SPX, DAX, COMPQ, CVX Updates: Bulls Might Have a Little Trick Up Their Sleeves

There really isn't much change from yesterday's predictions, however I do have a slightly "new" way of charting SPX which might be worth noting.

Yesterday, I warned that a larger fourth wave bounce might be in the cards, and it seems likely that we saw all (or part) of that fourth wave unfold through most of the session.  Not a bad call considering that the futures were down 47,000 points when I published the article.  In any case, it's tough to say if the entire fourth wave completed yesterday, since fourth waves are nasty and unpredictable environments, much like the inner depths of Bernanke's beard. 

Based on the one-minute chart, I'm inclined to believe that at least one fractal did fully complete, suggesting the wave may be finished -- however, 4th waves are known to string several complete fractals together, so I can't be certain. 

In either case, I don't believe the final lows for the larger wave are in yet.  It would look much better with new lows, and I've outlined a progressive series of targets on the chart below.

The chart I really want to call attention to is the bigger picture SPX chart.  It seems that just about every bear on the planet is watching the possible head and shoulders top which is forming in SPX.  I want to point out that there are different ways to view it, though all of the charts I've seen are charting it with an upward-sloping neckline. 

There's absolutely nothing wrong with charting it that way, but I always get nervous when too many technicians are on the same page, and begin to worry about foul-play from the market.  The market doesn't like to be transparent, so the bulls might throw in a curveball. 

Accordingly, I want to call attention to another way to chart the head and shoulders.  The wave counts suggest that the way I'm charting it below may in fact be "correct."  We'll have to pay close attention to what type of action develops around the potential necklines.

In either case, aggressive bears won't necessarily want to wait and see if my hypothetical is correct.  But it's certainly worth being aware of the potential.

Next up is COMPQ, which appears to be in a similar position to SPX, and looks like it needs to make new lows before any significant rally can get started.

I also wanted to update CVX, whose chart just seems to get uglier everyday.  I'm looking for new lows here as well, followed by a larger bounce, followed by me (and some of my readers, no doubt) shorting the living daylights out of it, followed by all of us living out our days explaining to our in-laws that, no, they can't have any more "small loans."  At least, not until they pay the last one back.

And finally, I want to call attention to the DAX, which did something noteworthy yesterday:  it overlapped the red wave-a high, thereby joining the FTSE in ruling out the super-bullish long-term counts (which I ruled out a long time ago) with very high probability.  It also appears to be in a similar position to SPX and COMPQ -- so the stars seem to be aligning for the bears over the intermediate term.

In conclusion, the expectation is that there may or may not be a little more sideways yuck left in the market first -- my inclination is that there's not -- but either way, new lows appear highly probable.  There are short-term targets listed on each chart, and I expect a decent bounce will emerge from one of the targets listed.  We'll keep tracking the short-term structure as it unfolds.  Trade safe.

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