Monday, November 30, 2015

SPX, BKX, RUT: Market Continues to Challenge Resistance

Last update noted that some concrete potentials were emerging from the muck, and, indeed, there has been at least one event of significance since last update:  RUT broke above 1200.  This is significant because the market is beginning to rule out at least some of the IT bear potentials.  Let's jump right into the charts, starting with RUT's 30 minute chart:

Bigger picture, RUT is now in the process of testing the broken long-term uptrend line for the third time.  This may be one time too many for bears, as one rarely sees three tests of a broken trend line if that trend break were to indicate that the trend has changed.  One or two tests is more common -- when you get three, it sometimes indicates that the market is going to barrel its way right back into that previous trend (in this case: up).  And if you get a fourth test, then it's usually a sign the the primary trend is about to resume.  We'll see what happens next, and watch for any signs that contradict the above theory.

Since the November 25 update, BKX has proved that the impulsive interpretation of the final near-term wave was correct:

Finally, SPX hasn't done anything since last update, but has been consolidating beneath resistance:

In conclusion, SPX remains below prior resistance, but RUT is attempting a breakout through the 1200 level.  While the market still hasn't cleared resistance, there's not much in the charts that appears terribly bearish at the moment.  Until we begin to see impulsive declines, the "threat" of resistance is really the only thing bears have in their favor.  Trade safe.

Wednesday, November 25, 2015

SPX, BKX, and RUT: Clearer Patterns Emerging

The last few sessions have been "watch and wait," but now some more concrete potentials have emerged from the muck.  Let's start with BKX, which demonstrates that we now have three three-wave moves:

In SPX, if we get another new high, then we have a five-wave rally.  That could be ALL OF Wave (5), or may mark wave i of (5).  Possible targets and resistance hurdles are noted:

Finally, RUT's long-term chart cautions us not to get too far ahead of the market here -- especially since the "bear pattern" would see this rally as the right shoulder of a head and shoulders:

In conclusion, after a few sessions of near-term ambiguity, some clearer patterns and potential targets have emerged.

Beyond the market, tomorrow is, of course, a day in which we're reminded to give thanks for life, and for all that entails -- even though many things happen in the course of a lifetime that we're not thankful for.  Sometimes life can be a harsh teacher, and we can be unwilling pupils -- but in the end, almost every event can serve to benefit us in some way (though not always in the way we were originally hoping), if we simply remain open to the idea that we ourselves don't always know what we truly need to allow us to move forward.

Interestingly, numerous scientific studies have found that people who maintain an "attitude of gratitude" are not only happier, but also tend to enjoy better physical health.  Said another way:  Science has proven that the happiest people on earth aren't the people who have what they want -- the happiest people are those who want what they have.

All that to say:  I wish you and yours all the best this Thanksgiving.  Trade safe.   

Monday, November 23, 2015

SPX and INDU: Charting the Muck

Last update expected there was probably some more upside due for the very short term, and Friday saw an opening pop.  That move then stalled, leaving all options on the table for now.  The issue I have at this moment is that the decline from 2116 is completely ambiguous, and could be either an impulse wave or an ABC, which leaves me hesitant to commit too heavily to a near-term outlook.

In looking at the total structure now from the 2116 high, one new option that comes to mind is a triangle, shown loosely below.  That's a pattern that would frustrate everyone, and might be fitting after all the strongly-trending moves we've had lately.  The market tends to cycle between trending waves and oscillating waves, and that's one of the ways it steals money from us:  Often, after the market has conditioned everyone to expect minimal moves, we get a huge move (think of the recent crash wave, and how many bears closed their positions way too early) -- and then, after we've become conditioned to expect huge moves, we get minimal moves.  Rinse and repeat until everyone has lost money.

The long-term INDU chart shows that we're back into the congestion zone of the first half of the year:

In conclusion, I really have nothing concrete to add, because we're still below the 2116 high, and I can't get a clear handle on that wave.  The double-retrace I discussed in the prior update is still on the table, and (most frustratingly) would actually remain on the table even in the event of a marginal new high.  The bottom line is that I'm still seeing ambiguity at multiple wave degrees -- so the market just isn't in a position where I'm terribly anxious to commit tons of capital right now.  As noted, this is often how it works.  Things will clarify again soon enough, and a higher-probability wave will emerge from the muck.  In the meantime, trade safe.  

Friday, November 20, 2015

SPX Update: Double-Retrace Potential Still Alive and Kicking

There's very little to add to last update, so we're just going to look at one new chart today.  The SPX chart below shows the potential for a complex double-retrace of the preceding rally.  This was an option I discussed back in October, while the rally was still unfolding, and this potential is still very much on the table for the time being:

Do note that on the chart above, there are various ways we could get to 2/B, including an immediate decline, followed by another wave up to retest the zone around the 2116 high (2000-2120).  Frankly, I remain somewhat hesitant to get too far ahead of the this market at the current juncture, because there are varying degrees of ambiguity across several wave degrees right now.  This is not uncommon after several straight months of reasonably clear patterns -- eventually, the market has to throw a few curve balls, and we have to wait those out.  Trade safe.

Wednesday, November 18, 2015

SPX, RUT, INDU, NYA, BKX: Market Tests Inflection Points at Multiple Degrees of Trend

For today's update, I'm going to let the charts do almost all the talking.  Let's start with BKX:

NYA shows that bulls found support at the first downside inflection zone -- and then bears made a stand at the first upside inflection zone:

INDU, in a simple long-term view:

RUT's chart has some interesting features at both the long-term and near-term levels.  Long-term first:

RUT near-term:

Finally, I'll end with an updated SPX chart.  Note that here again, bulls held the first (previously theoretical) support zone, and bears then rejected that bounce at a resistance line:

In conclusion, the market has reached inflection points at multiple time frames, and while we can speculate what comes next, there's no definitive answer yet, and both sides are keeping their hopes alive for the time being.  From here, we simply await the market's next declaration of intent.  Trade safe.

Monday, November 16, 2015

SPX, INDU, BKX Updates

Last update warned that there was significant bearish potential in the current decline, and that it was not advisable to front-run the current wave.  Friday's market saw SPX lose another 23 points.  The current wave is one of the more difficult micro-counts we've seen in the past few months, so we'll zoom out and focus on the bigger picture for today's update.  First up is INDU:

BKX shows that the current position of the market now points to a complete wave of higher degree at the recent highs:

SPX is almost impossible to micro-count:

Since micro-counting this wave is almost out of the question, I've drawn up a more basic 30-minute SPX chart:

In conclusion, on the SPX 5-minute chart I've outlined some of the qualifiers I'd look for before considering longs against the current decline.  Until those qualifiers are met, it remains advisable to remember that it's well-within the range of possibility that the market may revisit or break the crash low.  Trade safe.

Friday, November 13, 2015

SPX, INDU, NYA: Market Still in No Man's Land

On November 2, I warned that it may be time for a correction, but that turned out to be just a hair early.  Nevertheless, given the unusual nature of this wave -- and the fact that we expected a trade-able bottom back in September (at SPX 1865-80), and the near-term waves kept us leaning higher until the end of October -- it wasn't bad timing.

2116 was an incredibly interesting price point for the rally to stall at, because it keeps the most bearish options on the table.  The bull option is obvious:  Bulls want this decline to be a fourth wave that bottoms reasonably directly and heads to new all-time highs.  That's entirely possible, and I wouldn't rule it out.  But I personally wouldn't bet the farm on it, either -- at least not until we start seeing some impulsive rallies.

On INDU, I began showing the options for a large flat back on October 16, and the chart below shows that the minimum requirements for that pattern (particularly: a 90% retrace of the decline) have since been met:

Finally, NYA shows the potential that the recent rally may have been an ending diagonal c-wave (at least, in this index).  If the pattern shown below whipsaws significantly, then bears might want to be cautious:

In conclusion, this has the potential to turn into a nasty and deep decline, so it's not advisable to front-run this wave.  I'm somewhat tempted to begin favoring the intermediate bear counts, but I'll give the bulls a little more time, to see if they can turn this into an expanded flat (c) wave, since this is still something of a no man's land.  Basically, it seems advisable for both sides to remain well aware of the worst case scenarios here, at least until the market dictates otherwise.  Trade safe.