Monday, July 15, 2019

SPX and INDU: Inflection Arrives

Last update, we examined the big picture via INDU (SPX and INDU generally track very closely, so SPX would be expected to have extremely similar options), and noted that the market was approaching a potential inflection zone.  We are now into that general zone, though when dealing with very long term support and resistance, the market doesn't always turn on a literal dime, so the inflection reasonably extends a bit above and below the "exact" trend lines:

(typos:  "not the interesting confluence witht" should be "NOTE the interesting confluence WITH")

SPX has a similar appearance to INDU:

Although the next chart has the potential to "fail," I did look at the near-term to see how it compared:

Again, do keep in mind that the long-term trend lines may overpower the near-term "usual" expectations.  This is not a "usual" position for the market.

In conclusion, the market is now into a major inflection zone, as discussed in detail on Friday.  Now we'll simply have to see how it reacts.  Trade safe.

Friday, July 12, 2019

Inflection: A Look at the Long-term Bull Case vs. Bear Case

Last update noted that new a fourth wave could have completed on Tuesday, which implied new highs directly, and that's what happened.  We're going to take a break from the short-term today to examine the long-term in more detail.

Given the charts, it appears we're approaching a pretty significant inflection zone, which will likely either give bears a solid reprieve, or lead to a sustained resumption of the long-term bull rally.  Said another way:  If bears can't get anything done in the reasonably near future, we may see something approximating a redux of the relentless 2017 rally.

Let's look at the bull case first.  There are a couple ways to count this bullishly, and I've actually chosen the more conservative of the two to represent the bull count.  I mean, really, 10%, 30% -- what does it matter at this point?  If bulls push through here, then bears will probably just need to settle down for a while, and that's enough to know for now.

The first bear case option isn't anything new, and we've discussed it previously on several occasions -- the option for a massive expanded flat that leads back toward the December lows prior to a resumption of the rally and new highs.  (The second bear case of "alt: 5" is the "uber-bear" case.)

In conclusion, this appears to be a fairly important inflection zone for the intermediate term.  Since the trend (and thus the momentum) is presently up, bears have to treat that accordingly and await an impulsive decline before getting too excited.  As we always do, we'll track all that in real-time and burn that bridge when we come to it.  In the meantime, hopefully this helps people visualize where we currently seem to be in relation to the big picture.  Trade safe.

Wednesday, July 10, 2019

SPX Update: Short and Sweet

We're going to keep it short and sweet today.  As I noted in our forum early yesterday morning, we could have a complete ABC at 2963.  If that's what this is, it implies new highs directly:

In conclusion, there's still not much for bears to latch on to, and they need a sustained breakdown at 2963 PRIOR TO a break of 2994 to get anything going.  Trade safe.

Monday, July 8, 2019

INDU and SPX Updates: SPX Holds First Key Level

Last update called out 2968 as the most critical level for bulls to hold, noting that trade below that level would suggest further downside.  SPX then decline straight to that level (2967.97, to be exact), then bounced strongly for the remainder of the session.  This means bears still have work to do to reverse the prior trend -- their first task will be to hold Friday's high; their next task will be to sustain a breakdown at the blue dashed trend line:

I've drawn a couple of trend lines to watch on INDU, below:

In conclusion, due to Friday's decline bouncing right at the key level, the market really didn't provide much new information, so we'll have to see how today's session plays.  Trade safe.

Friday, July 5, 2019

SPX and INDU: Market Captures Next Upside Target/Inflection Zone

Last Monday's update listed 2990-3000 as the next upside target/inflection zone, and SPX captured that on Wednesday.  Futures are already indicating that the market is indeed reacting to that inflection zone, and the e-mini S&P futures have (as of this instant) dropped about 20 points down from their overnight high.

Before I go any further, I want to clarify something for folks who may not entirely understand Elliott Wave:  ABCs are corrections to the larger trend.  Yesterday, a (casual?) reader accused me of "doom and gloom," which I thought was quite odd, inasmuch as I've prefaced virtually everything, for years now, in the context of an ongoing bull market.  This is evidenced by the fact that all of my projections have shown the decline waves as ABCs, not as primary first waves.  Even the potential larger C wave we've entertained on and off for the past couple months (and always conditionally entertained, at that) is ultimately the complete opposite of "doom and gloom" -- a C wave is always the final wave of a correction.  In other words:  a C-wave is not the start of a new primary downtrend, it's the end of a corrective countertrend decline -- thus it leads to new all-time highs.  In my mind, remaining long-term bullish, as I've done for a long time, is... well, it's the exact opposite of "doom and gloom."

I do try to identify the inflection points where bears may have a chance for at least a bit of short-term or intermediate-term relief, because, really, what else is there to do in a bull market?  And there's always money to be made on both sides of the trade.  Anyway, I think I've done a pretty solid job of identifying those inflection zones, as the market reacts to them with pretty regular consistency.  I've likewise done a solid job of identifying the inflection zones where the decline could end and turn back up -- and I try to warn bears to be cautious at such times, as I did on June 3 (see: Market Reaches First Important Inflection Zone).

But the broader point is:  ABCs are corrections against the next larger degree of trend.  If I give a projection for a decline and it shows ABC on the chart, then it's not "doom and gloom" -- not yet.  To the contrary:  It's long-term BULLISH.

Anyway, that concerned me, because I certainly don't want readers mistakenly thinking every ABC to the downside is the end of the world; it's not.

Moving on to today's charts, SPX ran right to the upside target/inflection zone, and the market is reacting to it.  I can't say for sure that "this is the last stand" for bears, but as I noted last update, they're running low on real estate, so if they can't hold the stand they're attempting here, they'll probably have to kick back and watch for a bit.

There really wasn't anything to add to INDU's chart:

In conclusion, the market has captured the prior target, and is reacting to that inflection zone.  As usual, the first step for bears to solidify their chances will be to form an impulsive decline.  If they can't, then the uptrend will continue.  If they can, then we'll look at solidifying some concrete downside projections.  Trade safe.

Wednesday, July 3, 2019

SPX and INDU: Noise, Noise, Noise

No change from last update, which expected SPX would likely push on toward 2990-3000 before it had a chance to give much consideration to doing anything else.  In regards to the big picture, this pattern is shaping up to be the toughest we've seen in at least two years.  Because there are numerous options on the table, we're presently in an extremely difficult position in terms of reconciling the potential counts.

Recall that there are at least two possible bull counts:

1.  The current rally is a low degree fifth wave of a higher degree fifth wave.
2.  The current rally is a higher degree third wave of a higher degree fifth wave.

The first of those counts leads to a bit more rally, and then a stall and larger correction.  The second count leads to a relentless rally.  The first count could even be considered near-term bullish but bearish at larger degree (at least bearish for long enough to matter -- probably still unlikely to be "the end of the bull market" though).  The bear counts at this point are complex corrective waves that are intermediate bearish but long-term bullish.

In other words, because of what preceded the market's current position, we're wrestling with a high degree of interference noise in the charts right now, and we simply can't "wish it away," but must respect and work within the limitations it creates.

No change to SPX:


In conclusion, thanks to the sideways grind that began in 2018, there's too much interference noise this close to the range to sort these options out yet. Thus I'm contenting myself to attempt to deal with the near-term for now, and we'll build larger implicit structures if and when we can do so with more accuracy.  Trade safe.

Monday, July 1, 2019

SPX and INDU: Market Reaffirms the Importance of Impulsive Declines

So, given where futures are this morning, I'm trying to decide if I should berate myself or not.  While I was very slightly leaning toward the bigger picture bear case, I feel the last two updates were pretty clear in warning that bears had nothing to latch onto yet.  On Wednesday, I wrote:

Monday's update noted that SPX appeared to have formed a potential ending diagonal terminal pattern at Friday's high, and gave the first key level for bears to claim as 2940 SPX, with that statement that: "Much below 40, and bears could take aim at 2915ish." Yesterday's low was 2916.01. 

Now, one of the reasons I called out the 2915ish zone is because there is some potential support in this zone, which usually means a bounce (futures are already indicating that the market is indeed reacting to this support zone), and CAN mean much more than a bounce (i.e.- the end of the decline). Given the nature of the pattern, I'm not currently favoring the decline being over just yet -- but I should note that (as long time readers know), I'm something of a stickler for impulse waves as an "official" signal, and we do not yet have a complete impulse down -- so if the market wants to do something screwy here and get bulls back in the game, I can't guarantee that it doesn't.

And then on Friday, I reiterated "no change" and added:

As I noted in the last update, bears do not yet have an impulsive decline to latch on to, and that remains the case as Friday begins.

I also reiterated on the SPX chart that "if the market is going to bounce, even up to new highs, this is still one zone where that bounce could begin."

So I'm thinking I probably should be glad that I was able to both hit the near term price targets and correctly identify the inflection zones.  I mean, those are probably fairly decent accomplishments in and of themselves.

If nothing else, the market's behavior has reaffirmed why I'm a stickler for impulsive declines.

But I still can't help but feel a little disappointed that things don't seem to be working out for bears in the bigger picture.

In conclusion, we'll give the market a little more room here, but very much more upside (i.e.- much beyond the noted 3000 SPX zone), and we'll probably have to put bear counts back on ice for the time being.  Trade safe.