SPX Update: What's 200 Points of Profit Among Friends?

SPX captured its first target zone (1980-87) -- after reversing out of the preferred count's downside target zone of 1865-80.  The chart below was published on September 21:

I have since updated the (c) target zone to cover the potential that all it will do is break the (a) wave high.

Below are two updated charts, which pretty much say what there is to say:

SPX 3-minute chart below:

In conclusion, it appears that wave (c) will reach its minimum target at the open, thus validating the preferred count of the past few weeks.  Bulls do still have the option for this to become a true third wave, but I'm still more inclined to think the rally is wave (c).  Keep in mind that a (c) wave could end at any time heading forward.  Trade safe.

SPX and INDU: No Surprises from the Market Yet

The preferred count of the past several weeks remains alive and well -- note that the market bottomed inside the target zone (1867-80) and has since launched into a strong rally.  The present expectation is that this rally will likely exceed 2020, but will still ultimately prove to be a correction to the prior decline.  At present, I am not yet expecting new all-time highs just yet.  This could change if, for example, TRAN exceeds the levels noted in the last update.

Below is the preferred count, which is materially unchanged since early September; in black, the more bearish alternate is shown.  Due to the rather meandering nature of the prior wave, it's always possible that the current rally will develop in into a three-wave move, instead of the anticipated five wave move.  Also note that the only "requirement" of a (c)-wave is that it break the (a) wave high (1994).  It does not actually need to break 2020, though it would be more common for it to do so.

The INDU chart below shows that a break of the (a)-wave high would allow the pattern to maintain symmetry:

Finally, the SPX near-term chart, along with common targets for the current wave.  As long as the green acceleration channel holds, bears should be extremely cautious about trying to front-run this rally:

In conclusion, the market has followed the preferred path well enough to make it profitable -- so at the moment, there's no reason to begin favoring a different count.  I will, however, continue to play devil's advocate to my own expectations.  In the event we begin to see impulsive declines, we may have to give more weight to the more immediately bearish counts.  Trade safe.

SPX and TRAN: TRAN May Point to Intermediate Trouble

The next couple sessions appear to be a huge near-term inflection point for the market, and the reaction from futures to today's job report keeps bear hopes alive.

Below is a closer look at the short term waves:

From an intermediate standpoint (no matter what happens for the near-term), TRAN's pattern suggests that until TRAN breaks out over the recent swing high, it's probably prudent to maintain a big-picture bearish stance:

In conclusion, there appear to be a lot of marbles riding on the next few sessions, and the levels to watch seem reasonably clear.  Trade safe.

SPX and BKX Updates: Long-term Chart Reveals Potential for an 80% Decline

The E-mini S&P futures (ES) have been gyrating wildly in 25 point swings tonight.  This is not entirely new, and has been occurring on-and-off for several months.  On our forum several months ago (well before the recent flash crash), it prompted me to state that the character of the market seemed to have changed from bull to bear.  The more I watch and trade this market, the harder it gets to continue considering the possibility that we're still in a bull market.  At best, we're probably still in a Primary Degree fourth wave.  Liquidity, as revealed by the price action, still appears to be extremely thin -- and bull markets need liquidity.

The first chart we're going to examine today is a bit sobering.  BKX is one index that never left its bear market, and shows the potential of a complete, long-term ABC rally.  If that's the count, then the next long-term rally for this index comes after an 80% decline:

SPX continues to be difficult to chart on a micro level, so no material change here:

In conclusion, the next informational levels are outlined on the chart above.  Trade safe.

SPX Update: Keeping It Simple

I'm going to let the charts do most of the talking again today.  First is the daily chart of SPX, which left a candle that suggests at least some upside follow-through is forthcoming:

Near-term, the pattern in SPX suggests bears should be cautious on a sustained breakout, which would target a fill of the noted gap. 

Finally, there are now enough waves in place for the preferred count's C-wave to be complete.  Note the addition of the black bear count potential, which would align with the chart above.

In conclusion, there are finally enough waves in place for a completed corrective decline.  Whether it's complete or not remains to be seen, but the daily chart does suggest at least some upside follow through.  If SPX can sustain a breakout north of today's high, then the next two upside inflection points appear to be the noted gap fill, and the 1990 area.  Trade safe.

SPX, INDU, TRAN, AAPL: The Market Closes in on New Clues

I'm going to let the charts do most of the talking for this update.

First up is TRAN, which is approaching a key overlap.  Note that a break at the overlap still allows the ultra-bullish potential of a nested 1-2 count, but a sustained break would suggest that perhaps the rally was a complete fourth wave (bear 4):

A few folks have asked if there's a count that allows a new low, followed by a new high.  I've been publishing this chart as is for a while, but I'm highlighting it again for folks who missed this last time:

Apple presents an interesting chart, because this pattern shows a ton of buyers were waiting at that last dip.  A breakdown of the crash low would thus be very bearish (because it would show that buyers exhausted themselves in one fell swoop), but until that happens, this chart is at least a warning to AAPL bears:

Next is the SPX near-term preferred count.  The pattern at least allows the possibility for a complete c-wave decline, even if that may be less probable:

In conclusion, the market is at an inflection point that could provide additional big picture clues over the next few sessions.  Trade safe.

SPX, INDU, ES, HYG -- An Interesting Fractal Comparison to the Current Market

The price pattern has become an order of magnitude more complex over the past couple weeks.  On Thursday, we had a breakout that reached the first if/then breakout target of 2019-28 (shown on September 9), before reversing hard and fast.  Because expanded flat b-waves are allowed to violate key levels, this still leaves the preferred count on the table:

On the chart above, do keep in mind that blue (c) could instead be wave (3) of v, and thus ultimately rally to new highs.

My main argument for an expanded flat is still simply the fractal.  Last night in ES, a very similar fractal formed on the one-minute chart.  I traded that as a b-wave into the high, and indeed, price retested the low, then reversed back up and broke out (second chart).  Compare the chart below (ignore magnitude) with the chart above, and see if you can spot how similar the two fractals are.

Note how that pattern resolved:

The trouble bears have on an intermediate level is that it's a stretch to come up with bear counts.  Not impossible, but we have to resort to rare "triple three" patterns, or other unusual waveforms (triple threes are the Elliott Wave equivalent of a grunt and a shrug):

The HYG:TLT ratio provided fair warning, well in advance, that equities were diverging, and now it's reached an interesting inflection point.  If it breaks down here, there is a significant amount of downside potential -- so this continues to be worth watching.  If this ratio breaks down coincident with the market, then perhaps the more immediately bearish patterns are in play.  If support holds, of course, then no harm, no foul.

The straight-up bull count for SPX still remains alive for the moment as well:

In conclusion, frankly, this isn't my favorite "market moment" right now.  I spent a long time staring at charts this weekend, and this month's rally is truly one of the most ambiguous waves I've seen in quite a while -- so I can't be 100% certain of anything, but I'm modestly inclined to continue favoring the expanded flat preferred count (first chart), even after Thursday's curveball.  That nasty whipsaw does throw a bit of ugliness into the chart, so the more bearish patterns remain alive, and can't be written off.  We'll simply have to see how it pans out from here.  Trade safe.