“All through time, people have basically acted and reacted the same way in the market as a result of : greed, fear, ignorance, and hope. This is why the numerical (technical) formations and patterns recur on a constant basis” Jesse Livermore
Last week we warned the upward momentum was fading. The internal weakness as the market pushed to new highs was a hundred year record.
Despite a Key Reversal Week at the end of July the market pressed to new record highs.
The normal expectation after a Key Reversal week is for a give-back of some degree.
That’s what history tells us.
Yet not only did the SPX (and QQQ) not follow thru one iota below their Key Reversal Week lows, they rallied above those respective reversal highs.
Markets can remain ambiguous longer than one can remain solvent betting on logic.
The QQQ also left a Key Reversal Week at the end of July.
As we showed last week, the last 3 KRD’s did a good job identify downturns.
The week of February 17, 2025, the top, missed by a smidge being a Key Reversal Week (the market isn’t a Rolex)
The market tumbled into April.
The aforesaid last 3 perfected KRD’s are:
1) The week of July 28, 2025.
2) The week of July 15, 2024. A Flash Crash followed. The market is not a Rolex.
3) The week of January 3, 2022. A 10 month bear market followed.
Most of the smart traders I speak to say that the Key Reversal week at the end of July 2025 was a “failed signal”. A blaring buy siren. Clearly the SPX never followed thru to the downside.
That’s a clue: Follow Thru Is Key.
Theoretically the SPX offset the high of the KRD triggering a potentially very bullish Reversal of a Reversal: Bullish because False Moves Lead to Fast Moves.
Indeed a daily SPX shows the SPX surged above the KRD high on August 12.
On August 12 the SPX struck a nominal new high of 6479.61 closing at 6466.58 (Notice the synergy with the 666 price low at the bear market low on 3/6/09.
Would Nicola Tesla the 3—6–9 guy be short?
So just how key is the late July Key Reversal Week?
Well, checking the top formation in late December 2021/ January 2022 shows there was actually a Key Reversal Week on the week of November 22, 2021 which was followed by a SECOND Key Reversal Week 6 weeks later in early January.
The first mouse got the squeeze; the second mouse got the cheese.
It was a big hunk of cheese from 4800 to 3500 in NINE months.
The darlings stunk up the joint. They were not immune.
For example, NVDA, which incidentally left a weekly signal reversal bar in late November 2021 plunged 70% from 34.64 to 10.81.
That’s in the middle of a Secular Bull Market which of course one only knew in hind sight.
It doesn’t matter, The fact is a 70% decline occurred in the poster child of the bull market in the midst of a Secular Bull.
Buy The Dip? You’d better have a market timer on your team.
Speaking of NVDA, it broke trend yesterday.
It snapped a rising trend line from its April 7th 86.62 low.
Tomorrow morning’s report will walk thru the projections on NVDA based on the Sq of 9 Wheel.
Be that as it may, NVDA’s 20 DMA has acted as support all the way up since April.
Yesterday it broke its 20 DMA with authority.
PLTR turned its 3 Day Chart down for the first time since the April low on Monday.
In a healthy bull market that should define a low.
PLTR continued lower from the get go on Tuesday knifing below its 20 DMA and plunging.
The 3 Day Chart does a great job of defining the near term trend because it integrates Time and Price.
PLTR caved in right thru the open gap from August 5th.
The accelerated momentum suggests it should test its 50 day line today at 152.
From its 190 high 270 degrees down is 151.
Breakage below 151 opens the door to a full 360 degree decline to 139.
Today squares-out with 155 so that’s going to be a pivot on a bounce or if it is reclaimed, opening the up door for a bounce.
In sum the technical came together with a big Time/Price square-out in mid-August.
The August 13th high is 6479.61.
Rounding we get 648 to work within the Square of 9 Wheel.
As flagged last week, 648/649 aligns with August 13, one day off from 43rd anniversary of the August 12, 1982 low of the birth of the Great Bull.
Remarkably, 648 and August 13 vector the number 43.
This synergistic squaring-out in keeping with WD Gann’s Law of Vibration warrants caution.
My expectation is the door is open for a 10 to 12% correction.
Square of 9 Wheel
Purchase your own Square of 9 Wheel. Shipping to US only. Contact Jeff for shipping outside the US.