“You shake my nerves and you rattle my brain.” Great Balls of Fire, Jerry Lee Lewis
“Excesses in one direction will lead to an opposite excess in the other direction.” Robert Farrell
To say that August has been volatile would be a gross understatement.
The lead index, NDX, broke trend in early August, reclaimed it last week and came back to text it
Going into Fed Chair Powell speech in Jackson Hole today.
For all the noise, it is likely not to offer much news.
But that won’t stop the Algomatics from gaming it.
Markets tend to play out in three’s. Sometimes there is a 4th section.
From the October 2023 low you can discern on the above weekly NDX 3 drives to the July top.
Let’s pull back the lens to put the move from October 2023 into context.
You see 3 Drives to a high from the December 2018 low.
Despite the persistence and scope of the advance into January/February 2020 that marked the high prior to the Covid Crash we maintained that the rally from October 2019 was a B Wave.
The C Wave that followed (the Covid Crash) bore this out in spades.
Likewise, I have maintained that the strong likelihood is that the advance since October 2023 may be a B Wave. The A wave decline being the 2022 bear market.
If I am correct a vicious C Wave is around the corner.
This C Wave is underpinned by the structure of what looks like 3 large drives to a high into July 2024.
Drive 1 is the high in early 2020.
Drive 2 is the high in late 2021.
Drive 3 is the high in July 2024.
Essentially we have equality in time between the highs of 2 years.
The end of August/early September is an important anniversary period.
It marks the pre-crash high in both 1929 and 1987.
It also marks the Secondary High in 2000.
Notice the initial break off the NDX high in March 2000 followed by 3 swings or drives to the week of August 28, 2000.
It was downhill racer from there into October 2022.
If you are not a long time reader, and think we are a dyed in the wool bear, Hit and Run nailed the week of the October low in 2022.
Notice the 3 drives to that low.
Drive 1 into the end of March 2001.
Drive 2 into early September 2001.
Drive 3 into AUGUST 2002. October was an undercut low and a 4th section swing low.
Late August/early September is a big anniversary.
We have been paralleling this period with 1929 and 1987 and those late August/early September tops pointing to the potential for a Panic in September 2024 versus a rebound backtest into October.
in other words we may be offsetting time by 2 months or so.
This year we got a 13 week run for the roses from an April low into mid-July versus 1987 and 1929 which saw 13 week blow-offs from late May lows into the end of August/early September.
This year the calendar happens to be the same as 1929. Tuesday next week is September 3.
1929
New Moon 9/3
Top 9/3 Tuesday
1987
New Moon 8/24
Top 8/25 Tuesday
2024
New Moon 9/3
9/3 Tuesday ?
Remember also that using the numbers in the Square of 9 grid as years versus price, we see that 1929 squares out with August 23. Today.
You can’t make this stuff up.
In sum, yesterday was the worst day in the NDX since early August 23, 2024 .
It followed the backtest of a broken Bottoms Line from October 2023.
The sell-off occurred as the NDX (and SPX) went into the weekly Minus One/Plus Two sell position early this week.
Yesterday the NDX carved out an LROD or Lightning Rod…a Large Range Outside Down Day.
It closed right on its 50 day moving average.
It may be that the NDX is tracing out the Right Shoulder of a Head and Shoulders top pattern.
If so this is a pernicious “droop” Right Shoulder.
the DJIA produced a droop right shoulder prior to the crash in 1929.
VIX weekly. Breakouts above the 15 levels are particularly significant (bearish). The recent spike, which dipped below 15, has now crossed above it, potentially reaffirming a bearish outlook
VIX daily. Daily VIX reinforces the bearish implications of moves over the 15 level.
Overnight, as I write, the futes are up 20. Powell speaks.
He may generate some optimism among traders—at least initially.
But there may be “fire in The Hole”— Jackson Hole.
Fire in the hole is an expression used by American miners to warn others that an explosive detonation is about to happen.