Spring Low, July Fireworks Could Be on Horizon - TheStreet

As we enter the end of March and just had the vernal equinox of March 21, the market is confronted by the push and pull of many powerful cycles.

There is plenty of bad news to go around in the way of

General Motors

(GM) - Get Report

,

Citigroup

(C) - Get Report

and

American International Group

(AIG) - Get Report

.

Moreover, there were many breakaway gaps on Monday, such as

Level 3 Communications

(LLL) - Get Report

and

Avid Technology

(AVID) - Get Report

. So if a panicky plunge is going to play out, these could be the telltale signs.

At the same time, the

S&P 500

made a new low for the decline on Monday, pushing it into the body of support we referred to last week between 1160 and 1180 S&P.

It's important to remember that the high of the low-bar day this year from Jan. 24 was 1173.15, while 1174 conjuncts or resonates off March 21.

With the

Nasdaq

grazing its 200-day moving average, there are reasons to anticipate that this time frame will carve out a low. However, I do not expect such a low, if it occurs, to be of a V-shaped nature. I think a more sustainable pattern to launch a rally would be found in a down-up-down sequence, with the first-quarter low being punctured at the beginning of the second quarter. That is how the late-March 2001 low played out. The pattern I am looking for is a low at some point at the end of March/early April, to be followed by a rally into July.

The monthly chart on the S&P turned down on Monday as the index undercut its February low scored on Feb. 1, at 1181.05.

My expectation would be for, at the very least, a knee-jerk reaction up on Tuesday as this big wheel of time -- the monthly chart -- has turned. However, watch the behavior carefully here if a puny rally unfolds and the S&P knifes back below Monday's low in short order -- as in the next few days. Then I would expect a quick drive down toward 1160.

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.

Mr. Cooper is also a principal at Mutual MoneyFlow Management, a money management firm that is a registered investment adviser. MMM and its affiliates may, from time to time, have long or short positions in and/or buy or sell the securities or derivatives thereof, of companies mentioned in Mr. Cooper's columns. In such event, appropriate disclosure will be made. None of the information contained in Mr. Cooper's columns constitutes a recommendation by Mr. Cooper that any particular security, portfolio of securities, transaction or investment or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. While Mr. Cooper cannot provide personalized investment advice or recommendations, he welcomes your feedback at

jeff.cooper@thestreet.com.

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