Tuesday, October 15, 2019

SPX and INDU: Next Inflection Zone Captured, Market Enters No Man's Land

Friday's update projected the next inflection zone as 2985-93 SPX, and SPX rallied up to 93 and stalled.  This puts us back into a sort of no-man's land for the moment (as I also noted).

We can count three waves up from 2855, but the pattern could support one more minor high and remain a three, if it wants.  The key level for bulls is still the all-time high.

INDU likewise rallied up to its next projected inflection point, at the higher red horizontal, and also stalled:

In conclusion, it's interesting to consider that we first began discussing this big picture inflection several months ago (right before the initial stall), and we're still stuck here.  The market is getting coiled, so once it breaks (up or down), there would typically be some follow through to that move.  As of yet, though, we're still stuck in the range, which makes this no man's land.  Trade safe.

Monday, October 14, 2019

Update tomorrow

Had a slight scheduling mix up, so will post an update tomorrow.  Sorry for any inconvenience!

Friday, October 11, 2019

SPX and INDU: Next Inflection Looms

Last update noted that a rally to 2930-39, followed by a new low, would not be unusual.  The market then proceeded to play a trick on cash traders -- SPX rallied up to 2929.xx, reversed from there back to 2917, and then the session ended and the cash market closed.  Meanwhile, the SPX futures market continued dropping like a rock and indeed made a new low on Wednesday and Thursday.

This left cash traders high and dry, as the futures market completely reversed this decline, causing the cash market to open flat.  It appears this futures decline satisfied the requirements of the pattern and resolved the need for a new low.

I mentioned all of this to forum readers shortly after the open yesterday, so hopefully no cash traders were caught out by this move.

Moving on to the cash chart, the second leg of the rally is now underway, which (except for the screwy cash/futures issue) isn't unexpected.  We were viewing the last decline as likely "backing and filling" from the start, and before that even began, I wrote (on October 4):

...the strength and momentum of yesterday's bounce usually leads to at least a two-legged bounce, so it would be unusual for bears to regain immediate control without a fight from bulls first.

This will now satisfy that expectation as well, so hopefully the recent string of hits was helpful, because we'll be back into a sort of "predictive no-man's-land" in no time flat.

I've outlined the next "obvious" resistance zones, but it's unknown at present if this rally will only be an ABC, or if it will become an impulse:

Bigger picture, nothing much has changed, except to note that INDU appears ready to bust red line resistance on this second run:

In conclusion, outside of the futures market doing the work of cash and making a new low on cash's behalf, there have been no real surprises lately -- but we are heading back into an inflection zone now, and will simply have to see how the market reacts.  Trade safe.

Wednesday, October 9, 2019

SPX and INDU: First Downside Targets Captured

Last update noted that:

"We're now into the next resistance zone, which stretches from current levels up to about 2962ish."

And noted that a rejection could lead SPX back toward 2900ish.  SPX then rallied up to 2960, was rejected, and decline (yesterday) to 2893.

The next question is whether that's it for the decline -- but my best current guess is that the decline isn't over yet.

Nothing to add to INDU's long-term chart, just posting it for reference:

A reader recently asked what a "bear nest" is, so I'd like to address that briefly.  A bull or bear nest is a series of subdividing first and second waves.  So a bear nest is 1-2, i-ii (or more), to be followed by the internal iii, then the larger 3, then finally 4 and 5 (presuming it's an impulse).  Bear nests and bull nests are valuable to spot because the pending third wave is typically the longest and strongest wave of the move.

In conclusion, last update was a hit, but the decline looks like it may still have farther to run.  We do have to continue to keep in mind the option that the decline will turn into a impulse, which would mean that it would ultimately head below 2822, with 2760-70 on the radar.  First step for bears, of course is to break the October lows, and that's not a given yet.  Trade safe.

Monday, October 7, 2019

SPX and INDU: Upside Target Captured; Market Faces Potential Resistance Zone

Last update suggested bulls should "at least get a test of 2939-49" SPX, and bulls captured that target plus a few points on Friday.  We're now into the next resistance zone, which stretches from current levels up to about 2962ish.

INDU is also testing a potential resistance zone.

In conclusion, SPX captures its next upside target zone, and the rally has run pretty far pretty fast, so it would not be unusual to see some backing and filling kick in soon.  The momentum at the 2855 low usually suggests some sort of retest of that low (typically this will start weighing on the rally reasonably soon, though this need not happen immediately).  Trade safe.

Friday, October 4, 2019

SPX and INDU: Bulls Hold Support, So Far

Yesterday saw a near-term washout lower, followed by a reversal into the close.  In doing so, SPX tested its next important trend line and managed a whipsaw of the breakdown:

That appears to be three waves down from last month's high, so bears will need to force a breakdown at yesterday's low to turn that corrective decline into an impulse.  The strength of the bounce suggests bull will at least get a test of 2939-49 first (though they first have to clear the blue base channel just overhead).

INDU likewise held its next major support zone (red):

In conclusion, the strength and momentum of yesterday's bounce usually leads to at least a two-legged bounce, so it would e unusual for bears to regain immediate control without a fight from bulls first (even if this is to become a true impulsive bear wave; and there's no way of knowing at the moment whether that will happen or not).  Given that there are now three potential complete waves down, we simply can't rule out the possibility that the decline is over.  Trade safe.

Wednesday, October 2, 2019

SPX Update: "Pattern Not Resolved" Indeed...

Last updated predicted, in no uncertain terms, that if SPX continued to rally directly and ran north of 2990, then that would imply a b-wave low, and the market would then need to reverse and make a new low -- and that's exactly what happened.  Sometimes Elliott Wave can be quite a powerful predictive tool:

Intermediate term, SPX is approaching the first meaningful support zone:

In conclusion, the last near-term prediction was a hit.  Bulls will likley need to right the ship fairly directly, or they risk a trip back below the August lows -- and possibly well beyond.  Trade safe.