DOGE Ball

“Before all of this 
Ever went down 
In another place 
Another town” A Face In the Crowd, Tom Petty and the Heartbreakers 

“If you totally divorce economics from psychology, you’ve gone a long way toward divorcing it from reality.” Charlie Munger

“If you can dodge a wrench, you can dodge a ball.” Rip Torn

“The SPX triggered an up ORB (Opening Range Breakout)…but within the context of a large gap down. Be that as it may sometimes this leads to a big reversal (up) IF the gap is offset with a Jump the Creek buy signal.
That said, the likelihood as tweeted yesterday is that Wednesday would be an important pivot…if the market held up/rallied into Friday, it would get punished afterwards; while if the market dropped meaningfully going into Wednesday it would rally into the weekend. Right now it’s a case of ‘will the real Mr. Pivot please stand up’”

The above is from Tuesday on the Private Hit and Run Twitter Feed.

Just as it looked like the market had moved down into our expected pivot, after the bell, there was more Headline Roulette: The U.S. and China agreed to talk about talks.
The futes which had slid another 15 points after the close ramped 45 points.

Silly me I thought they’d been holding discussions last week according to the White House.

The effect these continued tape bombs will have is to shrink the liquidity created by traders.

In sum, the SPX which closed at 5607,well below the Maginot Line of 5650-5660, the summer highs, were magnetized back to The Line.

Whether it is a kiss goodbye or an engagement for a breakout through the 200 DMA will likely be revealed by the market’s reaction to Powell.

That said, today’s FOMC Cha Cha is setup to be a doozy given yesterday’s whiplash.

Believe it or not the SPX carved out the first two consecutive lower daily lows (INTRADAY, not closes) since the April 7th low on Tuesday.
This produced the first daily Plus One/Minus Two buy setup since the April low.

In addition the setup is playing out from a pullback to the 50 dma.

It’s a potentially pretty setup for a pop above the 200 day moving average.

It’s also a recipe for a failure.
A failure of the 50 dma to hold in sync with a turn down in the 3 Day Chart (3 consecutive lower daily lows) that does not mark a low, opens the door lower.

Fast moves come from failed patterns/setups.
So a failure of the 50 day line to act as support along with a potential first turndown in the 3 Day Chart (on trade below Tuesday’s low) that sees the SPX follow thru to the downside) warrants caution as it indicates an interim top was seen last Friday.

Checking the Q’s shows a second picture perfect test of the declining 200 day moving average for a possible double top.

The normal expectation would be for a pullback.
We’re getting it.
However, there is little room for a turn down of the 3 Day Chart to fail on trade below Tuesday’s low:
A Bottoms Line from April 7 has 3 hits. Notice the undercut on April 21st that put the hook in for the ramp back to the 200 day moving average.
Breakage below the green Bottoms Line will trigger an Angular Rule of 4 sell signal.

So far our expected turning point in early May is playing out.
Whether it marks an important Interim Top of a bullish pullback remains to be seen, but a failure by the SPX to reclaim 5660 region in coming hours/days and reversing back below its 50 day moving average opens the down door.

The QQQ tested the open gap from last week which ties to its 50 day line at the 474/475 region below which points to the 460/461 region.

The next major turning point is mid-June which squares out in Time and Price with major turning points since mid-December.
Tomorrow’s report will walk thru the setup.

Today, May 7, on the Square of 9 Wheel squares 576 on the upside and 553 on the downside or 5760 and 5530.
5760 seems like a stretch for this week (it’s always + or – a few days), but as President Trump says, “Never say never.”