By: Jeff Cooper

Hit and Run Trading Morning Report - April 18, 2024

How Will We Know When It’s Katy Bar The Door?

For a year, we’ve been warning about Cycles of War due to exert their influence.

That’s happening.

However, despite geopolitical concerns and “risk off” bloodying the tape, it has not perpetuated a flight to safety in U.S. Treasuries….at least not until the first glimmer of a rally in TLT on Wednesday.

Wednesday’s TLT rally came from the bottom of a trend channel (black) following a waterfall decline triggered from a 3rd lower high.

3rd lower highs are my Power Surge sell setup and often times see fast moves.

Despite tagging the bottom of this trend channel, it looks like TLT is vulnerable until the week of May 7th.

Why? On my Square of 9 Wheel, the December 28th high of 100.57  “points to” May 7th which is an interesting potential Time/Price cycle for many reasons that we’ve walked through in this space over the last month.

What is interesting about a potential pivot low around May 7th in TLT (and a corresponding high in TNX, 10 –year yields) is that a monthly big picture TNX shows a 5 wave culminating structure into last October.

The current rally in TNX may be carving out a Right Shoulder of a Head & Shoulders top pattern.

Think lower yields…ultimately…for an interim rally phase.

A reversal down from this H&S Top in bonds is consistent with the idea of a panic in stocks and a flight to safety in Treasuries.

A Panic Cycle in stocks has been on our radar for April/May since our early December report where Hit and Run stated our expectation for a “basing pattern to play out for around 7 weeks from early December to mid-January followed by a vertical but jagged blow-off into April.”

So far the SPX struck a top on Gann Day March 21st (tested on March 28th) followed by a knife thru the back of the 20 day moving average and a spike thru the 50 day moving average.

The SPX is perched NEAR the bottom rail of a trend channel from the October 2023 low.

It hasn’t been hit yet.

This ties roughly to a key 360 degrees down, 4979,  from the all-time high (March/5265).

4979 also ties to Phil D Gap from February 22.

The presumption is breakage below the bottom of the trend channel coupled with breakage below 360 degrees down (4949) opens the door lower.
Where is lower?

The next projection down would be a cube out or 540 degrees down from the all-time high which is 4838.

This ties roughly to the 4818 peak in early January 2022.

Prior resistance is supposed to be new support.

If a drop to the low 4800’s does not find support an elevator door opens.

Think the unthinkable.

4838 reduces to 484. On the Square of 9 Wheel 484 points to/vibrates off May 7th.


481 (the January 2022 top) aligns with May 17th, the anniversary of the NYSE.

My expectation is that time period may be dramatic and historic.

The NYSE start date is 1792.

The year 1792 squares out with March 6th and June 6th and the first week of September.
The first week of September was the pre-crash high prior to The Great Depression whereas March 6th marked the bottom of The Great Recession in 2009.

My expectation is the first week of June will be an important pivot this year as well.

For the last 6 months Hit and Run has been walking thru the many  synchronicities between 1929 and 2024.

For example, April is 94 ½ years from the October 1929 crash.

On the Square of 9 Wheel 94 ½ squares-out with early April when the SPX broke a trend line defining the uptrend in 2024.

As well, the “return to normal” rally after the October 1929 crash occurred on April 16, 1930.

On April 15, 2024 the SPX slammed thru its 50 day line. The 50 dma is a widely watched barometer of the intermediate trend for market technicians.

Obviously April is opposite October on the calendar.

The SPX turned its 3 Week Chart down this week…and extended to the downside.

In a strongly trending market, a turn down in the 3 Week Chart should define a low soon in terms of time and price. However, if the preceding move was a Buying Climax, a blow off, then the ensuing behavior following a turn down in the 3 Week Chart is bearish, ie. price continues lower.

That’s what has occurred this week.

You can see that the 3 Week Chart turned down directly off an all time high from January 2022 and extended. After a failed rally attempt accelerated downside momentum showed up.

Notice that it also turned down immediately off the recovery high in July 2023 and extended.

After a failed rally attempt accelerated downside momentum showed up.

Checking the weekly from 1929 shows the 3 Week Chart missed turning down right off the all-time high by a hair.

The market is not a Rolex.

You don’t want to stand on ceremony.

Sometimes the market is a Rembrandt, others it’s a Picasso.

The line is the 50 week ma.

Be that as it may, the drop right off the all time high in 1929 attacked the prior resistance before a short-lived rally attempt.

A similar drop in the current market structure implies a test of the low 4800’s, the January 2022 peak, which as noted ties to 540 degrees down from high.

Is it possible the SPX is a heat seeking missile to the low 4800’s?

If the Wheels come off, it is interesting that two “cubes” of 540 degrees each down from high or 1080 degrees down is 4429.

Why is this important?

Because parabolic moves often get completely retraced…and quickly.

4429 is Phil D Gap from November 14, 2023.

Notice that in 1929 the first drop off the top ties to 50 week moving average.

Currently, the 50 week moving average resides at 4617. The 50 week ma ties roughly to the 200 day moving average currently at 4668.

The 4600 region is important because 4617 is the July 2023 high.

There are many bearish technicians looking for “one more good high” before any kind of debacle.

One of the arguments is that if 2024 is a Super Cycle Top that the blow-off should have been more vertical mirroring 1929.

However, checking the weeklies from 1929 and 2024 shows Climax Run  in 1929 was 13 to 14 weeks.

The Climax Run from November 2023 to the March 2024 high was 22 weeks fully satisfying the case for a potentially larger degree Super Cycle Top.

In sum, if the patterns  from 1929 in combination with other cycle/patterns I’m looking at, exert their downside influence, once 4818 (the Jan 2022 top) breaks it should be Katy Bar The Door.

Of course, that is 250 points lower and there are downside pivots along the way that open the door which we are alerting Hit and Run members to as they trigger.

In keeping with our bearish stance on the market Hit and Run initiated positions in early April in:

  • SPY April 19 puts from 4.35 -  closed the balance at $14 and $15.
  • SPY May 17th 520 puts / open
  • IWM May 17th 202 puts/open
  • IWM May 24th 190 puts/ open
  • IWM May 24th 195 puts/open

These dwarf the opportunity that I see ahead.