By: Jeff Cooper

Hit and Run Trading Morning Report - May 2, 2024

They Don’t Call It The Holy Grail For Nothin’

Trading was extremely volatile following the FOMC. It soared and then tanked at the end of the day.

Was that a dunce cap or a witches hat?

Either way, it didn’t seem like a good omen but the intense swings continue this morning:

Following a close down 17 points the index is looking up 36 points a few hours before the open.

Volatility preceded Price, Velocity precedes trend change: V squared = instability.

Pulling the lens back shows an HOURLY Head & Shoulders on the SPX.

We call tests of the rising 20 day moving average  Holy Grail Buys and backtests of the declining 20 day moving average Holy Grail Sells.

Interestingly yesterday’s high, where Powell “shrinkage” started was a picture perfect backtest of the declining 20 day moving average.

They don’t call it the Holy Grail for nothin’.

509/510 squares out with May 1st. The downside slide started from 509 SPY/5096 SPX.

You can’t make this stuff up.

As well, prior to Powell’s Party, we tweeted that NVDA should find a low in the 815  region as  May 1st squares out with 815.

After satisfying the Time/Price square-out on 3 intraday drives to a low, NVDA exploded to 856.

870 is 180 degrees up from Wednesday’s low but we alerted that the first time up into the open gap near 855-860 should be good for a downside try.

NVDA skidded 30 points in an hour.

In sum, the SPX closed below a Bear Flag below its 50 and 20 day moving averages.

Until the 50 day moving average can be recaptured around 5120 which is 180 degrees down from high, the market is suspect. That said the bull dies hard and it must be remembered that the sharpest rallies occur in the midst of bear markets.

A daily SPX shows a Rolling Head & Shoulders Top from the first week of March thru the first week of April

It looks like it is working on a larger Head and Shoulders Top with the current Bear Flag defining the potential right shoulder.

Breakage below the 4950 region projects to 4635.

This ties to an undercut of the 200 day moving average which currently resides at 4698.

Caution is warranted.

That said, Hit and Run continues to play both sides intraday and on a swing basis.

For example despite our bearish complexion, we scooped up MNDY at 85 yesterday along with MOD, FTAI and VERA.

Buy and Hold may work in bull markets; Volatility is  the mother’s milk of Hit and Run.