Jeff Sees Very Large Price Swings Ahead. Do You?

“It is significant that a large part of a market movement occurs in the last forty-eight hours of a play, and that it is the most important time to be in it.”
-Jesse Livermore

The market treaded water on Monday in front of Wednesday’s Fed decision on rates.

Once again the SPX was rejected from an attempt to challenge 2900 closing just below the 2992/June 17th time/price square-out shown yesterday.

Following last weeks NR 7 Week, the SPX left an NR 7 Volatility Contraction Day on Monday to kick off the week.

In other words last week saw the narrowest range in 7 weeks and Monday saw the narrowest range in 7 days.

In fact Monday was the narrowest range in the index since the May 1st high.

NR 7 contractions generally see and expansion in volatility within a few days.

To say the market is coiled here in front of the Fed is an understatement.

The bulls see this as a constructive consolidation holding above the SPX 50 day line.

The bears are looking through the lens of a possible secondary high to a May 1 primary high.

The experience of the V Bottom in late December looms large following another V Bottom off the early June low keeping market participants off kilter.

While the June low tested the March low there was no real base for players to post off of.Consequently, while the normal expectation would be to see come give back in the market; despite tensions with Iran, uncertainty over a Trump/Xi meeting at G 20 next week confusion over just what the Fed is going to do, the SPX and NDX hang tough at their respective 50 day moving averages.

Arguably, the market presents as remarkably strong.

We gauge the markets by the action of the averages and the behavior of the leaders.

On Monday several growth glamours came out or pivoted out of setups while others chopped around.

Let’s take a look at a few.

AYX was a long idea for Monday that we swung based on its strength out of an hourly Cup & Handle.

We took CDNA long on a swing last week and it followed through nicely from a Plus One/Minus Two pullback buy setup on Monday (A +1/-2 set up occurs when the 3 Day Chart is pointing up and they you get 2 consecutive lower daily lows).

The usual suspects such as TWLO, MDB and SHOP were range bound. Ditto COUP and OKTA which gave no hint of moving higher.

The real fireworks were in the biopharma’s on the heels PFE’s bid for ARRY.

This backstopped gains in our AXNX and ODT long swing positions from last week.

SILK triggered an Opening Range Breakout (ORB) and we called an audible long on it in the Hit & Run private twitter feed.

Regrettably, we got stopped out of MRTX in the biopharma space, the second time around, on Friday before it exploded on Monday.

We took MRTX long based on a textbook 1 2 3 Pullback/180 setup on Friday.

This is a 3 bar pullback with day 3 leaving a close near session highs versus a close near session lows on day 2.

With the clarity of hindsight our stop should have been placed more optimally just below Thursday’s low.

This is a game of inches.

Likewise subscribers had a nice gainer in CRTX last Thursday.

We flagged a ‘cheater’ entry in CRTX on Wednesday and members took it long near Thursday morning as it came out.

A daily CRTX below shows the ‘cheater’ (Cheetah) entry as CRTX cleared a secondary high. I call it a Cheetah entry because the stock leaps after clearing secondary pivots.

While we locked in solid gains in CRTX on Thursday, the 3 point 10 min shake-out bar shook me up.

Consequently, I didn’t go back to the well when CRTX left a TNT (Thrust, Noise, Thrust) or Pause Day on Friday.

CRTX exploded again on Monday following an Opening Range Breakout.

Recent hot IPO’s such as CRWD, BYND and FVRR reflected a continuation of risk on sentiment.

All in all, the market fails to give ground shrugging off recent spikes in bonds and gold which are often negatively correlated to stocks as flight to safety vehicles.

We have been anticipating a May breakout in gold since March and positioned in GLD calls and several miners last month. The fuse was lit on the last day of May as GLD gapped over its 50 day moving average breaking out over a declining 3 point trendline.

Importantly, GLD’s breakout was defined by back to back gaps.Gaps reflect an urgency and insensitivity to price paid.

This underpins the impulsive nature of the move as does the 5 wave advancing structure.

The 5 waves up off the May low may indicate some consolidation, especially in light of Friday’s signal reversal bar.

That said Monday’s action looks like a conspicuous change of character as past reversal signals typically saw gold get hit immediately.

It will be interesting to see if GLD gives ground before clearing Friday’s high.

Offsetting Friday’s high I think will be a point of recognition serving notice that a major breakout over 3 year highs is on the table.

In my experience, it is pretty typical for an item to pullback just below well-defined resistance before successfully clearing that resistance whereas knifing straight through resistance from a pivot low often results in a failed breakout.

Consequently, subscribers remain long positions in GDXJ and KL as well as some junior miners.

Conclusion: Since January we have had an outstanding projection in the SPX to the 3000 region.

A push to 3000 satisfies a Megaphone Top as first shown in.

Is it possible the SPX runs to 3000 this week?

Interestingly, as the Square of 9 Wheel below shows, Wednesday, June 19th (the green arrow) aligns with/points to 2999 (the red arrow).

2999 is straight across and opposite June 19th.

Notice that 2891 ( the blue arrow) also aligns with June 19th.The market has been rejected every time its tried to close above this region for the last week.

Notice that 360 degrees just below 2999 is 2784 (the purple arrow)

My take is that clearing 2890 decisively could point the way to 3000, possibly very quickly.

Alternatively, according to these time/price harmonics, downside momentum below the 50 day could see the SPX drop to 2784—possibly quickly.

It may be that the market has discounted a rate cut that the Fed is not ready to give as it wants to keep the ammo live ahead of G 20.

What if the Fed should cut rates and surprising headway is made between Trump and Xi at G 20?

What if the Fed cuts rates and, knowing how Trump has been angling for a cut, the Chinese intentionally announce that they will not be attending G 20 to foil the Fed?

Large price swings one way or the other, and possibly in both directions, are in the wheelhouse. The next two days are going to be big.

Pos GDXJ, KL, GLD calls, AYX, AXNX, ODT, SILK