Friday, May 24, 2019

SPX Update: First Downside Target Captured

Last update was as unambiguous as I ever get, and was titled "Bears on Deck?"  In that update, I wrote:

There is potential for a large move down over the next few sessions.  SPX discusses initial targets.

Target 1 in SPX was 2800-09, which was captured yesterday.  On the chart, I then made reference to "complex corrections" -- this is because that the 2800-09 zone is an inflection zone.  There is a possibility for a complex corrective 2/B that runs back toward 2900-30 before the next leg down begins in earnest.  At present, I'm not favoring that, but instead suspect a more direct bearish resolution, but we can never rule out complex corrections (and can rarely predict them -- corrective waves by nature are inherently less predictable than impulse waves), so they should always at least be considered as a possibility.

We're just going to focus on the SPX chart today.  I've sketched-in the "or 2/B" potential:

In conclusion, bears captured their first downside target, and, presuming they hold the key upside levels, we will assume a more directly bearish resolution.  If they can't, then bears do need to be aware of the complex corrective potential.  Again, barring that, we're likely looking at a downward trending market over the coming week and/or beyond.  Trade safe.

Wednesday, May 22, 2019

SPX and INDU: Bears on Deck?

Still  no material change, as bears have continued to hold the first key level.  There is potential for a large move down over the next few sessions.  SPX discusses initial targets:

Not updating the INDU chart until I need to, because Stockcharts will mess with it when I do:

In conclusion, everything is "lined up" as well as it can be for bears, all they need to do is take advantage of it.  Note that a sustained breakout over 2893 would not necessarily kill the bear case, since the first option would be a bearish ending diagonal... but it would call for bear caution.  Trade safe.

Monday, May 20, 2019

SPX and INDU: No Material Change

No change from last update, which made the rather bold presumption that 2/B had completed at Thursday's high.  The market continues to track according to that presumption.  Since most of us trade SPX (or ES) instead of INDU, I've added an SPX chart with comparable targets for that index.  Much below last week's low, and the zone around the falling black trend line becomes next meaningful support.

INDU's chart is unchanged:

In conclusion, bulls need to sustain a breakout over 2893 to stall or ward off the bear options.  Barring that, we will continue to presume that bears have the ball.  Trade safe.

Friday, May 17, 2019

INDU Update: So far, so good...

Well, not much to add... "so far, so good" for bears.  On May 13, I published the following chart:

Here's what it looks like with the updated price action:

SPX would be expected to track INDU closely (over the weekend, I'll probably draw up a more detailed SPX chart).  Keep in mind the option for a more complex red 2, wherein INDU/SPX would likely test/break their recent lows, then could bounce again all the way back up to yesterday's highs.  Additionally, I can't entirely rule out a diagonal c of 2 yet, but that looks like an underdog.

In conclusion, bears aren't 100% on their count yet, but things look as good as they can look at this stage for them.  Trade safe.

Wednesday, May 15, 2019

SPX and INDU: Next Downside Targets Captured

Since last update, INDU captured its downside red 1 target and bounced:

And SPX captured its 2800+/- target (from May 8), and bounced.

The escalation of the trade war with China is certainly going to be near-term bearish for the US economy, and the market along with it.  It's interesting to consider that the INDU chart above was discussed in early January, when few people though the rally could run that high... and then I intentionally didn't discuss it again until it appeared possible that it might be about to complete (c) of the proposed B -- which was on May 1, when few people thought the market could turn suddenly bearish again.

Don't get the wrong impression:  That count isn't a "done deal" yet or anything.  But it remains a very real possibility.  It will be interesting to see if bulls can mount a continued defense of the recent lows, or if they fail directly.  Trade safe.

Monday, May 13, 2019

SPX and INDU: Market on the Brink

Let's get right into the charts today.  First up, let's take a look at what caused Friday's bounce, because it's an important zone that bears will need to get, and stay, below:

Next, I'm about 50/50 on the red intermediate count below.  Getting close to making it the preferred count, but not QUITE there just yet.  For now, suffice to say it's very much in the realm of possibility:

Near-term, Friday's low appeared to make wave b of an expanded flat:

In conclusion, bears have very much kept alive the "curveball count" that I first discussed 4 months ago... and then finally called attention to again on the very same day as the SPX all-time high.  That count isn't the only option here, but it's probably at least even odds at this point.  The next, and critical, step for bears is to sustain a breakdown at the very long-term trend line noted in the first chart.  Trade safe.

Friday, May 10, 2019

SPX and INDU: Market Reaches Next Inflection Zone

I'm not actually crazy about this pattern, because there are several ways to parse it.  Strangely, the micro waves within the wave have been reasonably clear and predictable, but the larger macro wave off the all time high in SPX is not.  There's one way to count the pattern that says yesterday was the bottom of wave C/3 -- which would mean bears need at least one more low for the decline to be considered as a larger impulse.

Let's look at the charts:

INDU big picture:


In conclusion, SPX fell through the first inflection zone and ran right to the second.  There's one option that says SPX completed 3 waves down yesterday, which could mark the bottom of either C or 3, and that it needs one more new low to be considered an impulsive decline.  For now, I think that's the option I'm going to lean toward, but given that there is a lot of ambiguity in the SPX chart, I definitely want to reexamine this pattern over the weekend.  I'm not crazy about the pattern at this juncture, but it is what it is.  Trade safe.