“There’s a place where you are goin’
You ain’t never been before.” Lost cause, Beck
“People always want to believe that this time is different, that there’s something new under the sun, and that through their own ingenuity they can wish away risk.” Seth Klarman
“There is nothing new under the sun.” King Solomon
The SPX Angle of Attack to the downside since its Feb 19 all-time high has been ferocious.
After going nowhere for four months, it’s as if the index was just waiting for “time to be up”.
As W.D. Gann stated, “When TIME is up the trend turns.”
This angle of attack to the downside in and of itself, in addition to the many divergences, we’ve showcased in this space, underpins the cycles due to exert their downside influence we’ve flagged that were/are due to do so in Q1 with authority.
The 3 Day Chart turned down directly off the all time high suggesting a false breakout when the SPX continued to go lower.
If the breakout had been the real deal, the turn down of the 3 Day Chart would have defined a low.
However, the 3 Day Chart coincided with breakage below the 50 day moving average.
In other words, the SPX snapped its 50 day line right off an all time high.
No Bueno.
On Wednesday, the SPX rallied to backtest the 50 dma.
It was a kiss goodbye.
All the index could muster was a solitary 1 day turn up of the dailies, closing below its open on Wednesday.
That action underscores the selling pressure in the market.
It’s the complexion of a runaway move…to the downside.
On Thursday, the SPX rallied on the open to once again kiss the 50 dma goodbye.
I guess it realized it forgot its hat and coat on the way to work.
And what a job it did on Thursday.
A 10 min SPX shows a blaring warning siren sounded on a Jump the Creek sell signal…when the index offset Thursday morning’s upgap.
Be that as it may, the SPX bounced off a test of Tuesday’s low which perpetuated a sideways stint until late in the session.
Despite several probes into the green, the SPX could not reclaim the key 5990 square-out.
Why is 5990 key? It is 180 degrees down from the all-time high.
When the THIRD rally attempt faltered, the selling became intense in the last two hours.
As offered on the Hit and Run Private Twitter Feed, the dominos were set to trigger a cascade.
570 (5700) squares out with today/Monday if the Wheels come off.
The first domino to fall was the break of Tuesday’s low, which ties to 270 degrees down, 5913, from the ATH.
The second domino was breakage below the rising trendline from August.
the third domino was offsetting the open gap from January 15 which triggered a Jump the Creek continuation sell signal.
Dominos below are:
1) The low for 2025 which is the January 13 low at 5774.
2) The 200 day moving average at 5716
Considering the angle of attack to the downside, the SPX looks on an immediate trajectory to 5837.
Why? This is 360 degrees down from the all-time high.
Breakage below 270 degrees down at 5913 opens the door to 5837, the next geometric tranche down.
IF the SPX takes out 5837 today, we may get accelerated momentum to the low of the year, the January low, 5774.36.
Today is the last day of Feb. Breakage below the January low today will trace out an outside down month. A Key Reversal Month because Feb registered an all time high.
Consequently a close below the prior monthly low will leave a Key Reversal Month.
Technical voodoo? Well, the last time we got one was January 2022.
It was followed by a 9 month drop of 1327 SPX points, around 27%.
My expectation is a similar drop is on the table. However, I think it will play out in a more compressed manner…within 3 months.
Notice how a trend line from the closing monthly low in September 2022 converges with a lateral line from the Jan 2022 4818 peak over the next couple of months.
In sum, as offered earlier this month, the pattern and the dates here January/February 2025 are eerily similar to January/February 2024.
Yesterday’s action puts the analogue front and center going into the Ides of March.
Conclusion. Prior resistance acts as new support.
I think there is a strong likelihood the SPX tests the January 2022 peak within the next few months.