“All the vampires walkin’ through the valley” Free Fallin’, Tom Petty
It was no country for old traders during the blowoff that followed the early August Flash Crash.
Now it’s no country for young traders in the blood bath aftermath Irrational Exuberance.
Momentum lies in shards
To wit, TSLA, the poster child for the blowoff exploding from 238 to 488 in SEVEN weeks…
The Gann Panic Zone. In this case a buying panic.
TSLA overshot our perfected 474 sqauare-out projection made last month for 1 day.
It closed at 479.86 on December 17th.
Overnight, as I write, TSLA is trading at 414.
It looks set to drop 360 degrees off the high which is 403. A full 540 degree unwind is 364 where the Rule of 4 Breakout started on December 5th.
When TSLA skids to a backtest of the breakout (BOB) undercutting its 20 day moving average.
TSLA is set to leave a large range weekly “tail”.
For its part yesterday, Hit and Run stated that given the downside momentum, the minimum target for the SPX before a meaningful bounce was 360 degrees down from high at 5791.
That may be hit today.
However as noted yesterday,. there is a strong likelihood given the angle of attack to the downside that the SPX cubes out on this initial leg down dropping 540 degrees.
This is 5640.
This ties to the July peak at 5669.
Interestingly on the Square of 9 Wheel, 564 (5640) is 180 degrees straight across and opposition
December 26th.
That is the anniversary of the Christmas Crash in 2018.
There is some good symmetry suggesting this plays out as 6 years is a cube in time…a true square being a 6 sided cube, 1 year of 360 degrees on each side, solving the age old enigma of squaring the circle.
In sum an array of posts yesterday on the Hit and Run Private Twitter Feed reflects our strategies in real time.
Hit and Run members bought UVXY last week at 18.85 anticipating that a downdraft from our December 7th “Pearl Harbor” turning point would end up being a sleigh ride to hell for those sitting back expecting typical seasonality.
Instead we’ve got another Powell Pivot that is taking the stuffing out of the market just like it did 6 years ago.
There is a strong likelihood the SPX 3 Week Chart will turn down next week with 3 consecutive lower weekly lows. Consequently we bought January UVXY calls yesterday.
The 20 week moving average at 5775 ties to 360 degrees down at 5791.
Checking the futures tonight the index coming up on that region.
Whether the SPX bounces from the 20 week or heads down to the July peak before a bounce,
The Gann Panic Widow looms large in January.
In sum, Mr. Market did a good job disabusing market participants of the notion of risk after the August blowoff.
The market roared back embellishing the Buy the Dip Mantra.
As we offered on the markets surge after the Trump victory, there was a strong synergy cyclically suggesting we get a mirror image of 2016 when the markets initial reaction was to plunge and then soar….for two years.
This time we soared for a month and the other side of the mirror may be down for two years.
Since the spring we’ve been concerned about a mirror image foldback of 1929.
This year the market impulse from early September, the high in ’29.
We may collapse into April 2025, the return rally “return to normal” high in 1930 before the real crash commenced.
This also ties to the 1 year cycle low from April 2024.
A failure of the July peak to act as support opens the door to a complete unraveling of the rally since the August low of 5100.
Be that as it may, the SPX is set to leave MONTHLY Train Tracks: November was a large ‘buy bar’ that closed at the top of the range at record highs.
December is threatening a mirror image with a close near November lows of 5700.
This is no country for young traders who have only been trading since 2009 and have not been through a down cycle.