SPX, NYA, BKX: 75-Year SPX Chart Reveals a Unique Weekly Fractal

In recent updates, we've focused primarily on the short-term waves, so today we're going to take a more detailed look at the big picture (and in the case of one chart, the REALLY big picture).  We'll also examine a few near-term patterns that might help as signposts along the way.

Let's start with a long-term historical chart that examines the current wave from a fractal standpoint.  The chart below "only" shows the prior 75 years of SPX, but I did examine SPX's patterns going back to its inception -- and the thing that jumps out is how unique the current pattern is on the weekly chart.  I find this somewhat intriguing, because it's pretty rare that you can't find a nearly-exact match for any given fractal in your historical charts (or, as the New Gangsta English Version (NGE) of Ecclesiastes says: "There ain't nothing new under the sun, yo.").

(This chart is 2000 pixels across -- to view at full size, right click and select "Open in New Window," then click the chart again.  That's what you do if you're using Windows, anyway.  If you're browsing from a Mac, I have no idea what you do, but it probably involves arbitrarily suing Apple over something.)

 
Now that we've established that the current move is somewhat unique, let's take a look at bull options for the current wave, because folks have been asking for 'em.  It's worth noting, though, that SPX is finally challenging a more important resistance zone than it has faced thus far.  Along those lines, also note that the more immediately bearish count is not detailed on the chart below (since it's been covered in detail previously), but is simply mentioned in the blue call-out box:

NYA is also challenging more significant resistance, and has effectively reached the third resistance zone that I spoke about in February:

Stepping away from the big picture, BKX did not make a new high on Friday, and may provide some additional clues heading forward:

Zooming out a little on BKX, we see why the next move in this pattern may afford some predictive power in its wake:

In conclusion, if you've found this market at all challenging lately, then buck up!  Nobody has ever faced a weekly fractal exactly like the one we've been dealing with -- so "challenging" is par for this particular course.  On Friday, I mentioned the area around 2022 as potential resistance on a breakout, and SPX closed right at 2022 -- today we'll find out if this area is going to indeed offer any resistance.  NYA is also challenging its down-sloping trend line.

On the bull side of the coin, to this point, resistance levels have proved to be only short-term challenges.  Nevertheless, the current levels, and the zone just north of here, are potentially a more significant degree of resistance than the rally has faced so far, and thus should be a more significant test of the rally's true strength, or lack thereof.  Trade safe.

SPX Update: Chop Zone Fun

Last update drove home then point that my interpretation was that the near-term downward wave was incomplete, then speculated on what that might mean for the bigger picture.  The near-term read was right, and there was indeed more downside still pending.  The speculation that followed that conclusion may not have been as accurate -- to be determined. 

For one thing, I had speculated that it was "at least possible" that SPX was forming a bear nest, but that was invalided at Thursday's open (when the prior relative highs were broken), which thus negated the potential bear nest targets.  SPX then went on to decline sharply, and then whipsawed the black support line. 

So, is that it for the decline?  Well, it's at least technically possible now that the anticipated new low was all she wrote for bears.  I'm still not a big fan of this market, because I've felt the big picture remained ambiguous (as I've stated quite often), so I'm simply doing the best I can to identify the near-term inflection points -- so far, each of those inflection points has generated a slight reversal that has lasted from 2 to 5 sessions, but bulls are then powering back up and through those zones.

To this point, we have had only small impulsive declines, but none at higher wave degree.  Until we see a larger impulsive decline, the trend remains up (impulse waves are the market's biggest "tells" as to larger trend).

The near-term bullish signal in yesterday's session was fairly clear:  SPX held the black trend line (I noted on Monday that this zone was important), then whipsawed its breakdown:

 Finally, shown below is one speculative option for the current pattern.  Take this with a grain of salt, because we could just break out and run instead of forming a complex pattern like this.  But this was my first instinct after studying the charts last night.  If 2009.13 holds, then bears have options for the retest to mark wave 2.  If 2009.13 breaks, then it could still mark a (b)-wave..

 
In conclusion, the wave remains open to interpretation at higher wave degree, and now the near-term pattern has formed itself into a chop zone.  My best guess is shown above.  Trade safe. 

SPX, RUT, BKX: Targets Captured; Here Are the Next Key Levels

Monday's update noted that SPX had formed only its second impulsive decline since the rally began at 1810, and that trade below 1993 would confirm that read, and generate targets of 1987 and 1977.  At Monday's open, SPX broke 1993, and yesterday, SPX reached the 1977 target.

The question now is whether that's all she wrote for the decline, or if bears are just getting warmed up.  Let's take a look at the charts and see if we can answer that question.

First is the SPX one-minute chart:

What jumps out immediately on the SPX 10-minute chart is the break of the uptrend line, and the chart discusses the levels I'll be watching next:

Here it is again on the 30-minute chart:

Below is an update to the BKX chart I published on Monday -- and this market also captured its downside target, and then some. (Typo:  "Note the the..." should be "Note that the..."  This typo was brought to you by the Department of Redundancy Department.)

Finally, RUT encountered resistance at "the scene of the crime" breakdown zone I noted on March 4:

In conclusion, the downward wave does not appear complete.  There are certainly ways to count it "creatively" and come up with a complete downward correction, but that requires the use of some unconventional counting techniques, so that has to be considered lower probability at this stage.  Of course, if bulls can sustain a breakout over 2010, then all bearish bets are off for the moment, no matter how outlandish the wave looks. 

If I run with the assumption that the downward wave is incomplete, then I'm left trying to determine "How incomplete is it?" and the most likely answer would appear to be a bear nest.  In that event, we'd probably break the key overlap of 1962, thereby eliminating the most bullish near-term counts.  Thus, the final conclusion is that this bears presently have the best shot they've had for a trade-able top since the rally began at 1810.  Trade safe.

SPX and BKX Updates

On Friday, SPX closed at 1999.99.  This led The Artist Formerly Known as "The Artist Formerly Known as Prince," to re-release his classic hit single over the weekend, with a slightly modified chorus ("Tonight we're gonna party like it's nineteen ninety-nine point ninety-nine." (keyboard solo)).  Dennis Gartman then announced that he would be shorting any years ending in 99, which immediately caused those years to rocket past the century mark.

In other news, last update speculated that Friday had the potential to mark a high; today we're going to discuss a couple signals to watch.  We'll start with the 1-minute SPX chart below:

As we can see, Friday's high was followed by an apparently-impulsive decline.  This is only the second time this has happened since the rally began at 1810.  The last impulsive decline came at 1946, and was followed by another impulse down, but proved to only be an ABC.  If SPX breaks 1993, then bears do need to stay alert to the possibility that one more wave down (for an ABC) might be all the market wants.  An attempt to answer that question in advance led me to look deeper, which led me to BKX (below):

On BXK, we can see potential for a breakdown to lead to at least a bit deeper retrace (even in the event of an ABC decline).  This suggests that bulls should be cautious in the event of a breakdown of the noted levels.

In the event we continue higher immediately, there is (theoretically) overhead resistance in the SPX 2015-2020 +/- zone, so that would be the next area to watch.

The 60-minute SPX chart is shown below:

In conclusion, trade below 1993 would at least give bears a shot to get something going, although 1960+/- is the first truly meaningful support zone.  To the upside, 2015-2020 +/- is the next potential resistance zone.  Trade safe.

SPX and RUT: Returning to the Scene of the Crime

Today is Non-Farm Payroll day (NFP), and in the past, this day has often marked wild whipsaw markets and/or turns.  There's the potential for today to get interesting.  Since last update, SPX captured its next upside breakout target of 1993-2000.  And this morning, ES (E-mini S&P futures) had a lovely spike on the NFP announcement -- and that spike looked suspiciously like a fifth wave blowoff.  More often than not, the first direction ES heads after the NFP number is a fakeout, and ES indeed reversed hard after the initial spike.

Thus, it will be interesting to see if today finally marks a turn of fortune for the rally -- keep in mind, though, that so far, we still don't have an impulsive decline in the cash market, so talk of turns can only be viewed as speculation.  Let's take a look at the charts.  We'll start with SPX:

SPX is finally into the zone where there's some established horizontal resistance from the prior trading ranges near the all-time highs.  And then we have RUT, which has "returned to the scene of the crime":

Not shown is NYMO, which is as overbought as it's been in a long time.  Between NYMO's extreme overbought condition, overhead resistance (and the capture of my breakout target), and the propensity for NFP to mark turn days, this could make for an interesting recipe.  That said, with no impulsive declines yet, I can only speculate... but I will speculate that today at least has the potential to mark a high.  Trade safe.

SPX and NYA: Bimodal Market

Last update noted that SPX had effectively reached its 1963-70 target zone, but that:

So far, we do not have an impulsive decline from 1962.96, but the near-term pattern does appear as though it may at least need some additional downside, so it could ultimately develop into an impulse.

There was indeed some additional downside still to come, but the wave did not develop into an impulsive decline, so bears continued to remain on the sidelines.  We now have a near-term pattern that could be an ending diagonal (aka: "bearish rising wedge"), but still no impulsive declines, so we can't confirm this pattern as particularly bearish just yet, and it could just as easily be a more bullish pattern.  It can be tiring for bears waiting for an impulsive decline -- but waiting (patiently or otherwise) is decidedly less tiring than front-running ambiguous waves and repeatedly getting blown out of positions.

We're going to keep the charts pretty simple today.  First is SPX:

And next is NYA, which has inched its way past first resistance:

In conclusion, we now have a pattern which is somewhat bimodal:  Bears are hoping for an ending diagonal that is complete or nearly-so, and which leads to new lows fairly directly -- while bulls are hoping this is a classic double-bottom, which could be aimed as high as 2060ish.  As I've repeated many times over the past few weeks, the wave remains ambiguous, so the conservative course of action is still to await an impulsive decline, which will be our first solid signal that this leg of the rally is ending.  Trade safe.

SPX and INDU: Out on a Limb... Again

On February 22, I revisited some calculations, and came up with 1963-1970 as the potential target for the current wave.  On Thursday, SPX broke above 1947.20 just before the close -- then, on Friday, it gapped up to 1962.96 and reversed.  Several people have since assured me that this was "close enough" for me to call the 1963 target captured (but I still feel a tinge of guilt in labeling it "captured" on the chart below -- such is the nature of being a perfectionist).

So far, we do not have an impulsive decline from 1962.96, but the near-term pattern does appear as though it may at least need some additional downside, so it could ultimately develop into an impulse.

I'm going to step a bit farther out on the proverbial limb, and suggest the red path below as one possibility:

Finally, in order to assure that Friday marks a decent high, we're going to take a quick look at an intermediate BULLISH option.  As long-time readers know, when I've been favoring a market direction for a while, one way to "guarantee" that the market will indeed head that direction is for me to finally publish a chart that discusses the other side of the trade.  (I say that facetiously, but it works more often than not!)

In conclusion, the overall wave remains ambiguous, and bears still don't have a truly impulsive decline to hang their hats on.  The 1963-70 zone has provided at least some degree of resistance so far, but it remains to be seen if that resistance will be short-lived or not.  Another smallish wave up would be okay for the immediate bear case, but a sustained breakout would call for bear caution.  Trade safe.