“I’m going off the rails on a crazy train.” Ozzy Osbourne
“Wall Street in boom days is an aggregation of madmen. The Stock Exchange becomes Bedlam well dressed.” Edwin Lefevre
NVDA reports tonight.
NVDA shows 5 waves up into its June 20th high where it left a large range Key Reversal Day.
Arguably it is working on a corrective A B C rally with a nominal new B Wave high.
The top of the blue channel ties to the low 150’s.
If the reaction to earnings is favorable the door is open for NVDA to be magnetized to the 150-158.
Alternatively, a poor reaction will see breakage below the magenta Bottoms Line opening the door to the low 130’s and ultimately the low 120 region.
From the August 5th Spike and Reversal low at 90.69 a 540 degree (cube) advance ties to 158.
Notice that the August 5th low is a Time/Price square-out: 91 ‘points to’ August 5th.
Amazing
158 is straight across and opposite August 5h…on the same axis as 91.
Proving the geometry, 133 is 360 degrees up from the August 91 low.
It was a straight show from 91 to August 26th high of 131.
Remarkable.
NVDA ran up 360 degrees in 16 trading days.
Breakage below the magenta trendline opens the door to the 1 year trendline (black).
Notice the confluence of the blue trendline and the red Ghost Line in the 122 range.
Breakage below the 122 region validates the idea of a B Wave ad opens the door to the C Wave decline.
Today/the rest of this week squares out with the 155 strike and on the downside 120.
120 is the “confluence” of the blue Bottoms Line and the red Tops Line.
“The SPX is testing:
1) Its 20 day moving average
2) The October highs
3) 3) 180 degrees down from high
A rally attempt seeks likely.
The structure suggests if that rally is going to play out it starts early this week….before another rug-pull before the end of the week.”
The above is from Monday morning’s Hit and Run Report
Monday the SPX rallied off its 20 day moving average.
Tuesday the futes were down as much as 60 points a few hours before the open.
The index gapped down on the open but reversed quickly to close up 23 points on the day.
In sum despite early weakness both mornings the agenda for a rally played out.
Tonight, The Magnificent One reports. Are NVDA’s coattails large enough to lift SMH?
SMH hasn’t made a new high since it’s June/July Twin Peaks Gilligan/ Key Reversal Days.
On Friday SMH triggered a Rule of 4 Sell, a break below a 3 point trend line.
A pop on a favorable reaction to NVDA could see NVDA backtest the broken trendline in tandem with a backtest of its 50 day moving average.
In short, there is beaucoup resistance in SMH at the 248/249 region.
Pulling the lens back to look at the weeklies shows Friday’s broken trendline ties to the bottom of a 1 year trend channel.
Underscoring the weak position of SMH is that its 3 Week Chafrt turned down in late July and remains pointing down.
The purple arrows are each time SMH traced out a weekly Minus One/Plus Two sell setup.
A monthly SMH shows it retreaded from resistance at the 250 region.
Support shows up at 220 with major channel support at 190.
Legendary trader Jesse Livermore said, “The stock market is never easy. It’s designed to fool most of the people most of the time.”
Turnaround Tuesday did a good job of fooling traders.
With the SPX opening down 40 points, traders piled into fear of nuclear holocaust.
This train goes through crazy town.
After one hour of backing and filling the SPX exploded after triggering an Opening Range Breakout (ORB).
Fast moves come from false moves.
A follow on buy triggered on a Jump The Creek signal offsetting Tuesday morning’s open gap.
Our intraday “roadmap” nailed the pullback from session highs and forecasted a subsequent rally into the bell.
The reversal was powerful amongst the usual suspects
Several of Hit and Run long plays for Monday exploded:
SITM
INOD
RDDT
ZS
VRNA
Additionally, APP, TEAM, COHR, VRT and VST rocketed…to mention a few.
Whether it was euphoria in front of NVDA, whether it was real of Memorex, the stampede in the face of the geopolitical news was something few would have imagined when the opening bell rang.
Be that as it may, on a further rally today, QQQ will be at well-defined resistance: Phil D Gap and its declining 50 hour moving average.
In sum, euphoria is driving the train.
Record inflows for ETF’s translate into buying of the underlying stocks without consideration of valuation or anything for that matter.
The SPX is now just under 40% overvalued.
In the last three cycles, an over-valuation of 20% was the critical threshold beyond which Mean Mr. Mean Reversal trumped the tape.
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