“The men don’t know but the littler girl understand.” The Doors, Back Door Man
“This was a big storm and he might as well enjoy it. It was ruining everything, but you might as well enjoy it.” Ernest Hemmingway, For Whom the Bell Tolls
“For whatever reasons, markets now exhibit far more casino-like behavior than they did when I was young.” Warren Buffett
The SPX has been in an 11 day Runaway Move. It is overbought on the dailies, weeklies and monthly momentum indicators. But then that’s one reason I don’t use indicators: markets can get overbought and oversold and stay that way for long periods of time.
Why won’t the market correct? A more important premise would be to recognize it won’t correct which is a sign of a Runaway Move.
That’s a call to arms to abandon “normal” approaches to market, to abandon rationality and entertain the horseplay.
For clearly this a time when money beckons, “Please Wilbur”.
There is an old Wall Street saying for moments like this: the little fools are dancing while the bigger fools are watching.
One way or the other Mr. Market is going to make a fool of you under the Tent Pole Top—just like it did of one of the most brilliant minds ever, Isaac Newton, who said about markets, “I can calculate the motions of the heavenly bodies, but not the madness of people.”
It looks like the SPX is on a trajectory to kiss either the upper rail of the blue or red channels in the 6160 (616) square-out region.
To recap 616 points to December 8th/9th and is opposite the 666 bear market low in 2009.
It is logical that tops and bottoms should “rhyme”
“All major highs and lows are geometrically related in time and price. ” W.D. Gann
In sum there is some strong confluence around 80 points higher on the SPX.
Attending the current 11 day runaway move in the SPX are Climax Runs in names such as
COHR, TEAM, SNOW, MRVL, DUOL, RDDT, SHOP, APP and CRM to mention a few.
The software names are leading the parade, taking up the slack from the chips.
Couple this with explosive moves in flushed out names like ELF, ULTA, FIVE and ROKU and you have full frontal FOMO.
The legendary Bob Farrell observed, “Exponentially rapidly rising or falling markets/stocks usually go further than you think, but they do not correct by going sideways.”
The equally legendary Paul Tudor Jones said, “There is no training—classroom or otherwise—that can prepare for trading the last third of a move, whether it’s the end of a bull market or the end of a bear market. There’s typically no logic to it; irrationality reigns supreme, and no class can teach what to do during that brief. Volatile reign. The only way to learn how to trade during that last, exquisite third of a move is to do it, or, more precisely, live it…Fundamentals might be good for the first third or first 50 or 60 percent of a move, but the last third of the mania runs wild, and prices go parabolic.”
There is one tool however when combined with pattern and momentum that can ride the runaway horse: the Square of 9 Time/Price Calculator.
Square of 9 Wheel
Purchase your own Square of 9 Wheel. Shipping to US only. Contact Jeff for shipping outside the US.
A daily and weekly chart of FIVE shows the momentum prior to the release of its earnings report after Wednesday’s bell.
FIVE looked too extended to buy into earnings, right?
Hit and Run members went long on Tuesday prior to earnings yesterday.
Why?
From the 79 low 360 degrees up is 119.
The presumption is that FIVE would be magnetized to 119.
In a tape that is characterized of late by Earnings Lollapalooza, it was not a stretch to entertain that kind of explosion.
Think SNOW, TEAM, MRVL and how about one non-tech…URBN.
Mr. Market is an equal opportunity parabolic employer.
FIVE rocketed to 120 after hours Wednesday.
Wednesday on the Hit and Run Private Twitter Feed we also took AVAV short prior to its report after the bell.
AVAV’s Bear Flag was backstopped by a projection on the Square of 9 Wheel:
360 degrees down from the its 236 high is 179.
After reporting, Wednesday, AVAV plunged to 179.
In sum, the Square of 9 Wheel’s projections unlocks setups and profits that one might otherwise never have taken.
It delivered two grand slams for Hit and Run yesterday.