“I’ve thought a lot of things when I’m managing money with great, great conviction, and a lot of times I’m wrong. And when you’re betting the ranch and the circumstances change, you have to change, and that’s how I’ve always managed money.” Stanley Druckenmiller
"There’s a hole in the ground into which I’m falling
So godspeed to the sound of the pounding." Shock of Lightning, Oasis
Wednesday morning’s Hit and Run Report showed the following daily chart with the SPX testing the top of a small trend channel with an NR 7 Day.
An NR 7 Day is the narrowest range in 7 trading days.
These contractions in volatility typically see an expansion of volatility within a few days.
Because the intermediate term trend is down with the SPX at clear cut resistance, the normal expectation is that the expansion of volatility would be to the downside.
Breakage below the short-term rising trend line (purple) suggested a backtest of the 20 day moving average at 5715.
Below that opens the door to Phil D Gap at 5667.
What’s interesting is that today squares 564 (5640) on the Square of 9 Wheel.
What happened?
The SPX Pinocchio’d its 20 day moving average and bounced to close right on it.
An updated daily SPX shows technical trifecta of resistance overhanging the SPX going into Wednesday.
- A Ghost Line (brown) from the important December high. Notice how when the index recaptured the line in early 2025 it drove to a new all-time high. when this Ghost Line was lost on March 3 it perpetuated a waterfall decline. The SPX hit its head on the Ghost Line on Tuesday…while the vast majority were expecting a push to over 5800. Bear markets don’t accommodate.
- The horizontal black line is prior support acting as resistance. It was tagged on Monday/Tuesday.
- The top of a short-term bear channel.
Underpinning this technical trifecta of resistance was the 200 day moving average at 5756.
Fast moves come from false moves. While the index Pinocchio’d its 200 dma on Monday and Tuesday, back below the 200 and holding below it yesterday opened the door to lower prices.
I think it is important that yesterday’s plunge started after the “hidden pivot”, the gap down from the close of March 77th , was filled on Monday.
Consequently, Hit and Run shorted GEV before Tuesday’s bell.
We also came into Wednesday short ORCL, FSLR, RH and CAVA.
The open gap from Monday’s explosion served to magnetize the SPX lower on Wednesday.
In a bull market, Tuesday would have been a Pause Day prior to upside continuation on the heels of Monday’s upthrust.
However, now we know what kicked off Wednesday’s Gap & Go.
Concern broke out on the Street about was to be CoreWeave’s iconic IPO.
That story didn’t just pop up out of the blue on Wednesday morning.
Someone knew about it last week.
Friday’s rally served as a graceful exit for those in the loop realizing concern over CoreWeave’s IPO would be a Tech Cuisinart.
What better way to orchestrate an exit than to trigger a Squeeze Play on Friday’s first Quad Witch of the year.
Trump’s tariff announcements were baked in.
Will today be a “sell the rumor, buy the news” day?
In sum, if the market doesn’t continue lower after the first hour today, the likelihood is it rallies.
That said whether the SPX rises to the top of the Bear Flag one more time or not, a dramatic decline is on the table below the bottom of the Bear Flag.