SPX Update

SPX actually did something in recent sessions, as it made a new high and, additionally, finally broke 2116, while flirting with the upper boundary of the larger chop zone in the process.  At this point, it's put up or shut up for the bears, as they (ideally) don't want to see a sustained breakout over the all-time-high, which isn't far away.

INDU and NYA did not make new highs, so one potential pattern is shown below, but please do not take this as a "high-probability projection."  We have nothing in the way of a decent impulsive decline yet, so I can't guarantee that red wave c is complete.

Bigger picture, things are unchanged:

In conclusion, SPX finally rallied into the zone it was "supposed" to -- now it's up to bears to get to work, or head back into hibernation.  Trade safe.

SPX and BKX: Still a Chop Zone

Friday saw the market open sharply lower, but buyers showed up for the remainder of the session.  Near-term, the pattern is nothing but chop at this point, so I can't draw any high-probability near-term conclusions at the moment.  Bigger picture, we're also still in the chop zone that I warned about back in March.  Stay alert to the possibility of a head-fake higher.  In the event there's a breakout followed by a whipsaw with this pattern, I would suggest bulls behave extremely cautiously.

BKX did what it was "supposed to," but it didn't do it in a pattern that leaves much clarity in its aftermath, so there are no new conclusions to be drawn here presently:

In conclusion, we're still inside a larger chop zone, and there still isn't any new information from the market.  Thus, as of yet there really isn't too much to add beyond the last few updates.  That will hopefully change soon, but patience is in order for the moment.  Trade safe.

SPX and RUT Updates

Yesterday was one of those "special occasions" for my family, and there's nothing to add to the big picture, so today's update is going to be short -- but hopefully helpful.

We'll start with RUT, which hints at the potential for increased frustration over the coming sessions:

Below is SPX in its simplest possible form.  The chart should read "...then 2076 +/- is the FIRST target."

In conclusion, beyond the charts shown above, there's still not much to add to the recent updates.  Trade safe.

SPX and BKX: The Canary Hasn't Died Yet

Last update, we discussed using BKX as a canary and trade signal, and concluded with:  "Of course, if BKX fails to make a new low here, then we'd have no impulsive declines to signify a turn was underway yet." 

Unfortunately for bears, BKX did not make a new low during Friday's session, so there is as yet no confirmation of a turn, and thus no clear signal to act against.  That could, of course, change during today's session, but as of this moment, the market has reserved the right to run higher if it so desires:

On SPX, bears are running out of real estate for the C-wave.  On the plus side, we're finally into territory that qualifies as "lower risk."  Lower risk does not guarantee the market will move in your favor -- it just means that if it moves against you, you lose less than you would have if you jumped the gun and entered too early.

In conclusion, there's still no material change.  If the C-wave is going to pan out, then bears need to make a stand fairly directly.  As of yet, though, the declines have remained corrective, with nothing impulsive for bears to take action against.  Trade safe.

SPX and BKX: Possible Canary

There's not much to add to recent updates, but I do have a chart that may help act as a near-term canary to help determine if the proposed "flat C" wave is complete.  Let's get right to it.

The chart that may help determine if ALL OF C is complete is BKX, as outlined below:

SPX's chart below:

In conclusion, BKX may help point the way to the completion of the proposed C-wave.  Because BKX has already declined more significantly than SPX, keep in mind that BKX could make a new low at the dashed red line, then turn and bounce in wave 2/B during which time SPX could make a minor new high -- but an event like that would make any minor new high in SPX a decent sell opportunity against a reasonable stop.  Of course, if BKX fails to make a new low here, then we'd have no impulsive declines to signify a turn was underway yet.  Trade safe.

SPX Update: Upside Target Captured

On May 20 (after SPX captured its downside target zone from May 4), I attempted to sort through the virtually-infinite options, and ultimately arrived at a preferred target of 2070+ for the next move.  Yesterday, the market captured and exceeded that target.

People who are unfamiliar with attempting their own Elliott Wave analysis may not realize that predicting the C-wave of an expanded flat is one of the most difficult calls to make, because there is virtually nothing in the price pattern that tips the market's hand -- which is one of the reasons I included so many caveats when I made that call.

Now that we've broken the relative high at 2071, it at least clears a few options from the table (although I was never showing those options on this chart, so there's nothing to delete or add):

In conclusion, there are two options for the C-wave -- one is to stall near current levels (blue 2), the other is to stall north of 2085, but south of 2111 (red 2).  The view that 2025 is most likely a B-wave (thus due to be broken) remains modestly preferred, so we should stay alert to a turn developing in the near future.  Yet because of the ambiguity at the bottom and the 2022-25 target capture, we can't get complacent here, and have to consider the alternate "Bull: 5" count -- so bears who are inclined to take action may want to act against small impulsive declines, and stay nimble if the level they acted against is subsequently cracked.  Trade safe.

SPX Update: Understanding Elliott Wave and More

"When you're one step ahead of the crowd, you're a genius.  

When you're two steps ahead, you're a crackpot." -- Rabbi Shlomo Riskin

Apparently I failed to convey my sentiments well enough in the prior update, so we're going to cover a few things to help clarify that -- and to help clarify my overall style of conveying my analysis.

Let's start with summing up what I was attempting to convey in Friday's update:

1.  I am continuing to lean bearish, at least in the sense that it appears reasonably unlikely that 2025 marks a significant bottom.

2.  However, that does not preclude a near-term rally -- in fact, as of Friday's update, I was FAVORING a near-term rally (via the outlined "black c-wave" path).

3.  Due to the ambiguity of the pattern, and the fact that my standing SPX target of 2022-25 from May 4 was captured, it's difficult to favor a directly bearish outcome from here with CONVICTION.  Thus I included a whole bunch of caveats.

4.  Intermediate-term, I continue to lean bearish and suspect this year's lows will be revisited and broken.  The question the market has not answered is whether 2111 is the "final" high for this rally, or if a marginal new high is still forthcoming -- that's what was meant by the statement that it's possible we completed a "bullish fourth wave."  Incidentally, sustained trade north of 2135 would cause me to reexamine bearish intermediate expectations.

Let's move on to how I convey things in general, along with a few Elliott Wave terms that have definitive meanings and which thus underlie definitive expectations.

When things appear clear-cut in the sense of pending market direction, I try to express that with clear-cut language that conveys at least some level of conviction.  For example, on April 27, I wrote:

In conclusion, if one is bearishly inclined, this is a larger inflection zone that stands a decent chance of turning the market.  All markets do have a little bit of wiggle room here, and if they were to run slightly higher, it wouldn't change the inflection zone unless and until the all-time high is reclaimed -- but we do seem to have an impulsive decline from 2111 in SPX, so we could be witnessing the early stages of a turn. 

I feel that's pretty self-explanatory, but it does presume at least a cursory knowledge of Elliott Wave Theory.  Under Elliott Wave Theory (hereinafter: "EWT"), impulsive declines point the way to the trend at the next larger wave degree, and one impulsive leg typically begets AT LEAST one more impulsive leg in the same direction, of equal or greater length.  Thus, stating "we do seem to have an impulsive decline from 2111 in SPX" is another way of saying "I expect at least one more leg down of at least equal or greater length."

I rounded it out with "we could be witnessing the early stages of a turn," thinking that was probably enough to clarify the entire statement -- but perhaps I presume too much.  For future reference, I often speak in terms of impulsive moves with the presumption that readers know what impulsive moves signify.  I sometimes forget that not everyone speaks the language.  Please keep the above information in mind for the next time I forget to mention anything beyond "that wave appears impulsive." 

Now, there is one exception to the rule that an impulse wave signals the trend at one larger degree, and that's when the impulse is the c-wave of a flat.  However, I always, without exception, note that flat pattern if I feel it's probable (or even possible).

So, to sum it up:  Barring the flat c-wave exception, an impulse wave is always expected to beget at least one more impulse wave in the same direction, and the next wave is virtually always of approximately equal or greater length.

On April 29, I wrote:

In conclusion, lower prices continue to appear likely over the near-term.  Bigger picture, the possibility for another 4th and 5th wave can't be ruled out yet, but this remains "bearish until proven otherwise" territory (as noted on Monday) for the moment.

I don't see how that can be taken any way other than "I'm bearish right now," so again in that instance, I was trying to convey my outlook in a clear manner.  Of course, it goes without saying that the updates of April 27 and 29 proved to be correct -- here we are nearly a month later, and the 2111 high remains intact.

Let's look at a statement with less conviction, but which I still felt was clear.  This was from Friday's update:

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.

If we parse this and ignore all the caveats, we find the preferred outlook with ease:

"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."  That's a very specific outlook, which called for a decent rally followed by a decline to break 2025.

So why all the caveats?  Well, first off, all trades need both an entry and an exit.  SPX captured its 2022-25 target, so that represented an exit point (either a partial or complete exit, depending on one's trading style).  Once a target is captured, in a sense, "my work here is done" for that moment.  I have often written that it's a fool's errand to attempt to expand one's account endlessly, and attempting the impossible only leads to ruin.  In other words:  There are times for action, and there are times to do nothing.  Just like the rest of life:  One cannot harvest crops indefinitely; one harvests in the Fall, then waits out the Winter, then plants again in the Spring -- then allows the crops to mature until it is time to repeat the cycle.  Trading follows similar rhythms.  Immediately after closing a successful trade is usually a time to step back and take new stock of the situation, not a time to assume you know exactly what's going to happen next.

Along those lines, in Friday's conclusion, I was trying to convey that the pattern wasn't terribly clear-cut anymore, so the market's price point at Friday's open wasn't necessarily a great place to enter new positions.  I called it like I saw it:  "literally anything is possible from here."  Too vague?  Sorry, but that's reality, and reality is sometimes vague.  I don't make reality.  I'm simply trying to interpret it, and sometimes multiple interpretations must be considered, and are equally valid.

"The people who fancy they are sure of themselves are the ones who are truly unsure... 
In the long run, it is the better-adapted man who triumphs, not the wrongly self-confident, 
who is at the mercy of dangers from without and within."  

-- Carl Jung, Depth Psychology and Self-Knowledge

Intermediate-term, the bear count remains preferred unless and until 2135 is broken:

Near-term, the wave structure is simply ambiguous, and has not locked itself into anything at the moment:

In conclusion, I'm still leaning bearish in the sense that the wave structure leading into 2025 is not suggestive of a sustainable bottom.  This is based on probabilities -- in this instance, there are a couple outlier patterns that at least allow the possibility for 2025 to mark the bottom of "alt: Bull 4" -- in other words, this is a place to pick one's entries and exits carefully, and to stay nimble.  Trade safe.