Wednesday, February 4, 2015

SPX and INDU Updates: No Surprises So Far...

In the last two updates, the preferred count expected new lows south of 1988 SPX, followed by a strong rally, which is exactly what we've gotten since then.  There is thus no material change to the outlook, though in the interest of prudence, I've noted the current inflection zone on the charts.

Let's start with SPX:

Next, let's take a closer look at the wave count which could underpin the current inflection zone.  We'll start with INDU, because I've detailed that count more specifically on that chart.  The count in black is considered the alternate count for now:

The alternate count on the SPX chart is essentially the same as INDU, so is painted only in broad strokes on the SPX chart:

Here's a bigger-picture view of INDU via the daily chart.  INDU and SPX are largely expected to move in a very similar, though not necessarily exact, fashion.

Finally, INDU's 5-minute chart below:


In conclusion, there's no material change to the outlook since last week, and it is currently still anticipated that this is a corrective rally, which will ultimately end with new lows for the intermediate term.  Nevertheless, I would be remiss to not at least mention that, with the recent new lows, the bulls have finally opened up at least the potential now for new highs over the intermediate term.  That bull count is being viewed as a heavy underdog right now, because, presently, the best fit for the charts is still that this rally is a correction to a new downtrend.  Thus we'll cover the bull count in more detail only if it becomes appropriate to do so.

It's worth noting that the current rally fits as a c-wave, since c-waves function as the great imposter.  The job of a c-wave is to convince everyone that the trend has changed -- so the purpose of this rally is to convince everyone that the "correction" is over, that the market has sounded the all-clear, and to make as many people bullish again as it possibly can.  Trade safe.

1 comment:

  1. Excellent call for Feb 2 bottom. I've only been following your work for a couple of weeks, but easily the best I've seen. You only look at EW, but Dow daily timing seems to line up with what I expect for ECB/Greek crisis - a Feb 28 debt deadline and probable Apr resolution/Greexit.