Wednesday, September 24, 2014

NYA, SPX, INDU, COMPQ: "As Good as It Gets" for Bears

Last update noted that bears had an excellent shot at taking control of the market, and the subsequent sessions have gone well for bears.  The next couple sessions appears to be critical for bulls.  Let's get right to the charts, and we'll start with NYA, which again seems to be revealing the market more plainly than SPX or INDU.  Readers will recall that NYA suggested a bottom on September 15, and at the same time, revealed five waves down, which suggested a bounce toward 11,000, likely to be followed by new lows.

Presently, NYA has reached the first of two downside inflection points. 

If this is simply a corrective decline at a smaller wave degree, the market will likely bottom either directly, or at the blue 3/C on the chart -- this would complete the alternate count of 2 of (5).  If this is an intermediate bear wave, then NYA will instead ultimately go on to form a five wave decline (after blue 3/C, we'll have 4-up and 5-down), then it will bounce more significantly before declining again to new lows.  I'm favoring the idea that this is a bear wave.

A bigger picture look, via SPX:

COMPQ long-term:

COMPQ near-term (continued, next page):

INDU, which, in keeping with this chart's simplistic look at things, shows one reason why the bears may have more firepower heading forward:

In conclusion, while it's too early to entirely write-off the bulls just yet (as NYA shows), the market seems to be signaling that bears have some strength at their disposal.  I'm well-aware that we don't have five-waves down yet, so any calls for an intermediate turn are premature.  I don't care.  Considering that:

1.  Virtually all my intermediate upside targets were reached, and
2.  the wave structure fits for five complete rally waves, and
3.  the decline has shown a character-change from previous declines

I'm going to run with the idea that an intermediate correction has begun.  We'll watch NYA for signals that all those signs are wrong, though, because we always have to stay cognizant of the other side of the trade, and we don't yet have confirmation via a five-wave impulsive decline at higher degree.  As of this exact moment, though, things look pretty good for the bears, and I suspect confirmation will follow.  Trade safe.

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