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Friday, February 27, 2015

SPX Update: Bears Finally Get an Opportunity


Two quick charts today, which pretty much say it all.

Before we get into these, I had noted on Monday that a break over 2110 SPX would likely lead to 2115-17+/-, and that zone would have potential to mark at least a minor top.  The market ran to 2119, before reversing.

First off, the SPX near-term chart suggests that we haven't bottomed yet.  I published this chart in our forums shortly after the cash close, and the overnight action in the E-mini S&P futures (ES) seems to be confirming this count so far:


The preferred near-term count would be invalidated north of 2120.  Stepping back a bit, here's how it looks on the 30-minute chart.  The first bearish trigger target was captured yesterday -- if the count shown above is correct, then the second target should be captured as well:


In conclusion, this appears to be the best opportunity bears have had since 2072 SPX.  If this is a bull wave, then it's likely that this will prove to simply be a fourth wave correction.  If the bears have control, then it will turn into something more significant, and 2058 comes into view as a potential target.  Either way, near-term, prices appear likely to be headed lower, so if you're a bear who's been waiting patiently for another decent opportunity, then this is the best one that the market has presented in a while.  Trade safe.

Thursday, February 26, 2015

SPX, INDU, BKX: Giving the Bulls Some Airtime


This rally has been one of the least-clear waves we've seen in a while, and the overlapping price action has created repeated difficult-to-read congestion zones on the near-term charts.  Yet it has continued to recover from each decline, so bulls are, of course, very happy and complacent at this point.  So, today, we're going to give bulls a little more airtime in the wave counts, thereby guaranteeing an immediate top in the market (sorry, bulls!).

Let's start off with the elephant in the room for bears -- the long-term INDU chart:


Next, we'll look at a bear option that no one seems to be considering, along with its bullish counterpart:


Below, broad strokes on the bull/bear cases in BKX.  BKX was one of the hardest-hit market during the last decline, and which often leads the broader market:


The near-term SPX chart contains some bull and bear options, but this wave has been so tough to micro-count in real-time that I'm almost hesitant to even put wave labels on the chart.  One of the most challenging moments in Elliott Wave analysis is when you arrive into uncharted price territory, and have doubts as to what the next larger wave count is -- so you're not sure whether to expect five waves or three, etc..


In conclusion, the rally hasn't been as strong or relentless as one would hope for third wave, yet it has continued to recover from each overlapping decline so far.  We're certainly into price/pattern territory where one would expect at least something of a correction to develop, but as I've noted, the micro-counts remain less-than-clear.  If bears can break yesterday's low, then we have some downside target zones to watch for the near-term.  Trade safe. 

Monday, February 23, 2015

SPX, BKX, TRAN, NDX: BKX May Hold Clues to the Market's Future


I'm going to let the charts do virtually all the talking in this update.

Let's start with SPX:


BKX may hold big clues heading forward:


TRAN is still inconclusive in its current position, but may also offer some important clues in the near future:


Finally, NDX has now rallied about 95% of the way toward the previously-noted breakout target.  Bears still have options here, in the form of a C-wave and the black path, but the first step would be some impulsive declines to begin suggesting a trend change.


In conclusion, I feel that watching BKX and TRAN heading forward will be helpful to sort out the bull counts from the bear counts.  Trade safe.

Thursday, February 19, 2015

SPX, INDU, TRAN, MID: Fractured Markets


I find it interesting that bulls seem to have claimed victory on SPX's new all-time high, given that SPX isn't exactly the only market that matters.  A number of major indices are lagging considerably, not the least of which is TRAN.  TRAN still hasn't reclaimed its last swing high, much less its 2014 highs:



The Dow Jones Industrial Average hasn't broken out yet, either, which is interesting inasmuch as INDU usually leads SPX, not vice-versa.



SPX may have completed five waves of rally (which would mean a larger correction pending), though could still support another wave up.  As noted previously, the "easy" part of this rally was 1980 to 2064 -- the patterns have been a bit muddled since then:


Finally, the S&P midcaps (MID) present some interesting options:

(Note typo about the "blue" trend line, which should read "red" trend line.  I changed the colors after writing the annotations!)


In conclusion, bulls have claimed victory and seem to have settled back into complacency.  And who knows, maybe they're right to do so... but, given the fact that some important indices are still well-below their most recent major highs, it doesn't seem to me that the markets have signaled an all-clear just yet.  Trade safe.

Tuesday, February 17, 2015

SPX Update


Since last update, SPX broke the all-time-high, which serves to eliminate the wave (2) count from consideration.  It does still leave open the option of a complex B-wave into the new high.  2096-98 was noted as the textbook target for that pattern, and SPX closed Friday at 2096.99.


In the event the current rally is wave C of B, then there are roughly enough waves in place for a complete rally:


In conclusion, SPX went out on the highs, so there's nothing in the way of an impulsive decline yet to suggest a turn -- thus there is nothing to add any confidence to the possibility that wave C of B is complete.  Bears should be aware that, in the event SPX can sustain this breakout, then this could turn into a trend-following wave; however, if the market turns from this zone, then bears have a decent shot at getting something started from here. 

In other words, the market is in an important inflection zone, and bulls and bears alike will have to respect how SPX responds.   The very first step for bears would be an impulsive decline from Friday's high, to help add confidence to the expanded flat scenario.  Ideally, we'll have a bit more significant information by next update.  Trade safe.

Friday, February 13, 2015

SPX, INDU, NDX, BKX Updates


Back on February 2, the preferred count anticipated that there would be a break and whipsaw of 1988 SPX, and then a rally all the way back to 2064+.  From there, it anticipated that the 1980 lows were then likely to be revisited.  Yesterday, SPX closed a mere 24 points beyond the 2064+ target, but so far, the rally has defied any attempts to anticipate a top.

Last update suggested a "canary" for bears to watch, in the form of BKX, and the key level noted here proved to indeed be a solid tell that the rally had more steam left in it:



Worth noting is that NDX made a new high yesterday, thereby eliminating its most bearish count, but not all intermediate bear counts.  It hasn't broken out over its November highs quite yet, but bears should probably be cautious in the event that NDX can sustain a breakout:


SPX is very close to its all-time-high, but as of this moment, still trading just below.  Here again, a breakout would eliminate the most bearish count, but not all bear counts:


INDU, on the other hand, continues to lag SPX and NDX, and still has a ways to go to reach its all-time high.  This is interesting, because usually INDU leads SPX.


In conclusion, there's not much to do analytically until we see if SPX can break the ATH.  If it does, then the wave (2) count is off the table, but the B-wave count is not.  Frankly, there's something a little "off" about the current wave, and it has been almost impossible to count at a micro level.  It has been ripe with overlapping structures, and reminds me of the wave from 1988 to 2064 SPX.  This leads me to wonder if it is not the impulse we were expecting, but perhaps is instead another 3-wave rally. 

In any case, today should help answer some questions on the intermediate picture -- and until those questions are answered, there's not much more to add.  Trade safe.

Wednesday, February 11, 2015

SPX, INDU, COMPQ, BKX Updates


I'm going to simply let the charts do the talking for today's update.

Let's start with SPX 30-minute:


SPX 1-minute.  Note "the alternate count would obtain preferred status" applies only to the near term wave count:


INDU 1-minute:


BKX:


And finally, COMPQ presents an interesting pattern:


In conclusion, there is something I'd like to add which isn't discussed in detail on the charts:  In the event yesterday's rally was a one-day wonder and we begin declining directly (as suggested by the near-term preferred count), then I think bears and bulls alike want to watch the zone near 2030 SPX very carefully as a potential support zone.  There is a chance that the last leg of the rally was an extended fifth of Wave (3), which would mean that we're about to embark on the second leg of a double-retrace to the noted zone -- and then head back up to 2073+ in Wave (5).

Intermediate-term, the preferred count remains unchanged for the moment.  Trade safe.