SPX, COMPQ, and INDU Updates: Official Target Captured -- Here's What to Watch Next

Yesterday, SPX finally "officially" captured its first downside target and futures are trying to bounce from that zone, so nothing unrecoverable has happened for bulls yet... but in case bulls can't get their act together here, I'm going to cover what we'll be watching heading forward (later charts).

On this first chart, we can see SPX came down for a perfect kiss of the blue trend line:

Since this was the expected resolution of both the expanded flat and the diagonal (just the diagonal would keep dropping lower), this leaves the jury still out on which of those we're dealing with.

If we're dealing with the diagonal, I've outlined its targets in more detail:

Now, let's start to break into "hmm, that would be interesting" territory, starting with COMPQ, which is close to its very long term trend line.  If that breaks, it wouldn't have far to go before things start to look shakier for "el bulleroni" (this is Spit-alian, a combination of Spanish and Italian that I just made up and which bears equal similarities to neither language).  That's because COMPQ is dropping out of potential "bull 5" territory, so if it starts to knock out some key overlaps, it could signal an end to the long, slow bull market that began years ago.

Next, we have INDU's long-term chart, which shows the same problem -- that problem being that the most recent labels on the chart are 3s and 4s, which means we've been in wave 5.  

The near-term chart discusses the more bearish interpretation of the recent action -- but I do again need to stress that, so far, nothing has happened to indicate that the more bearish interpretation is more valid than the less bearish interpretation.

Finally, if COMPQ keeps following the blue path, it may get into the ballpark of creating problems with at least the first key overlap.

In conclusion, the market did continue lower to capture its "official" downside target -- and this (with a little wiggle room) is where bulls need to get their acts together.  While the market can support lower prices to a point, if it gets into key overlaps, the picture is going to start to look shakier for bulls and we may need to consider the idea that the 5th wave we've been watching for a while has finally ended.  And that would bring the potential of a recession and more.  Trade safe.