By: Jeff Cooper
Hit and Run Trading Morning Report - February 6, 2024
The Ice Man Cometh
“That which is not but ought to be is more real than that which merely is.”
Stocks entered a secular bull market in June 1949.
That secular bull market topped on February 9th, 1966.
A period of 58 years.
While the market made several attempts to breakout following the Feb 1966 top, they all failed.
Essentially markets went sideways to down until 1980-82.
Let that sink in.
Interestingly, as long time readers will recall, it was 58 years from the 1929 crash to the crash in 1987.
Now you may say that looking back Black Monday in 1987 looks like a blip on a chart.
That said, the market was essentially sideways for 3 years until a plunge from July 1990 to October 1990 installed a low.
That is an eternity when you consider that markets have not seen more than a 2 to 3 year down stint this century:
Interestingly this week is 58 years from the Feb 9th, 1966 secular bull top.
I don’t know about you but that sent chills up my spine.
Checking my Square of 9 Wheel, we see that the number 58 points to (180 degrees opposition) late January.
As well, 58 squares October 29th, the big crash day in 1929.
In other words, if you had a Wheel in 1987 and noticed that the pattern that fall was virtually identical to that in 1929, as did Paul Tudor Jones, you could have anchored “0” to the number 58 and seen that it vibrates off October 29th.
Given the pattern and the time/price synchronicity, the presumption could have been made that another October crash was on the table. Pay Dirt.
We are currently 95 years from 1929.
95 squares early April. As the pieces come together we’ll be able to determine if a waterfall event sets up. And we will report on it in this space.
Pay Dirt is coming.
IF a waterfall is going to play out in April, the market should start to drift down no later than mid-February.
There’s a lot pointing to a turning point in February.
Tulip Mania in Holland ended in February in 1637.
That’s 387 years ago.
When I noticed this I immediately thought of the 1929 DJIA Mania Top at 386.10.
I know this must sound like voodoo technicals, but I’ve seen these synchronicities strike too often to be happenstance.
“Synchronicity is an ever present reality for those who have eyes to see.”
Gann and Jung would have gotten along famously.
At the same time, the 481 prior SPY all-time high from January 2022 squares mid-February.
Yesterday we said that a Soup Nazi sell on the SPX would be triggered on a stab down thru last weeks 4931 high. The index pushed thru 4931 to 4918 and it looked like a Trend Day down was in play. Yet once again a rebound played out with the SPX rallying to nearly unchanged before settling down 15 on the day…more or less half the range of the early decline.
A weekly SPX log chart shows 5 waves up with the SPX tagging the top of a trend channel from “the 2 Octobers”…the October 2022 low and the October 2023 low.
A Bottoms Line connecting the March 2023 low and the August 2023 low intersects the top rail of the trend channel..
Half the range of the current advance from the October 2023 low is 4540 which is an important pivot: it ties to a Ghost Line (red) connecting the Jan 2022 high to the important July 2023 high.
Other than the current region, these are the two most important highs in the last 25 months.
I can’t help but wonder if the index will be magnetized to this 4540 level over the next month as 454 (4540) squares out with March 11th
In sum, the great decoupling between fundamentals and price for the sake of price is creating one of the most bifurcated markets in a generation.
Even the Mag 7 are not impervious: META and NVDA ramp while TSLA’s in the ditch and APPL trends water.
But price is a hologram when time catches up with markets: to wit some stocks from all-time highs are getting annihilated.
We sold the balance of our FN long Monday morning. After reporting it’s down 32 points.
It will be interesting to see what NVDA does today on Day 3 of a possible Star Burst pattern.
A gap up that goes red could see a big fizzle stick.
Friday’s internal market weakness matched or broke several records for an all-time SPX high.
Each occurrence should be viewed not as a sign of imperviousness of the bull and that a broadening out is on the horizon but as a blaring siren warning of the consequential decline that will come like a thief in the night…like FN. The annihilation awaits.
Among the aforesaid records:
This is only the second time in history that more than twice as many issues declined as advanced on the day the SPX closed at an ATH.
The McClellan Oscillator for the NYSE and the NAZ were below zero at an SPX ATH close.
On Monday, on the first day of a decline from an ATH and just 0.32% below the ATH, the McClellan Oscillator is already -44.86.
Looking back over recent years to find a comparison for a negative McO at an SPX ATH and downside momentum developing quickly, the best example would be that of Feb 19, 2020…on the precipice of the Covid Crash.
We’re on thin ice folks.
The Ice Man Cometh.