Thursday, May 21, 2015

SPX Update: The Matrix Has You

I am sincerely hoping this is the last super-short update for a while, and that we can return to our regularly-scheduled programming next week.

Since last update, the market has continued to stall at resistance, but there's (still!) been little in the way of definitive pattern clarification yet.  Below, I've noted the obvious potentials.  Frankly, the massive bull nest looks a bit far-fetched, so I'm more inclined to think this is a terminal pattern.

Even viewed from a simple classic TA perspective, things are still pretty gray ("grey" if you're British):

In conclusion, this is still the most inconclusive pattern I can recall seeing in years, and I'm seriously considering taking the red pill.  This still has the feel of a terminal pattern, but it's one that could certainly continue to grind sideways for a while.  As noted previously:  If bulls can sustain a breakout, then bears might consider taking a "watch and wait" approach for a time.  Trade safe.

Tuesday, May 19, 2015

SPX and INDU: Short and Sweet Update

I've had some very exhausting personal issues to contend with lately, so I apologize in advance for the brevity of this update.

Bulls are now testing the first upside resistance levels on SPX and INDU.  Basically, bears will want to maintain a cautious stance if there's a sustained upside breakout, particularly if price momentum begins increasing.  If there are back-tests of the breakout zones, pay close attention to whether those succeed or fail:  If there are lots of anxious buyers waiting on the back-tests, then that will be a positive sign for bulls, but if the market starts dropping through the zones that should be providing near-term support, then that may be a warning of greater pending weakness.

Trying to keep it simple again today, so just two charts.  INDU first:

SPX is in the process of testing upside resistance:

In conclusion, the next few sessions may hold the key to the market's intermediate-term future, so bulls and bears will likely be watching closely to see how price reacts to nearby levels.  For the next update, life permitting, I'll attempt to present some of the options for wave counts.  Trade safe.

Friday, May 15, 2015

SPX and INDU: Letters from the Chop Zone

It's been a couple days now since I ran out of titles for articles written from within the Chop Zone, and morale is dwindling.  Yesterday, we finished the last of our food.  Then, last night, Rob wandered a bit too far from camp, and was bitten by something resembling a spider, only bigger, and with more teeth.  I think we may have to amputate his leg.  He probably won't be happy about that, since he was bitten in the right arm.  Melissa finally went nuts this morning and burned all our maps, not that they were doing us any good.  We just can't seem to find our way out of the Chop Zone, and many are losing hope.  Billy ran off into the woods AGAIN today, completely naked, while screaming, "Chop Zooooone!  Still!!!"  We haven't seen him since.  I think the group is finally starting to crack.

Since last update, the market raced back to the top of the range, and here we sit.  There just isn't anything to add until something meaningful happens, so today's update will cover a few seemingly-significant upside levels.

First is INDU:

And next SPX:

In conclusion... hey, here comes Billy!  Figured he was gone for good.  Sorry -- in conclusion, there are some pretty bullish patterns that remain on the table, but terminal patterns often mimic bullish patterns, otherwise there would be no one left buying.  Thus, we'll watch the upside resistance zones with a close eye for clues.  If the market can even break the prior highs, of course, and it shouldn't surprise anyone if it doesn't -- so far, every prior run up here has been rejected.  Trade safe.

Wednesday, May 13, 2015

INDU and SPX: Today's Title is Stuck in the Trading Range, Check Back Later

This market long ago abandoned all but the most die-hard traders, so congratulations if you're still paying attention to it.  This has been a short-term traders' market for several months now, and not really a market that would interest folks who have other things to do.  Eventually, this trading range will end, and we'll go back to some sort of trending market that lends itself better to swing trades -- but for now, it is what it is. 

As of Tuesday's close, there's been no real change to the prior update.  Monday's session saw a deep retrace -- which (hopefully) made the only count I posted into a winner for anyone who played along and stayed nimble.

Near-term, INDU has the appearance of an ending diagonal, but I'm not 100% certain it's a true ending diagonal.  It may instead be a simple bearish rising wedge, which leads to a fairly deep retrace prior to another leg up:

There's really not much to add beyond the chart above -- but below is SPX's updated chart, with a few additional notes:

In conclusion, Monday's wave count tracked well enough to make for a winning trade, and there's been no new or revealing information from the market since then.  So, until we have a new key level break, there's not much to do but watch and wait from here.  Trade safe.

Monday, May 11, 2015

SPX and INDU: Market Still 'Home on the Range'

I'm just going to come out and say that I'm getting rather tired of this trading range.  Charting it has grown increasingly more difficult over the past few weeks, and until there's a sustained breakout or breakdown, there really isn't anything substantial to add.  We can speculate on what comes next until we're blue in the face, but simply recognizing the range for what it is, and trading accordingly, has been more valuable of late.

I think both bulls and bears are starting to feel like the confused shopper in the photo below, and growing a bit impatient waiting for the checkout line to move:

The chart below (again) shows why everyone is feeling that way: 

Obviously, there's still no change to the intermediate picture (let's just hope we're all still sane when there finally is):

Near-term, INDU looks like it may be working on a complex flat.  I'm hesitant to get too married to this, because the pattern has already put together a series of several unusual waves, so there may be more coming before it's all said and done -- but this is my best guess at the moment.  Note that wave (B) does not have a true invalidation level. 

Beyond that, I'm not going to update any particular wave count at this juncture, because the options are presently bordering on infinite.  It's been a long time since I've seen the market so noncommittal -- so I think it's more valuable to simply continue to recognize the trading range for what it is right now, and to simply remain focussed on the present until things clarify again:

In conclusion, in the event the market can sustain a breakout over the noted resistance zones, then we'll have to respect that breakout for as long as it lasts -- but do keep in mind that INDU is currently hinting that the range may still have more down/up frustrations planned.  The caveat to that is the same as I've continued warning for the past several weeks:  the more often we traverse this range, the less reliable the patterns become.  Right now, the reality is that almost every wave (up and down) looks corrective -- so this pattern has kept its options open and thus left us waiting for the next key level break, which will allow us to at least begin definitively eliminating what the pattern is NOT.  Until then, trade safe.

Friday, May 8, 2015

SPX and INDU: Trying to Make the Complexities Simpler...

Lately the Fed has been doing something different, and no, I'm not talking about their personal hygiene:  They've been talking down the market.  Yellen recently stated that stock valuations were "quite high" (whatever that means).  I feel like I can barely remember the last time the Fed believed that equities were overvalued in terms of the broad market.  To my recollection, the last time that happened, a fella named Greenspan was involved in sort of an irrationally exuberant way.  (Yellen talked down "smaller firms" in social media and biotech last year, but not the entire market -- and taking shots at social media doesn't even count, because social media is virtually always overvalued.  As far as I'm concerned, anyway.)

So it seems that maybe, just maybe, the Fed has finally begun seriously considering the idea that it doesn't need to be quite so incredibly accommodating anymore.  Assuming the Fed stays consistent in that view and begins tightening, that will ultimately have an impact on the market. 

Of course, it bears noting that when Greenspan made his "irrational exuberance" comments in 1996, the bull market still had several years left in its tank.  But we are certainly in a different position now than we were then, and I have maintained for some time that we are in uncharted waters.  The 90's bull market wasn't launched (and then carried) on the back of Quantitative Easing; and neither was any other prior bull market in history.  So it remains to be seen how this current bull market ends, and whether or not it will end in a similar manner as previous bulls.

So, with that simple stuff out of the way, let's take a look at the charts.  As I've been continuing to note for several weeks, we're still inside a very well-traded range.  The trouble with trading ranges is that they create a ton of noise on the charts, and noisy patterns give the market a lot of options in terms of wave patterns.  It's thus becoming increasingly difficult to try and simplify the charts into something easily-understandable, but I've tried my best to do so.

What we'll do is start with some basic charts and work our way up in complexity.  First off, a simple near-term support and resistance chart.  This should be viewed with the understanding that near-term support and resistance grows increasingly weaker (and eventually meaningless) inside an old trading range:

For the bigger picture, this is the most simplistic chart I can come up with for SPX:

Moving over to INDU, we can see that the pattern is actually growing exponentially more complex, but I've tried to reduce all that into a few fairly simple concepts: (continued, next page)

Wednesday, May 6, 2015

SPX, COMPQ, TRAN: Still in the Range, but Here are Some Key Levels

Since last update, SPX rallied, then hit the upper edge of the trading range and collapsed again.  The trading range continues to reward those who have recognized it for what it is, and are trading it like a range, while punishing traders who hold their positions for longer than a few sessions.  Bulls who bought last week's decline and held are now, at best, at zero profit.  Many of them have likely already been stopped, or are in drawdown (unless they bottom-ticked it last week).

Let's get right to the charts, because there's a bunch of them.

First off, readers have been asking about the potential diagonal:

Basically, until 2072 is broken, the most immediately bullish counts remain technically possible:

If SPX sustains trade below 2072, then we probably have to give the odds to the bear count until proven otherwise:

Here's a basic near-term resistance chart for SPX: (continued, next page)