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Anticipating Turning Points Using the Square of 9


Jeff Cooper dives into the power of the Square of 9 wheel.

"Speculation is about anticipating the anticipators."
-Bernard Baruch

Tuesday's and Wednesday's morning reports flagged the time/price square-out at 2103. 

Why was it a square-out?

2103 is 180 degrees straight across and opposite December 1 and 2. In other words, time and price balanced out there on Tuesday's Late Day Breakout which saw the SPX magnetized precisely to 2103 on the bell.

It looked like a nice pivot out of a Cup & Handle on the daily and hourly SPX.

However, as we offered in yesterday morning's report:

"It's either a breakout or the square-out is another top that at the very least will require a pullback probably to Tuesday's late breakout pivot (around 2095). We should know by the end of the first hour today. The last hourly high was 2116 from November 3. The low of that high hour was 2111, so regaining 2111 puts the SPX in a further strong position---near term. Eclipsing November's high could see a fast move to eclipse the May all time high. The fly in the ointment is the square-out (2103) but through 2103 and hold is bullish. That said it clearly looks like an ORCESTRATED effort with the usual suspects squeezing sentiment higher. If the breakout above this big 2100 SPX level was to attract buyers and performance chasers and technical paparazzi in order to sell into, we may know in the first half hour to hour today. A break back below 2094, Tuesday's Late Day Breakout is a yellow flag."

The fly in the ointment came home to roost as the SPX triggered a downside ORB (an Opening Range Break) and accelerated lower.

In so doing, the index is flirting with snapping a potentially bullish Cup & Handle.

Since fast moves often times are elicited from failed patterns, caution is warranted.

And, since fast moves come from false moves ala Tuesday's failed breakout -- then a failure of the Handle of the Cup & Handle may come to fruition.


The last month has seen two square-outs: November 3 opposite 2120 (the high there was 2116) and December 1 opposite 2103.

Importantly, the high prior to the August debacle was 2103. Will the second mouse get the cheese for the bears?

90 degrees in price down from the all time high is 2071. 180 degrees is 2024 which ties to the mid-November low.

That looks like the Maginot Line for the bull market as shown in the daily SPX below.

An hourly SPX from November shows Wednesday's decline held up at last ditch short-term support, so an early rally attempt could play out to backtest the 50 period around 2090.

P.S. If you are interested in obtaining a Square of 9 Wheel along with a consultation on how to use it, please contact:

Twitter: @JeffCooperLive

Get Jeff's commentary plus day & swing trading ideas each day with a FREE 14 day trial to Jeff Cooper's Daily Market Report.
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No positions in stocks mentioned.

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