SPX, NYA, COMPQ, INDU: Shock the Monkey

Since capturing its June "bull count" target, SPX has remained in a near-term downtrend.  Let's look at a few charts.

This jives with the very long term trend line that we've been watching since July:

COMPQ has also stalled at its inflection zone:

As has NYA:

For bears, the one monkey in the works is probably INDU:

In conclusion, multiple markets have reached and reacted to their inflection zones, so score one for inflection zones, if nothing else.  It's too early to say if these reactions will be short-lived or will turn into a full-on resumption of the bear market, but that possibility is at least on the table (and fun to consider, since I suspect it would catch almost everyone by surprise).  Even the more bullish case could see a meaningful correction develop, though there are no concrete targets for such a move yet.  Trade safe.

SPX Update: New Year, New Options

I said I'd "likely return on the 3rd," so here I am -- though I still have relatives in town for a few more days and have weird "drive us to the airport" hours to contend with on Friday/Saturday, so the next update after this will be on Monday.

Despite my holiday break, the market has moved surprisingly little in absolute terms since last update, so we're just going to look at one chart today, because it's probably the most relevant chart going right now:

In conclusion, SPX has captured its old June "bull count" target, which does open up options from here.  It's a bit early to say whether bears will actually capitalize on those options yet or not, but at least they finally have some again.  

I wish everyone a safe and prosperous New Year.  Trade safe.

End of the Year Update: Counting Chickens

SPX is flirting with the all-time high and its first "bull count" target from June:

Bulls (and bears) have seemingly all decided that a new all-time high is a given, and maybe it is, but as the old expression goes:  "Don't count your chickens before the cows come home to roost."  

SPX is again facing the same resistance zone that knocked it down the last time bulls were expecting a new all-time high -- i.e.- the old red trendline.   (Bears have forgotten that many bulls lost a bunch of money buying too early during the last decline and getting stopped out, before buying again and getting stopped out again (when that rally turned out to only be the 4th wave of C) -- before finally being rewarded by being too scared to pull the trigger at the actual bottom and therefore missing most of the big rally, before closing their longs way too early and missing the rest of the rally since then.  That's the thing:  The grass isn't greener, it's just that everything always seems so darn easy until you have actual money on the line and your emotions are fully invested.)

COMPQ is also now into the general ZONE (it's a zone, not an exact level) of the old "or (2)" bear inflection:

NYA suggests there may still be a bit more upside, but I do have to note (and did, on the chart) that the first inflection zone for the C wave has been reached.  (You know, just in case those chickens don't hatch.)

So, we'll see how it goes here.  Maybe bulls will blow right through these resistance/inflection zones as well.  Maybe there's just so much liquidity floating around (from where God only knows) that the market simply can't go down.  But I'm just sayin', those chickens haven't actually hatched yet, so let's see if the cows come home to roost, because a penny saved is worth two in the bush.  

***

And with that, as per usual, I bid my adieu for the year.  I have relatives on-island until (I think, keep meaning to double-check) January 5, so I'm going to try to make the most of my time with family this year, because, for one thing, we're running out of Christmases where we have any kids at all at home.  Our oldest already flew the coop, and our next oldest is getting close.  We really only have one kid left who's still a "kid" (technically he's a teenager, but this is probably the last year where he's still more childlike than not).  

You know, when I had my first, I remember SO MANY older couples saying, "Treasure it, they grow up so fast!"  And -- especially when it's your first and the kid is still an infant and keeping you up all night and just generally demanding every bit of your free time and energy to the point that you're convinced the whole experience must be some kind of punishment -- you think, "Yeah, right, they grow up fast.  Man, I HOPE so."  Because at that point, you'd really just like to get a full night's sleep again, for crying out loud, and you're still kind of in the mindset you were in when you were childless, and this new gig seems like nothing but sacrifice.  Which it is.  (Eventually you realize it's one of the most rewarding sacrifices you can make in this life, but you don't realize that two weeks in.  Or at least, I didn't.)

And then you blink, and they're off to college.  

And you can't believe how much time has passed and how quickly it did.  And you find yourself nostalgic and a bit wistful for so many things that you feel like you didn't savor enough when they were happening.  

You other parents know what I mean.

Anyway, I'll likely return with the updates on January 3, unless there's still nothing interesting to say about this market, in which case I may just enjoy another few days of family time.  But probably on January 3.  

As is tradition for the final update before Christmas, here's the link to a non-market-related piece I penned almost exactly a decade ago (Can't believe it was a decade ago already.  "They grow up so fast!"), titled:  

A Christmas Story - Reflections on What Matters

Merry Christmas to all my readers -- or Happy Holidays, if that's your thing instead.  Trade -- and be -- safe this holiday.  I wish you all the best for the New Year.

SPX and a Random Thought about Real Estate

So I looked through my chartbook, but there's just not a lot to say about a trending market, except that it's still trending.  As the old saying goes, "The trend is your friend -- 'til the end when it bends."  Accordingly, there's not much to add to recent updates, except to note that SPX is getting close to the zone of the old red trend line:

I also wanted to share an interesting thought (not a prediction, just a random speculation) regarding the housing market.  As we all know, just as I predicted back in April 2022, the housing market hasn't fallen, despite rising interest rates.  My speculation at the time was that rising rates would cause people to cling to their 3% mortgages, so while demand would fall from rising rates, supply would also fall, which would tend to counteract falling demand.  That's exactly what happened... then I had another thought a few months ago that went something like this:

• When rates finally do start to fall, people who have felt "trapped" in their mortgages may finally rush their homes to market.
• This will, of course, increase inventory.
• Depending on how much pent-up supply lies in the wings, there's a chance that falling rates could again trigger the inverse of what everyone is expecting:  Instead of rising prices, it's not outside the realm of possibility that lower rates could lead to a supply glut, as "trapped" would-be sellers finally see a way out -- which would then trigger falling prices.

Again, that's not a prediction, because there's no reliable way to measure how many people will list their homes in a falling rate environment -- so I don't have enough data to make that prediction.  But I think it's at least a possibility that the housing market once again does the exact opposite of what "everyone" is expecting.  If it were to play out this way, I still wouldn't expect a housing "crash," but a significant rise in supply brought on by lower rates could at least turn this into a buyer's market.  Again, not a prediction, just a random thought.

Not much to add beyond that.  Trade safe.

BKX and NYA: Lessons from the Trenches

Since last update, Powell came out and signaled that the Fed is not only ready to back away from ongoing rate hikes, but that there could be three rate cuts in 2024.  The market loved hearing this, of course, and rallied on the continued assumption that inflation is literally the only problem that was ever, or will ever be, on the horizon.

But to me, that's not the most interesting thing that happened.  The most interesting thing is the resolution of an extremely complex chart pattern.  I'll admit, while I saw the potential for a version of this in advance, I didn't foresee this version of it.  

The pattern in question is shown on the NYA chart below:

This pattern hit me right in an Achilles heel, because I simply assumed in advance that if it was going to play out as a flat, then it would be an expanded flat (meaning it would head below the blue A wave before any big rally) and not the running flat that it was.  Running flats stall without breaking the prior A wave low, and because they're quite rare, it's generally silly to "assume" running flat.  So when NYA formed an impulse down that failed to break the A-wave low, I subconsciously wrote off the expanded flat option I'd been watching, entirely skipped the running flat option, and instead assumed the heavy-odds-on-favorite:  That it was wave 1 down.  

I didn't really think about this -- when you hear hoofbeats, you think horses and not zebras.  "Zebras!" probably doesn't even enter your mind.

But this time, it was indeed zebras.  

Which is part of why this type of pattern is extremely difficult to navigate in real time, and the market got one over on me here.  Even after more than two decades, there are always more lessons from the market.

Anyway, lesson learned; I won't make that same mistake again.

BKX is interesting as well, inasmuch as it appears to be forming a classic "double-retrace" of the prior extended fifth wave.  

On the BKX chart above, do note that the blue horizontal has been on that chart for over a year for a reason, and has at least the potential to be a resistance zone, near-term or otherwise.

Not much to add beyond that.  Trade safe.

TLT and SPX: Time to Update the Bull Count from 6 Months Ago

Back in June, I published the following bull count, which was roundly ignored, so I figure now's as good a time as any to check in on it and update it:

Let's also not forget that SPX still has this long-term overhead trend line to contend with:

Finally, TLT has continued bouncing after hitting the noted support zone:

Not much else to add.  SPX has managed to rally above horizontal resistance at the prior 4607 high, so we'll see if bulls can hold that.  Trade safe.

SPX and BKX: Caveat Subscriptor

There are two major aspects to what I present through these updates:

One aspect is the technical side of things, typically in the form of Elliott Wave counts, which are based on a combination of concrete patterns and gut instinct, in which I (almost) always present both sides of the trade.  The other aspect is something readers always seem to want (often even when I haven't offered it), which amounts to "okay, but which way are you leaning?"  That aspect is typically based on a combination of technicals, fundamentals, and, of course, gut instinct.

None of it is foolproof, but let's examine a recent case in point, because it illustrates the conundrum well.  For months leading into the recent swing low, my charts pointed to that price zone, often with the label "3/C" (or "C/3," same thing).  That was my technical (mixed with some gut instinct) read on where we were headed for the immediate future.  In Elliott Wave, a C-wave always represents three down (or up), which is always an inflection zone -- though in this instance, I further mentioned that my lean was that we'd go on to form five down.  That lean was based largely on the seemingly-awful fundamentals that the market faces, but that lean turned out to be in error.

What was not in error was the location of the inflection zone (SPX 4090-4115; in fact, the market nailed it dead-center).  It's just that many of us (including me) thought that wasn't going to be the end of it.  As I wrote on October 26 (in an update appropriately titled:  Now Entering "Bounce or Break" Territory):

Yesterday, SPX came within 7 points of its preferred target zone, which also puts it into the C-wave inflection zone (not that I'm expecting this to be a C-wave, but I'm not always right, so I never ignore things that run counter to my biases):

That was followed by this chart: 

So on the one hand, the technical aspect worked flawlessly in this case -- but my lean that we'd go on to form an impulse did not.  It's important to understand the difference between those two things -- my lean is always an xx% vs. xx% proposition; it is NEVER, EVER 100% vs 0%.  Never.  Usually pretty far from it, as it's usually 5x% vs. 4x% (i.e.- 53% to 47% or similar).  

Even the technical aspect isn't 100%.  (Nothing I believe about anything is 100%, for that matter, at least as far as I'm concerned.)  I feel like I've made that pretty clear over the years, but in case I haven't, there it is again.

In this instance, I probably needed to focus more on the warnings and caveats for bears.  I covered them a few times, but probably didn't highlight them enough.  

Below, I intentionally left the labels on this chart as they were -- next update I'll delete the 1/2/3, since we know now that it was the A/B/C portion of those labels.

Anyway, I'll try to caveat more in the future.  Usually I'm pretty good about that, but I don't think I did it enough at this last inflection.

Beyond that, I really don't have a lot to add here about the current market -- I'm still awaiting an impulsive turn, as I have since I wrote about that publicly on November 8 (we had one quick little false alarm since then, but after it shook out, it was back to waiting).  Until then, there's not much for bears to sink their teeth into, and the market could run higher in the meantime.  As mentioned last update, BKX (and many other markets) has/have reached resistance, but that doesn't mean the market won't break through it:

Trade safe.