SPX Update

The market has traded sideways since last update, so no change, except to add that there's now a possible micro bear nest in the near term pattern:

SPX is still in the same place in the bigger picture:

In conclusion, not much to add since last update, but I suspect we'll get some resolution soon.  Trade safe.

SPX and INDU Updates

Last update noted the possibility of a complex flat toward 4176, which may be unfolding now:

No change to the big picture, and while SPX is within an inflection zone, Red 2 remains on the table:

Near-term, the pattern has gotten noisy in INDU:

In conclusion, my initial instinct last update was that SPX had only formed three waves down and was thus likely to rally and return to the low, and I'll stick with my first read for now, but INDU has at least caused me a bit of uncertainty in that, so we'll see how it plays from here.  Trade safe.

SPX and NYA Updates

The main thing to add since last update is for the very near-term:

No change to the big picture:

NYA is in a similar position to SPX, and appears to be incomplete to the downside:

In conclusion, the picture remains the same as it did on Friday, with the market within an intermediate inflection zone and the near-term appearing to be incomplete to the downside so far.  Trade safe.

SPX and NYA Updates

On Monday, I noted that bulls needed to recover the breakout or they were at risk, and SPX now appears to have head-fake whipsawed (some people only refer to downside whipsaws as "whipsaws" and upside breakout/reversals as "head-fakes," but I generally refer to fake breakouts in either direction as "whipsaws," since the informal use of the term simple means "subject to a double loss," which is why I sometimes use both terms for upside "whipsaws") its most recent breakout.

NYA has remained stalled since effectively reaching its target zone (coming within less than 1% of the target may have been close enough):

And, of course, as noted before, Blue 2 remains on the table:

In conclusion, bears are still very much in the near-term game here, and normally one would expect some downside follow-through to the pattern so far (though worth being aware that it's three waves down from 4176 so far, which, 9 out of 10 times, means it either needs to become five down, or it will turn into an expanded flat that runs back toward 4176 before heading lower later; 1 out of 10 times it's something weird like a double three).  Trade safe.

SPX, NYA, and Powell

Powell spoke yesterday, and I found some of his statements interesting, one of which was: “There has been an expectation that [inflation] will go away quickly and painlessly; I don’t think it’s guaranteed that’s the base case.  It will take some time.”

Implicit in this statement is that, so far, things have been "painless."  (I agree with that assessment and have said so a number of times.)  Explicit in his statement is that Powell does not "think it's guaranteed" that things will remain painless.

Seemingly in an effort to drive home that point, he added (emphasis mine): “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more.”

Powell seems to be asking: "What exactly do I need to do to create more layoffs?"  So the implications of that are interesting to ponder.

SPX has traded sideways since last update, so there's nothing to add in that regard.  Yesterday closed at the blue trendline, with no clear whipsaw or breakout yet:

NYA has also traded sideways:

Beyond that, not much to add to the prior update.  Trade safe.

SPX and NYA: Keeping It Lively

So they're keeping things interesting for now.  Last update noted that NYA had come exceedingly close to its two-month-old target:

And now SPX is threatening to whipsaw its most recent breakout:

This action keeps blue 2 on the table for the time being:

In conclusion, bulls need SPX to recover its breakout, which would clear the way for further upside.  If they cannot do so and this breakout whipsaws, then the confluence of the red and black trendlines on the final chart above may be worth keeping an eye on as a potential downside target area.  Trade safe.

SPX and NYA: One Question Answered

On Wednesday, Chairman Pao(well) announced that financial conditions had tightened significantly (even though, by most objective measures, they have not) and that the "disinflationary process has started," hence that the Fed was probably just going to call it a day soon and get back to golfing and loan sharking, or whatever it is the Fed does when it's not creating new bubbles while actively dropping money from helicopters.  The market responded, shockingly, by rallying.

Chairman Pao also cautioned that it would be "premature to declare victory" against inflation, and that inflation was "still running very hot" -- but most traders were too busy screaming "buy!" to hear that part.  Interesting to note that, while goods are experiencing some disinflation, commodities and services are still accelerating.  

Chart-wise, the "to B or Not to B" question from way back on December 16 (which revolved around the suspicion that 4100 may have been a corrective B-wave high and thus ultimately fated to be broken) has finally been answered in the affirmative.  That of itself does not invalidate the potential of blue 2 (blue 2 would be technically invalidated north of 4325).

Near-term, SPX broke above the next trend line:

Finally, NYA has come very close to its "textbook" upside target:

In conclusion, SPX finally answered the "to B or Not to B" question (maybe phrasing it as an existential question caused the market to think extra hard about it) and broke above the next trend line.  Now bulls want to see that line hold, and not whipsaw as it did in 2020.  NYA's proximity to its textbook target keeps the option of blue 2 on the table, but it's never a bad idea to await an impulsive decline before doing anything overly aggressive on the short side.  Trade safe.