SPX and BKX: Nimble It Was

Last update warned traders to "stay nimble," which proved timely, as SPX ran higher for much of Friday's session.  As discussed (in advance) in that update, this leaves the appearance of an imperfect low (an incomplete pattern) in BKX:

SPX discusses one common target, but I want to stress that it's not the only possible target zone.  The point of a complex correction is to be, well, complex.  These types of corrections are "supposed to be" unpredictable (the market's intention is to get everyone wrong-footed), so sometimes complex corrections will string together more than one complex wave, which can indeed make them unpredictable.

In conclusion, no real change from last update, except to note that the complex correction appears to be upon us.  For now, we'll focus on the most common target zone -- if SPX wants a "running flat," it could fall a little short of that zone.  In the event it exceeds that zone, we'll discuss further options.  Trade safe.

SPX and BKX: "STAY NIMBLE PRAY"

I had to head into town today to run a few errands, and on the way, I ended up behind a car with a bumper sticker that read:  "STAY NIMBLE PRAY" -- and I thought, "Boy, that's kind of an odd bumper sticker... but pretty sound advice for traders, especially in this market.  And probably not bad advice for all of America at this point in the Supercycle."  

But alas, my brief moment of reverie was ruined when I got closer to the car and realized that my recently-modestly-unreliable early-middle-age (or, as I prefer to think of it: "late-stage youth") eyes had misread the bumper sticker, and it actually said:  "STAY HUMBLE PRAY."  Which made the bumper sticker seem a bit less esoteric, but which is probably still reasonable advice both for traders and for America.

Anyway, I thought it a bit serendipitous, as today's update could certainly carry the theme of "STAY NIMBLE" (though not necessarily in ALL CAPS), as we'll see in a moment, starting with the BKX chart.  BKX made a new low, confirming the red (iv) label of the past few weeks... but so far, it's only three waves into the new low (three waves counting down from the (iv) label), which means either it continues lower until it forms a proper five-wave structure, or it bounces back up in a more complex (iv) (see: expanded flat), before heading lower later.

SPX has confirmed the read of July 6, when I noted that INDU had broken a level that suggested SPX's bounce would ultimately fail (which it did).  BKX puts SPX in a similar spot in regard to the potential for a more complex correction before heading lower (it could, of course, simply head lower immediately -- the broader point is that BKX's pattern is incomplete if it bottoms here):

In conclusion, BKX suggests that the pattern is incomplete to the downside, thus presumably both SPX and BKX are, in the words of the old Fram Oil Filter ads, in a "you can pay me now or you can pay me later" position.  This means that even if another bounce develops, more downside is likely still needed later (in much the same vein as the INDU chart suggested this same thing back on July 6).  The simpler resolution would be for both markets to just resolve this pattern with more downside immediately, but the market always reserves the right to take your money via complex corrections.  In other words:  "STAY NIMBLE PRAY."  

And trade safe.

SPX Update: Preferred Count Set to Come Through

On July 6, I noted that INDU had made a new low when SPX bottomed in the "structural support zone" -- and that this could be a harbinger of things to come, as it suggested that the bounce would fail.  In the week since, I've stuck with publishing the same near-term count, and today, CPI jumped 9.1% (lucky for our government, 1981 was a year for blistering inflation, so no matter how high CPI seems to go, the headlines always say "Inflation Now the Highest It's Been in 40 Years!" and it just doesn't have the same punch it did a few months ago), and futures are suggesting a gap down.  

Seems the market knew a week ago that this would happen, though, as the tells were already there then.  The updated chart below discusses some potential target zones:

In conclusion, although the 2/b bounce ran a little higher than I'd initially anticipated, the preferred near-term count of the past week is on the cusp of being vindicated.  The reason I said that red 3 appears modestly more likely than red c is that (assuming no miracle bounce) BKX is going to make a new swing low for the move, which implies that its last micro decline was wave 1 (which implies the bounce as wave 2 and this decline as wave 3 down at micro degree) -- that said, a complex correction (read: expanded flat, for BKX, anyway; where a new low in BKX would be c of B instead of 3 of 5, and imply a bounce and then more new lows after that) is always possible, so there will still be reason for prudence in the red c target zone.  Trade safe.

SPX Update

Short update today, as we are into the "either this works or it doesn't" zone for the near-term count, so no material change from the past couple updates:

Once again, the legacy annotations, which vanished from the chart in Stockcharts:

In conclusion, no material change from the past couple updates.  The long-term outlook remains bearish.  Trade safe.

SPX Update

Last update discussed how INDU had made a new low on July 5 and that this might be a hint that the current bounce might not last.  Since then, SPX rallied up through both near-term resistance zones, but did find some resistance shortly before yesterday's close.  In a perfect bear world, they'd probably like to see yesterday's high hold, but in the event it doesn't, there is additional resistance in the zone between there and the June 28 high.

Beyond that, not much change from last update, except to note that Stockcharts has been deleting my annotations again, and I get tired of retyping them for every update:

So here's what the annotations said last time:

In conclusion, other than that, not much to add from last update.  Trade safe.

SPX and INDU: Harbinger?

Since last update, there's been another test of and bounce at support... however, INDU made a new low during that test, which might be a warning that yesterday's low is a b-wave low (meaning that low will be revisited/broken):

INDU's (unannotated) chart below:

In conclusion, on the one hand, support held again -- however, the new low in INDU is probably not what bulls wanted to see, as that can be a warning of a temporary low.  SPX, of course, did not make a new low, so this isn't crystal clear, and maybe INDU simply needed a fifth wave to wrap up its decline... but it's certainly a caution signal for bulls, at the minimum.  If the bounce in SPX continues, then watch 3845-55 and 3868-75 as potential resistance zones.  Other than that, no real change from the past couple updates.  Trade safe.

SPX and BKX: Support Does Its Thing

Since last update, SPX declined down to the "structural support zone" I noted on the near-term chart, and found some support there:

BKX declined all the way down to retest its prior swing low, and since it overlapped the start of its more recent micro wave (spell check would like it noted that it believes "microwave" is one word, as in "NEVER put your pet goldfish in the microwave!"), the high at red (iv) is not as relevant anymore and would no longer indicate an impulsive rally.  

In conclusion, bulls managed a bounce at (the zone I had previously theorized might act as) support and have so far held above the tentative key overlap, so there's no real change from last update, and if bulls keep holding that zone, they can put together a larger bounce -- if support and the (tentative) key overlap fail, then bears might have the near-term ball.  I do want to note, in case it wasn't clear for anyone, that I remain long-term bearish regardless of what happens here.  Trade safe.  Oh, and happy Fourth of July to everyone.