By: Jeff Cooper

Hit and Run Trading Morning Report - March 27, 2024

Possible Upside Cascade Setup

Yesterday we noted that the SPX would turn its 3 Day Chart down on trade below Monday’s low.

The 3 Day Chart turns down on 3 consecutive lower daily lows, not lower closes, but lower lows.

The market opened strong yesterday and it looked like a turndown in the 3 Day Chart was off the table. However,  a Late Day Selloff, did the trick.

The 3 Day Chart turned down on Turnaround Tuesday.

Remarkably a turndown in the 3 Day Chart has occurred only once before since this rally started in late Oct 2023.

That was on January 3rd.

It was expected based on tax selling pushed into the new year.

The SPX traded a little lower  into January 5th before exploding.

Markets seek equilibrium and are often symmetrical.

The range of the rally from the October 27 low to the high prior to the turndown in the 3 Day Chart on January 3, 2024 was 689 SPX points achieved on December 20th.

Adding 689 points to the January 5th low of 4682 gives 5371.

That’s a mere 100 SPX points above last Thursday’s all-time 5261 high.

A move to 5371 would perfect a Measured Move.

That has been my thesis throughout the month…that we would at least tag 5371 region  with a shot for 5500-5600 for a Cherry on Top Buying Climax.

What would you say if I told you 537 (5371) “points to” April 8th?

Yes 537 squares-out with April 8th, The Second Great American Eclipse.

What are the odds this is happenstance?

A Measured Move Square-Out.

I have maintained if the market was going to pop its cork, we would have to see champagne start no later than the end of this week.

On Tuesday’s late selloff, the idea of champagne looked flat.

However, as I write at 3:00 A.M. PT the SPY is trading up 21 at 521.

Did yesterday pull the rubber band back for a run to new highs?


Tuesday was an outside down day. We rallied above Monday’s high in the morning and traded below Monday’s low in the late afternoon.

A reversal above Tuesday’s 5235.16 high will trigger a Keyser Soze continuation buy signal (a Reversal of a Reversal).

Follow through over coming hours/days that offsets last Thursday’s “Tail” high of 5261.10 would trigger a second Reversal of a Reverssal because last Thursday left a Topping Tail reversal (albeit it was a strongly positive session holding well above the open gap).

As well, trade above last Thursday’s high would turn the 3 Day Chart back up EVEN IF IT HAPPENED WITHOUT 3 CONSECUTIVE HIGHER HIGHS.

Why? Because there are 2 ways the 3 Day Chart can turn up.

1)      3 consecutive higher daily highs or

2)      A rally above a CIRCLED prior 3 Day Chart high.

Obviously, last Thursday’s all-time high is a circled 3 Day Chart high.

So we have a POSSIBLE upside Cascade setup on the table.

if we offset yesterday’s high: Keyser Soze 1.

If we offset last Thursday’s 5261.10 high: Keyser Soze 2.

If we rally above last Thursday’s high: a turn back up of the important 3 Day Chart.

You couldn’t write this script. But here it is.

It’s a real Squeeze Play coming on the heels of yesterday’s late selloff…if it plays out.

Did big money all of a sudden decide in the last hour Tuesday that they just had to sell after having all day to do so?

Did they all of a sudden have Seller’s Remorse in the middle of the night?

Was there an agenda to pull the rubber band back or was it just a wayward Algomatic straying from the fray?

Be that as it may, my expectation is that no real selling pressure plays out because the bulls aren’t going to throw the baby out with the bathwater into quarter-end.

Indeed they might paint the tape and put the pedal to the metal after Tuesday’s late fainting spell.

Methinks the damsel in distress trade in the last hour doth protest too much and if this rally promised for the open today actually follows thru, then yesterday was  Miss Direction and we may see new highs in coming days/early April.

In sum, if the market is bullish, yesterday’s turndown of the 3 Day Chart will find a low soon in terms of both time and price.

Soon looks like immediate given this morning’s pre-open action.