By: Jeff Cooper

Hit and Run Trading Morning Report - May 1, 2024

FOMC: Fear Of Missing Crash

We have been saying throughout 2024 that the ghost of 1929 was going to haunt the tape this spring.

Yesterday market participants got spooked on schedule.

From Tuesday morning’s Hit and Run Report:

“It looks like a clear A B C Measured Move off the April 19th low.

The A wave rally is 135 points.

The C wave started at 4990 on April 25th.

Adding 135 points to 4990 gives 5125.

Monday’s high, 5125.49…we’re in the Wheelhouse for a turn.”

Below is an SPX from Tuesday’s report

Tuesday was a relatively orderly decline until the runoff when markets plunged into the bell.

A blaring sell siren will sound if the DJIA and SPX take out their mid-April lows.

The blaring siren is what I call a Time Turn Trend sell signal.

It is based on the weeklies which W D Gann said to key off of to determine the primary trend.

Allow me to explain.

The DJIA and SPX 3 Week Charts turned down the week of April 15.

The first turndown in the 3 Week Chart in a strong uptrend should produce a rally phase.

It did.

Trade back below the “circled low” of the 3 Week Chart low issues a Time Turn Trend sell signal.

It is based on TIME, as this is where the 3 Week Chart turned down.

That level on the DJIA is 37,611.56

It is just below current Tuesday’s close.

The corresponding level on the SPX is 4953.56 and ties the 20 week moving average.

Notice that the DJIA cracked its 20 week moving average on a plumb line drop off the top.

Last weeks bounce Pinocchioed the overhead 20 week before falling away from it yesterday.

The DJIA has been leading the SPX. It topped 1 week earlier.

The SPX is still holding its 20 week moving average; however breakage below would trigger a Combo sell signal:

A break of the 20 week in league with a Time Turn Trend sell signal.

As well trade below the mid-April low means the SPX is violating a 360 degree decline from the 5265 all=time high.

Checking the weeklies from the summer of 2023 shows the downside acceleration when the SPX triggered a Time Turn Trend sell signal violating the 3 Week Chart low.

But why do I say a crash setup is in the Wheelhouse?

Members know several of the correlations with other crashes, but  the synergy with 1929 in May 2024 is complelling.

1)      The year 1929 “points to May 17th/19th. May 17th is the anniversary of the NYSE in 1792.

2)      In the same way, 1987 squares-out with October 29th, the big Kahuna in 1929.

In other words, the year 1987 “points to” October 29th. The pattern of the Fall in those two years is nearly identical (as are most crashes). Seeing that and anchoring zero to 1987 in September that year would have put you on alert for a crash in October 1987.

3)      131 years ago in  1893 there was a panic between April and November.

1893 is a corner number on The Sq of 9 that squares-out with May 6th.
Anchoring zero to 131 squares out with May 17th.

My thesis has been that we are seeing a mirror image fold-back with 1929.

At the end of October 1929 a crash hit with a 5 month return rally into mid-April

At the end of October 2023 we got a low after a sharp decline and a crash up into mid-April.

If I am correct about a mirror image fold-back, the potential is we crash in May and get a return rally into the fall.

In other words the elevator shaft was in October 1929. The slow motion escalator crash occurred from April 1930 for two years.

We may get the elevator shaft NOW followed by a downhill escalator to be determined.

The Great Bull Market began in 1982.

42 years ago.

On the Square of 9 the number 42 also squares out with May 17th.

Many of you who are familiar with my story know that my dad went broke in the market in the Crash of May 1962.

He was on margin and was in the hospital with my mom who was having a procedure when the crash hit.

As they say timing is everything.

He came back and took 3 times out of the market what he lost, but he was a rare person who didn’t think twice about getting back up after getting knocked down.

That was 62 years ago. On the Square of 9 the number 62 squares out with June 6th, March 6th and early September.

Why is that important? June 6th aligns with the 2009 bear market low of 666.

March 6th was the date of that low.

Early September was the high in 1929 and is opposite March 6th and squares 666 and June 6h.

So there is some eerie synchronicity with 1962.

I can’t help but feel my dad is pointing the way all these years later as to another May Day.

Above I noted that the NYSE started in 1792.

1792 also squares out with June 6th.

Today is FOMC Cha Cha Day.

The Fed may be boxed in as described in yesterday’s report.

Is it possible this is why Mr. Market had a tantrum Tuesday?

The Fed was founded in 1913. This is 111 years ago.

111 squares May 6th.

Remember this also squares out with the year 1893.

Curiously that was the only year that a President, Grover Cleveland,  won a second NON-CONSECUTIVE term.

That potential parallels this year.

In sum, the SPX is on the precipice of panic.

It’s hanging by a tread tp the bottom of a Bear Flag.

Conclusion.  Stocks fell sharply Tuesday concluding their worst month since September 2022. Is it business as usual. Volume expanded above its 10 day average. It looks like the SPX has completed  its contra-trend rally. If we bounce today, the next time down breaking this Bear Flag will trigger an hourly Rule of 4 Sell signal…a break of a 3 point trend line.

Either way, bounce or not, a drop below the April 19th bottom means we are in the heart of a powerful decline.

In tomorrow’s Hit and Run Report we connect the dots as to WHEN the Gann Panic Window opens and closes.

What are the odds that the January 2022 high ties to the 5265 all-time high and the February 2020 high…point to the 1987 high and the 2008 November crash low?

You have to see it to believe it.

The odds are we are on the precipice of panic…when market participants recognize that a pullback is no longer a pullback and the T Rex in the ointment is that  Buy The Dip has jumped the sharp.