Gold, Oil, SPX, INDU -- and the Most Frustrating Pattern in the World

Lots of interesting goings-on since last update, so let's get right to it.

Gold recently captured its next downside target, published exactly three months ago:

Oil has been behaving according to its preferred count, which has been a big win no matter what happens next:

SPX is behaving a bit oddly given that this is supposed to be a C-wave decline -- it's rare that A waves (the last decline) are more relentless than C-waves.  This means that either the C-wave is just warming up and it will rectify itself soon... or that something more annoying is afoot (more on that shortly).

On June 12, I warned that INDU and NYA didn't seem to be playing along and that this was cause for bears to be on guard.  While SPX was busy clowning around, INDU actually made a new all-time high yesterday:

As promised, here's the "something more annoying"/"Most Frustrating."  The potential exists for the current wave to NOT be wave C yet, but to be part of a triangle B-wave.  I do have to give a shout-out to forum member 1FE who, although I think he was talking about a different triangle, may have played a role in planting the triangle idea in my subconscious.

So the triangle's not a given or anything, but it's something to keep in our minds as a live possibility for now.

In conclusion, Gold has performed as expected and captured its next target -- and may have further to fall if gold bulls can't hold it here.  Oil has performed as expected.  SPX is, technically, performing as expected directionally, but the choppy nature of the decline is enough to send up a caution flag to watch for the triangle.  Trade safe.

SPX Update: No Change But the Typo

SPX is so far behaving in accord with the larger preferred count, though the near-term has been behaving a bit goofier than it was last time.

Note there was a typo on Monday's chart targets (the first number in the first target range was too broad and had accidentally inherited the prefix of the second range):

No changes (other than to correct that typo) so far.  Trade safe.

SPX Update: It Was Easier When It Was Hard

On June 12, I mentioned that "there's not a ton of cross-market agreement right now.  And that alone is cause to avoid complacency. Bears probably want to see INDU break down again fairly directly or they could be in for a larger rally."

So I'm going to present the bear case but instead of blinding assuming everything will go according to plan, we're going to talk about all the ways it could go wrong.

Let's start with the near-term chart:

What's bothering me on that chart is Thursday's action -- which has three options:

1. It's a b-wave high in progress, which likely leads to the black path.

2. It's part of an ending diagonal, which would rally just a hair more but then be more bearish than black.

3. It's a micro bull nest -- which could lead to a rough retest of 7577 (+/-) and potentially even new all-time highs.  If it breaks over 7512 immediately and begins to gain momentum, bears should watch out for this option.

Next up is the intermediate chart, which now features a couple of "early bearish partial confirmation" trend lines:

In conclusion, this is the inflection:  As long as bears hold below 7578, they have excellent odds. Option 3 above would act as the first early-warning signal (though that MIGHT only lead to a rough retest of 7578, it still wouldn't be ideal for bears to see).  We likewise have early warning signals for bulls (the trend lines).  Trade safe.

SPX and INDU Updates

On June 12, I talked about how INDU and NYA didn't seem to be playing along with the bear case, and both have since made new highs.

SPX has now rallied up to the rough retest of its prior high:

So bears probably can't afford too much more rally if they want to get a C-wave down.  I do suspect that if SPX forms another scary wave down, this is probably not the end of the bull market yet, based on INDU and NYA -- but I can't rule that out, of course.  Trade safe.

SPX and INDU: Narrator: "It Did Not"

Last update ended with: In conclusion, SPX looks straightforward, but there's not a ton of cross-market agreement right now.  And that alone is cause to avoid complacency.  Bears probably want to see INDU break down again fairly directly or they could be in for a larger rally. 

INDU did not break down -- in fact, it rallied:

And now SPX futures are indicating bears are indeed in for a larger rally:

So we'll just have to see how SPX does with its next inflection zones. Trade safe.

SPX and INDU: Holding the Bear Case to the Fire

So SPX performed almost exactly as drawn on the black projection in the prior update, but that doesn't mean we should rest on our laurels.  We should instead rest on someone else's laurels and save ours for a special occasion.  

No!  That's not what I intended to say when I started typing.  What I meant to say was:  as I looked through the charts last night I found several... "counterexamples" isn't exactly the right word, because they're not conclusive -- but in that vein.  Basically, charts that aren't quite playing along with the bear thesis (yet, anyway).  Let me show an example of what I mean:

NYA and BKX are also not looking... exactly "bearish" at this moment.  Again: yet.  They could always resolve that later... OR: maybe they're warning signs for bears.  It's a little early to say, but I'd be remiss not to mention it.  

Point is, markets are dynamic and the situation -- via INDU, NYA, BKX -- is, for the moment, seemingly in flux.  So we should at least entertain the possibility that the bear case may not be quite the slam dunk it looked like a couple days ago.  Maybe that will resolve in bears' favor in the next few sessions.  But we should stay open, in case it doesn't.

Looking at the bear side of things, we have SPX (and COMPQ looks similar):

In conclusion, SPX looks straightforward, but there's not a ton of cross-market agreement right now.  And that alone is cause to avoid complacency.  Bears probably want to see INDU break down again fairly directly or they could be in for a larger rally.  Trade safe.

SPX and COMPQ: A Larger Impulse Down

SPX did go on to form a larger impulse down, as suspected.  I spent a lot more time than I anticipated on the charts, so we're long on charts and short on text body today.  Let's start with intermediate SPX:

COMPQ, as promised:

Near-term SPX for a detailed look (typo: Occam's):

In conclusion, while a b-wave high is always possible (this would be bulls' lone remaining out, here), there's no clear evidence of one in the charts.  Thus, the assumption should probably be that the trend is now down, until proven otherwise.  

Note that it's hard to detail this without cluttering the charts, but something that approximates a retest of the high prior to the next down leg is "not impossible" in this scenario.  We'll play it by ear if bulls sustain trade out of the crash channel.  Trade safe.