“The greatest trick the devil ever pulled was convincing the world he didn’t exist.”
The greatest trick the Fed ever pulled was convincing markets it could print an economy.
On Tuesday, bond, stock and precious metals markets erupted in unison on one number that implied inflation was in retreat.
Of course the government would love us to believe that because then bonds will rally and it will be easier to fund the debt.
When did one data point become a trend?
I guess only when there are trillions bet on one roll of the dice.
Last week, Hit and Run showed this Triangle Pendulum.
The Triangle Pendulum is a pattern I developed to identify potential fast moves.
Because often times fast moves come from false moves.
As you can from the above daily SPX there is a 7 month Triangle.
The bottom rail of the triangle is the red line connecting the March 2023 low with the early October 2023 low.
The top rail of the triangle is the blue line from the July 2023 peak.
The SPX knifed with authority below the bottom of the triangle to 4104.
Then it turned its 3 Day Chart up immediately on November 1st.
In a continuing bearish phase, that should have defined a high soon in terms of both price and time.
Instead, the SPX staged a Gap and Go reversing back into the triangle leaving an O’Neil Follow Thru Day.
The rally continued up to the top of the triangle where as one would expect, it consolidated.
I assumed it would pullback.
It did, on November 9th to 4344.
My expectation was it would shake out below its 50 day line to 4325.
I was wrong.
That said when the SPX turned back up the next session on Friday, November 10th, it triggered a Keyser Soze buy signal.
This is a Reversal of a Reversal.
Since Thursday was an outside down day reversal and Friday eclipsed and closed with authority above Thursday’s high it was a Reversal of a Reversal.
Keyser Soze’s like its namesake from the movie The Usual Suspects, have a violent twist.
Two closes above the triangle validated the breakout in front of Tuesday’s CPI.
Boy the market’s smart, isn’t it?
Yet another Gap & Go ensued sending the SPX up a “square” 540 degrees from the 4104 low just 12 sessions earlier.
It’s not just the key 540 degrees from low that should present resistance to the 404 point rally.
As well, on the Square of 9 Wheel 404 is opposition October 27th, the day of the low for a possible square-out of the range.
Let’s see if this represents resistance for the moment.
There is another factor that suggests we are at/near resistance that is shown on the Hit and Run Private Twitter Feed this morning.
Taken together, all three factors suggest a pullback whether that comes from a higher open or not.
Of course momentum is its own master. It answers to no one.
In sum, any pullback that proves impulsive (5 waves) from here versus a corrective pullback, prior to clearing the July high is a red flag…especially a pullback that slips back below the top of the triangle and keeps dropping…especially back below the bottom of the triangle currently at 4300.
That opens the door to a drop below 4100.
Let’s take a look at two key stocks NVDA and TSLA to see if they are a Tell.
Last week Hit and Run said “TSLA is going to 205 as it is a key 540 degrees down from the 299 high”
180 degrees up from 205 is 234. As long as TSLA holds 234 it can push higher, but it’s at Phil D Gap and its overhead 50 day line.
NDVA had a Time/Price square-out at its 502 August 24th high.
August 24 is opposite 502.
This week NVDA is square the 505 strike.
A weekly NVDA shows a new high satisfies a possible weekly Megaphone Top.