The Magnificent Seven

The point is, these events already were present in the nebula of market participants' consciousness when the turning point occurred. It is really a matter of when time and price square out, galvanizing a familiar historical pattern that acts as a catalyst for cautious, nibbling buyers to begin to overwhelm persistent heavy selling. People think in images, not ideas.

Trying to determine and attach a specific, isolated event that rationalizes a turn has nothing to do with trading. Speculation is observation, pure and experiential. Understanding isn't necessary and may just get in the way. As someone once said, "Any fool can believe the obvious, it takes a genius to believe a palpable lie." And the market lies only twice -- at the very bottom and at the very top.

And on the Seventh Day

On Thursday, the magnificent seven of monthly, weekly, and daily trend line tumblers clicked into reversal mode. The market did what it needed to do, pouncing back above our 798 pivot on hefty volume. Counting from Aug. 22, the Gann death zone of 7 squared, or 49 to 55 days, is winding down. As always, follow-through is key, but a weekly turn up from here that sticks should confirm that the rally phase is on.

Thursday morning, the S&P briefly went below the July 24 low and quickly reversed, regaining our 798 pivot and continuing higher after an ORB (Opening Range Breakout).

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Jeff Cooper is the creator of the Hit and Run Methodology and the author of the best-selling books Hit and Run Trading (The Short-Term Stock Traders' Bible), Hit and Run II (Capturing Explosive Short-Term Moves in Stocks), as well as a video course, Jeff Cooper on Dominating the Day Trading Market. He also created the Hit and Run Nightly Reports and co-founded a trading markets Internet site. Click here for information about Cooper's email newsletter, The Trading Reports. At time of publication, Cooper held no positions in any of the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Cooper cannot provide investment advice or recommendations, he welcomes your feedback.

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