SPX Update: All the Marbles

Last update concluded:

[I]n conclusion, we are at (3/c could have completed on Friday, though it would look a little better with a bit more upside first) or approaching a bear inflection zone, and it's going to be tricky, because even the bull count would likely correct lower from that inflection (in gray 4? on the second chart), so both counts will seem up in the air for a time. 

Since then, we indeed got "a little bit more upside," and then "corrected[ed] lower from that" 3/c inflection.  If you're a new trader, you'll have a lot of people tell you that calling for a little bit more upside followed by a turn -- and then having the market play out exactly that way -- isn't something you're "supposed" to be able to do.  But here we are anyway, at the inflection, with things seeming "up in the air," and now the market does have options again (all week, I've said it's pointed higher -- that is finally not baked in anymore).

Bigger picture, we all need to be aware that in the event that inflection zone was the end, things can get extremely bearish from here:

In conclusion, this inflection zone is quite possibly playing for all the marbles for the immediate future.  I would still prefer to see a bit larger bounce here (after gray 4 completes), but I can't draw that from the charts, because we do have three waves up and three up can end a corrective bounce (gray 4 only exists if the rally wants to become 5 waves up instead of 3) -- so the market has the option to go either way now, my own personal preferences notwithstanding.  Trade safe.

SPX Update: "Not a Fourth Wave" Confirmed

On 10/24, in an update titled More Cause for Bear Caution, I wrote multiple times that the rally didn't "feel" like a low degree fourth wave to me, implying that it was going to head more than a little bit higher, and that has since been confirmed.

I also wrote:  "Big picture, presently I'm slightly leaning toward this either being the Big C wave that we've discussed a million times, or a nested 2nd wave," and presented the following chart, with the nested 2nd and the Big C wave terminuses shown in red and blue respectively:

Here's that same chart with the updated price action now:

SPX has gotten a lot closer to Red 2, but it's still not there yet, obviously.  So that's the bull case, and it's the way I'm still slightly leaning -- but let's take a quick look at the bear case, which we'll discuss after the chart:

The bear case says that we've about completed 3 waves up (gray 3/c), and because three waves can complete a corrective move, it is indeed always possible for any structure to terminate at such an inflection.  If we refer back to the first chart, we can also see that SPX is backtesting the lower rising black trend line -- so I'm not entirely closed to the idea that maybe this will be it for the bounce.  I'm very much open to it, I'm just not presently leaning that way, as I wrote on the 24th.

So, in conclusion, we are at (3/c could have completed on Friday, though it would look a little better with a bit more upside first) or approaching a bear inflection zone, and it's going to be tricky, because even the bull count would likely correct lower from that inflection (in gray 4? on the second chart), so both counts will seem up in the air for a time.  That said, I'm still slightly inclined to think bulls get more rally after that correction, but as I said, I'm very much open-minded to the bear potential, so when that correction occurs, I'll mark the zones to watch.  Trade safe.

SPX and TLT: Last Monday's Update Absolutely Nailed TLT

Last update noted that COMPQ had reached intermediate resistance and that SPX had captured its next upside target, and that this could generate a reaction, which would most likely be a fourth wave.  We've had the anticipated reaction, now we find out if it is indeed a fourth wave.  No change to the chart below (the annotation is from 10/26), but I did add a bit more detail to the (seemingly most likely) micro wave count.  Note that gray iv has some room to play around a bit if it wants:

Next, let's take a look at Monday's if/then price projection, which has played out pretty well so far:

Also, let's revisit COMPQ, which is probably responsible for the market's hesitation here:

The caveat regarding the potential micro fourth wave and how it contrasts with COMPQ is that this is intermediate resistance, so as I warned in the last update, bulls probably shouldn't get complacent just yet.  

And last, a quick follow up:  On Monday, for TLT, I issued the first warning I've given to bears in a long time, writing:

Finally, TLT is firmly into its target zone now, so I'm going to give my first warning for "bear caution" since I published this target back in April. As of yet, there's nothing even vaguely bullish in the chart, but my gut has started saying: "be careful, bears" -- for whatever that's worth.

That turned out to be the exact bottom, and TLT proceeded to launch the largest bounce it's had in 3 months (so far):

In conclusion, by all rights, SPX probably does still need another wave up, but we still have to remain cognizant that this is an intermediate resistance zone, because off-beat patterns do show up every now and then to keep us on our toes.  As long as SPX holds above 3762, nothing gets too complicated yet.  Trade safe.

SPX Update: Resistance vs. "The Usual Outcome"

Last update noted that all options pointed to higher prices for the near-term, and that was a hit, as the market indeed ran higher since then.  From last update:

I've outlined a couple options above -- both of them point higher for now. As I noted, bears' remaining near-term hope would be for an ending diagonal (or a b-wave high that runs down to Friday's low, but then runs back up to today's high), but even a diagonal would need to run higher before it ends.

Today, we're going to keep it simple, and just focus on the near-term uptrend line for now:

 

For the past few updates, I've presented the bull case, so let's take a quick look at the bear hope... but again, referring back to the "keep it simple" approach above, bears need to break the near-term uptrend in order to gain much traction.  So while tagging this overhead resistance line (chart below) isn't reason in itself to be bearish, it is at least reason for bulls not to get too exuberant just yet:

In conclusion, last update opined that the market needed to run higher, and it did... and near-term, this pattern would normally need to continue to unwind higher (assuming it isn't something weird, such as a WXY, which one can never rule out).  That said, COMPQ has reached a potential intermediate resistance zone, so the market may react to that -- and SPX did capture its old 3/c target.  This is a moment where one might want to take a more cautious stance if already long, if nothing else.  If one is inclined more bearishly, then this is an area to watch closely.  Trade safe.

SPX Update: More Cause for Bear Caution

Last update highlighted a near-term pattern in SPX24 and noted:

These can be terminal patterns, in which case a bounce may be imminent, but they can also be nesting patterns -- so while a minor break and whipsaw of the lower line would be perfectly fine, bulls should be cautious if there's a sustained breakdown at lower black.

It turned out that a bounce was indeed imminent, and the cash session began rallying immediately after the open and kept going through the close.  

Let's start off by looking at the next hurdle bulls face, and the possible outcome if they can clear it:

In terms of the wave count, this just doesn't "feel" like a fourth wave to me.  If it is, then it needs to be an ending diagonal, in which case it needs two more new highs anyway:

Big picture, presently I'm slightly leaning toward this either being the Big C wave that we've discussed a million times, or a nested 2nd wave:

Finally, TLT is firmly into its target zone now, so I'm going to give my first warning for "bear caution" since I published this target back in April.  As of yet, there's nothing even vaguely bullish in the chart, but my gut has started saying: "be careful, bears" -- for whatever that's worth.

In conclusion, futures are indicating that SPX will likely clear 3763 on the open, and as I've written previously, I think that bears need to be cautious when it does.  I've outlined a couple options above -- both of them point higher for now.  As I noted, bears' remaining near-term hope would be for an ending diagonal (or a b-wave high that runs down to Friday's low, but then runs back up to today's high), but even a diagonal would need to run higher before it ends.  Trade safe.

SPX and TLT: TLT Captures April's Downside Target

Last update discussed my view that 3762 was a potentially-important inflection zone; since then, the market has held below that level, which keeps open the bearish possibility for 3762 to mark the top of a fourth wave.

Near-term, SPX did break down from the blue uptrend line on the chart below, but I still believe the lower black trend line is the more significant downside inflection:

Zooming in even further, and looking at the SPX24 chart (which combines the cash action with the overnight futures action), we see a scary-looking wedge developing.  These can be terminal patterns, in which case a bounce may be imminent, but they can also be nesting patterns -- so while a minor break and whipsaw of the lower line would be perfectly fine, bulls should be cautious if there's a sustained breakdown at lower black:

Bigger picture, I've outlined some potential targets, relevant only in the event the last high was ALL OF 4, though even at that, let's consider these as tentative right now, as the jury is still out on whether that high was a fourth wave, or just a bullish wind-up:

Finally, TLT has reached my "you're crazy for even suggesting that!" target of 91-94, published in April.  This is absolute carnage, which is why most people thought I was nuts for suggesting this:

In conclusion, the market is still trading below last update's inflection.  If bulls can break out above 3763, then bears should be very cautious for the immediate future; if they cannot, then perhaps that was ALL OF 4 and it's straight on to new lows from here.  Unfortunately, it's still not entirely clear which case this is, but we do have some zones (as outlined above) to watch for clues.  Trade safe.

SPX Update: Still Important

Last update, I noted that I was slightly leaning toward the rally continuing, and that lean was correct, as it turns out.  Things get a bit more complicated now.  Let's start with the near-term chart, then we'll discuss a few things afterwards:

First off, SPX fell short of the initial 3775-3815 target -- this is due to the high being a b-wave (I talked about this in our forum) and measuring from that b-wave high instead of the actual end of the impulsive 1/a wave.  When I published this, I was not entirely sure the high was a b-wave, but yesterday it was confirmed (by the market) that it was, so I noted in real-time (on the forum) that we had reached the C=A inflection zone at 3762.  This means that 3762 is of some importance, as that could mark the end of an ABC rally from last week's low.  Conversely, if SPX sustains trade north of 3762, and particularly 3799, SPX may be winding for a stronger move higher, though some of that will need to be determined in real-time, based on the extant wave structure.

The b-wave high is why I adjusted the 3/c target lower.

Still looking at the chart above:  If the decline continues, the next test will be the rising blue trend line, but I think the more important zone is probably the falling black trend line, currently crossing 3635ish (and falling).  I say this because it's not uncommon to see such trend lines back-tested before the resumption of a rally, so, if SPX chooses to test that line at all, then bears would need to see that back-test fail.  The most bullish case would be a back-test that holds, then a breakout over 3762, which could suggest a strong countertrend rally underway.  Of course, if yesterday's low holds, then bulls can just go grab lunch or something.

Bigger picture, things are unchanged, since SPX is still within the range of the past several weeks:

In conclusion, last update's lean was correct, but I don't have another strong lean at the moment, so for now will have to suffice with knowing that yesterday's high (plus a little) is a near-term inflection zone.  Range-bound markets tend to muddy things, but how the market reacts from here will be telling, so hopefully the picture will clarify further for the next update.  Trade safe.