“Keep on running, keep on hiding.” Keep On Running, Steve Winwood
On the heels of Wednesday’s late rebound, stocks staged a stunning rally on Thursday.
It didn’t start out as a barn burner.
Despite TSLA and IBM getting knee-capped the SPX opened flat, but signs of animal spirits
In several glamours from the get-go telegraphed the animal spirts to be unleashed.
Specifically, SNDK left a large range signal reversal bar on Wednesday, opened flat and exploded on Thursday.
In a spectacular display, SNDK triggered a Keyser Soze Reversal of a Reversal on trade above Wednesday’s reversal high and plowed ahead, bears and bulls alike were left scratching their head and wringing their hands in dismay.
Notice that SNDK hasn’t inhaled since exploding in August. It hasn’t turned its Weekly Swing Chart down since going parabolic.
Despite more indiscriminate selling in high-flyers like NBIS, IREN, BE and CEG to mention a few on Wednesday, these names and others stutter-stepped out of the gate but built on the strength when Earnings Reversals played out in TSLA and IBM inspired FOMO.
Let’s take a look at TSLA’s Earning’s Reversal.
TSLA dropped to test Octobers low of 414 after reporting.
After triggering an up ORB, TSLA pulled back briefly, but exploded when it cleared the ORB at 425.86.
It never looked back running directly through the morning gap, triggering a Jump the Creek buy above 437.
The power of the Combo buy signals backstopped another surge to 449 where it carved out a Bull Flag in the last two hours of trade.
An hourly TSLA shows it is poised for a Rule of 4 Breakout.
From Thursday’s low of 414, 90 degrees up is 434.
TSLA closed with authority above that at 449.
Consequently, the door is open to strike 180 degrees up at the 455 strike.
Clearing 455 opens the door to 477. But let’s take one square at a time.
Interestingly 477 is just above this years high of 470 struck just 3 weeks ago.
IBM plunged over 20 points after reporting Wednesday night kissing it 50 day moving average before staging an Earnings Reversal as well.
Notice how IBM’s low on Friday morning coincide with the gap low from September.
Stocks have a memory. If you know the upside and downside pivots before the frenzy after the opening bell you can capitalize with relative calm…whether those pivots be moving averages, squares, open gaps or trend line support or resistance.
An hourly IBM shows a massive Jackknife right off the open that catapulted the stock into the open gap and into its 20 DMA.
From the 50 to the 20 in one fell swoop.
The stunning reversals in TSLA and IBM incited frenzy in names like:
APLD
FEIM
NBIS
IREN
HOOD
SNOW
CIEN
For example.
In sum, the market is not trading cautiously into this morning’s CPI.
Will the volatility we said would mark the last two weeks give a final gasp down today before a directional move?
Or, alternatively is the correction behind us with the flush out in go-go names having set the stage for a monster rally into our November 7 to 14 key time frame.
Is the SPX tracing out a corrective, bearish B Wave, or was yesterday the start of a buying riot?
If the SPX should rally to 7000 region quickly over the next two week, there is a strong likelihood it may be setting a major top.
The Fed meets next week and since they have telegraphed lowering rates, despite a market in overdrive, they may have no choice but to pour gasoline on a running inferno.
Could that be the cherry on top of this banana boat?
Remember that the SPX rallied from 1395 to 1552 in the two weeks into the historic March 2000 top.
A rally from here…6738… to 7000 is small percentage wise in comparison.
We wrote earlier this week that 703 (7030) is square November 7.
November 7 being a very synergistic date…and as we know, it’s always “the week of”.
Will Mr. Market keep on running right into the arms of the bear?
Interestingly today stands out as a pivotal day marking a transition amplifying a powerful natural cycle.
This can spark a dramatic rally or conversely unleash a sharp sell-off as sentiment suddenly becomes risk-off.
We should prepare for either scenario especially as the SPY is striking a record high pre-open this morning —above the October 10 high that saw a large range key reversal.
Should the SPY jackknife back below the Oct 10 high of 673.75 today or Monday, it suggests a bearish B Wave has played out pointing to a C Wave slide.