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A Graceful Exit

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Everything that happens once can never happen again. But everything that happens twice will surely happen a third time.”
-Paulo Coelho, The Alchemist

On the surface markets made an impressive reversal on Thursday. On the surface.

You can’t always believe what you see in markets.

They tend to speak in tongues, but if you learn their language and have an open mind, they speak to you. Sometimes more loudly than at other times.

This is one of those times for me.

Below depicts the run up to the September 1929 top and the October crash.

chart, scatter chart

Notice the Rising Wedge and the rebound around the trend line from May.

That was the first little leg down, a wave 1 decline. You will notice a rally attempt off the 360 region.

Following a test of the trend line  (red) that acted as support starting from the late May low the DJIA bounced. Then it crashed to the  bottom of the trend channel (green) that defined the entire year.

The first waterfall decline elicited a multi-day rally attempt that was larger than the rally attempt right off the first decline from the top. That is the normal expectation.

When the initial low was broken the market crashed.

This all happened in days. It came out of the blue.

I suspect the vast majority of market participants assumed the 17% correction to a trend line that had acted as support for a year was a gift. That presumption was underpinned by the strong countertrend rally of around 7 days..
Then came the deluge drowning the Wall Street “axiom” that crashes don’t happen from highs…but from lows.

They can and they do happen from highs.

Investors who became intoxicated with the easy money of momentum lost more money buying on the way down waiting for the prior strength of the Roaring Twenties to be revisited than those who simply bought and held through the duration.

The axiom that is true is that vicious rallies on all time frames take place in bear markets convincing many that the tide has turned at exactly the wrong time.

Mr. Market. He good.

You need to have a way to measure the market. If you can’t measure risk, you can’t manage risk.

Funymentals don’t measure risk. Only Time and Price, the Lennon and McCartney of trading, can do that.

In sum, you have to have a method to the madness.

The heart and soul of my method is the Square of 9 Wheel which integrates Time and Price.
Secondly the patterns that Time and Price weave.

I bring up the 1929 chart because I want to compare it to the current position of the DJIA.

chart

Below is a weekly SPX from 1987 and a weekly SPX from 2023/2024.

chart

chart

Drilling down shows the channel break here in April 2024.

NVDA is the tell.

Let’s take a look.

A daily NVDA shows a gap down on Thursday followed by a large reversal, essentially a mirror image of Wednesday’s action.

chart

 

The reversal was nailed on the Hit and Run Private Twitter Feed.

graphical user interface, application

graphical user interface, application

graphical user interface, application

graphical user interface, application

NVDA snapped its 50 day line with authority last Friday.

It looks like it may be working on an A B C corrective rally.

A Measured Move of the A wave projects to 870-875 region which ties to a declining trendline.

chart

Checking the big picture since the orthodox top in late 2021 shows an A wave decline and a B wave up into March 2024.

It shows a 3 Peaks and Dome with the Dome tying to the end of a Rising Wedge.The fallout from Rising Wedges is abrupt.

But this Rising Wedge culminates a B wave.

C wave declines are vicious.

The stage is set for a waterfall decline.

On the Square of 9 Wheel the year 1929 points to May `19th.

It will be interesting to see what the metals complex does if the market crashes given the current rip in gold.

Yesterday Hit and Run Private Twitter Feed alerted the metals may be ready for the next leg up.

person

person

Despite the 10 year on its way to 5%.

Despite a strong dollar, the metals are surging.

Let’s take a look at the charts

Yesterday we tweeted this big picture GLD.

person

 

chart

chart

chart

In sum, the Rule of Alternation is in play.

The 1929 crash aligned with an economic event.

1987 proved to be a financial event.

The Crash of 2024 sets up as an economic event.

Volatility precedes price.  God knows volatility has exploded.

The current snapback may prove to be the only graceful exit.

It shows a 3 Peaks and Dome with the Dome tying to the end of a Rising Wedge.

The fallout from Rising Wedges is abrupt.

But this Rising Wedge culminates a B wave.

C wave declines are vicious.

The stage is set for a waterfall decline.

On the Square of 9 Wheel the year 1929 points to May `19th.

It will be interesting to see what the metals complex does if the market crashes given the current rip in gold.

Yesterday the Hit and Run Private Twitter Feed alerted the metals may be ready for the next leg up.

person

person

Despite the 10 year on its way to 5%.

Despite a strong dollar, the metals are surging.

Let’s take a look at the charts.

Yesterday we tweeted this big picture GLD.

person

chart

chart

chart

In sum, the Rule of Alternation is in play,
The 1929 crash aligned with an economic event.

1987 proved to be a financial event.

The Crash of 2024 sets up as an economic event.

Volatility precedes price.  God knows volatility has exploded.

The current snapback may prove to be the only graceful exit.

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