By: Jeff Cooper
Hit and Run Trading Morning Report - February 28, 2024
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When Is It Time To Get Out Of Dodge?
On the heels of Friday’s little Gilligan sell signal on the SPX, yesterday we had 2 consecutive lower daily lows leaving a daily +1/-2 buy SETUP.
These are not ‘automatic’ buys. They are setups.
That said we are in a Runaway Move and we did get a 180 buy setup as well last night (a close near the low followed by a close near the high in the context of trade above the 50 and 20 dma’)
However, we also have not had a correction since the Oct 2023 low.
So when one comes it could be fast and furious….or of course, it could mean a significant top is in.
As well we have a large open gap below the bottom of which ties to the SPX rising 20 day moving average….around 4992.
Trade below Tuesday’s 5057.29 low turns the 3 Day Chart down for only the second time since this Runaway began in October.
The first instance was on January 3rd, 2024.
The index dropped a little lower the next day undercutting its 20 dma.
It’s an interesting parallel as we are gaping down this morning threaten to turn the 3 Day Chart down from the get- go.
Is it possible the early January low and the turndown of the 3 Day Chart define a mid-point of this Runaway?
If so, the Measured Move produces a projection to the 5380 region.
In league with the potential for the big top I see between 5100 and 5500.
Why 5100?
First, 510 (5100) squares Oct 27, the low day.
As well I connected the body of the Oct 2022 low with the important March 2023 low and extended it.
Note that the late October ’23 drop clearly was a Trap Door/Undercut Low.
Fast moves come from false moves don’t they.
I paralleled that Bottoms Line off the first high off the Oct 2022 low.
This was the early Dec 2022 peak.
The geometry is validated by the fact that this Tops Line is kissed perfectly at the late July 2023 top.
Now the Tops line is being kissed again.
The SPX may do an Aretha Pullback here (respecting the trend line); however, I can’t help but wonder if in coming days/weeks we get a Throw-Over, mirroring the late Oct 2023 Undercut.
If so and the SPX then stabs back below the Tops Line, Get Out Of Dodge.
The Truth Teller, IWM, is warning of a drop.
An hourly IWM shows resistance just overhead at 204.5 region (purple Tops Line).
This ties to the rising red trend channel.
Notable is the gap over the Ghost Line (green).
Breakage back below the green Ghost Line and the bottom of the red trend channel open the door for a drop to the Bottoms Line (blue) around 198.50