Wednesday, January 18, 2017

SPX and BKX Updates: Obama Signs Last-Minute Pardon for the Algos

My title has nothing to do with anything, I'm just tired of writing titles that basically say: "Still a Chop Zone, Huzzah!" Which is what has led to titles such as last week's: "How Much Wood Could a Woodchuck Chuck if a Woodchuck Could Chuck Norris?"  And so on.

Last update expected the market would open higher and then reverse, and that's what happened.  BKX in particular did so in a rather dramatic fashion, likely trapping many unsuspecting bulls into a loss:

SPX didn't reverse quite as suddenly and dramatically, but reverse it did:

Bigger picture, we're still stuck in the same spot we've been in since last year:

In conclusion, the market is keeping its near-term options open, but I'm still slightly leaning toward a continuation of the complex correction.  Bigger picture, the trend remains up, and even if we get the more bearish (C) wave, I expect that will then be bought up to new highs.  So, bottom line, no matter what happens from here, I am anticipating a continued rally, the only question is how we get there.  Trade safe.

Friday, January 13, 2017

SPX and BKX Update: What Will Friday the 13th Bring for the Market?

Today is Friday the 13th, so you're probably expecting I'll make bad jokes about good luck, or good jokes about bad luck, or something.  But you'll be sorely disappointed.  My only Friday the 13th joke goes like this:

- Knock, knock.
Who's there?
- Friday the 13th.
Friday the 13th who?

And that's it, there's no punchline.  That's the whole joke, and it makes no sense whatsoever.  I think I first read it on the back of a cereal box, during an unusually vivid dream I had -- so you can rest assured I won't be telling that joke today!

Anyway, the market has continued to chop everyone up and spit them out while laughing hysterically.  The last breakout whipsawed, and the recent breakdowns have done the same.  For what it's worth, the pattern doesn't appear complete to the downside, so most of the time we'd expect another low here -- which hints that the black (C) wave might be playing out.  Here's a near-term chart in detail:

The slightly bigger picture chart below shows that red 4 has been invalidated:

BKX seems to confirm the idea that the decline is difficult to count as complete:

In conclusion, in most markets I'd be fairly confident of another new low -- in this market of the past couple months, it's hard to be fairly confident of much of anything.  At this point, I'd say the near-term onus is on bulls to prove this is something other than a near-term bearish pattern.  Again, from a bigger picture standpoint, I do expect the black wave (C) bottom (presuming that pattern is actually underway) to be a buy op.  Trade safe.

Wednesday, January 11, 2017

SPX Update: If a Woodchuck Could Chuck Norris

*Preventative Note in Case Chuck Norris is Reading:  The title is not meant to imply that a woodchuck COULD Chuck Norris.  Only Chuck Norris can Chuck Norris.  Nor is the title asking:  "How much wood could Chuck Norris chuck if Chuck Norris could chuck wood?"   Everyone knows Chuck Norris can chuck ALL the wood, if he wants.  Along with all the woodchucks, for that matter.  Please don't hurt me. 

I can't recall the last time I've written "No material change," "nothing to add," "no real change," and "please don't hurt me, Chuck Norris" as often as I have over the past month or so.  That's largely because this market has remained slightly less exciting than flossing your cat's teeth would be, presuming you have a cat, and presuming that cat does not wear feline dentures.  This has gone on for what seems like an eternity (the trading range, not your cat's much-needed teeth flossing), especially after the rocket-launch rally that came before this extended chop zone.

So, with that said, there's only a little tiny bit to add since last update.  Basically, the complex (B) and (C) waves still look pretty viable.  If 2263 fails, then traders should be on high alert for a decline back below 2233 -- and if 2233 goes, then even the 2200ish zone isn't out of the question.

Note that SPX dipped below the blue trend channel as of yesterday's close.  Bulls want to see that channel reclaimed.  Bigger picture, there's also no change, and it is still presently assumed that the black (C) bottom would be a buy op for an eventual trip toward 2400 SPX.

In conclusion, the complex black ABC that I first warned about on December 30 continues to look like a viable possibility.  To negate that option, bulls need to clear this chop zone with a little more energy than they mustered (mustard?) on January 6.  Trade safe.

Monday, January 9, 2017

SPX Update: The Cheese Stands Alone

On Friday, SPX finally broke back above 2277, thereby validating 2233 as the bottom of ALL OF C (and validating my belief that this was all just a correction and not the start of anything bearish) -- but not yet eliminating the possibility that that first ABC merely marked a larger (A) wave. 

One of the blessings and curses of B-waves is that they can exceed the prior relevant high or low, which makes them the wave that bulls hate to see on a breakout, and the wave that bears hate to see on a breakdown.  The "blessing" part of B-waves is that they offer high odds that the market will ultimately turn back around and reclaim their peaks/troughs.  But they do require patience, because the nasty C-wave that follows a B-wave can and will shake most people who attempt an early knife catch.

(Note that I'm not saying the (B)-wave is what's going on here, I'm simply expanding on the commentary about B-waves in general.)

In any case, the next couple sessions should give us clues as to whether we're dealing with a simple fourth wave (red 4), or the more complex nastiness of the larger black (A)/(B)/(C).  If we see a larger impulsive down move develop, or if SPX sustains a breakdown at 2263, then the complex (A)/(B)/(C) gains some favor.

Bigger picture, there's still no change unless and until the market says there is:

In conclusion, as Market Watch would say:  "The Dow Jones Industrial Average Ordinary Mediocre Almost Barely Nearly Possibly Sort of Reached Really Super-Duper WOW OMG OMG Close to 20,000 on Friday and... Like, What Were We Talking About Again?" 

Trade safe.

Friday, January 6, 2017

SPX Update: Edwards and Magee...

Last update noted that an immediate breakout over 2263 should lead to a retest of 2273, and that was what happened.  The bigger picture is unchanged, with SPX 2400 still in the cards unless and until the market suggests otherwise.  And until the market suggests otherwise, the main question is how much more goofing around the market will do in the current price zone before its next "for real" move, so we're just going to look at the near-term chart today, along with some of the relevant levels:

In conclusion, there's been no real change since November, even though the market has spent the last month trading inside the famous Shake, Rattle, and Confuse 'em Pattern, which was first recognized by Edwards MaGee and Molly during a 1951 broadcast of their popular radio series of the same name.  Or... wait.  Part or all of that might be wrong.

No matter!  The point is, we have levels to watch now.  The worst move for everyone here would be a (B) wave that breaks the prior high before reversing into a (C) wave, but bears have to be very, very cautious if there's a breakout, because if no B-wave materializes, this consolidation/continuation pattern could be entirely complete, and the market might not look back on a breakout.  Trade safe. 

Wednesday, January 4, 2017

SPX Update: 2017

Well, 2017 is finally upon us, like a thing that falls upon another thing or something (writer's note:  go back and edit this to a more poetic image if there's time).  Interesting to note that we're now five full years past the Apocalypse that was supposed to occur in 2012 (according to someone's interpretation of the Mayan calendar), and all we really got out of it was a few crummy movies.

SPX was clearly excited about 2017, and opened the New Year with a gap up.  One potential near-term path is discussed below, along with some additional levels and where they may lead:

The black (A)/(B)/(C) shown above is still just a hunch, and may or may not come to pass -- but I think it would be a nice confuser and a fitting way to get bears excited and shake some bulls off the rally before it continues higher.

Still no change to the big picture:

In conclusion, near-term, keep in mind that SPX is currently within an established trading range, which means predicting its near-term behavior becomes more difficult.  Trading ranges have the effect of "loosening" all the patterns that show up inside the boundaries of that range, so those patterns rarely lead where they would typically be expected to lead.  Bigger picture, there's still no material change.  Trade safe.

Friday, December 30, 2016

SPX Update: An Ultra-Rare Pattern to Close the Book on 2016

After Wednesday's session, it became apparent that the previously-assumed triangle count was off the table, so before the open yesterday, in our forums, I posted a new short-term wave count, along with a first downside target of 2244.

With that chart, I included the following commentary (slightly edited for clarity):

Since I don't do Thursday updates on the main blog, I at least wanted to publish this quick chart for everyone here on the forum.  Triple zigzags are among the most rare legitimate patterns (there are patterns that are more rare, but the only patterns more "rare" are patterns I don't consider valid (lol), such as the "expanding ending diagonal," which I don't believe exists at all, thus making it technically more rare than the triple zigzag, since the "EED" has a frequency of 0%). 

Anyway, if ever I've seen a pattern that COULD be a legit triple zigzag, this is it.

If 2248 fails, then this pattern is a triple zigzag, which you'll have to forgive me for not anticipating in real-time. In the past couple decades, there have literally only been a small handful of these, so it's something of a fool's errand to even watch for them, and these types of long-shot patterns are generally only tracked by perma-(bears/bulls) who are trying to find SOMETHING that can fit their underlying bias. (IMO, watching for triple zigzags is somewhat akin to betting on an unforeseeable black swan event every time the market corrects even slightly).

If 2248 fails, then we have to presume this is a triple zigzag, in which case we have 3/C targets at 2244 +/- and 2226 +/-.   Just a heads-up for everyone.

Here's the triple zigzag chart:

Here it is on the now-defunct triangle chart:

Again, if SPX sustains a breakdown at the blue/red trend line (blue on the first chart, red on the second), then bulls might want to hold their fire until things clarify again, because it's always possible that red C (above) is only wave 1 of a larger C-down.  Nimble traders might even consider shorting against the all-time high IF (and I stress IF) we get back up within a few points of it -- playing for a more complex correction, that could even head as low as 2200-2215.  That's looking a bit down the road, but something to keep in mind.

As of yet, no real change to the bigger picture:

In conclusion, we just witnessed a corrective pattern so rare that I can't recall having seen one at this wave degree in at least the last 5+ years.  Whether this is ALL OF the correction remains to be seen, but there are enough waves for a complete ABC down, if that's what the market wants.

On another note, the next time I do an update it will be 2017.  Which seems ridiculous, really, because 2017 sounds incredibly futuristic.  I'm going to be sorely disappointed if we don't at LEAST develop warp capabilities in the next 48 hours, so technology can get caught up with the sound of the year.  I mean, c'mon, if you'd told high-school kids in the 80's what the differences would be between 2017 and, say, 1989, we'd have been SORELY disappointed.

To illustrate this point, let's look at an unbiased list of the pros and cons of 2017 vs. 1989.

2017 Pros:

1.  Everyone has cell phones.

2.  Virtually all other communication, shopping, bill paying, etc., can be done over the internet.

3.  At a loss here, and I've been thinking for like four entire minutes.  Oh!  Digital cameras.

2017 Cons:

1.  Everyone has cell phones.  Even little kids have cell phones, which makes YOUR kids (yes, you have kids now!  It's 2017, duh.) believe they, too, are entitled to a friggin' cell phone -- so when you refuse to get them cell phones because you want your kids to learn how to communicate like actual human beings and not constantly bury themselves in a "one-step-removed" form of interaction, AND you want them to learn to entertain themselves without technology, they believe you are the most ruthlessly-strict parent to ever walk the face of the Earth.

2.  The music sucks.

3.  Commercial forms of art are dead.  Virtually everything (from movies to music) is a "reboot," a remake, or an outright ripoff of something that came before.  It seems like nobody has any original ideas anymore, probably as a result of everyone having their face buried in a cell phone or laptop 24/7, which allows them no TIME to think up original ideas.  Some of the greatest inventions and ideas in mankind's history have come about simply as a result of boredom, which gives people time to daydream and motivates us to create.  When we fill up our every waking minute with "busy work" or mindless entertainment, we leave no space for true creativity to break through.

4.  Everything else.

Anyway, my point is:  Happy New Year!  Despite the inherent cons of 2017, I do wish all my readers a safe, healthy, and prosperous New Year.  Trade safe!