By: Jeff Cooper

Hit and Run Trading Morning Report - February 27, 2024

In the Belly Of the Beast

“Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that’s no matter---tomorrow we will run faster, stretch out our arms farther….And one fine morning----
So we beat on, boats against the current, borne back ceaselessly into the past.”
-F. Scott Fitzgerald, The Great Gatsby

“The most important lesson of history is that nobody learns the lessons of history. People don’t know history, and they think they are smarter than history.”
-Jim Rogers

“Welcome to the breakfast show.”
-Mick Jagger, Jumping Jack Flash

Yesterday’s report showed how following the March 2000 Bubble Top it really took 13 years for the SPX to sustain a new high.

A monthly SPX shows the leg up into the March 2000 top started in October 1998.

So the entire last leg was 18 months or a cube in time…540 degrees is a cube ( a true square) as it is 6 sides of 90* for 540 degrees. (the October 1998 low was an outside up month so that is ‘month 1’).

Notice the turn down of the 3 Month Chart in October 1998 that started the final leg up into March 2000 roughly 18 months later (the end of March 2000).

The 3 Month Chart also turned down in October 1999 which defined the low prior to the final blow off top which arrived 5 months later.

My premise is that due to the structure of the market from 2009 and the cycles which we’ve walked through many times in previous Hit and Run Reports that there is a strong likelihood that the October 2023 low mirrors the October 1999 low.

This takes us to MARCH 2024.

Whether March signals the top or whether we get a quite sharp shakeout prior to an extension will be telegraphed by the price action in March.

Either way I think we get a waterfall event before Spring is over.

The top in 2000 is synchronous to the top in 1929 basically a Gann 70 years (7 is the number of panic)

Earlier. The NAZ dropped over 80% following the 2000 top mirroring the near 90% drop in the DJIA into 1932.

There is substantial synchronicity between 1929 and 2024 which we will recap again and expand on in reports this week.

Suffice to say it was 24-25 years 1929 until the DJIA struck a new high.

We are 24-25 years from the 2000 top is 2024-2025.

A mirror image fold-back may be on the table.

From the January 2022 top 540 days/degrees or 18 months gives July which defined an important high.

18 months from Oct 2022 is April 2024.

In the above monthly SPX from 2020 we see that the Covid Crash did not turn the 3 Month Chart down.

Mirroring the 2000 top the SPX carved out a monthly +1/-2 buy setup which led to the last rally into the Jan 2022 top.

The 3 Month Chart turns up with 3 consecutive higher monthly highs (NOT closes necessarily) and turns down with 3 consecutive monthly lower lows.

Ditto the 3 Day Chart and the 3 Week Chart.

These define my Swing Method.

When the 3 Month Chart is pointing up and you get 2 consecutive lower monthly lows that is a +1/-2 buy setup.

Bearishly, the 3 Month Chart turned down right off the all-time high then suggesting a significant downdraft was on the table. It was.

Notice in the 1998-2000 advance the 3 Month Chart turned down twice on its way to the top.

In the above monthly SPX from 2020 we see that the 3 Month Chart finally turned back up in June 2023 (that’s roughly 18 months from the orthodox high in late 2021).

The 3 Month Chat then turned back down in October 2023 defining an Under Cut  Low…with a false break of a trend channel (magenta)...

This is channel of least resistance produced by the October 2022 low and the July 2023 top.

As you can see the SPX is kissing the top of the trend channel.

However, given the duration of this rally off the October 2023 low has exceeded the duration of the 90-100 day blow-offs in both 1929 and 1987, it would be fitting to see a Throw Over above the top rail of this magenta trend channel.

We must be mindful that the pattern currently mimics that of the turn up of the 3 Month Chart in June 2023 which produced a high the following month in July.

Now we have a turn up of the 3 Month Chart in January 2024.
Will February/early March define a high?

In sum, in the big big picture, we are culminating the rally off the October 2023 low.

This in turn is culminating the advance off the 2022 low and the 2009 low and potentially much further back.
The SPX may have already completed its objective; however the door remains open to targets straddling the 5150 region to 5300 and theoretically as high as 5500.

However, breakage below 4950 now is a warning sign that A top is in.

The complexion of the next pullback will tell us if THE top is in.

That said, declines out of Ending Diagonals such as that being sported by the SPX can be fast and furious.

A decline of 6% ish to the prior high of 4800 from January 2022 could play out flushing out the market before a possible last ditch run for the roses before the higher projections noted above are struck.

Remember in early December 2023 we wrote in this space that a “basing period” could play out from December 20-21 for a month prior to a series of intense spikes and dips.

The SPX exploded on January 18th and we’ve seen several  brief air-pockets since ---notably January 31 and February 13.

The leading QQQ shows the point of recognition.

The Q’s triggered a Blade Runner buy signal when it offset a potential right shoulder of a Head & Shoulders pattern in November (red horizontal line)

A Bottoms Line (black) from the October 2023 low intersects the red line at the 380 region in the first part of March.

Is it possible to see a shake-out to this point of recognition before a last ditch run?

We are in the throes of a buying climax now.

We are in the belly of the beast.