SPX, RUT, INDU, NYA Updates: Understanding the Beard Through First-Hand Experience

Before I get into the charts, indulge me a moment of digression into a personal story. 

As many of you know, I often go several days without venturing out into public, and as a result, I can be somewhat lazy when it comes to shaving.  Well, as of this evening, I had gone perhaps 4 or 5 days without shaving and my beard was growing in fairly well, so I decided to do something radical:  I shaved only my neck and left the rest of the beard, above the jawline. 

I went with a look commonly referred to by hipsters as "The Ben Bernank."  It's the look favored by Fed Chairmen everywhere, and offers the substantial economic benefit of reducing wear and tear on your razors.  Oh wait... I guess for Keynesians, that's an economic detriment -- something of a razor "liquidity trap" if you will. 

Anyway, I showed my wife the new look, and when I asked her what she thought, she gave me an unenthusiastic shrug and responded, "It's okay."  I began to get a glimpse into some of the pain endured by Mr. Bernanke. 

Despite this, I think I'll keep it for a while.  My hope is that being Beard Brothers with Bernanke might allow me to better understand the enigmatic Fed Chairman... and with some luck, it might even create an inter-dimensional portal into the Mystic Powers of the Beard, which could offer us advanced warnings about the Fed's next move.  I feel closer to Ben already -- as clearly shown by my casual use of his first name in this sentence. 

I might even try to endure the beard until the next Fed meeting, to see if it gives me an "insider perspective" on the machinations of the Fed Board -- such is my unending dedication to my readers.  Of note, astute students of the English language will quickly recognize that there is a difference of only one vowel between the words "Board" and "Beard."  Coincidence?  Not likely.  I'll keep you posted.

Moving onto the charts, the hypothetical ending diagonal I proposed on Tuesday has gained a bit of favor in my view, due to the depth and complexity of the retrace of the prior wave.  At the beginning, diagonals are all about frustration and whipsaws.  Toward the end, they're a God-send and fairly easy to play -- at least, they are for those who are aware of them... for everyone else, they're account burners, and usually end up trapping the majority on the wrong side of the trade. 

If this is what's happening, it's still in the early/middle, less-predictable phase.

Next is the big-picture combo chart, which still shows that most major indices are trading above key breakout levels.  Again, right click and select "open in new window" to bring up the full-size chart.

Next is the SPX 5-minute chart, showing the preferred count, which still expects new highs down the line.  Bulls aren't out of the woods, by any means, but I still think the edge has to be given to higher prices until proven otherwise.

The next chart shows an interesting potential analog between a pattern formed back in February, and the pattern just recently formed over the last few sessions.

RUT has picked up a ST bullish trade trigger pattern of an inverse head and shoulders.  SPX shows a similar pattern.

The big picture RUT chart reveals why there's been some indecision and gyration in that index.

NYA has formed a potential a-b-c bull flag.  The pattern isn't complete unless the top line is broken.

In conclusion, the charts are marked with several key levels to watch.  The preferred count continues to expect new highs will be made, either within the ending diagonal pattern, or within the more bullish conventional impulse.  But the bears have made a pretty good run here, and have cast a bit of a shadow over my new beard.  Speaking of, mine is much less scraggly, with hardly any gray.  Also I still have the majority of my hair, and I'm way taller.  Trade safe.