The Market Is Speaking


“My expectation is for a relatively sharp decline at some point this week…”

We wrote the above in Monday morning’s report.

The Square of 9 posted on the Hit & Run Private Twitter Feed is one of the factors underpinning the idea of a downdraft.

Any reversal from this time frame must be respected as it ties to the Gann Panic Zone, 7 squared days up from low — in this case the early March low.

An hourly SPY below shows this 46 point nearly 13% rip in just 7 weeks.

I drew a trendline connecting the early March low and the late March low and paralleled another trendline off the March highs.

Breakage back below the upper channel validates the idea of the April 16 time/price square-out.

As well, the SPY has declined below its 50 hour moving average for the first time this month.

When this occurred in mid-March, there was more downside to follow.

Notice that the 20 hour moving average crossing below the 50 hour in mid-March perpetuated a Zig Zag pullback.

Currently the 20 hour looks poised to cross below the 50.

This may coincide with a short term rally attempt that sets up a Combo short on a backtest of the 50/20 hour moving average Bowties. This would coincide with the broken rising trendline just overhead.

In sum, trade below Tuesday’s low today will turn the SPY 3 day chart down for the first time since March 25.

Of course, at that time, the SPY was testing its 50 day line.

Currently the 50 day line resides at 396.

With the bottom rail of the above trend channel near 400 coinciding with Phil D. Gap, the takeaway is the near term Line of Least Resistance is lower.

IF a crash cycle is active, the SPY should waterfall from a secondary high in late April into the first half of May.

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