By: Jeff Cooper

Hit and Run Trading Morning Report - March 13, 2024

It’s All Weimar, I’m Only Bleeding

“…the child’s balloon
Eclipses both the sun and moon.”
-Bob Dylan, It’s Alright, Ma

The market acts like it’s a rag doll in the jaws of a pit bull, foaming at the mouth with momentum,

Salivating with FOMO.

Friday’s large range Key Reversal Day can’t shake the bullish grip.

Tuesday’s hotter than expected CPI bites the bears in the butt.

NVDA’s cliff dive on Friday merely incites a buying frenzy two days later leading to a close a whisker from a new record.

What’s driving the ferociousness of this beast?

It may be inflation.

The same reason Venezuela’s stock market has gone parabolic.

The market seems sure that the Fed can never raise rates above the true inflation rate to fight inflation.

This is because of the massive debt service of the U.S. Treasury.

Is this why gold and Bitcoin are running in tandem: because the Fed can’t raise rates to defend dollar hegemony at the same time Washington’s spending spree mainlines juice into the economy.

You may not be able to print prosperity; but you can print the stock market apparently.

once the music of momentum sinks its teeth into the tape nothing sounds a sour note.

Every hiccup is an invitation to buy.

This week I was looking for a Panic Cycle to play out into OpEx. It looked like last Friday’s reversal was setting the stage.

The weeks not over but it looks like unequivocal recapture of 5115 (90 degrees down from the ATH)

Opens the door to a spike higher into OpEx versus a shakeout.

A 10 min SPX shows Turnaround Tuesday’s textbook price action.

The SPX gapped higher pulling back to fill the open gap for a Side Door Entry long.

An Opening Range Breakout (ORB) saw the index explode higher.

A mid-day pullback tested the level of the ORB eliciting a drive to close at session highs.

Be that as it may I believe Tuesday’s solid negative breadth with the SPX up 5 7 points may be a record.
At the same time, Tuesday was also a record closing high sporting negative breadth.

If we do not get a panicky shakeout prior to the sharp last ditch rally higher I was expecting then it may be that a parabolic rally is starting.

Stocks crawl before they walk, walk before they run, and run before they sprint.

This is the analogue I’m looking act:

We know that there is a 2nd Great American Eclipse on April 8.

The first Great American Eclipse was on August 21st, 2017.

That turned out to be a low prior to a Runaway Move that culminated with an historic parabolic rally

That lasted 18 trading days. (By the way this correlates to the 16 trading day vertical Buying Climax in 1929)

Notice that the advance from the August 17th, 2017 low started with a breakout over the 50 day ma.

Just like the advance off the late October 2023 low.

My thesis is that we may have a Mirror Image Foldback on the table.

In other words, if August 17th was the start of a momentous advance ending with a parabolic advance,

Then potentially, the April 8, 2024 eclipse may be the end of a parabolic advance on top of this rally from October.

A similar trading day count from the Aug 2017 low to the January 26, 2018 high takes this rally into the week of the Second Great American Eclipse.

It will pass over SEVEN cities with the name Nineveh.

God destroyed Nineveh.

SEVEN years ago the first Great American Eclipse passed over SSEVEN cities with the name Salem (as in Jerusalem).

To me Nineveh sounds a lot like Nvidia.

The current advance off the late Oct 2023 low, as persistent as it is, has not gone vertical…yet.

Notice how both the advances never tested their 50 day lines and the extent from the 50 day to the high in both instances.

In sum, my expectation had been that the market would shake out with a short-term panic prior to a vertical run…if we were going to get such a run.

1929 is an analogue for this.

However if we don’t start that shakeout before the end of today, then the likelihood is a surge that shocks bulls and bears alike may be the agenda.

There is one hurdle to this thesis.

Last week we mentioned that 520 squares out with March 13.

If we have another day like Tuesday it will but the SPX at 5220 (520) for a Time/Price square0out.

If that occurs and the SPX knifes thru this region over coming days, the Buying Climax may be in gear.

The T Rex in the bull ointment is that a break back below 5050 suggests a top is in.