SPX and COMPQ: So Much Depends Upon a Red...

Last update expected that SPX and COMPQ both needed at least one 4/5 unwind, and they both stalled and then made a new high, in line with that expectation.  But it's finally getting tougher now, for reasons we'll discuss below:

When we study the above chart, we cannot help but be reminded of the famous poem by William Carlos Williams Carloses:

so much depends 

upon 

a red wheel  number

barrow iii

glazed with rain 

water

beside the white 

chicken nuggets

The moral of that poem, of course, is: It's getting tricky around these parts now, so watch your back -- and please check the bottom of your shoes before entering the house (believe me, we have wild chickens all over our yard here in Hawaii, and they're not just the cute decorations that William Williams makes them out to be).

COMPQ is in a similar boat:

Also, Stockcharts is on that weird kick again where it deletes all my prior annotations every time I try to add a new annotation, and it's been doing that literally since I first annotated the above chart.  Since I'm tired of re-typing them, I took a screenshot before I edited the chart, so here they are for anyone who reads legacy annotations:

Anyway, we can see from COMPQ and SPX that it's probably a bit more likely that there are still new highs out there and thus that it may be premature to start publishing the chart below, but I'm publishing it anyway, because it's worth keeping in mind:

In conclusion, while it's probably slightly more likely that new highs are still lurking (have I mentioned that yet in this update?), we are getting into "this thing could end whenever it wants" territory.  That said, because of the possibilities of a fifth wave extension (and similar), I continue to advocate waiting for an impulsive decline before getting too aggressively bearish.  Many a bear has been burned by that final fifth wave, which usually runs stops and looks bound to go to the moon before reversing (of course, many a bull has been burned for the exact same reason) -- so my broader point is, while these updates have had a solid handle on the market's intentions going back several months now, this is where I tend to start to lean toward more of a "wait and see" approach.  Trade safe.

SPX, COMPQ, and Shoes

Last update prognosticated:

What we see on both charts is three waves up (so far) off the recent lows, which suggests that this is (most likely) not yet a complete rally wave. An alternate potential to remain aware of (for the next session or two, anyway) is for those three waves to mark yet another b-wave high, which would reverse back toward the right-most "IV?" on the COMPQ chart, before rallying again. Given the strength of the rally so far, that seems less likely, but it is still technically possible... At this point, it appears to remain bulls' ball, for now, with at least one micro fourth and fifth probably still needed, possibly two.

Friday's market obliged, and it's worth mentioning that the b-wave high option appears even less likely after Friday's continued rally. 

I've added a few "rough" spec labels to COMPQ as a visual aid (don't take these as gospel):

No material change in SPX yet, either:

In conclusion, not much else to add to recent updates.  Trade safe.

SPX and COMPQ: No Surprises

SPX continued rallying on Wednesday, bringing the pattern I thought I was seeing (originally on June 24) to a more satisfying fruition.

Since the chart above references COMPQ, let's look at that chart before we talk further:

What we see on both charts is three waves up (so far) off the recent lows, which suggests that this is (most likely) not yet a complete rally wave.  An alternate potential to remain aware of (for the next session or two, anyway) is for those three waves to mark yet another b-wave high, which would reverse back toward the right-most "IV?" on the COMPQ chart, before rallying again.  Given the strength of the rally so far, that seems less likely, but it is still technically possible.

In conclusion, thankfully, no surprises over the past two weeks, so we were able to avoid bull and bear traps during the sideways mess.  At this point, it appears to remain bulls' ball, for now, with at least one micro fourth and fifth probably still needed, possibly two.  Again, though, once V finally completes, there is potential for a larger correction -- though I do still continue to advocate awaiting an impulsive decline as opposed to trying to front-run this wave.  Trade safe.

SPX, COMPQ, and Thank You

First off, I want to take a moment to thank everyone who responded to Monday's post (as well as everyone who was already a reliable supporter, of course!) -- I truly appreciate your warm response, thank you.  (I may speak about this more on another day.)

Chart-wise, SPX performed about as well as we could have hoped in order to match the pattern I thought I was seeing a week ago:

COMPQ discusses the options from here:

In conclusion, we're now into territory where things could begin wrapping up, but it remains to be seen whether the market will choose to subdivide the current wave to stretch the rally longer and higher.  In the event it elects for an extension, then it could run notably higher.  Trade safe -- and have a safe and pleasant 4th of July!

SPX Update: Correct Call vs. Correct Grammar

Friday's update concluded:

If I was forced at gunpoint to offer something, I'd probably lean toward SPX correcting some more (either with or without a modest new high), then (after correcting) going on to make another high to finally complete wave 5 and thus wrap up the remaining 4/5 I discussed a couple weeks ago.

SPX then went on to make a modest new high before reversing almost all the way back to the low of the week.  Although it was challenging to predict last week with much confidence, I can't call it much better than that, though in hindsight, I believe I probably should have used "were" and not "was" in that first quoted sentence.  

Which brings us to something I've never said in the 13 long years I've been updating this blog:  If you value these updates and want them to continue, then it's becoming more important than ever that you click the "donate" button on the upper right side of this page. 

I've published a fair number of charts recently, so just one today:

One thing that makes this a bit more challenging is that SPX is expected to be nearing the final fifth wave before a larger correction -- and one of my old sayings is: "Never bank on fifth waves."  So we could place an "alt. 5" where that (b) label is, at least in our minds. I didn't label it that way because the odds favor the b-wave (and thus that the current correction is part of a larger 4th wave), but odds are always just odds.

In conclusion, the market remains in difficult near-term territory, but last week's call (which was initially made on Monday during the live session) saved us from getting burned by multiple whipsaws.  I've outlined the options on the chart, so we'll just see how the market wants to play it from here and take another look on Wednesday.  Trade safe.

SPX, INDU, COMPQ Updates

Last update wondered if SPX would catch up with futures to thus behave according to Monday's real-time prediction, and it ultimately did.  Thing is, this wave structure is less than clear, so let's take a look at the chart really quick:

Interestingly, INDU is still leaving open at least the near-term bear option:

COMPQ might indirectly argue more for the bull case, though it's always possible COMPQ makes a new high as part of a complex IV or to complete V:

In conclusion, there's not a lot of agreement across markets, which makes it all but impossible to make a high confidence call here.  If I was forced at gunpoint to offer something, I'd probably lean toward SPX correcting some more (either with or without a modest new high), then (after correcting) going on to make another high to finally complete wave 5 and thus wrap up the remaining 4/5 I discussed a couple weeks ago.  But again, there are no high confidence calls at the moment, so treat that accordingly, and remember that a launch higher out of this pattern isn't impossible.  Trade safe.

SPX, INDU, COMPQ and You

So, they've elected to make things interesting.  Last update, I speculated that perhaps bears would get a little respite... which they sort of did, but not as much as I'd projected.  Perhaps counterintuitively, this makes things more complicated, not less.  Let's get right into it, starting with SPX and a bear case:

Here's the forum post referenced above, along with the SPX 24-hour chart, as of ~30 minutes before market open:

So, that's at least interesting.  We'll see if SPX elects to break that near-term low, or if it instead wants to "catch up" to futures and run up to that level, too.  And if it then feels it's done making lows entirely and feels that little new low it made was enough to satisfy my prior instinct (on Monday) that another near-term low was still out there.

Also of interest, INDU shows that in the event things did go bearishly for SPX, then there could be some room to run.

Finally, let's talk about the bull case.  COMPQ reached my unofficial target zone (my "unofficial" targets are those I often scribble on the charts based on experience and instinct, but don't call out beyond that, because I have no concrete math to back them up.).  I added the lower "IV?" to this chart as of today:

So we can see on COMPQ that the decline reached an inflection zone and bounced, so that does give bulls the option to take over.

In conclusion, futures behaved as I suspected they would, but the fact that cash hasn't (yet?) pushes everything into an area that's much less comfortable, analytically, because the number of near-term options has increased significantly.  I tend to want to continue to lean very, very slightly toward the bears over the coming sessions, but we'll take it as it comes.  Trade safe.