SPX, NYA, COMPQ: Resistance Resists...

Here's what we have so far:

1. The market has indeed encountered resistance at the resistance lines we've been watching.
2. This is about the best bears could have hoped for at this point, but
3. So far, the decline is not yet impulsive.

In other words, it's everything bears could want at this stage, but thus far is not enough to definitively signal they have the ball, so "just a near-term correction" is still possible.  I can't sum it up much better than that.

Finally, I did want to revisit the near-term chart from earlier this week, since SPX never rallied high enough to bring the speculative option into the fore:

In conclusion, as I said at the beginning, I can't sum it up much better than I did there, so I won't repeat myself here.  Trade safe.

SPX, NYA, COMPQ, BKX: Credit "Raiding"

So the big news to hit since last update is, of course, the downgrade of the USA's credit rating, only the second time in history this has occurred (the first was in 2011).  The downgrade comes from Fitch, and my favorite snip from their report is this:

In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years

Yeah, no kidding.  Government has gotten so bad that I went from having a rule to never bring up anything political (which I succeeded in doing for years) to feeling forced to mention certain issues (usually obliquely, but occasionally directly) in these updates on and off for the past 4 years or so.  Of course, it doesn't help that our country is now more polarized than ever and therefore EVERYTHING is perceived as political, even things that shouldn't be (in my view, issues such as free speech and creeping totalitarianism are not "political" issues, they are human rights issues, and thus we'd do better to stop viewing them through the lens of our political affiliations and instead fight for/against them with the same vigor on whichever side of the aisle we find them.  A politician who's trying to sell us totalitarian policies is no longer on "our" side, even if they still claim to be.).

Fitch also underscored the rising general government deficit, which Fitch expects will rise from 3.7% in 2022 to 6.3% of gross domestic product in 2023.

With a heavy heart, Fitch ultimately decided to downgrade the USA from AAA credit to a more appropriate rating of D.  I'm kidding of course.  They generously downgraded us to AA+.

While the market reaction to the downgrade in 2011 was short-lived, this still does come at an interesting time.  

SPX, so far, still remains below its next relevant long-term trend line:

NYA remains below its intermediate line:

BKX has tagged the "90ish" target zone several times, but has so far been unable to clear it:

And COMPQ is still lingering near its relevant long-term trend line:

In conclusion, if the market was looking for a catalyst to react to these resistance lines, then maybe the credit downgrade will provide one.  Or if it was looking for a "gotcha" rally (i.e.- negative news generates a positive market reaction), then the same thing applies.  On the downside, 4527 SPX is the first level bears need to claim and hold, on the upside, the trend lines serve the same function.  Trade safe.

SPX and NYA: Near-Term Potential

There's one near-term chart to Friday's comprehensive update -- the near-term SPX chart:

On the chart above, the ending diagonal might need two more slight new highs, while the complex flat could reverse lower directly (though would ultimately revisit these highs after visiting the 4520s or below).

Given long-term overhead resistance (chart below), the above seems like a reasonable near-term possibility, which would also accomplish the goal of being confusing to many participants.

NYA is also facing intermediate overhead resistance:

Not much to say beyond that.  Trade safe.

SPX, NYA, COMPQ, BKX, Oil: Oil's Well That Ends Well

On Wednesday, the Fed raised rates another .25%, giving us the highest interest rates in 22 years, but leading pundits to speculate that the Fed is done raising rates and will pause in September.  The market responded to the announcement like an electrocuted giraffe, lunging lower, then higher, then lower again on Thursday.

Powell, on the other hand, was reluctant to commit one way or the other, preferring to wait for the next two months of data.  And there's at least a chance that Powell might be onto something.  It's worth noting that oil was stuck in a potential basing pattern for the last couple months, at the lowest levels it's seen in the past year and a half:

NYA encountered resistance yesterday at the black trend line, which is bulls' next obvious hurdle:

BKX reached its "90ish" target, now we'll see if it can break through or not:

Still watching to see how COMPQ reacts to this back-test:

And still watching to see how SPX reacts to this 36-year-old overhead trend line:

That's about all I've got for today.  Trade safe.

SPX and COMPQ: Tyrants and Tie Rants

Today is the much-anticipated Fed Day, and many pundits have wondered whether Jerome Powell will "stay the course" and wear either his blue or purple tie, or whether he'll signal a shift in stance by wearing something new.  Since we covered all that in great detail on Monday (???), there's not much to add in that regard, however, I did add the official "bear version" of the current rally to the SPX chart:

COMPQ is now attempting its first back-test from above, which is worth keeping an eye on:

Beyond that, it's just a matter of waiting for the Fed, though Lord only knows WHY we have to play this stupid waiting game every Fed day, no matter what the announcement, but that's the way things work now.  Trade safe.

BKX, SPX: Mr. Gorbachev, Tear Down This Wall

We're coming up fast on the Fed meeting (July 25-26, casual dress okay, BYOB), so you might think there's nothing to say about this market in the meantime, and you'd be half right.  But there is one interesting chart to take a gander at nonetheless:

BKX has reached a much smaller trend line, but it's also worth a gander (though not a goose):

In conclusion, NYA managed to put the kibosh on the most immediately bearish count, but it's not like that's a complete "all clear" for bulls.  While the most "straightforward" interpretation of things is probably that the market is in a 3/C up (as I've said previously), that's not the same as saying 3/C is a slam dunk, so we'll see if the Fed causes any ripples.  Trade safe.

SPX, NYA, BKX: Pass the Salted Crow

NYA finally broke its invalidation level, which at least helps clarify the chart picture a bit.  That said, it does mean that I made a mistake "betting on the bears" analytically, and I apologize for getting that wrong.  Fortunately for bears, at least, there haven't been any recent impulsive declines to cause a stir and signal tentative confirmation of the inflection.  Long-time readers know I generally advise waiting for the first impulsive decline before acting strongly (which is why a few weeks ago (June 28), I only suggested a "small stab if one was bearishly inclined"), and "no system is 100% right, so let's try to limit the damage when wrong" is one reason it helps to be patient.

Having cleared its prior swing high, NYA's most straightforward option would be for the current rally to be a C/3 wave.  There are still other options, but this is the most "straightforward."  On the opposite end of the spectrum, the absolute least straightforward option would be for NYA to form a b-wave high and drop back toward the blue 2/B.  Until we have signals for that (such as an impulsive decline), we'll just keep it in the back of our minds, though.

SPX, likewise, is apparently in a 3/C wave rally.

BKX is an interesting chart in this context:  If it's correct that BKX formed a large impulsive decline off its 2022 high, then it's currently in a large second wave bounce -- which, although unlikely to end immediately, will eventually end and lead to another big wave down.  This is very much worth keeping an eye on, as the rest of the market would inevitably be dragged down by a major disruption in the banking sector.  

From a fundamental standpoint, the simplification of the bull case is something like: "Due to the lessons learned during Covid and concerns about future supply chain disruptions, private industry is in the process of revitalizing the American manufacturing base, which will lead to an era of meaningful prosperity."

The simplification of the fundamental bear case is something along the lines of: "Yeah, but inflation often comes in waves (see the 1970s, when inflation rose, then dropped down to 'normal' for a few months before spiking even higher in the next round) and we've only finished the first wave.  The Fed isn't out of the woods yet.  Plus we still have the worldwide debt bubble to contend with, and the economy hasn't meaningfully contracted in order to burn off its prior significant excesses.  We're still carrying too many zombies to start a new era of prosperity."

In the coming updates, we'll take a closer look at each of those arguments (plus some others).  For now, we'll presume bulls have the ball in a C/3 wave up either way.  Trade safe.