“Market needs to break Friday’s low to get things moving to the downside. Do not underestimate the whipsaw we can see in this region.
Taking out 4490 still opens the door to 4560ish.”
We wrote the above on Tuesday morning’s Hit & Run private Twitter feed.
We followed up with:
“Trend line from 1/24 and 1/28 ties to 4460 key level.
Watch for possible Undercut & Rally if the bulls want to attempt to take the ball.”
Here’s the hourly SPX trend line referred to.
Shortly after:
“IWM, The Truth Teller, was talking earlier (green while the rest of the market was crimson).
The SPX held the hourly trend line in the prior thread and turned up.
Should we complete 5 little waves up off today’s low, then we probably are headed to 4560ish.”
Then:
“SPX is challenging overhead 3 point trendline all the way from Jan 4 ATH.”
The SPX exploded off the aforesaid hourly trendline without undercutting it after striking a low of 4465, just above our key 4460 region.
In so doing, the SPX spiked to 4531 before settling at 4521, a hair above the 4520 mid-point of the entire leg down this year.
Clearing the declining hourly trend line in league with the open gap at the 4550 region should perpetuate a spike.
My expectation is for an extension higher as FOMO permeated the tape today.
Our NET exploded after early Bleedback from Monday’s rip to the 115 square and is set to challenge that level again.
In tech, ACLS, XLNX and MRVL rocketed after demonstrating relative strength during the sell-off.
In sum, the SPX whose 3 Week Chart is pointing down looks like its set to trade above last week's high this week.
If so, that will put it in the weekly Minus One (3 Week Chart is down)/Plus Two (2 consecutive higher weekly highs) sell position.
If the underlying trend is down as cycles indicate, this will set up a strong sell setup.
The rally came despite 10 year yields knocking on the 2% door.
As well, precious metal minus showed strength in the face of ripping yields.
Let’s look at GDXJ.
As tweeted on the private feed on Monday, clearing 39, GDXJ looked like a Bear Trap (bullish) was in gear… as long as we got follow through.
Tuesday looked like follow through with GDXJ pushing above 40 in what appears to be a Pause Day prior to the potential for some fireworks today.
Why?
GDXJ is perched just below its 50 day line at the 40 strike. Sustained breakage above the 40 strike opens the door for a challenge of a declining trend line from the November 12 high at 48.25.
This trendline ties to 41.50. Above 41.50 indicates a push to the prior swing high at 43.50.
Markets seek equilibrium. A 50% retrace of the swing down from 48.25 to 36.50 is 42.50.
So momentum above 40 indicates a push to 42.50/43.50.
At the same time, a weekly declining trendline from May 2021 comes in at 44.50.
Momentum in GDXJ should see it magnetized to the 43.50 to 44.50 region.
Is it possible it tags the 45 strike for Feb Opex?
