Friday, November 7, 2014

SPX, INDU: SPX Targets Reached, INDU Targets Exceeded

During yesterday's session, SPX reached its next target zone (2028-31), so we'll see if that generates anything by way of reaction.  So far during this rally, there have been minor reversals at the pivot zones and targets I've noted along the way, but there still has been nothing in the way of a clear impulsive decline for bears to take seriously.  I keep hearing bears talk about how they're short, and I cringe a bit when I hear this, because, since this rally started, there has been nothing in the way of a concrete signal to short this market for more than a near-term trade.

Maybe that will change after today's session, who knows.  But there are times it's a high-probability trade to short a market, and there are times to either go long or stand aside -- and it's important to respect the difference.  Personally, I haven't been the World's Greatest Bull during this rally, but I certainly haven't been anything approaching bearish during the majority of this run-up.

So, for awareness sake, I have illustrated one bull count in a bit more detail on the chart below:

Near-term, the next targets were hit, and the count has two interpretations.  There are potentially enough waves in place for a complete five-wave structure.

INDU reached, and exceeded, its next target:

INDU's near-term chart below.  In the event the rising wedge has any validity, a breakdown could lead INDU a couple hundred points lower.

In conclusion, there has still been nothing in the way of a clear impulsive decline to indicate that bears are gaining control.  Maybe today will be the session that changes that -- but until it happens, we have to continue to respect the trend.  Trade safe.

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