By: Jeff Cooper

Hit and Run Trading Morning Report - April 2, 2024


Divergences, like overbought and oversold conditions can last a long time.

They matter when they matter.

This is because, as W.D. Gann astutely stated, “Time is more important than price.”

It is TIME that turns trend.

Most market participants think that the market just topped and rolled over en massed in September 1929.

In truth the divergence between rising DJIA and the falling A/D Line lasted nearly two full years as a select few carried the DJIA higher as the majority were already in a Bear Market.

This was the longest divergence on record---until 2024.

In the summer of 1987 the divergence between the rising DJIA and the falling A/D Line lasted nearly six months as a select few names carried the DJIA higher as the majority were already in a Bear Market

In both instances when Time was up, the Jaws  of Divergence snapped shut producing  a crash.

In both instances indicators---like the VIX, advance-decline line, and measures of sentiment (fear and greed) hinted at trouble ahead.

While the vast majority of traders were swept up in the euphoria of the Moment, astute observers recognized these signals for what they were: warnings of a market that would turn in a spectacular show.

1929 heralded an economic event, The Great Depression.

1987 was a market event.

In keeping with the Principle of Alternation, the likelihood is that the divergences that have been produced over the last two years are telegraphing an economic event.

While it may seem that the market talks in tongues and that the tale of the tape is like the whistle that only dogs can hear, those with ears to hear and eyes to see will recognize the lessons of history.

The diabolical nature of markets is that the longer divergences persist, the tendency of players is to believe that “this time is different” because the market held up in the face of these “obstacles”.

Time is not different. Time is elliptical. It repeats.

It is important to have an understanding of historical analogs.

With these insights traders can mitigate downside risk and capitalize on a massive opportunity with confidence and precision.

We have been drawing attention to the crash of 1929 since the blow-off rally stated in November.

Interestingly November was the low after the 1929 crash…the low for 5 months that is…into April 1930.

As horrific as the October 1929 crash was more money was lost buying the dips following the April 1930 secondary peak.

Is it possible April 2024 is a secondary peak to the January 2022 high…TWO years ago?

Clearly April 2024 sets up as big pivot.

April 2024 is 94 ½ years from October 1929.

We have shown how 94 ½ squares-out with April 8.

As well, April 2024 is 1134 MOONths from October 1929.

1134 squares out with April 8th.

Wheels within Wheels.

The DJIA 386 high in September 1929 squares out with mid-April as well.

Dog Whistles. Synchronicities. Call them what you will.

When you have synergies lining up like the spokes of a Wheel, you can expect things to roll.

If the big picture is coming into focus then our job is to drill down to see when price triggers a potential event.

In sum, my thinking has been that the SPX is carving out a B Wave high on this years rally above the the January 2022 high of 4818.

Let’s look back to another B Wave high in the DJIA  to see what we can see.

The DJIA eclipsed its 2000 high and pushed higher in 2007. However when it knifed back below the 2000 high, the crash of 2008/09 was on.

Now the DJIA has cleared its 37,000 high from January 2022; However, a reversal back below that high warrants caution.

The equivalent number on the SPX is 4818. But that is 400 points nearly 9% below current levels.

The downside pivots are a turn down in the Weekly Swing Chart.

This week that number is 5203.40

The Monthly Swing Chart turns down in April on breakage below the March low of 5056.82.

The 50 day moving average currently resides at 5056.

It has not been tested since it was reclaimed in early November.

The normal expectation is that the first time that the 50 day line gets tested after a persistent parabolic run, that it will produce a bounce.

If it does not, Get Out Of Dodge.

If the bounce is shallow and short-lived, Get Out Of Dodge when the 50 day buckles.

The SPX eclipsed 4818 on January 19th.

April 19th, the Day (week) Of Infamy in history is 90 degrees/days following January 19th.

This week is 90 days/degrees from the early January 2024 when the 3 Day Chart turned down for the first time since the rally started last October. I’m

This week is pivotal. Watch for signs of Jaws snapping.