By: Jeff Cooper
Hit and Run Trading Morning Report - February 13, 2024
“Everybody knows this is nowhere”
What occurred on Monday with the Magnificent 7, AAPL, AAZN, GOOGL, META, MSFT, NVDA and TSLA is highly significant for the SPX, NDX and COMPQ.
All seven traded higher in the morning. but all seven had reversed and closed DOWN on the day.
NVDA for example, was +24.81 but by the end of Monday’s session reversed to close at 720.10.
It didn’t look like NVDA was going to honor the 721 square-out flagged in yesterday’s morning report, but it reversed leaving a large range signal reversal bar…a Lizard sell signal.
This is a run up to a new 10 day high that tails off closing near the open.
In Monday’s case, this was the largest signal reversal bar of the year.
As we know range precedes price.
In other words an expansion of range marks an initial momentum impulse or exhaustion.
The fact that NVDA’s reversal occurred at this 721 square-out (squaring the October 2022 low of 108 indicates a strong likelihood of a corrective phase…not just for NVDA but probably for the overall market since NVDA has been the heart and soul of speculative sentiment of late.
The Mag 7 comprises 29.6% of SPX and 27.5% of NDX and QQQ.
Downside follow thru in NVDA from Monday’s reversal could have a significant impact on these major market averages.
Remember, as flagged in Monday’s report a decline in NVDA could see a 70 to 140 point drop.
After testing its July high AAPL has carved out a significant lower high.
It shows triple bottoms at its 200 day moving average. Breakage below those bottoms at 180 opens the door to test of last October’s lows, 25 points lower.
AMZN was set for follow thru on Monday but faltered.
A weekly AMZN shows it is testing the region of the major breakdown pivot from March 2022.
GOOG reversed lower with authority 2 weeks ago leaving a Key Reversal week after a Pinocchio of 2022’s all-time highs.
META had a massive Earnings Gap on February 2.
It reversed red on Monday. Downside follow thru validates a Hidden Dragon sell setup on the dailies.
MSFT left a Key Reversal Day on January 31st but never followed thru.
Yesterday it left bearish looking Train Tracks after hitting the top of a trend channel.
Is this going to be a case of the first mouse getting the squeeze and the second mouse getting the bear cheese?
TSLA was also higher Monday morning but reversed leaving an outside down day from its declining 20 day moving average.
Breakage back below 181 opens the down door.
In sum, the Mag 7 reversals took the SPX down -4.77 points and the NDX -79.74 by the close despite a gain in the DJIA of + 100 and IWM by +3.62.
The market is fractured.
While some market participants may say that the Generals are entitled to a breather and that it is a good sign the market is broadening out, my take is when all the Generals get shot in the back the troops ultimately flee the battlefield.
In a nutshell, leave with the one who brought you to the party.
VIX and VIX derivatives surged on Monday, even when SPX was higher in the morning …and despite the triple digit gain in the DJIA.
The surge in the various VIX instruments (UVXY) could indicate that smart money today sensed an important change in trend to the downside.
Eerily, the SPX high on Monday was 5048, the same as the NAZ close on the March 10th all-time high in 2000.
Is this indicative of a major top and drop?
That question will be answered over coming weeks.
My expectation is for a Panic Cycle to hit this spring.
In early March we are 15 years or 180 months opposition the bear market low in early March 2009.
That SPX low was 666.
Moving the decimal point we get 66.6.
This number vibrates off October 24th, the first of the crashes in late October 1929.
This year being opposition the 2009 low I can’t help but think it is pointing to a low to high cycle.
As you can see on the above Sq of 9 the number 66.6 also aligns with late April.
April 8th is the date of a Great American Eclipse.
And of course April is opposite the crash month, October.