Wednesday, July 19, 2017

BKX and INDU: Markets Still Fractured

The only thing worse than this market is my current sinus infection, so I'm going to keep today's update brief.  There really isn't much to add, but the BKX chart is worth an update:

INDU has left the b-c option alive.  I'm not updating anything on this chart, because when I try to, StockCharts deletes everything -- so it's only been auto-updated with the price action:

In conclusion, this market's been harder to trade than a heavily-used Beenie Baby lately, because there is a serious fracture occurring across markets.  This suggests that there is not enough liquidity available to pump everything higher at once, and this does represent a noteworthy character change from the past few years, during which virtually all indices rallied together.  If this trend continues, it may add a bit of weight to the idea that the market is in the fifth wave preceding a decent correction.  Trade safe.

Monday, July 17, 2017

INDU, SPX, and NDX Updates

I came down with a nasty head-cold over the weekend (possibly due to the rapid changes in the market's altitude! (rimshot)), so I'm going to let the charts do most of the talking today.  First off, INDU is attempting to sustain a breakout over its recent noise zone; if that breakout holds, then it will be on track for the next long-term upside target zones.  (We'll look at the near-term picture after this.)

Near-term, the diagonal appears to be the first line in the sand, but careful of whipsaws and head-fakes if we do back-test it -- sometimes markets get ugly around such zones:

SPX is in a similar position to INDU:

I'm still holding out hope that my first instinct in NDX (back when we were near the bottom) was correct. If so, the rally should be nearing completion.  If not, then it will just keep going, of course.

In conclusion, it's going to be hard for bears over the immediate future, because SPX and INDU are both in patterns where the bears' best NEAR-TERM hopes are for a counter-trend decline in an unpredictable expanded flat.  Thus I wouldn't advise trying anything too bearish unless we see an impulsive reversal in those indices.  Bears can still hold out some hope for NDX -- for the moment, anyway -- but do be careful if it sustains a breakout over the prior highs.  Trade safe.

Friday, July 14, 2017

SPX and INDU: Enough of this Noise, Let's Look at the Bigger Picture

Last update noted that bears needed to make a stand, but they didn't, so numerous markets ran toward the upper end of the recent noise zone -- which is what happens when you break near-term resistance inside a thinly-traded range.  Of course, everyone is now bullish as we reach the upper edge of the noise zone, but now we're into the reverse of the warning I published near the bottom ("Just remember it's never a good idea to get too bearish this close to support -- some signals suggest it will fail, but in the end, either it breaks or it doesn't.").  At this point, it's not a good idea to get overly near-term bullish until we see a sustained breakout over resistance.

But near-term noise aside, I think the recent noise zone is becoming a bit of a distraction from the larger view (this may in fact be the market's exact intention) -- so today we're going to step back a bit from all the near-term noise and take a closer look at the big picture.

For our big picture examination, we'll focus on INDU's long-term chart.  The option not discussed on this chart is for an extended fifth of v -- I allude to the way a bear would protect themselves from that in the notes (specifically: "watching for completed patterns followed by larger impulsive turns becomes more important") -- but for now, we'll just keep that in the back of our minds and not focus too much on it unless/until the market tells us to.

Near-term (below), there are still several paths that INDU can take to complete the pattern shown on the long-term chart:

SPX has similar options (though lately we can't really rely on anything to move in sync with anything else):

In conclusion, the near-term is still a mess, but should clarify fairly directly.  Bigger picture, though, it does look like we're going to be completing wave 5 of a larger fifth in the not-too-distant future.  When that wave completes, bears should finally get some time in the sun.  Trade safe.

Wednesday, July 12, 2017

SPX, NDX, BKX, INDU: Bears Need to Make a Stand

Well, it may be something of a near-term do-or-die moment for bears today/tomorrow, so we're going to get right to the charts.  Let's start with SPX, for reasons which will become apparent after you read the annotation:

INDU looks like a b-wave into the recent low, so I'd prefer not to see INDU sustain a breakout over the all-time high.  It could break that zone briefly and then return back down to break the purported b-wave low, but be aware that a break of the ATH would cast doubt on the remainder of the blue path.  And a sustained breakout would cast doubt on the b-wave, too, though frankly I'd be a bit surprised if that's anything other than a b-wave.

BKX's pattern remains legitimate for the moment.  Here again, a break of the ATH would invalidate the "2" but not the B -- it's just really hard to trade anything on the hopes of an expanded flat B-wave, at least until you see an impulsive reversal at the minimum.

NDX has plenty of room to run and remain below the ATH... and my very first instinct when we broke the red A/1 low was for the black "Flat C" option -- so we'll see how this shakes out:

In conclusion, bears probably need to see a reversal today/tomorrow to keep their near-term hopes intact here, otherwise the market has some room to run.  As a side note, I'm really looking forward to the markets getting back in sync one way or another, because the patterns across markets are still "all over the place," which makes the near-term incredibly difficult to predict.  Trade safe.

Monday, July 10, 2017

SPX and NDX: Turn Down the Noise

This remains a difficult market to predict, but I'm still holding out hope for the expanded flat red wave ii in NDX.  If that's the pattern in NDX, then (in a perfect world) NDX would rally up to 5684-5757, then reverse and head back down to break the most recent low.  Of course, this overall market is hardly the market we would expect in a perfect world.  At least, it's not the market I would choose for my personal perfect world, but maybe somebody else would; to each his own, I suppose.

SPX has, so far, held the bull/bear line in the sand (2405), so there's no new information out of this index:

In conclusion, SPX is a giant noise zone going back to June, so until it breaks out of the edges, it's going to be nothing but noise in the interim.  NDX has at least been reasonably predictable prior to this point, but it's worth mentioning that while the option of a "completed decline" looks less probable, it's not impossible -- and that's a change from the beginning of last week (it looked virtually impossible, pattern-wise, at the beginning of the week -- and NDX did then make lower lows).  In any case, there's really no new information from the market since Friday, so there's really nothing new to add to (or subtract from) the prior update.  Trade safe.

Friday, July 7, 2017

SPX, RUT, INDU, NDX: Bulls Running Out of Real Estate

This market has been a near-term challenge lately -- to say the least -- but our intermediate "tell," which we established on June 16 (RUT), has remained bearish throughout all the noise:

We've also been on the right side with NDX, as we caught the last 230 points of decline, then have continued to note (since the target capture) that "no sustainable bottom is in place yet."

INDU was, if nothing else, at least quite orderly since the last update, responding as if on cue to each noted price zone:

SPX remains the most challenging pattern, though that could change soon:

In conclusion, RUT and NDX have kept us looking lower on an intermediate basis, and the overall market is still giving us reasons to hold to a "bearish until proven otherwise" stance.  If not for all the bear-pattern blow-ups of the past few years, I would be unabashedly bearish with what I'm seeing currently... but as it sits, I'm still a bit gun-shy until the following condition is met:  If SPX sustains a breakdown at the red line on the chart above, that would eliminate the (lower case) abc option and open up significant bear potentials, in the form of a large bearish nest of 1's and 2's.  Bull's main hope (if there's a breakdown) would be for an ending diagonal, but even that would not bottom immediately.  Just remember it's never a good idea to get too bearish this close to support -- some signals suggest it will fail, but in the end, either it breaks or it doesn't.  Trade safe.

Wednesday, July 5, 2017

SPX, INDU, NDX: Fractured Markets is Right

"Fractured Markets" was apparently the correct title for the last update.  Bulls may not realize it just yet, but the overall market has grown an order of magnitude more complex in recent months.  In the past, bulls could count on everything rallying together, but that has not been the case lately.  And that means there isn't enough liquidity right now to rally everything at once -- so it may be an early warning shot to bulls. 

On Monday, INDU made new highs, but NDX made new lows.  This could be viewed as the proverbial "flight to quality" and away from beta -- if that trend continues, it would suggest a "risk-off" mentality has entered into the market. 

Given that many markets have been trading in a range-bound noise zone for some time -- which all by itself makes charting quite difficult -- this fracturing of markets is going to make things that much more difficult for the time being.  All of this does suggest, however, that the larger fourth wave we're on alert for may be drawing increasingly closer (and may even have already begun in some indices).

Let's look at INDU first, because it does appear to have the cleanest pattern, and two price zones to watch:

The move in NDX could still grow more complex:

SPX is a complete mess, but there are a couple price zones to keep an eye on here.  Unfortunately, with all the noise of the past few months, those zones can't guarantee anything, but they're all we've got at the moment.  I haven't charted the bear nest option on this particular chart, but if this is a bear nest, then things will likely get very ugly on any sustained breakdowns below 2405.

In conclusion, it still appears likely that NDX has not formed a sustainable bottom yet, but (as we saw on Monday), that may not be relevant to INDU or SPX.  With the choppy overlapping noise zones we've been enduring of late, this is a very difficult spot from which to attempt near-term predictions, so for near-term clues, about the best we can do is watch the zones discussed above.  Trade safe.