SPX and BKX: Minimum Upside Target Now Captured

Last update decided we'd stick with the most straightforward count for the time being, and the market obliged by reacting to resistance on the nose:

On the chart above, I have changed the color of some of the labels, as I somewhat like the idea that this current wave is red 4, with us still in the larger wave 1 down.

Near-term, SPX captured its target zone:

BKX has done enough to call it complete if it wants:

In other news, The WHO officially declared Monkeypox a global emergency, then smashed their amplifiers with their guitars, before performing an encore of "Magic Bus."  I don't know why we have to listen to Pete Townsend on global health issues and think The WHO should stay in their lane, but whatever, I thought it interesting as it might serve as "news" to give the pundits a "reason" for the market to decline in a fifth wave ("Oh, the rally was underway, but then MONKEYPOX yada yada yada, bulls just can't catch a break!")

In conclusion, there are enough waves in place for the market to reverse here.  It's always tricky determining if there's still "one more little wave up" needed, and that's the case here as well -- so the pattern could support slightly higher prices, but they are neither required nor desired.  If you held my feet to the fire, I'd probably lean toward the idea that the top is in for this wave, but I would heavily hedge that lean with the standard caveats.  Trade safe.

SPX and BKX: Wait and "C"

Since last update, SPX continued up toward the "straightforward c-wave" target zone of 4005-45, ending the session just shy.  Let's start with the near-term SPX chart:

Interesting to notice how the target for black C lines up with red resistance on the longer-term chart:

BKX has done the minimum that was required for a b-wave low, c-wave rally (a presumed expanded flat, in this case), but could certainly support higher prices if it wants to adhere in a more textbook fashion:

In conclusion, while there are still other options here, for now we're going to stick with the most straightforward of them (which is: black wave C, as discussed above), and wait to see how SPX reacts to the upcoming resistance zone, in order to determine if we even need to discuss any other options.  Trade safe.

SPX and BKX Updates: Market May Have Had Enough of Making It Easy

The last couple of weeks in the market have formed a complex pattern, but we've stayed one step ahead of it the whole time, so it's been relatively easy to predict -- but things may be about to grow much less predictable.  Because the market is complex enough on its own, I don't like to present too many options (even though such options often exist in reality), since then things get too confusing for readers, so today we're just going to focus on the two most straightforward options, then we'll see what the next session or two bring.

First up, let's look at BKX again, to confirm that it does indeed appear to be three waves into the last swing low:

I always study other charts to see if I can find the broader pattern stretching across multiple markets -- and as it happens, NYA seems to share the appearance of a three-wave low with BKX:

So, while nothing's perfect, two major markets have the appearance of three-wave lows, which argues that the low is most likely a b-wave and thus ultimately destined to fail.

Where it gets tricky is, as I alluded to at the start, that there are multiple paths the market can take between here and there.  The two most straightforward are discussed on the SPX chart below, but I want to stress that these are far from being the only interim options -- thus, "stay nimble" (the theme a few updates back) continues to apply:

In conclusion, we seem to see more than one market adhering to the theme of an imperfect low that will ultimately need to be revisited for resolution, but by no means does this need to occur immediately.  It could occur immediately, if SPX takes the super-simple red 2/b path and stalls directly -- but if it doesn't, then we'll examine more potential paths in the next update.  The simple takeaway is:  Any way we slice it, SPX will most likely revisit the "structural support zone" at least one more time.  Trade safe. 

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.