SPX, INDU, COMPQ: The Bad News Bears

Since last update, SPX made a slight new low, while COMPQ and INDU retested their lows.  Before we look at those charts, though, here's a "let's keep it simple" chart.  SPX is currently in a crash channel:

COMPQ tested, but is still holding above, its first key overlap:

And INDU is probably the clearest indicator that the current drop is only 3 waves down (so far):

Probably the most noteworthy thing to come out of all of this is that while SPX made a new low, it appears to have done so in only three waves (coming down from Tuesday's 5865 high).  This implies that in the event it bounces directly (first target 5875-5904), then that will leave a b-wave low that would need to be resolved with another new low.  If it doesn't bounce directly, then it's likely going to need to run south of 5600 in order to create the requisite 5-waves down from 5865.

In other words, it appears more likely than not that bears still have the ball for now, one way or the other -- though a b-wave low and bounce would give bulls a short-term reprieve.  Trade safe.

SPX, COMPQ, INDU Updates: Bulls on Fumes

Last update again called attention to INDU's long-term blue trend line as the zone bulls would need to reclaim to keep their hopes alive for the near term, but that trend line proved too much for them and acted as resistance:

COMPQ has now effectively completed its blue "more bearish" projection from January:

Big picture, bulls are trying (again) to stage a rally, this time at COMPQ's first meaningful overlap.  It's almost like the market knows where these levels are (wink):

SPX has now captured its first diagonal target:

In conclusion, COMPQ and SPX have now both captured their "more bearish" targets.  This leaves the two options discussed in brief on the SPX chart.  The most bearish option now shifts from "decent correction" to "major bear market may have just started."  Due to the lack of sustained trade beneath any of the key overlaps (and a few other things), I'm going to hold off on at making that call just yet -- but just know that it's actually on the table in a very real way now, for the first time in years.  We'll see how the market handles things from here.  Trade safe.

SPX, INDU, COMPQ: INDU Target Now Officially Captured as Well

Last update noted that "this is where bulls need to get their acts together" -- and they did exactly that, staging a strong rally after INDU's February 14 target was captured:

Note that the next significant test for bulls on the upside will be the old long-term trendline:

SPX behaved just like it did in early February.  Its next real test (for bulls) will be the red line:

Finally, COMPQ likewise bounced at its long-term trend line:

In conclusion, while we anticipated these zones with high accuracy, Friday's bounce solidifies them as being correctly identified (one never knows for sure until the market 1) gets to the zone and 2) reacts).  So, at this point, the lines bears need really couldn't be any more clear.  But this means that bulls have kept all their options open and could very well keep running with it, if the market chooses.  The next real tests are the red line for SPX and the old long-term blue line for INDU, so we'll see how the market reacts to those, if it gets there.  Trade safe.

SPX, COMPQ, and INDU Updates: Official Target Captured -- Here's What to Watch Next

Yesterday, SPX finally "officially" captured its first downside target and futures are trying to bounce from that zone, so nothing unrecoverable has happened for bulls yet... but in case bulls can't get their act together here, I'm going to cover what we'll be watching heading forward (later charts).

On this first chart, we can see SPX came down for a perfect kiss of the blue trend line:

Since this was the expected resolution of both the expanded flat and the diagonal (just the diagonal would keep dropping lower), this leaves the jury still out on which of those we're dealing with.

If we're dealing with the diagonal, I've outlined its targets in more detail:

Now, let's start to break into "hmm, that would be interesting" territory, starting with COMPQ, which is close to its very long term trend line.  If that breaks, it wouldn't have far to go before things start to look shakier for "el bulleroni" (this is Spit-alian, a combination of Spanish and Italian that I just made up and which bears equal similarities to neither language).  That's because COMPQ is dropping out of potential "bull 5" territory, so if it starts to knock out some key overlaps, it could signal an end to the long, slow bull market that began years ago.

Next, we have INDU's long-term chart, which shows the same problem -- that problem being that the most recent labels on the chart are 3s and 4s, which means we've been in wave 5.  

The near-term chart discusses the more bearish interpretation of the recent action -- but I do again need to stress that, so far, nothing has happened to indicate that the more bearish interpretation is more valid than the less bearish interpretation.

Finally, if COMPQ keeps following the blue path, it may get into the ballpark of creating problems with at least the first key overlap.

In conclusion, the market did continue lower to capture its "official" downside target -- and this (with a little wiggle room) is where bulls need to get their acts together.  While the market can support lower prices to a point, if it gets into key overlaps, the picture is going to start to look shakier for bulls and we may need to consider the idea that the 5th wave we've been watching for a while has finally ended.  And that would bring the potential of a recession and more.  Trade safe.

SPX and INDU Updates: First Downside Inflection Zone Reached

In the prior update, I wrote:  "most of these patterns suggest a fourth wave bounce is due, followed by lower lows," which is exactly what happened since.

SPX has now completed the minimum requirements for its pattern, having broken the low of the potential a wave (if this is an expanded flat):

And INDU, so far, has reached into the 43.2K zone, which is probably close enough to 43.1K, if it wants:

As I noted on February 18, this pattern could be called "the market hates everyone, especially you."  And part of the reason for that is, now we have to wonder if the pattern is roughly complete, or if we're dealing with the more bearish diagonal.  I continue to very slightly lean toward that idea that, since the upper line was not overthrown, the less bearish pattern is probably a miniscule favorite, but there's still no way to rule out the diagonal at this juncture:

If the diagonal were unfolding, then the recent decline could be wave 1/A down, with a larger bounce to develop for wave 2/B up, followed by an even more significant drop in 3/C down -- just so folks know what to watch for in that event.  Again, the diagonal would be expected to break the blue wave (ii) low at the minimum and could even turn considerably uglier (if it marked, for example, the end of the bull market, or even just the end of a high-degree wave).

In conclusion, the options now are:

1) The market is at or near the low of this move and will rally back up to new highs either directly or after one more low.

2) The market is resolving the diagonal, with wave 1/A down complete or nearly complete, to ultimately head more significantly lower.

In the event of the latter, we'll stay alert to a decent-sized three wave rally that stalls shy of the all-time high.  Trade safe.

SPX and INDU Updates

A couple updates ago, I outlined a potential ending diagonal, as well as the potential for a less devastating, but still near-term bearish, expanded flat.  Since then, the market has performed in line with both of those patterns, which is kind of "exactly what I was afraid of," because it's pretty difficult to sort one from the other.  Let's look at the diagonal first:

Since the diagonal didn't overthrow the upper line, I'm very slightly inclined to give a tiny edge to the expanded flat (below), which would normally be expected to test the lower blue trend line, or at least to break the low of 5923:

INDU broke its lower blue trend line and a sell-off ensued:

And INDU has now firmly broken down from the triangle, coming very close to its first target zone:

In conclusion, most of these patterns suggest a fourth wave bounce is due, followed by lower lows.  There's always an outside shot of the decline wrapping up early or what have you, but at present there are no indications of such.  Trade safe.

SPX, INDU, TLT Updates

The market is still roughly in the same place that it was near the high of December of 2024, but it could be getting close to doing something interesting, one way or the other.  Maybe.  If we don't light ourselves on fire first.

Since last update, SPX stalled right at the upper boundary of the theoretical "just because it's there" diagonal.  Note that a diagonal would *usually* be expected to overthrow that upper red line before reversing.  Again, this is not to say this IS a diagonal, just that's how they normally behave.  There's typically a "fake-out breakout" to run all the stops before the real damage ensues.  

But again "again" -- a sustained breakout on increasing momentum could signal a bull nest off to the races.

No change to the near-term SPX chart:

Next up is whatever chart I upload next (hang on a second).  Looks like it's INDU, which is flirting with its long-term blue line yet again:

Which means the next chart will be the near-term INDU chart.  Here, we see INDU fell out of the potential triangle, but no breakdown of the prior low yet:

Next up is a chart I haven't published in a few months.  The potential red 4 has so far held. 

Finally, another TLT chart, this one I haven't updated since April of last year... but it is interesting to look at now (I forgot to publish it back in November when I updated the chart above):

In conclusion, not a lot has changed since last update, with the market keeping everyone on their toes here.  Trade safe.