversal so why bring up the prospect?

First, as offered above we have a possible high to low to high cycle on the table.

Second, there are five waves up from the October 2022 low.

As well, the 5th wave is a vertical affair which has struck the top of a trend channel.

At the same time notice that the last leg of this move up from October 2023 is in the context of an Ending Diagonal.

Drops out of Ending Diagonals can be fast and quick.

However, it is best to wait for a break, to see the whites of Mr. Bear’s eyes, before shorting,

as a 5th wave extension could play out with price riding higher on the top rail of the trend channel.

As well, it is theoretically possible that we see a Spike & Reversal pattern that overthrows the

Trend channel and the Ending Diagonal…a last ditch run for the roses.

However, even if that is the agenda I think it comes from a sharp decline first.

The next few months warrant extreme caution as, walked through in recent Hit and Run reports,

There are multiple cycles that indicate the possibility of Airpocketism along the lines of what we saw in February/March 2020.

The leading QQQ broke out above the November 2021 peak in late December 2023 and pulled back to test it in early January 2024 before ramping.

Breakage below the Bottoms Line (blue) from the October 2023 low should perpetuate a test of the 400 region.

This week is a Time/Price square-out and a time to look for a change in trend as the recent October 342 low “points to”/vibrates off February 8th.

At the same time this week and  342 square out with 254 the October 2022 low in the Q’s.

342 red

February 8 blue

254 region purple

Interestingly , the SPX July 2023 high of 461 also squares out with February 8th.

While late January represents the aforesaid possible high to low to high cycle, as legendary trader W.D. Gann wrote often you get two periods of time “on the side” be it days, weeks or months…or even years; this week into mid-February is a potentially big turning point…2 weeks from the idealized January 27th pivot (the high to low to high cycle).

Mid-February also ties to a Panic Cycle.

W.D Gann had a panic zone of 49 days. He wrote that 7 is the fatal number with 7 squared being a powerful turn.

For example the crash in 1929 started after a rollover 49 days from that years Sept 3 high.

The crash in 1987 started after a rollover 49 days from that years August 25th high.

The SPX is in the 4900 region. 70 squared.

Mid-February will be 490 days from the October 13th, 2022 low.

In sum, Stock indices set highs in Jan/Feb ’22, Jan/Feb ’20 and Jan/Feb ’18.

All were followed by consequential sell-offs.

The set-up for each peak was similar to Jan/Feb 2024.

In 2018 stocks rallied from October 2017 into January 2018.

In 2020 stocks rallied from October 2019 into January 2020.

In 2022, stocks rallied from October 2021 into January 2022.

In 2023/24, stocks started a strong rally from October 2023 and have advanced into January 2024.

If a high is struck in late January/February 2024, it would be synchronous  with a 24 month low (Jan/Feb 2014) to low (Jan/Feb 2016) to high (Jan 2018) to high (Jan-Feb 20) to high (Jan 2022) to high Jan/Feb 2024 cycle sequence.

The last once in a generation top was the March 2000  Dot.Com Bubble Top.

In 2000 the market rallied from an October low into January prior to plunging into late February prior to a final surge into March 24th.

A secondary high played out into September 1st, 2000 which test the March high.

In the current cycle we had a primary high in late 2021/early 2022 prior to a major selloff into October 2022.

The late 2021/January 2022 highs are being tested.
Often times these tests are higher highs as was the case in 2007 and 1973 prior to severe bear markets.

It was 6 months from the March 2000 peak to the secondary high in 2000.

We are going on two years from the January 2022 top.

The bigger the top, the bigger the drop.

The Advance/Decline Line struck a high in late 2021 that has not been exceeded two years later.

Most stocks made their high in 1928 where as the DJIA did not top until a year later on September 3rd, 1929.

In other words the bear market that started in late 1929 began after a one year divergence.

We are working on a two year divergence---greater than 1929, a once in a generation top.

The price low after the 1929 top was  in July 1932.
That was 92 years ago.

Underscoring the nature of the Super Cycle high  that is due to exert its downside influence is that 92 is straight across and opposite late January.

We are in the eye of another one of a kind top, a once in a generation top.