Current Equities Market Continues to Shadow 1929

The market has continued to punish those looking to buy the dip, which is market behavior most seasoned traders have been "waiting for" for a long time.  In a moment, we'll look at an interesting analog chart which overlays the current market with 1929 and shows a striking similarity -- but first, the current charts. 

On January 29, and in every update since, I've mentioned that the market was behaving like it's in a crash wave -- and so far, that continues to be the case.  I figured it needed no further discussion, but suppose I should add that, for less-experienced traders, "crash wave behavior" means that attempting to catch falling knives is ill-advised.

The SPY chart below shows a great example of where a seasoned vet might try to knife-catch this decline, on the idea that the most recent decline was/is a fifth wave.  The problem with crash waves is that they don't follow the "normal" guidelines of a wave structure -- which means that the bounces which would typically be expected to be tradeable often end up being nothing more than brief pauses in the decline.  When there's a crash-wave underway, most traders would do well to simply stick with the trend (as I discussed in a bit more detail on January 31).

Incidentally, January 31's near-term preferred count (the only count I published, actually -- no alternate was shown) proved to be correct, and wave (4) was indeed complete.  One could argue that we've reached, or are approaching, the end of this wave -- but again, given the crash wave behavior we've continued to witness, I would recommend approaching only with extreme caution.

In favor of the bulls, do note the positive RSI divergence at the recent low, and the fact that we hit black trend support and bounced.  If bulls can hold that line (or head-fake bears with a quick whipsaw) the market does have the ingredients present to put together a snap-back rally from here.

Next is the S&P 500 (SPX) 1-minute chart.  Near-term, this chart is an absolute mess.  I ended up cross-referencing five major markets against this chart, but none of those charts were much better.  The choppy, overlapping structure does suggest a market that's still struggling to advance against continued selling pressure, so we probably have to give odds to the idea that SPX is headed to new lows.

Examining the other side of the trade: the rally could conceivably be counted as an impulse wave.  In fact, that's what I've detailed on the chart (because that's how I do my chart work while trying to arrive at a conclusion).  I've outlined a few levels to watch.      
 

Next is the Dow Jones Industrial Average (INDU) -- a bit wider view than the two previous charts, which is always important for perspective:

Finally, there's an analog to today's market that you may or may not have seen previously.  It's certainly intriguing.  One of my regular readers has been tracking this for some time, and he was kind enough to send me his data in order to allow me to recreate his chart.  This chart compares the current Dow Jones Industrial Average to 1929's market.  We've been tracking this since before the market turned -- and now that we've seen something of a relentless decline, the comparison is starting to seem a bit uncanny.

In conclusion, SPX may be closing in on completing a fifth wave, which would finally lead to a larger bounce -- however, I would continue to recommend extreme caution.  Even if we bounce from here, all current indications still suggest that the trend has changed at intermediate degree and that bounces should be sold.  I will, of course, continue to watch for any signals which might suggest we reexamine that thesis.  Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

Some of the Fundamental Issues Facing World Markets

It's time to address the elephant in the room.

I generally watch charts first and fundamentals second, for the simple reason that fundamentals give me a biased view of the charts.  That may sound a bit strange to some folks, so let me explain further by way of analogy:  I think of fundamentals as the foundation which underpins the collective "market."  Looking at the foundation of a house gives us a general idea of how many square feet it might be -- but the foundation won't tell us anything about whether the bathroom floor inside that house is made of linoleum or Travertine tile.  And it won't tell us how many people live in the house, or whether those people even like the house in which they live.

In other words:  The fundamentals set the backdrop for the market in broad strokes, but the charts contain the specifics.

Fundamentals drive social mood to a degree, and I've found that if I focus on them too much, I start to become subject to current mass sentiment -- and the problem is, the market is all about doing the opposite of what sentiment thinks it should do.  We can throw out adages in abundance to illustrate this point:  "Buy when there's blood in the streets";  "Sell on the sound of trumpets"; "Bull markets climb the wall of worry";  "Bear markets slide down the slope of hope"; etc.

So to some degree, I try to compartmentalize the "real" world (fundamentals), and keep it separate from the fantasy world of hopes, dreams, and fears that is the market.

And the fact is, what constitutes the "real world" as I see it is only my opinion anyway.  While there is most certainly an objective reality, none of us are truly capable of seeing it clearly -- we all see some vestige of ourselves when we look at the world, because we are forced to interpret the world through the lens of our own minds.  Our minds are, in essence, the brokers of reality, and due to a host of human traits which relate to our emotional needs and insecurities, our minds frequently avoid giving us a full disclosure of reality.  To some degree, we all cast our own shadows onto the world beyond.  (For more thoughts on this subject, please see:  Trader Psychology and Why the Stock Market is Always Right)

Anyway, to draw a totally arbitrary example, I might look at, say, a massive quantitative easing program and say to myself, "Self, something this huge is bound to have huge unintended consequences somewhere down the road.  Like ripples spreading across a pond, this is going to impact the global economy and cause issues we cannot control, or even foresee."  But the next guy, especially if he's a Primary Dealer for the Federal Reserve, might look at QE and say, "Hey cool, free money!"

His reality differs from mine -- but true, objective reality is likely to lie somewhere in-between.   

As a finite person in an infinite universe, I recognize my opinions of reality can never claim the corner on objective truth -- so I try to listen to the charts first, because charts are less subjective than my interpretations of reality.  As an example, back in late 2012, the news headlines still talked of fear and dark days ahead, while the charts told the story of a rally to new highs (and by the beginning of 2013, the charts told the story of a massive rally).  The same thing happened in reverse more recently: the charts told the story of pending trouble, while the media was still touting the message that stocks were headed to "infinity and beyond."

This has been my consistent experience of many years of charting: charts are forward-looking, while the media typically only reports that which has already happened.  Since the immediate past is what impacts current sentiment, giving the charts more weight is one way we can avoid becoming part of the herd.

So, with all that said, I feel it's time to talk about some of the fundamental issues which could become the catalyst for trouble -- especially since the charts continue to warn that trouble may be lurking.  The issue currently grabbing the headlines lately is "the emerging market crisis."  "Emerging" is a reference to the markets of less-developed countries; this is a term we use in the West to refer to countries who don't enjoy the sophisticated conveniences we do, such as:

1.  The Super Bowl, wherein we humbly crown a team from our country as "World Champion."
2.  A massive, ludicrously-powerful central bank.
3.  Ben Bernanke (currently available).

The "crisis" these unfortunate countries are experiencing comes about from, of all things, our very own ludicrously-powerful central bank (let's have a big Las Vegas welcome for: the Federal Reserve!).  In a nutshell, this is one of those unintended consequences people are always yammering about: When the Fed was pumping $85 billion a month into the primary dealer's pockets, that money found its way into anything and everything -- especially with Fed interest rates effectively at zero, investors looked for places they could put that money to work to earn a higher return. 

Enter the carry trade.  If you're not familiar with that term, quite simply, a carry trade is when investors borrow (or short) a currency which has a low interest rate, such as the Japanese yen or U.S. dollar, and then use that money to buy currency (or invest in assets) from a different country where they can get a higher rate of return.

Enter the aforementioned emerging markets.

So, for example, I might borrow money in yen at 0%, then invest that money in an emerging market where I can get 5%.  Seems like a no-brainer, right?  More free money!  Not necessarily.

Trouble starts when sentiment begins shifting.  As the threat of QE taper becomes reality, investors have been reassessing their risk exposure:  After all, if the good ol' U.S. of A. is going to raise interest rates, why stay invested in a higher-risk emerging market? 

Nobody wants to be the last one standing when the music stops, so in some emerging markets investors have been rushing the exits -- and this is causing currencies such as the South African rand, the Turkish lira, the Argentinian peso, and the Indian rupee to plummet.  This has a contagion effect, so the currencies of less-troubled nations, such as South Korea and Mexico, tend to suffer as well.


This is not the first emerging market crisis the world has ever seen, nor is it likely to be the last.  Historically-speaking, things have been relatively mild so far.  However, this is the worst "emerging market crisis" we've seen in the past five years -- and we must acknowledge that these things always have to start somewhere.  The financial crisis of 2008 didn't start off as the end of the world.  Don't get me wrong, I'm not trying to be alarmist here, I'm simply pointing out that problems generally start off small -- then from there, they either get better or they get worse.  How bad things will actually get, and to what degree this may or may not impact the U.S., is currently the subject of significant debate among people who know more about it than I do. 

So to bring everything full circle from the opening paragraph:  My personal suspicion (since the day QE was announced) is that as QE winds down, there will be plenty of other unintended consequences.  However, since I can't anticipate most of those -- and since I certainly can't time exactly when they'll occur -- I'll stick to the charts for the specifics.

Since we've been talking about the emerging market crisis and the carry trade, let's start off with the US dollar/Japanese yen chart.  This charts shows usd/jpy is sitting on a zone which appears to be key support, having formed an apparent head and shoulders topping pattern.  From an Elliott Wave perspective, the highest probability wave count appears to be a bearish nest of first and second waves -- but as of yet, there's been no serious technical damage to this chart and it could still be viewed as a simple back-test of support.  The noted support zone is critical, and if this market sustains trade beneath that neckline, classic technical analysis would target a trip to 97.800-98.100.   The first step for bulls to begin a recovery would be a sustained breakout over the upper boundary of the blue trend channel.

Next up are the financials, via the Philadelphia Bank Index (BKX).  My first inclination when I look at this chart is to think we rally over the near term -- but I've outlined a number of signals on the chart to allow for a "let the market dictate" approach.

Finally, the S&P 500 (SPX) chart.  This is another chart where I prefer to let the market dictate its next intention.  As I mentioned in a recent update, the market has been behaving like it's in a crash wave, so while I'd "like" to see a rally here, I also feel this is potentially a dangerous market right now.  I'm always in favor of trades where one can get a low-risk entry -- but I would highly recommend staying extremely nimble and honoring one's stops with the market in its current position.

In conclusion, so far all the market has done is briefly arrest its decline.  There's been nothing significant to indicate bulls have regained control.  Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

 

Bears Wake Up from Hibernation in US Equities

Bears have made progress since last update, having forced the anticipated new low, which is beginning to give the wave structure an impulsive appearance.  This was the expectation, since we're following November's preferred count (for those just joining us, the preferred count anticipates that the market is now retracing an extended fifth wave rally), but it's important to have confirmation from the market anyway.  We've all seen what happens to traders who form a thesis and then ignore the market's signals (i.e.-- preferring to be "right" over being successful).

We'll start off with the S&P SPDR Trust (SPY), which is an effective proxy for the S&P 500 (SPX).  Since last update, SPY has reached the first downside target from January 10, but appears to need at least one more wave down to form a complete impulsive (five-wave) decline.  In a way, this is now the "hopeful bull" count... on the NYSE Composite (NYA) chart which follows, I outline a more bearish potential.  As I mentioned in the last update, this market has been behaving suspiciously like it's in a crash wave (or "waterfall" if we want to avoid the "c" word), so we need to stay open to that possibility.
 

The NYA chart notes the more bearish potential and some signals to watch.  Notice how NYA broke down from the lower black support line.  It's back-tested that line, and not only failed to rally above it, but has consolidated the breakdown by back-testing the trend line twice.  That suggests strong selling pressure in that price zone; price consolidation beneath support is generally a bearish signal.

For those following along at home, I've also labeled the subdivisions of the wave structure in more detail (on this chart), to help "show the math" behind the idea that the next wave down is wave (5).  I didn't show this level of detail on the SPY chart because when I tried, Stockcharts.com gave me the following message:  "You have too many annotations.  Try deleting some.  Seriously.  What is wrong with you?"

Finally, an updated look at the trusty SPX:AGG (essentially: stocks to bonds) ratio chart, whose signals have been dead-on for the past few months.

In conclusion, it appears quite likely that November's preferred count will continue to hold, and that bears are going to effectively confirm an intermediate trend change.  If you're a relatively new trader, remember the counter-trend trading is the most difficult type of trading there is.  When you trade with the trend, the market will always come back to you eventually, and will thus bail you out of even the worst entries.  When you trade against the trend, you have to stay extremely nimble -- your entries and exits must be close to perfect, or the market will leave you high and dry and not look back.

There are, of course, bullish options here; after all, we're always dealing in probabilities, never certainties -- but for the moment, there is nothing in the charts that suggests an intemediate bottom is at hand, though they do hint at the idea that we may be getting close to a short-term rally.  Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

Bears Closing in on Intermediate Victory

There's been no material change in the outlook since last update, except to note that the first downside targets have nearly been captured for the S&P 500 Spyder Trust (SPY).  SPY so far has come within .12 of the target -- which isn't too shabby considering that thesis was originally put forth before the market had even reached the 184-186 upside target zone, much less reversed downwards.  Momentum has confirmed the low, so the charts appear to suggest at least one more wave down lurking in the future.  Another wave down would serve two functions:

1.  It would capture the first target zone.
2.  It would give the decline an impulsive appearance, which would suggest another leg down after the next bounce.

Stay alert to the fact that, at the moment, the market is behaving like it's in a crash wave, so I'd suggest staying very nimble on any long positions if 1772 fails.

Near-term, the S&P 500 (SPX) presents two options, as discussed on the chart below.  If we're forming a standard impulsive C-wave, then any opening declines should find support north of 1772 -- and the impulsive c-wave actually suggests a decline toward gray 2 (which would be bought immediately) to start the session.  Please read the annotations below for discussion of the potential of a "failed" c-wave, and the implications.

On the 30-minute SPX chart, it's interesting to note how the market was drawn to the confluence of support lines on Friday's chart.  It's also worth observing how the well-traded range of the noise zone provided virtually zero support, also as noted on Friday.

In conclusion, bears have done what they've needed to up to this point -- if they can force another new low, either directly or after an impulsive c-wave, then we'll have what appears to be a five-wave impulsive decline.  On the flip side: if bulls are going to stick-save this market and build an intermediate bottom, then now's the time.  Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic

 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

How Deep Will the Correction Be in US Equities?

Friday saw the first 2% down day since Nixon resigned... or that's what it seems like anyway.  We've all become conditioned to the Invisible Hand supporting the market at all times recently, so the relentlessness of Friday's sell-off wasn't something any of us are "used to" anymore.  By the same token, as I've written about in almost every article this month, there have been repeated warning signals in the charts -- so while Friday's decline definitely exceeded near-term expectations, it certainly didn't come as a surprise.

So where are we now?  Bull markets, particularly near the tail end of third wave rallies, tend to breed an unusually high level of complacency (as I wrote about last week; See: Bulls Are Happy Now, But Charts Suggest Caution), so there are probably now a lot of trapped bulls north of SPX 1810.  That zone could represent solid resistance to any rallies.  

A near-term bounce isn't out of the question, since the market is oversold on a number of near-term metrics.  The key to remember with this, I think, is that to say this market is anywhere close to being oversold at an intermediate level is ridiculous.  Everyone and their mother's dog is still net long this market, so a continued shake up is entirely possible, and probably needed.

Let's lead off the charts with the S&P 500 Spyder ETF (SPY).  Back in November, I outlined my "out on a limb" extended fifth wave preferred count in this index, and suggested that an extended fifth would travel up to 184-186, then reverse back to 175-177.  We can see on the chart that the all-time-high was dead in the middle of the anticipated target/reversal zone -- and Friday's decline made good progress toward the first downside target.  Whatever happens from here, we're way ahead of the game already. 

I've outlined my "perfect world" path on the chart, assuming this count continues tracking.  An alternate count is noted, and the two charts which follow SPY give more detail on some of the signals to watch heading forward.

Next is the S&P 500 (SPX) long-term chart, which has tracked almost as well (SPX exceeded my target zone by about 10 points before turning).  The main notable feature of this chart is the breakdown of the bearish rising wedge (a pattern we've been watching for the past few months).  Rising wedges typically return to roughly where they began -- and they usually do so in 1/2 to 2/3 the amount of time they took to form.  This wedge pattern falls under "classic" technical analysis -- so it's interesting to note that its expectations also fit the "rapid retrace" expectations of Elliott Wave Theory for an extended fifth wave. 

Incidentally, to say Wednesday's bearish sell trigger (not shown on this chart) was a success is a bit of an understatement.  Also worthy of some mention: On Friday I noted that there was a remaining bull potential, in the form of an expanded flat, which targeted 1795 +/-.  The market exceeded that target slightly, but that option currently still remains viable, if lower probability.  The first step for bulls would be to form a small impulsive rally wave off the low -- so we'll cover that option in more detail if it becomes more relevant to do so.

For now, we're going to stick with November's preferred count of an extended fifth, with the expected retrace now underway.  Since the results have continued to match the expectations, the market has given us every reason to continue favoring that original thesis.

Finally, the recent top in SPX is a bit noisy on the chart -- so for the moment, I suggest we use another market as our "canary in the coalmine."  Below is the NYSE Composite (NYA), a much broader market than SPX.  This chart has the advantage of providing a clear pivot level on the upside.  I've saved some of the caveats for this chart, so please read the blue annotations for additional thoughts.

In conclusion, while the market has not yet formed a five wave impulsive decline, it has given us reason to continue favoring the preferred count of the past several months.  A fourth wave rally and fifth wave decline this week would create a larger five-wave (impulsive) decline, and go a long way toward adding confidence to that intermediate view.  Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic

 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

Bears Make Some Noise

Bears made some noise yesterday, as the market opened with a big gap down.  Yes, you read that right (I'm picturing bulls pulling out their dictionaries and looking up the word "down"). 

Chart-wise, there are a few interesting tests underway.  First off, Wednesday's bearish sell trigger became active in the S&P 500 (SPX) when price crossed below 1832, and that trigger break targets 1817.  The alternate count is that 1820 marks the bottom of a corrective c-wave, but that appears lower probability.  Bears will want to be cautious if the market can convincingly reclaim the black (2)/(4) trend line on the chart below, and very cautious if 1839-40 is reclaimed.

In the bigger picture, price has reached an intermediate trend line, and I think the next few sessions will be extremely telling.  The fact is, while it's fun to play at getting far ahead of the market and making grand predictions about the upcoming months, it's simply too early to make much of the wave structure at intermediate degree yet -- so I'm going to take this one day at a time for the moment.  As the structure develops, we'll be able to draw more concrete conclusions about the market's intentions beyond the next session or two, and the chart which follows this will show why bears will want to stay nimble here.

The chart below shows that we may now be in the c-wave of an expanded flat correction.  This was an option I discussed last week, and it's completely viable as a nasty whipsaw move.  The expanded flat would break 1815, then find support shortly thereafter.  The textbook target for an expanded flat c-wave is 1795 +/-, so watch that zone if 1810-15 fails.  

In conclusion, SPX tested trend support yesterday, and while it held on the first test, the wave structure (and Wednesday's trade trigger) suggests it will break -- so near-term, I expect further downside to capture the target zone.  Beyond that, bears still have their work cut out for them at the next key noted levels, while to the upside, bulls want to try and reclaim 1828 and 1840.  We'll examine the intermediate picture in more detail in the upcoming updates.  Trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic

 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.

Trader Psychology: The Importance of Knowing When to Trade, and When to Stand Aside

Traders usually have expansive dispositions; they tend to be ambitious people who are seeking more from themselves and from life.  Generally speaking, I think that's a good trait: after all, one doesn't get very far in life with little or no ambition.  However, like most personality traits, there's a positive and negative side to ambition (incidentally, have you ever noticed that your spouse is exceptionally aware of the negative side of every single one of your good traits?  For example, your friends say you're "tenacious," but your spouse says you're "stubborn.").  Anyway, one of the dangers of having an expansive disposition is that not every problem in life can be solved by an aggressive push forward.  Some problems require us to wait patiently, while others actually require us to retreat temporarily.

Markets must be approached with those options in mind.  Sometimes the best trades are the ones you don't make -- and (as I've been known to remark on occasion) cash is a position, too.  Sitting idly by can be an incredible challenge for those of us who are used to accomplishing our goals by pushing ahead through sheer willpower.  Yet no matter how great our willpower or personal fortitude, we cannot force our accounts to increase every moment of every day without pause.

Like most things in life, there is a time and a season.  We wouldn't plant crops in the winter and still expect them to grow (well, okay, out here in Maui we do -- but you know what I mean).  In trading, there is a right time to expand capital and a time to preserve capital.  A big part of successful trading is learning how to tell the difference between the "seasons" -- and then an even bigger part is having the discipline to take action or stand aside in accordance with the time.

We can draw analogy from the physical world:  Think of your account like a solar panel which, instead of sunlight, collects money.  When the market is illuminated and direction is clear, then that energy can be harnessed to grow your account.  Capital can and should be expanded in those situations.  But when the market is dark and hazy, there is simply no energy coming in and nothing can be done.  Capital cannot be expanded during the dark times -- at best, it can be preserved for the next moment of clarity.  Getting frustrated and climbing up on the roof to smash the solar panel with a hammer because "it's not working anyway" in the middle of the night isn't a solution that understands reality.  The panel still works just fine -- once the sun rises again. 

If we fail to acknowledge the reality that there's a time for action and a time for stillness, then our accounts will be a huge roller-coaster of inconsistent ups and downs.  Our trades will be winners during the bright times... but then we'll give most (or all) of that profit back by trying to expand when we should be conserving during the dark times.  Over-trading is as futile as trying to force the solar panel to work at night.

Conversely, if we sit still when we should be taking action, then we also fail to align with reality.  If we don't capitalize on the moment to enter a good trade, we must often wait through an entire cycle before another opportunity arises.  In my opinion, the times just after a missed opportunity are some of the worst moments for traders psychologically.  There's a pressure that comes with the feeling of "missing out," which is why we sometimes find ourselves forcing trades when we should be sitting quietly:  We're hoping to catch up with an opportunity we missed, so as to relieve that pressure.  Yet opportunity in the market comes at its own pace, not at ours.  We cannot "rewind the market" to the position it was in last month for that low-risk trade we should have taken.  And we cannot force opportunities to appear simply by randomly entering trades.  What's done is done, as they say -- we cannot call the exchange and have them "un-ring" the opening bell.   

These are some of the reasons that discipline is so incredibly important for traders.  The market will pull our emotions in every direction imaginable, so if we allow our emotions to dictate our trades, then we'll pretty much take the exact wrong trade day after day until we're flat broke. 

Entire books have been written about trading discipline, so that's beyond the scope of this article.  My main point today was this:  Before you enter that next trade, ask yourself, "Is this the right moment to be trying to expand my capital, or should I be in conservation mode?"  By the same token, when you find yourself acting like a deer in the headlights and watching that next low-risk trade entry pass by, ask yourself the same question.

Moving on to the charts, this remains, in my opinion, an ambiguous market in its current position -- however, I feel we finally have some high-probability near-term levels to watch.  Before we get into that, though -- I've had a number of readers over the years ask what I mean when I say "sustained trade," so I thought I'd take a moment and address that.

Sustained trade has less to do with time and more to do with how price reacts to a given level.  It's fairly easy to learn to recognize what it looks like, and even easier to learn what it does not look like.  The chart below contains several recent examples, and learning to recognize these moves in real-time and adjust accordingly can save one considerable cash over time.

Yesterday the S&P 500 (SPX) head-faked below 1835 and reversed.  It has expanded its boundaries a bit, but near-term, I feel these boundaries now mark reasonably high-probability trade trigger levels.

In the big picture, we still have indicators flashing warning signals for bulls, one of which is noted on the Dow Jones Industrial Average (INDU) chart below.  That said, there's nothing actually bearish about the price action in this chart yet -- it's a chart with bearish potential energy.

In conclusion, I feel SPX has set up some reasonably good near-term trade triggers, and sustained trade beyond those triggers should have above-average odds of reaching the noted targets.  Bigger picture, we still have warning signals in a number of indicators, but (as I've noted previously), this bull market has defied all top calling for a long-time now, so take that under advisement.  I'll continue to watch the price action and patterns for stronger indications of the next move.  In the meantime, trade safe.

Follow me on Twitter while I try to figure out exactly how to make practical use of Twitter:
 @PretzelLogic  https://twitter.com/PretzelLogic

 

Reprinted by permission; Copyright 2014 Minyanville Media, Inc.