Jeff Cooper: Is the Train Coming Off the Tracks?


“You said no strings could secure you at the station
Platform ticket, restless diesels, goodbye window
-White Room, Cream

After Monday's new high SPX close above 2400, they had very opportunity to gun the stops above 2400 yesterday but failed to do so.

Amongst the heavy weights, only IBM and MSFT were doing heavy lifting.

Other than AMZN and GOOG, the FAAT Cats (FB, AMZN, AAPL, TSLA) weren't meowing.

“Silver horses ran down moonbeams in your dark eyes.”
-White Room, Cream

Along with a handful of semis, and a few techs it was a mixed bag.

The fireworks were reserved for Chinese rockets in WB, SINA and our long in appropriately named, MOMO.

Are Tuesday's Gap & Go's in WB and SINA representative of an extension higher or exhaustion?

FB shows 3 drives to its 20 day line and a failure at this picture perfect buy set up would be a conspicuous change in behavior in this general

AAPL virtually satisfied our square-out target of 157 shown in this space the other day.

So we must be mindful of the apple cart getting upset here.

TSLA is questionable with Train Tracks from May 2 followed by a test of highs on Friday. Trade back below the 313 pivot as flagged last week it is vulnerable.

The King of the Jungle, AMZN, eclipsed our key 954 level. A trip back below 954 warrants caution.

Technically, Tuesday may not be so innocent.

The SPX narrowly avoided multiple sell signals.

A close in the bottom of the range would have installed bearish looking Train Tracks in addition to a Soup Nazi sell on a stab back below the May 9 high.

Additionally, a close near session lows on Tuesday would have burnished a Gilligan sell signal.

This is a gap up to new 60 day highs with a close near session lows.

Last night, I couldn't help but wonder if Wednesday isn't on the phone to Tuesday and today will finish what Tuesday hinted at.

And as I write this early Wednesday, the futes are gapping down — contradicting Tuesday's upside gap.

We need to be mindful of a Gap & Go that violates our key 2380 level.

2380 is home to Charlie's Angels.

These are the 3 Bottoming Tails from  5/11, 5/4 and 5/3.

Snapping these triple tails will trigger a sell signal that should perpetuate a decline to 2370 and the 50 day line.

This ties to a 50% retrace just above 2360 and the upside gap from 4/24.

So you can see with complacency in the FAAT Cat- bird seat, a cascade setup is on the table:

Accelerated momentum could show up to the downside if it looks like a double/triple top at 2400 is playing out confirmed by a break of multiple technicals.

At the same time the SPX shows a 2 month Cup & Handle.

The bottom of the handle ties to 2380.

Fast moves are often derived from failed patterns.

Additionally, a break below the Charlie's Angels is a sell signal.

Likewise, losing the 50 day line puts defense on the field.

A strong market should not offset a gap.

If the SPX falters below the April 24 gap, something's wrong in Dodge.

As I always say, the news breaks with the cycles, not the other way round.

The market has been making Headline Highs — shrugging off an array of seemingly bad news of late and inuring most market participants to the idea of risk.

Last night a fellow trader sent me this headline:

Has the market been resilient or complacent?

It would serve us well to remember that crashes don't come from too much bullishness but from too much complacency… and that trains run both ways.

There are several cyclical trains clustering at the mid-May ‘station'.

We've flagged a huge low to low to high cycle that hit in mid-May.

This ties the two biggest lows of the last 100 years (1932 and 1974) to the current time frame.

We've mentioned a 360 month cycle from 1987—the low that elicited the 3 month blow-off in 1987 was on May 19th.

There may be a mirror image foldback, an inversion, on the table.

Yesterday we walked through a geo-cosmic cycle I found that last occurred from October 1998 to early September 2000 and hit late last week and is due to exert its downside influence.

Notably, early September 2000 marked the test failure of a bull market. It was also near the anniversary of the 1929 high.

Although they are given short shrift on the Street, W.D. Gann believed in the power of anniversary dates.

Note that this ties to approximately a 2 year period. This cycle is not always two years. Cycles are not circular, they are elliptical.

Be that as it may, interestingly, this 2 year period into early September 2000 echoes the roughly 2 year period from the primary low in MARCH 1980 to the start of a huge bull market in August 1982.

We are at the 2-year anniversary of the important May 2015 market peak.

Above we mentioned anniversary dates.

Today is the 225th anniversary of the founding of the NYSE.

On my Square of 9 Wheel, 225 aligns with early May.

Click to enlarge

180 years ago, a panic began in May 1837 (180 years opposition).

Likewise, this is a year ending in 7. A few months ago we penned a piece, A Year Ending In 7, noting the panics of 1907, 1937, 1987 and of course, the debacle that started in 2007.

W.D. Gann's coded novel, The Tunnel Through The Air, begins with an eclipse and ends with an eclipse.

Eclipses are like activators.

The end of this week resonates off a very important total solar eclipse on August 21.

The end of this week is 90 degrees square this eclipse.

Additionally, the end of this week is 120 degrees, trine, the important September 23, Autumnal Equinox which is a significant event this year.

At the same time, the White House has come under a cloud of controversy this week.

Whether this time is reminiscent of the runup and top in 1973 following Nixon's election in November 1972 remains to be seen, but the market pattern is similar.

“I told you 'bout the swans, that they live in the park…
Don't you notice how the Wheel goes 'round?”

-Badge, Cream

Leave a Comment: