Another Monday, Another Bungee

“Monday, Monday, can’t trust that day.” Monday, Monday, The Mamas and Papas

“If you can’t measure it, you cannot control it. Things you measure, tend to improve.” Ed Seykota

Last Monday the SPX had a massive gap down but bottomed shortly after the open at its 20/50 moving average Bowtie.

A Bowtie of the 20 and 50 DMA’s simply means when the ‘pinch’ and are coiled.

The presumption is this provides increased support or resistance as the case may be.

One week later we got another massive gap down.

This time the index gapped with authority below its 20/50 Bowtie.

We got another Bungee. The difference being a week ago the 20/50 MA’s acted as a trampoline hoisting the SPX 158 points over the next few days to within a fraction of all time highs.

Monday was a different picture.
We knifed thru the 20/50 and jackknifed again but this time the confluence of the two moving averages may act as resistance.

The “Bowtie” hovers at 5985/5990.
The SPX spiked off the low off more tariff headlines after the first half hour and essentially flatlined the balance of the day.

Despite the broad market momentum waning after the first hour and a half, momentum names took the reins: If the market’s not getting bombed, individual names will on the prowl:
When the bear cat’s away the momentum mice will play.

Let’s take a look at a few names flagged as long candidates on the Hit and Run Private Twitter feed before the open.

First up is ROOT.

ROOT broke out last week and put in a Pause Day on Friday.

It opened on its lows Monday and an Opening Range Breakout at 97.50 did a good job identifying an explosive trend day to the top side.

CRDO was another go-to name.
It was not is as strong a position having plunged below its 50 day a week ago.
While it reclaimed its 50 day line on Friday, it tailed off and got hit hard on the open yesterday.
Be that as may, the open pretty much defined the morning low and CRDO went on to trigger an Opening Range Breakout at 67.01…a tick over the 10 min opening reversal bar.

CRDO was immediately magnetized to Phil D Gap where it consolidated closing near session highs.

A strong reversal from the morning air pocket but it has its work cut out for it closing right on its overhead 20 day moving average.

As well CRDO is at horizontal resistance.

However, I like to “invert” and look at the other side.
If CRDO can push higher above both the 20 dma and horizontal resistance it has some blue sky.
Phil D Gap from last Monday looms large…at the 80 region.

Here’s what the Square of 9 Wheel indicates.

From the 86 January 26 peak, 360 degrees down is 53.

CRDO bottomed at 52 last Monday.
A 360 degree drop in 3 days.
Amazing.

180 degrees up from the 52 low is the 69 region.

Potentially bullishly, CRDO closed well over 69 at 71.80 suggesting it has room to run.
The next 90 degree decrement up from 69 is 77.
That’s what’s on my radar, if the market hangs in…at least for 1 day.

PLTR is another name flagged for possible Down Opening Spike Reversal.

PLTR was on the radar based on its bullish Cup and Handle Pattern.

I didn’t realize that earnings were on deck after the bell.

Be that as it may, PLTR struck a opening low, undercut it and rallied like a bat out of hell after triggering an Opening Range Breakout at 80.96.

Constructively, PLTR triggered a Jump the Creek continuation pattern when it offset Monday morning’s gap..

It closed at a new high on Monday. The action was a “giveaway” for PLTR’s 20 point ramp after the bell.

Underpinning the play was the Square of 9.
The last swing low was 63/64 on January 13th.

360 degrees up is 100.

PLTR spiked to 102 after reporting, opening the door to the next decrement of 90 degrees up at 111.
111 squares out with February 4th.

In sum, this is how we integrate multiple time frame pattern analysis with the Square of 9 Wheel using our Hit and Run strategies.

The Market

The tape has gotten “chunky”…big moves and Air Pocketism.

This was expected as we are 180 degrees/days straight across and opposite the Flash Crash in the first week of August.

What happened 90 degrees/days after the August Flash Crash? The Trump Bump.
We got a massive gap 100 + point gap up the day after the election.

It’s not just that 100 point moves are becoming frequent, but 100 point gaps are becoming common.
This is King Vol. The King is dead. Long live the new King.

It’s a royal fit for Hit and Run trading.

90 days/degrees from the election and 180 degrees from the August 5th air pocket is today, February 4th.

There is another reason to expect outsized volatility over coming hours/days.

Using 2025 on the Wheel as the year versus a price, shows that 2025 squares February 4th.

It is worth noting that the year 2009 squares March 6th, the bear market low 16 years ago.

If you know how to use the Square of 9 you an time big market turns.

Interestingly, February 4th ‘vibrates”/vectors 601.
The SPY hit a high of 600.29 yesterday.

My expectation is it will probe 601 today.
If it can clear and sustain above 601, the door is open.
If it cannot drive above 601, I think the door is open to another downdraft on Wednesday.

If you can’t measure risk, you can’t manage risk.

In sum, those bullish of the market have been disabused of the notion of fear these past two Monday’s.
Understandably so if you paper over the last hour on Friday and the first hour on Monday.

They’ve got the plan down now. This game is so easy. Right.
As Mike Tyson says, everyone has a plan until they get punched in the face.

I think a punch is coming.