Keyser Soze Signaled Tuesday’s Slide

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In the movie The Usual Suspects, there is a villainous character by the name of Keyser Soze that strikes fear into the hearts of all who cross his path.

Keyser Soze is not what he appears to be. He pretends to be what he is not… not unlike Monday’s attempted reversal in a vicious bear market.

In essence, a Keyser Soze signal is a Reversal of a Reversal. And fast moves come from false moves.

As noted in Tuesday morning’s report, Monday’s rally had the look of a corrective A wave rally to be followed by a B wave decline and another rally, a C wave prior to a drop to new lows.

It became apparent by virtue of the action in the high-flyers from the get-go that Tuesday was going to be a rout versus a B wave pullback.

Before that rally could take place, the SPY dropped to a new closing low for 2022.

Ditto the QQQ and IWM.

We have had projections since January on IWM to 186. It’s close.

Our projection on the Q’s is 299 region.

Those are projections. The price behavior when and if they get there will be what counts.

As stressed on the Hit & Run private Twitter feed in recent days, 420 SPY is a key level as it is 180 degrees down from the March 29 price high of 462.

The SPY closed at 416.

This opens the door for a drop to 400 region.

Today is April 27.

Using the numbers on the Square of 9 as years versus numbers shows that the year 1987 and the October crash “squares-out” with April 27.

As stressed last week, the 1929 was 93 years and 93 squares the 3rd week of April where this recent downdraft started.

Range precedes price. The large range declines from last Thursday and Friday telegraphed that momentum was intent on a new low for the year. Why would the market stop shy of one?

The only question is whether that new low will play out in a slow-motion crash such as we’ve seen or a cascade.

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