By: Jeff Cooper

Hit and Run Trading Morning Report - May 15, 2024

Editor's Note: Today there are two reports. Scroll down for the second one.

Hit and Run Trading: A Day In The Life

Stocks can turn on a dime. Most traders cannot.

This maxim is the hallmark of Hit and Run Trading.

Hit and Run is the flip side of Buy and Hold.

The inspiration for Hit and Run Trading came from my dad who was a dyed in the wool

Long term investor until he got wiped out in the crash in 1962.

He had retired at 50 after selling his company and moved the family from Philly to Beverly Hills.

He decided to invest. Pretty soon brokers were saying, “Jack you can make twice as much money on margin.” He went along.

Then one day in May, 1962, my mom had to have fan operation and he left instructions with his broker that if something happened in the markets to sell out one stock to get off margin on all the others.

For some reason the broker didn’t follow my dad’s instructions.

He let stock A get a margin call.

Ditto with Stock B, C and D.

My dad lost more than he had to his name that day.

That was the curse of Buy and Hold on the Cooper family.

We had to move back East where my dad started over in the same industry and eventually

He created the same business in China at the behest of the Nixon administration who wanted to open relations with China.

A few years later he sold the enterprise.

He had a score to settle with the market.

He got back into the market, but this time as a trader with a play book and a game plan.

I remember coming home from school and walking into his office at home and asking how his day was and he’d invariably answer, “Hit and Run baby!”

Years later this same approach to the market instilled in me by my dad and his experience was reinforced by a trader named Mark Weinstein.

Like myself, Weinstein plays for quick profits often covering within hours.

Even on position trades we have the same M.O. ---I will usually take partial profits quickly to assure a net profitable outcome.

To quote Weinstein,  “When I trade at home, I often watch the sparrows in my garden. When I feed them bread, they take just a little piece at a time and fly away. They keep on flying back and forth, taking small bits of bread. They may have to make a hundred stabs at a piece of bread to get what a pigeon gets at one time, but that is why a pigeon is a pigeon. You will never be able to shoot sparrow, it is just too fast. That is the way I day trade.”

That is the way I day trade.

It rhymes with the way I swing trade. I don’t stick around if I sense something a shift in momentum.
I can always get back in.

It is interesting to me at least that the word pigeon starts with “pig”.

Unlike a pig, I don’t try to eat the whole thing. I take a piece and keep a Stub if the market is in gear.

Let’s take a look at some of the action from the Hit and Run Private Twitter Feed on Tuesday.

First and foremost, I start with a playbook and a game plan.

This means identifying where the upside and downside pivots are with stocks on my long and short radar.

As with any game, things can shift mid-stream and you must “go with the flow”

1)      FSLR had recently broken out of a Bull Flag and clearing its 50 day line in April.

On Friday, May 10th, FSLR produced a Gap & Crap. It gapped up to 197 pushing to 199 before reversing and triggering a down ORB (Opening Range Break). It triggered a continuation sell signal when it offset the opening gap (Jump The Creek sell).

Monday night I determined FSLR had well-defined resistance near the 195 strike…interesting with this week being a big OpEx as well.

We alerted on the Private Twitter Feed to short FSLR at 195.75.

Literally minutes later we covered half for more than a 4 point gain.

FSLR skidded to 189  with the first 20 minutes and we covered the balance of our short.

Could we have kept a Stub and made more? Yep. But Gift Horse Gains. Time is money and you can only watch so many trades percolating at the same time.

On Monday we shorted an Up Opening Spike in CVNA to 122.

Like FSLR it looked like déjà vu.

APP has been a big go-to name for Hit and Run this year.

On Tuesday they did a secondary offering and we tweeted that 79 is 90 degrees down from high.

APP dropped to 80 on the open and reversed smartly immediately.

 We turned our sights to another solar name, SEDG that was bumping up against resistance at its declining 20 day moving average near the 55 strike

On Monday Hit and Run shorted FIX at 343.16 on the premise that it would be magnetized to the 317 region near its 20/50 moving average Bowtie.

On Tuesday we covered the balance of FIX at 324 locking in a nice gain before it completely rebounded to 336.

On Monday Hit and Run flagged 42.80 as the downside pivot in GDXJ.

GDXJ is in position to come out today.

One of the strategies my Hit and Run books is known for is the Hot IPO Pullback.

What made LOAR  a long IPO Pullback setup on Monday night for Tuesday was it was in what I call the Crouching Tiger position, a double down inside setup.

Essentially this means the stock is coiled to spring.

And spring it did.

ANF was a long day trade idea for Tuesday.

When a stock follows through with authority often times it warrants swinging.

Such was the case with ANF on Tuesday as it came out of a Cup and Handle clearing the 135 strike.

In sum, today we get the CPI number on the heels of the SPX closing at an all-time high,

Call buying is swamping put buying.

MEME Mania is sweeping the Street with the most heavily shorted stocks squeezing.

From my perch, whether the number is hot or cold, it looks like a sell, sell today or into the weekend.

If the number is hot, the market may sell off perceiving  that it takes a rate cut out of the Fed’s hand.

If the number is cool, the market may spike but then worry that the economy is actually weaker than recognized.

We show the setup in the regular Hit and Run Report this morning, which you can read below:

What Is the Sign Of the Bear?

“trouble on my left, trouble on my right”
-Cage The Elephant, Trouble

“When everybody is running around saying how great a stock is, everybody who can buy probably already has, and the only direction for the stock to go at that point is down. When it’s obvious and exciting to everyone, it’s too late!”
-William O’Neil

The SPX struck an all-time high of 5264 on March 28th. It tailed off to close at 5254 that day followed by the largest pullback in the Runaway Move since last October.

The drop into April 19th overbalance in Time and Price any decline on the advance since October 2023.

Breakage below 5100 and 5050 open the door to the downside and the 4950 April low---particularly if it occurs in a 5 wave impulsive drop.

Breakage below the April 19th low of 4950 is trouble.

Because 495 (4950) squares out/points to March 28th, the high day.

In other words the day of the high, March 28th, squared out with the price of the low, 49i50 for a time/price square-out.

This is why the market has rebounded so sharply---the aforesaid square-out presented key support.
The T Rex in the bull ointment is that a break of 4950 going forward smashes this time/price square-out support.

In addition, trade below the April 4953 low will pierce the 3 Day Chart circled low (4953.56O).

There is nothing but air below.

Yesterday, the SPX hit a high of 5250, a fraction from the all-time high.

Is the SPX in a new leg up or is it making a double top?

The Square of 9 Time and Price Calculator shows a square-out for today May 15th at 526 (5260).

In other words, we have a Time/Price square-out, opposite of what we had at the April 19th low.

As W.D. Gann stated, when time and price square-out expect a change in trend.

While the SPX hit this region in March, time was not up.

Now that price has caught up with time we must be mindful of a change in trend.

As Gann wrote, “Time turns trend.”

Checking a weekly SPX shows that the index turned its 3 Week Chart down on the week of 4/15 and extended to kiss its 20 week moving average before rallying back to the prior highs.

Yesterday the 3 Week Chart turned back up.

If indeed we are at a double top, this turn back up of the 3 Week Chart should define a high soon in terms of time and price.

It would not be surprising to see a WEEKLY Soup Nazi sell signal occur before the weekend.

This occurs when an item makes a new 20 period high and reverses quickly back below the prior high within the 20 period lookback, but with at least 4 bars of separation from the prior high.

Since this is a weekly pattern we’re looking at here it means to perfect a weekly Soup Nazi sell we would need to print a new high above the March high and jackknife back below the high of the week of March 25th.

Current prices show at least a 4 week interval from the March high and we are within the 20 week lookback, the criteria for a weekly Soup Nazi sell is present.

A Spike and Reversal today that produces a red close on the day and especially a red close on the week is a strong indication that a top is in.

Consequently, a spike up today on the CPI that reverses, sounds a sell siren.

Why a siren? Because in addition to the cluster of cycles and time/price harmonics/square-outs showing up this week, a double top warrants caution as the structure of the waves indicate we may be culminating the advance from 2009 or longer, as shown in recent reports.

Trouble on the left, trouble on the right.