Monday, September 16, 2019

SPX and INDU Update: Justin Bieber Declares War on Saudi Arabia

Over the weekend, a major Saudi pipeline was attacked, and the futures market opened lower.  It's interesting that this is coming right at intermediate resistance... but keep in mind that there's an old expression on Wall Street (originally coined by Nathan Mayer Rothschild about two centuries ago) to "buy on the sound of cannons" (meaning war creates initial panic, but is ultimately bullish).

Of course, no one uses cannons anymore, preferring instead to wage war with drone strikes -- or (in the case of Canada) via the export of Justin Bieber albums, against which only full-scale nuclear retaliation would be appropriate.  However, Canada is protected by the fact that it shares a geographical border with the United States, which is what prompted this bold act of aggression on Canada's part in the first place, since nuclear retaliation would render certain places like Wisconsin even less hospitable than they already are.  Canada enjoys no such protection against Saudi Arabia, however, so Justin would be wise to remember that.

What were we talking about again?

Oh yeah... Canada.

No!  Cannons.

Anyway, on the bull side of the coin, this disruption in the global oil market might give the Fed exactly the excuse they need for another rate cut, which the market was already betting they were going to make before the strike.  So that's something for bears to keep in mind.

Chart-wise, nothing much has changed, since the market spent Friday goofing around sideways:

Near-term, I've drawn up a few trend lines to watch in the event the market continues reacting to resistance:

SPX is, as usual, in a similar position to INDU:

In conclusion, the market's in a bit of a no-man's land in terms of prices and pattern:  There are now three waves up from last month's low, so if the rally is corrective, this is likely where it would end.  On the bull side of the coin, RSI showed strong momentum at the last peak, and usually that's a recipe for at least a retest of that high, if not higher prices.  Trade safe.

Friday, September 13, 2019

SPX and INDU: Long-term Implications of Current Inflection

SPX finally validated September 6 call for a new high toward 3000 and captured/exceeded that target, putting it within striking distance of the all-time high.  INDU is also flirting with its all time high.  Trade above these all time highs may have long-term implications.  INDU first:

INDU near-term:


In conclusion, the all-time high is likely an important long-term inflection point.  If bears have anything left to offer, they need to pull out the big guns and make a stand here.  Trade safe.

Wednesday, September 11, 2019

SPX and BKX Updates

Last update suggested that if the market were to decline immediately, it would be a buy op (as new highs would still be reasonable to assume) and "so far so good" as long as bulls hold 2957:

BKX is (so far) also performing as predicted:

Finally, I want to show one very simple chart, and this chart may be more significant than it looks at first glance.  It appears that the black trend line is rather meaningful, and that bears need to get SPX to hold below that trendline before they can get anything going on an intermediate basis:

In conclusion, SPX seems to be performing as expected, so as long as bulls can hold 2957, we should expect a new high.  Below 2957 would open up some bear potentials (and the potential for a more complex correction), but we'll worry about that if it occurs.  Trade safe.

Monday, September 9, 2019

SPX Update

Last update noted that "I'd prefer to see at least one more high beyond 2885" and SPX may be poised to deliver that new high right at the open.

Bigger picture, SPX is attempting to challenge intermediate resistance:

In conclusion, there's not much to add at this juncture.  As always, since the near-term trend is up, the first step for bears will be to generate an impulsive decline.  Trade safe.

Friday, September 6, 2019

SPX Update

Since last update, the market has at least resolved the question of "higher now or higher later" (we were looking at the option of a temporary b-wave high), and there are now 5 waves up off SPX 2834, though I'd prefer to see at least one more new high beyond 2985.  That means that if bears are going to mount any kind of defense of a C-wave, they will need to do so soon.  Otherwise, we're probably looking at bull wave (iii) and new all time highs on the horizon.

In conclusion, the market appears to have formed a five wave rally from 2985 (one more new high reasonable to expect, but not absolutely required to complete 5 up), so if bears have anything left, they need to show that via an impulsive decline and some support whipsaws.  Trade safe.

Wednesday, September 4, 2019

SPX Update II: Revenge of the Stockcharts

I drew a really nice chart for today's update -- maybe the best chart I've ever drawn.  It's highly likely this chart, had I been able to publish it, would have improved the lives of millions of people, and possibly cured diabetes.  Unfortunately, StockCharts had other plans, so when I attempted to save the chart, it deleted it.

This left me short on time for today's update, which will be accordingly brief.

I've reproduced what I could of the deleted chart:

In conclusion, yesterday's decline did not quite overlap the presumed wave-I high (Blogger or Edge keeps auto correcting my I from lower case to capital), which leaves open the option for yesterday's dip to be a micro fourth wave, if SPX can break out over 2940.  If that high holds, then we may be looking at a b-wave high at 2940, which would lead to the black "or (B)" on the chart above.  Trade safe.

Friday, August 30, 2019

SPX Update: Bears Pull a Tennesse Titans (Super Bowl XXXIV)

Well, as of last update, bears had a chance to put the finishing blow on the market -- but they dropped the ball and bulls have run with it since.  Today's open is thus going to create two options:
  1. A sizeable bull nest up from this month's low.  That option would see a strong, sustained rally to new all-time highs.
  2. A very complex corrective wave.  For this option, bears will need to slow the current momentum and then reverse the market.  There are implications for a broadening trading range if they can manage this, and we'll address that in more detail if bears turn the market back down.  
This means that bears are in a potentially dangerous position, because of Option 1, and may be wise to await an impulsive decline before acting with force again.  Note that even if this is black bear (C) that it could run higher than shown.

One market that's been bothering me (for a few weeks) for the bear case is the Philadelphia Bank Index (BKX).  The current pattern appears to have "too many waves up" -- which is the expression I use when a pattern appears to need further upside (or downside for "too many waves down") to resolve.  Nothing's impossible, but it would at least be somewhat unusual for BKX to leave the high at 103.40 unresolved.  I've been ignoring this market in favor of SPX, but with SPX now breaking out without making a new low, this has to be viewed with caution by die-hard bears, at least unless/until there's a solid impulsive reversal in SPX.

In conclusion, bears were stopped short on the one yard line, and bulls are back in the game for now.  There are still multiple bear options, but be aware that there is at least significant bullish potential energy in the current breakout -- if bulls can sustain it.  If bears can whipsaw it fairly directly, then their best case scenarios will remain alive.  Trade safe.