Jeff Cooper: Are We Stepping Into a Bull Trap?
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The buy program ended on Thursday.
An hourly SPY shows a breakout above a 3 day flat or Slim Jim and a break back into the flat. If the SPY violates the formation with authority, it will trigger a little hourly Boomerang sell signal.
Below the gap at 215ish is a yellow flag.
The bullish structure could remain intact on a backtest of the breakout pivot around 2110. However, in a runaway move, the index should be strong enough to hold above 2145-2150 and especially the old record high of 2134.
But in my work, a leg to 2200 or even 2300 in a continued blow-off should not see weakness below 2145-2150.
Theoretically, we could have seen the high for the year this week.
The SPX satisfied many time/price harmonics with multi-year records in sentiment.
As a refresher, 2174 is one full rev of 360 degrees in price up from the Brexit low and 2 full revs up from the February low of the year.
This is occurring on the important 9th anniversary of the primary high in 2007.
Additionally, the major low bear market low on August 12, 1982 was a Fibonacci 34 years ago.
Let's look at other years in the sequence from 1982.
5 years later was the 1987 top.
8 years later was the major top in JULY 1990 and low in October.
13 years later was 1995 when the market exploded for the famous irrational exuberance run.
21 years later is 2003 the beginning of the rocket to the 2007 high.
So a buying climax and failure of the breakout pivot must be respected here.
Interestingly, like the 5 year run from 1995 to 2000 we are 5 years from the thrust from the major higher low in August/October 2011.
Conclusion.
Despite all the fireworks, the SPX has actually closed down 3 of the last 5 days.
If the 3 Day Chart turns down with 3 consecutive lower daily lows here and upside momentum doesn't show up we may have seen a buying climax.
Back below 2100-2110 suggests a Bull Trap.
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