Wednesday, December 10, 2014

SPX, COMPQ, INDU: A Game of Inches

Monday's update was near-term bearish, with three downside target zones, but still bullish for an eventual new all-time high.  All three downside targets were captured and exceeded, and I probably did some over-thinking on Monday, due to all the options for the pattern.  Prior to that, my original concern had been that a more complex wave (4) could form and take SPX below 2049, and it now appears that may be exactly what happened:

A bit more detail on the 15-minute chart:

COMPQ performed right in line with expectations, and the A-wave was indeed a warning for the rest of the market, as originally discussed on December 5.

Let's step away from the near-term charts for a moment, and take a look at the big picture.  I updated this chart for everyone on December 1, but apparently I then forgot to publish it (!) -- so as far as the general public is concerned, I haven't updated the big-picture chart in several weeks.

This appears to be a game of inches for bulls right now, but ideally, I'd still like to see new highs in RUT and NYA  -- and, by extension, SPX (interesting to note that RUT was up 1.8% yesterday).

(continued, next page)

A quick look at INDU's daily reveals a bullish wick on yesterday's daily candle (SPX even moreso -- not shown).

In conclusion, in a perfect world, we've finally completed a complex fourth wave correction, and SPX and COMPQ will make new swing highs against Tuesday's low.  However, due to the impulsive nature of the decline, bulls probably want to avoid complacency here, as it's currently expected that the market is completing five waves at multiple degrees of trend, and a deeper correction is expected to follow.  Bear options begin to open up below 2030-34.  Trade safe.

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