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Is This the Hulk, the Reversal We Were Looking For?

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Today’s morning report will be brief as there is little to add to what we were looking for on Turnaround Tuesday.

Let’s recap some of the factors as to why we thought a reversal was on deck:

1) The SPX “squared-out”/balanced out with its all-time high in price and time.

Why? 398 (2980) is 360 degrees in price down from 481 (4818) the ATH.

As well, 4020 is an important geometric Gann 1080 degrees down from high.

At the same time, 400 (4000) vectors May 9 in keeping with Gann’s Law of Vibration.

2) Yields were backing off on Tuesday. TNX pulled back and TLT rallied.

3) VIX and UVXY were red when the SPX was down on the day. This was a “positive divergence” suggesting Monday was exhaustion and an interim selling climax as offered in this space was likely to kick off the week. For good measure, the SPX struck a new low on Tuesday, which set up an intraday Bear Trap and Boomerang buy setup.

4) QQQ was up throughout Tuesday’s session forming a little positive divergence to the SPX as well.

In sum, we sent an alert to subscribers to go long 420 SPY calls trading at 38 cents (for this Friday’s Opex).

The timing was fortunate as the SPX immediately exploded 60 points to 4070, where it was rejected by its 20 hour moving average.

The market pulled back to flat on the session and we sent a final tweet saying it looked like a Flying Elvis Pattern.

This is where it looks like a rally failure with the market back in free fall, but the next day we get a gap open as the rip cord is pulled and stocks lurch higher.

Let’s see how the market handles the CPI.

The market could buckle again, but an impulsive 5 waves up and clearing 4070 opens the door to 4200.

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