“I spent a lifetime
Waiting for the right time
Now that you’re near
The time is here, at last.” It’s Now or Never, Elvis Presley
“Markets are fundamentally volatile.
No way around it. Your problem is not in the math.
There is no math to get you out of having to experience uncertainty.” Ed Seykota
Ladies and Gentlemen, Elvis Is In the Building.
Or is he? Is it real or Memorex?
Monday was one of the sharpest one day declines on record—particularly for the mega-cap momentum names.
Tuesday the market had amnesia.
It’s like Mr. Market suffered from a traumatic brain injury with his tech darlings annihilated on Monday.
Perhaps the DeepSeek shockwave created what is called anterograde amnesia, a type of memory loss that occurs when you can’t form new memories. Remember the movie Memento from 2000?
How apropos.
In the most extreme cases, it means you permanently lose the ability to learn or retain any new information.
Like Artificial Intelligence meets Bizarro World.
How apropos.
I say this because on the heels of obliteration and a massive downside Breakaway Gap in the SPX, Mr. Market didn’t even wait for the dust to settle.
From the get go rotation saw software names explode.
Scorched semis staged a stunning rebound.
The software lollapalooza was led by CRWD and CYBR.
Riding shotgun were NET, SNOW and ZS.
Other notable gainers were RDDT and DUOL.
Then after the bell, FFIV rocketed 40 + points after reporting.
Even the dogs were barking: DDOG, MDB and FTAI.
The Roadmap’s call for a directional day was spot on.
I’ve been doing this a long time and the kind of moves were seeing are typically reserved for Bear Markets, ie. the sharpest rallies occur in the midst of Bear Markets is a truism.
In bull markets stocks move like they’re on an escalator…unless they are blowing off…the last stage of which sees them hyperventilate—big downs followed by big ups followed by big downs.
A little birdie tells me that big money shorted those techs that had not been pulverized on Monday. When the market didn’t follow thru to the downside the inevitable squeeze started.
The squeeze turned into a buying panic in software names.
Maybe my Birdie’s right. There’s always a rationale.
But judging by some of the above names that shot the lights out, you’d have thought the SPX was up 100 points.
Nope.
It was up half that. 55 points to be specific.
However, NYSE breadth remained alarmingly poor, with an Advance/Decline ratio of 0.80.
This equates to a net decline of -339 issues—one of the weakest breadth readings ever recorded during an advance of Tuesday’s magnitude.
The NYSE McClellan Oscillator, an indirect measure of market momentum, has declined for 5 consecutive sessions, even as the SPX closed higher on three days.
This consistent loss of momentum signals growing market fragility.
A similar story was told in the NAZ, where its McClellan Oscillator mirrors the same concerning trend.
These indicators highlight a market struggling to sustain upward momentum…under the surface…despite Tuesday’s rebound.
Yesterday the SPX pushed past the 6040/6050 square-out on the Square of 9 Wheel.
As well 6049 is 90 degrees down from high, above which, theoretically opens the door higher.
That said, the SPX pushed right up to resistance—the bottom of the Island Reversal from Monday’s gap.
In sum, with the SPX now up a stunning 111 points off Monday’s low which by the way was near the open. Elvis clearly had an encore.
If the bears are going to regain field advantage in the heart of this weeks Gann Panic Window—it’s now or never.
As improbable as a complete reversal to the downside seems from here, so too Turnaround Tuesday’s rip in many go-to tech names seemed improbable.
Remember in the Covid Panic there were hellacious 1 day rallies and the next day was a Gap & Go to the downside.
Never say never in the markets.
If AAPL can trade like a penny stock, anything can happen.
AAPL’s going to be a good tell.
AAPL caved in 9 points below its 50 DMA on January 16th on its way to its 200 DMA last week.
Maybe that’s why it’s had two consecutive two consecutive rippers this week, +7 and + 9 respectively—the 200 DMA being kissed.
The last time AAPL was near its 200 DMA was last May.
From the December 26 high of 260, AAPL dropped 219 in 15 trading days to tag its 200 DMA.
AAPL turned its 3 Day Chart down directly off its high and bearishly kept on going.
Extending after turning its 3 Day Chart down telegraphed lower.
Notice the false breakout above the black Tops Line.
Fast moves follow false moves. We got one.
A Minus One/Plus Two sell signal occurred on January 15th which perpetuated the next sessions plunge.
AAPL has powered to its 20/50 Bowtie. The momentum suggests it will turn its 3 Day Chart up today.
That should be easy to do. All it has to do is trade above Tuesday’s 240.19 high.
Let’s take a look at AAPL thru the lens of the Square of 9 Wheel.
AAPL topped at 260 and bottomed on January 21st.
260 squares out with January 21st.
Amazing.
AAPL is up 19 points off that low in 5 trading days.
What is the Wheel indicating now?
Well 90 degrees up from the 219 low is 234. AAPL knifed thru that with authority yesterday.
Interestingly 244 is 90 degrees down from the 260 all time high.
Interesting because today, January 29th, is 180 degrees straight across and opposite 242
The takeaway: AAPL should start a pullback of some degree from this region…ideally following a turn up of its 3 Day Chart on trade above Tuesday’s high.
With the Powell’s presser today and META, MSFT and TSLA reporting after the bell, AAPL sets us up as a short.
What we’re looking for is a push over Tuesday’s high and selling to show up for an Overnighter short.
Will AAPL’s behavior set the tone for the market? Will it be a tell for the tape?
Well it certainly was so in December when both the SPX and APPL topped.
AAPL’s Dec 26 top marked the start of a 275 point pullback in the SPX over 10 trading days/
In sum it’s now or never for a reversal of fortune in the market.
Either the drop down into mid-Jan was an A Wave followed by a corrective B Wave into last Friday with a vicious C Wave on deck or the market will extend to new highs.
If so, the likelihood is they make more than a nominal new high like late last week.
We’ve been there, done that.
A new high should augur for a continuation.
That does not mean the market has bought time.
To the contrary, we may get a price extension but time is running out quickly in my work.
Either the Top is in or one more drive will nail the Top.
As to a near tern downside setup, the C wave down needs to see the SPX hold below its ATH and turn down in an impulsive 5 wave fashion.
If we get 5 waves down from this region in the short term, followed by a bounce, that will be the ideal low risk spot to short for a plunge.
The tension is on the tape. There is ample reason for the market to make its decision in today.
It’s now or never.