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Jeff Cooper: SPX 2431 Is the Spot to Watch


Yesterday, the selloff continued with an opening selloff in keeping with the historic Friday/Monday plunge scenario.

The strongest of the leaders saw liquidation and shorting in keeping with the typical action into the Fed, when shorts are covered to make a rate increase look rosy.

Many glamours bounced Monday morning after plumb line drops that saw their 50 day lines tagged for the first time this year.

Names include SHOP, VEEV, DATA and CHKP to mention a few.

We sent an alert in the morning that SHOP looked viable for an upside try.

90 degerees down from the 101 high is 91 where SHOP closed on Friday.

180 degrees down ties to 81.

Note how SHOP waterfalled on the gap through 91 and bounced back, unable to recover the gap and 91.

It may be set to fully test 81 undercutting Monday's low.

Market participants and pundits are desperately seeking catalysts for Friday/Monday's sell-off but the fact that there is no such news is more bearish.

It points to the handiwork of the big cycle we mentioned in Friday morning's report, and the time price harmonics for the week of June 6.

Some say it's rebalancing with money going into laggards, but it doesn't look like they have the power to generate momentum.

Smart money doesn't sell like that, the sprinkle selling on the way up.

The selling may have been related to quad witch expiration where we said that arbs would walk the market down.

That wasn't a walk down.

Someone big many have taken advantage of the cheap puts around the setup for the arbs in front of quad opex and the Fed and staged a bear raid.

If so, they may have taken advantage of cheap calls on Monday morning and gone the other way.

If so, theoretically, a new high could play out into Friday.

2433 remains the angle/pivot to watch on the Square of 9.

The range for the first week of June in the SPX is  2415.70 to 2446.20, giving a mid-point of 2430.95, close to the above 2433.

So this looks like the key level and it ties to the overhead 50 period on the SPX hourlies.

The action after the first hour today when the index hedging in front of the Fed should be over so it's dangerous short-term if they don't hold after the first hour.

The leaders were liquidated with some buying going into the laggards, but I doubt this has the traction to mend the damage with many glamours giving conspicuous sell signals.

But the arbs may have been taken by surprise and may want to make it look like 2400 is going to hold.

If it does not, a decline of 6 to 7 weeks or 3 months should be on the table.

The hunt for a culprit for the selling continues, but it was a cycle's calling card.

If it had occurred on Comey Thursday, the media would have been Twitterpated connecting the imaginary dots.

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