INDU and SPX: SPX Captures Downside Target

In Monday's update, it became apparent that bears were holding the cards, based on the performance of the broad market.  Wednesday's update (which was posted late on Tuesday night), concluded that "all roads appear to lead lower."  Yesterday, SPX finally captured Target 1 (2022-25 SPX) from May 4.  This puts the market into a bit of a gray area for the moment.

It does not currently appear probable that the entire decline is complete -- however, because SPX captured my May 4 target (which was calculated based on the potential of a bullish 4th wave), we do at least have to stay alert to bullish potential, and realize that the market reserves the right to use that captured target level as a springboard.

If I had to pick a count from the myriad options now that my target has been captured, I'd probably lean ever-so-slightly toward the black "flat: C" count shown on the chart below, but I'm far from being married to that outcome. 

When the market makes things plain to me, like it did on Monday and Tuesday, then I try to convey that clearly -- and likewise, when the market hits an inflection point and/or grows somewhat ambiguous, I try to convey that as well.  As Mike McDermott says in the movie Rounders:  "Get your money in when you have the best of it; get it out when you don't."  It doesn't get any better than capturing targets.

INDU's bigger picture chart shows that there's an overhead confluence of several resistance zones, and sometimes confluences can act as price magnets:

In conclusion, SPX finally captured its 2022-25 target, and that does represent an inflection point which provides bulls with some options that they didn't have earlier in the week.  If I had to pick an exact path from here, I'd be modestly inclined to think we follow the black "flat: C" on the SPX chart -- but literally anything is possible from here.  If the entire series of waves we've seen so far is not a flat but a bear nest, then we could easily collapse spectacularly.  If it's a completed bullish fourth wave, then we could rally straight on to new highs. 

The important point is that we have to recognize that the "sure thing" downside target I spoke about earlier in the week has indeed come to pass.  Thus, for the moment, we have to take it one step at a time again.  Trade safe.

SPX Update: No Material Change

Last update covered the fact that bears appear to be holding most of the cards at the moment, and the price action since then has only adds confidence to that outlook.  Bulls got pretty excited by Monday's 20-point SPX rally (which was exactly what the market wanted), but that rally was only wave C of an increasingly-complex flat correction (this option was noted in passing on Monday's 10-minute SPX chart). 

On Tuesday, Monday's rally was immediately retraced by more than 100%, which decisively confirmed Monday's rally was an expanded flat C-wave, and not the beginning of anything truly bullish.

Near-term, bulls' main hope appears to be for the expanded flat to continue through another up/down sequence (expanded flats are time-wasting chop zones), but it appears that all roads ultimately point lower. 

Beyond that, there's nothing to add to Monday's update.  The odds are still that bears are holding the cards for now, regardless of whether bulls get a short-term reprieve or not.  Sustained trade north of 2112 continues to be required in order to call the near-term bear outlook into question.  Trade safe.

SPX and INDU Updates: Bears on the Verge

Since SPX captured Target 2 back on May 6, I have been "very slightly" favoring the bearish near-term count of an expanded flat, and it's beginning to look like I never should have doubted my initial read from May 4 (which was that any immediate bounce from the 2040 zone should be sold north of 2083).

SPX failed to make a new low on Friday, but INDU did, as did NYA and BKX.  BKX is now below its apparent key overlap, which suggests that the remaining bull pattern there is for an ending diagonal or similar.  Intermediate-term, the odds that ALL OF C are complete are increasing, though we still can't rule out a final thrust higher in SPX.

The preferred intermediate count remains unchanged over the past few months, and I'm still inclined to believe that the low from earlier this year will be broken:

Near-term, I've added a second, lower target based on the current pattern, though of course 2039 needs to be broken to confirm Target 1 and 2:

INDU appears to be one of several markets that likely provides a tell for SPX:

Bigger picture, INDU is attempting to whipsaw its recent breakout, which will create bearish potential energy if the attempt is successful:

In conclusion, the "very slightly favored" near-term count is on the verge of proving itself correct.  The preferred intermediate outlook remains bearish, and odds are increasing that ALL OF C completed at 2111 and an intermediate turn is underway.  Trade safe.

SPX Update: More Fun than a Barrel of Rabid Monkeys with Tasers

SPX has continued to move in a fashion normally associated only with seizures, thereby frustrating both bulls and bears, and causing everyone to consider smashing their computers with Janet Yellen (note: not that I am suggesting you try this.  Err... maybe.).

In other words, the market has behaved as it does when it's in a... drum roll please... chop zone:

Not surprisingly, given the chop zone of the prior two months, there is no change to the intermediate picture.  I still prefer the complex ABC, with C complete or nearly so (the annotation of May 6 remains true for the moment):

It's interesting to note that RUT made a new low yesterday (not shown), although SPX bounced shy of its recent low -- because it was required to, in order to fulfill its contract with Goldman Sachs (ticker symbol: GOD.  At least, that's what the symbol is supposed to be, according to an internal memo released by Goldman Sachs.)

Finally, no real update to the near-term SPX chart:

In conclusion, after the last couple months spent in the chop zone, and after the last several sessions in a chop zone within a chop zone, there's really very little to add to the recent updates.  Now it's more a matter of waiting for the market to point the way to its next move more clearly.  Trade safe.

SPX Update

Last update was heavy on warnings for bears not to presume the market would continue lower from then-current levels, and yesterday saw SPX rally to the biggest one-day gain it's had in a couple months.  It's actually pretty amazing how well SPX followed the black path laid out on May 4, turning within pennies of the noted 2040 level, then running up to break the 2083 price point:

The near-term charts have been kind to bears, providing plenty of sign-posts along the way, and on Friday, due to the falling wedge (aka: diagonal) in the charts, I added a warning to bears if SPX reclaimed 2052ish.  That exit saved about 32 points of drawdown.

With SPX having broken 2083, we're now into the inflection point for the "bull" abc count shown above (now the "bear" abc count, since bullish/bearish are relative to the current price point -- on May 4, at then-current levels, it was a bullish count) -- the only thing is that it's not quite as clearly bearish as it appeared it would be back on May 4.  This is because the entire decline took the shape of a diagonal (something I couldn't have known would happen back on the 4th), which gives bulls an out.  As mentioned last update, I'm still very slightly inclined to favor the bears, but this is not a high-probability call anymore.

Finally, the 2 hour chart, with nothing to add since last update:

In conclusion, to reiterate:  SPX is now in the bear inflection zone (though it could run a little further to the upside, if it so desires) -- beyond that, there's nothing else to add from the last couple updates.  Trade safe.

SPX, INDU, BKX: No Key Breaks Yet

The last couple updates suggested that Target 2 (2030-40) from April 27 was "a given," and that target was indeed captured on Friday.  Further, SPX bounced directly off the 2040 level that was noted as an inflection point back on May 4.   And, additionally, BKX has so far held its key overlap.  This does at least open the possibility of a completed ABC decline, so for the moment, we have to respect that from a technical perspective.

A slightly wider view of SPX in the updated 2-hour chart:

BKX held its key overlap by .03:

INDU also illustrates the significance of the current inflection point via the trend line shown below:

In conclusion, both of my preferred near-term target zones from April 27 were captured, and SPX bounced within pennies of the noted 2040 price point.

Last update noted that the next few sessions would be "make or break" for the bulls, and that:

the next few sessions will likely answer the lingering question as to whether ALL OF C is complete or not. 

But so far, we don't quite have a "break," meaning the question above is still unanswered, and bulls have kept their options alive from a technical perspective.  We could have a definitive answer soon, but bears do need to keep in mind the the market has captured my downside target zones -- so we have to look at the charts again and see what's there now.  Meaning, we have to observe what has happened in a real sense -- and what has not happened.  What has not happened is a key overlap in any index.  What has happened is that we captured my near-term bearish targets.  Intermediate term, I have been reserving judgment until the market answered the question of whether ALL OF C is complete, via a key overlap.  It has not answered that question yet, so bears still need breaks of the key levels for confirmation of the intermediate bear case.

Again, we have to see what's there in the charts -- not what we hope to see, not what we want to see, not what we think we might see in the future -- but what has actually happened so far.  We can't anticipate the future unless we are able to genuinely see the present.  Seeing the charts clearly is what allowed us to capture roughly 60 points of downside profit.  

That said, I am very, very slightly inclined to think that bears aren't done, but I have to respect the price action above all -- and without key overlaps, there are simply no intermediate assumptions to be garnered from the recent price action.  Thus, personally, I would only take very low risk entries heading forward if attempting any short trades.  Trade safe.

SPX and BKX Updates: Make or Break Time

Last update concluded:

In conclusion, barring a miraculous stick-save by the bulls, Target 2 from a week ago looks like it's almost a given at this point, and lower targets are now appearing on the radar.  It's worth a reminder that, in the bigger picture, a break of the 1800 zone is still preferred.  The question is whether 2111 marks the completion of ALL OF Bull: C, or if there's to be one more minor new high.  As noted, the near-term pattern is beginning to look increasingly bearish; if that continues, the odds that ALL OF C is complete will rise accordingly. 

The next few sessions look like they're going to be make-or-break for the bulls.  Let's start with the big picture chart from March 14:

Next, let's examine how the near-term might provide warning for bears if bulls are going to get their act together:

Another look at SPX below:

Finally, BKX is approaching its first key overlap.  This overlap would help further stack the odds against the recent rally being blue wave v (from the first chart), which I have continued to doubt since day 1:

In conclusion, the next few sessions will likely answer the lingering question as to whether ALL OF C is complete or not.  Trade safe.