By: Jeff Cooper

Hit and Run Trading Morning Report - April 16, 2024

The News Breaks With The Cycles, Not The Other Way Around

On Monday the market may have set the land speed record for a relief rally fizzling out.

The SPX gapped up gaining 45 points in the first 20 minutes.

It was all downhill from there. Literally.

Since December we have been outlining a slew of cycles due to exert their downside influence in April and May.

There is no lack of news breaking with those cycles.

In addition to geopolitical events, the ramp in 10 year Treasury yields is killing growth stock generals.

Names include CRWD, ZS and OKTA which Hit and Run alerted to short on the Hit and Run Private Twitter Feed Monday morning.

Following Monday’s opening fireworks, the SPX pulled back testing the open gap and attempted to rally; however, when the index offset the open gap it triggered a Jump The Creek sell signal.

Caving in thru the 50 day moving average as well as  5120 which is 180 degrees down from the 5265 ATH opened the downtown door.

The next decrement of 90 degrees down is 5045. The SPX struck a low just above that at 5052 on Monday.

Breakage below 5052 targets 4949 which is a full 360 degrees down from high.

This ties to the bottom rail of a trend channel (blue).

As well there is an open gap at 4982. Consequently there  is a strong likelihood the SPX will be quickly magnetized to the 4949 region.

Interestingly 496 (4960) on the Square of 9 Wheel points to March 21, the orthodox high.

That means there is a Time/Price square-out at 496/498 and the date of the high.
It underpins a pull to 4960-4980 cash.

Today squares out with 490 (4900)---so if the wheels come off we could see a waterfall decline to the 4900 region today/tomorrow…with Wednesday being VIX expiration.

Breakage below 4950 and the trend channel opens the door to a “cube-out” at 4834.
In other words 4834 is 540 degrees down.

Below that, the 200 day moving average looms large at 4660.

So there is a strong vibration potential there is potential for  an outsized move of 400 SPX points lower (the 200 day moving average).

If that sounds steep, remember that we’ve been pointing to the potential that a mirror-image foldback to 1929 may be unfolding.

Specifically, following the  elevator crash in October 1929, the DJIA ran up 5 months into APRIL 16, 1930.

That marked a pivot from which the market started an escalator crash for 2 years.

Is it possible an elevator commeth?

This is how you used the Square of 9 Wheel to forecast.

Range precedes price. With Monday’s large range break below the 50 day m.a., the 200 day moving average is targeted.

Currently the 200 day moving average resides at 4662. This ties to 720 degrees down from the all-time high which is 4700.

Consequently, accelerated momentum suggests the potential for a flush/undercut of the 200 day moving average…sooner than later.

Remember surprises break in the direction of the trend.

Big surprises break in the direction of sharply trending markets.

There are many reasons to think the top is in.

1) To kick off the week, the SPX and QQQ snapped their respective 50 day lines with authority.

The large range breaks in both the SPX and the Q’s below their 50 day lines left Hit and Run Expansion Pivot sell signals---large range breads below the 50 day lines.

2) March 21st ties to the 24th anniversary of the Bubble Top in 2000.

3) On the Square of 9 Wheel 24 is opposition 480, the SPY high in January 2022.

The presumption has been that January 2022 marked the orthodox high of the bull market with an A Wave decline into October 2022 followed by a B Wave nominal new high (in percentage terms in March 2024. A violent C Wave, a crash wave should follow if this correct.

The Q’s also gapped up to an all-time high on March 21st.

A Hook, Line & Sinker sell setup perpetuated Monday’s drop.

The Q’s hooked up on Thursday, with a line drive down on Friday, leading to a Sinker on Monday.

From the 448 high on March 21st, 90 degrees down is 428 and ties to the April 8 eclipse.

180 degrees down is 408.

270 degrees down is 388 which represents an undercut of the 200 day moving average.

360 degrees down is 369.

In sum, the leading QQQ targets a test of the 388 to 369 region.

My cycle work suggests it happens in the second quarter in keeping with my recent note, This Things Gonna Crash.