Monday, October 12, 2015

SPX and INDU Updates

There's not much to add after Friday's exciting session (by which I mean Friday's unexciting session), but I've drawn up a couple charts anyway, mainly to fulfill my contract with myself, which states that I must annotate at least 45,974 charts each year.

We're into a zone where we should probably at least begin watching for topping action, though one formula suggests this wave could run as high at 2071 +/- before experiencing any correction more significant than the one we saw on October 2 -- so Friday's warning to "let the market lead" remains in effect, at least until such time as it leads us to a more clear suggestion of a correction.

I've drawn up a near-term chart of SPX which gives us the first levels to watch:

Let's take a look at a count that allows for the potential of a fairly direct top, though here again, we have nothing yet that indicates a turn has begun:

Also, I stumbled across this old SPX chart, and updated it because the support/resistance lines are relevant, and the market reacted to one of them on the Fed spike (to 2020) last month:

In conclusion, there are now enough waves in place for a complete (c)-wave rally, and the minimum requirements have been met and exceeded.  The trend at all degrees currently remains up, but if bears can sustain a break of 2007, then we can at least start considering the idea that a deeper correction may be underway.  Trade safe.

Friday, October 9, 2015

SPX, INDU, TRAN: Time to Let the Market Lead

Just a few charts today -- the annotations explain everything.  First is TRAN, which has developed into a bit of a conundrum:

Next is the IT INDU count, which -- as previously discussed -- does allow the possibility that ALL OF Wave IV is complete:

Finally, the ST SPX chart:

In conclusion, there are several upside inflection points for the bear count -- but bears should keep in mind that we've never been able to rule out the possibility that Wave IV completed at the crash low.  The preferred near term count has had us looking up since SPX reached the target of 1865-80, so it's not as if we've missed out because we were "too bearish," as many others were -- it's simply a good idea to let the market lead now, and wait for clear signals.  Trade safe.

Wednesday, October 7, 2015

SPX Update: What's 200 Points of Profit Among Friends?

SPX captured its first target zone (1980-87) -- after reversing out of the preferred count's downside target zone of 1865-80.  The chart below was published on September 21:

I have since updated the (c) target zone to cover the potential that all it will do is break the (a) wave high.

Below are two updated charts, which pretty much say what there is to say:

SPX 3-minute chart below:

In conclusion, it appears that wave (c) will reach its minimum target at the open, thus validating the preferred count of the past few weeks.  Bulls do still have the option for this to become a true third wave, but I'm still more inclined to think the rally is wave (c).  Keep in mind that a (c) wave could end at any time heading forward.  Trade safe.

Monday, October 5, 2015

SPX and INDU: No Surprises from the Market Yet

The preferred count of the past several weeks remains alive and well -- note that the market bottomed inside the target zone (1867-80) and has since launched into a strong rally.  The present expectation is that this rally will likely exceed 2020, but will still ultimately prove to be a correction to the prior decline.  At present, I am not yet expecting new all-time highs just yet.  This could change if, for example, TRAN exceeds the levels noted in the last update.

Below is the preferred count, which is materially unchanged since early September; in black, the more bearish alternate is shown.  Due to the rather meandering nature of the prior wave, it's always possible that the current rally will develop in into a three-wave move, instead of the anticipated five wave move.  Also note that the only "requirement" of a (c)-wave is that it break the (a) wave high (1994).  It does not actually need to break 2020, though it would be more common for it to do so.

The INDU chart below shows that a break of the (a)-wave high would allow the pattern to maintain symmetry:

Finally, the SPX near-term chart, along with common targets for the current wave.  As long as the green acceleration channel holds, bears should be extremely cautious about trying to front-run this rally:

In conclusion, the market has followed the preferred path well enough to make it profitable -- so at the moment, there's no reason to begin favoring a different count.  I will, however, continue to play devil's advocate to my own expectations.  In the event we begin to see impulsive declines, we may have to give more weight to the more immediately bearish counts.  Trade safe.

Friday, October 2, 2015

SPX and TRAN: TRAN May Point to Intermediate Trouble

The next couple sessions appear to be a huge near-term inflection point for the market, and the reaction from futures to today's job report keeps bear hopes alive.

Below is a closer look at the short term waves:

From an intermediate standpoint (no matter what happens for the near-term), TRAN's pattern suggests that until TRAN breaks out over the recent swing high, it's probably prudent to maintain a big-picture bearish stance:

In conclusion, there appear to be a lot of marbles riding on the next few sessions, and the levels to watch seem reasonably clear.  Trade safe.

Monday, September 28, 2015

SPX and BKX Updates: Long-term Chart Reveals Potential for an 80% Decline

The E-mini S&P futures (ES) have been gyrating wildly in 25 point swings tonight.  This is not entirely new, and has been occurring on-and-off for several months.  On our forum several months ago (well before the recent flash crash), it prompted me to state that the character of the market seemed to have changed from bull to bear.  The more I watch and trade this market, the harder it gets to continue considering the possibility that we're still in a bull market.  At best, we're probably still in a Primary Degree fourth wave.  Liquidity, as revealed by the price action, still appears to be extremely thin -- and bull markets need liquidity.

The first chart we're going to examine today is a bit sobering.  BKX is one index that never left its bear market, and shows the potential of a complete, long-term ABC rally.  If that's the count, then the next long-term rally for this index comes after an 80% decline:

SPX continues to be difficult to chart on a micro level, so no material change here:

In conclusion, the next informational levels are outlined on the chart above.  Trade safe.

Thursday, September 24, 2015

SPX Update: Keeping It Simple

I'm going to let the charts do most of the talking again today.  First is the daily chart of SPX, which left a candle that suggests at least some upside follow-through is forthcoming:

Near-term, the pattern in SPX suggests bears should be cautious on a sustained breakout, which would target a fill of the noted gap. 

Finally, there are now enough waves in place for the preferred count's C-wave to be complete.  Note the addition of the black bear count potential, which would align with the chart above.

In conclusion, there are finally enough waves in place for a completed corrective decline.  Whether it's complete or not remains to be seen, but the daily chart does suggest at least some upside follow through.  If SPX can sustain a breakout north of today's high, then the next two upside inflection points appear to be the noted gap fill, and the 1990 area.  Trade safe.