“The greatest trick the devil ever pulled was convincing the world he didn’t exist.” Keyser Soze
“Well, I stand up next to a mountain
And I chop it down with the edge of my hand.” Voodoo Child, Jimi Hendrix
Yesterday Hit and Run wrote:
“Will the test of the SPX 50 day ma elicit a bounce?
Maybe, but Wednesday’s decline snapped a Bottoms Line connecting the October 2023 low with the April 2024 low and the May 31st low.
This is a big deal to me. It is breakage of a 3 point trend line…a Rule of 4 Sell Signal.
Can he SPX backtest the broken trend line around 5480?
Of course it can. The market can do anything.
A RALLY ATTEMPT OFF WEDNESDAY’S LOWS MAY TARGET 5493.
Why? This represents 90 degrees up from Wednesday’s low.
There is some good geometry there because last Friday’s low was 5497 prior to a rally attempt.”
Thursday’s high: 5491.59…courtesy of the Square of 9 Wheel.
Square of 9 Wheel
Purchase your own Square of 9 Wheel. Shipping to US only. Contact Jeff for shipping outside the US.
A daily SPX from last October’s low shows Wednesday’s break of this 9 month trend line and Thursday’s rally to bactest it that was rejected.
The failed upside reversal left the SPX with a clear close below its 50 day line…the first such close below its 50 day line since April 15th.
In sum, the SPX reversed to the upside after an opening slide on Thursday.
An Opening Range Breakout telegraphed the move to our 5393 projection.
The SPX was rejected with authority from our flagged resistance leading to a Reversal of a Reversal or what I call a Keyser Soze. I call it a Keyser Soze, after the vicious character from the movie “The Usual Suspects.” It can be a deadly plot twist in markets as false moves lead to fast moves in the opposite direction:
The Keyser takes no prisoners.
Breakage back thru the level of Thursday’s morning ORB triggered a plunge into the runoff.
Despite yesterday’s Reversal Of A Reversal, another twist is on the table as I write overnight.
The futures are ramping.
However an hourly SPX shows more potential volatility in store today.
Why?
There is a likelihood of a 5th wave to the 5373 region which satisfies a 360 degree drop from the all-time high.
If a 5 wave decline is satisfied I would not be surprised to see a late day squeeze to the topside into today’s OpEx
Checking a weekly SPX shows a Key Reversal Week at the record high at our mid-July turning point.
Whatever plays out today, while “They” may try to protect the baby from a Friday close below the 50 day moving average, the index looks poised to turn its 3 Week Chart down.
It has only done so once since the October 2023 low—the week of the April 2024 low which tested the 20 week moving average.
A similar test of the 20 week and a turn down in the 3 Week Chart looks on deck for the end of July…when we have another potential Panic Cycle.
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