By: Jeff Cooper

Hit and Run Trading Morning Report - April 8, 2024

There’s Something Happening Here

“But all the clocks in the city
Began to whirr and chime:
O let not Time deceive you,
You cannot conquer Time.”
-W.H. Auden, As I Walked Out One Evening

The 2nd Great American Eclipse is today.

The First Great American Eclipse was August 21st, 2017.

These are Great American Eclipses because they cross the totality of the U.S.

The market bottomed on August 21st, 2017 starting a torrid run into a top on January 26, 2018.

We got an eclipse 5 days later on  January 31. The market went into free fall on February 2nd.

The SPX crashed from 2892 to 2532 in 10 trading days…bouncing hard off its 200 day moving average.

The crash rippled through the market throughout 2018.

The SPX tested its 200 day again in late March and again in early May.

The “triple bottom” produced a strong rally into SEPTEMBER 21st to 2940 striking a marginal new high above the January 2018 peak.

From there a 3 month 90 day/degree drop played out….The Christmas Crash as it bottomed on 12/24-12/26.

You can see following the FIVE MONTH RUN, the Volatility Reversion To the Mean persisted for nearly a year.

Is it happenstance that the rally in August 2017 began from the Great American Eclipse and essentially 11 months of turbulence played out from the late January 2018 eclipse?

An eclipse occurred on October 14, 2023. A momentous Runaway move started 14 days later on October 30th.

Just as a powerful advance started on the First Great American Eclipse in 2017, is it possible the SPX’s 1160 point FIVE MONTH  surge will end on April 8th …or the week of this Second Great American Eclipse.

IF we got a flash crash here to the 200 day moving average it would tie roughly to a backtest of the July 2023 high of 4607.

Given that the 50 day line has not been tested since the Runaway Move started, arguably Mr. Market could pass on the scenic route knifing through the 50 day m.a.  taking a direct route to the 200 day.

Prior resistance (the 4607 July 2023 high) should act as the region for new support.

So the 200 day could be a magnet when most players would probably expect the 50 day to hold the first time down. My cycle work suggests otherwise: that if we see downside momentum it will be a momentous….not abiding by expectations or traditional support.

Importantly notice on the above chart that Thursday the SPX knifed below 2024’s rising trend line.

It could rally further to fully backtest this broken trend line.

Recapturing Thursday’s large range outside down day could theoretically perpetuate a squeeze to a marginal new high in the low to mid 5300’s.

However, my expectation is that would mirror the September  B WAVE high in 2018.

We started out talking about eclipses.

I’m sure many of you are wondering what this has to do with the stock market or anything on this planet.

If  you think the stock market exists in a vacuum apart from geopolitics then stop reading here.

Well, the Universe is synchronous. As above, so blow.

 Geopolitical tension is coiled.

Throughout March we’ve walked through the many synchronicities pointing to the possibility that a mirror image fold-back is playing out between 1929 and 2024.

One more spoke in the Wheelhouse: April 16 was the return rally high in 1930.

Just as this advance began on Monday, October 20th.
In other words, the anniversary of the October 29th, 1929 crash was on a weekend in 2023.

The next day the market bottomed and began what would be an historic CRASH UP.

The rally into this October 16th region underpins the idea that this is a secondary B Wave high

To the January 4, 2022 orthodox high.

Either way, whether January 2022 was a Wave 3 high followed by a Wave 4 decline into October 2023, the structure still points to a major Wave 5 culmination of some degree.

The January 4th high is a significant marker in the market because it is straight across and opposite

768, the 2002 the bear market low and 1576 the 2007 bull market high.

Let’s take a deep dive.

The black line is a horizontal line across the 4818 January 4, 2022 high.

The yellow horizontal line is the July 2023 high.

The purple Bottoms line connects the March 2020 crash low to the March 2023 March low.

The October 2023 low was an undercut low.

The magenta bottoms line connects the March 2020 close with the October 2023 low.

Notice how the purple trend line intersects with the yellow line at around 4600 (the July 2023 high). This month.

The magenta line ties to the 4400 region this month. It intersects with a blue horizontal Ghost Line which was a Neckline of a Head and Shoulders top in 2023.

The takeaway is that if a C Wave crash is on the table there is a lot of air below 4400.

Breakage below the 4800 level of the January 2022 high opens the door to the domino levels below.

A Waterfall setup.

The trajectory to the potential C wave low is not an immediate crash projection.

The presumption is a drop that tests the October 2022 low will elicit a countertrend rally.

The timing is more important and is something we’ve mapped out potentially.

Drilling down to the short-term in the heretofore leading QQQ shows after Thursday’s violent plunge which was the worst down day in over a year we got a Snapback on Friday that recovered a good deal of Thursday’s losses.

We’ve got a 5 point Megaphone Top on the table but the 3 Day Chart has not turned down yet.

That said the high day on March 21st left a Combo sell signal: a Gilligan sell signal (a gap  up to a new 60 day high with a close at/near session lows) and a Soup Nazi sell signal (a reversal back through a prior high within a 20 day look back with at least a 4 day interval).

That Combo sell signal drove the Q’s to a test of the 50 day line with a large range outside down day on Thursday.

It was the first kiss of the 50 day line since the rally started last fall.

The 449 high is opposition April 7th…so we have possible square-out with the high here.

Notably the Breakaway Gap to the all-time high on March 21st was filled with a counter-balancing Breakaway Gap to the downside on April 2nd.

The Q’s are trying to reclaim that April 22 gap at 443 but so far have been rejected on a closing basis.

 Breakage below the 50 day line … and something is happening here.