Monday, February 2, 2015

SPX and INDU Updates

Last update expected lower prices over the near term, and the market obliged.  There were two near-term wave counts shown for INDU, and INDU closed right on Friday's target for the more conservative of the two counts, at the blue (B)/2 label.  This is the moment of truth, and if INDU sustains a breakdown at 17136, then we'll have confirmation of at least a fifth wave decline underway. 

Building the next larger wave degree from the current near-term pattern, if INDU breaks 17136 immediately, then we can probably expect a test or breach of the 200 DMA:

An additional INDU one-minute chart contains some further discussion on the pattern:

No change to the SPX counts:

And a more basic support/resistance chart on SPX:

In conclusion, on an intermediate basis, there's no change from Friday's update (or the updates of the past few months, for that matter).  Basis near-term, a breakdown here would need to be respected as holding at least considerable bearish potential energy, and I would not look for an immediate bottom in that event, but expect at least some degree of follow-through.

On a near-term basis, on Friday, the market was expected to decline to test the recent lows at the minimum, and that's what happened -- so now we've hit the first inflection point, and there's simply not much more to be done in the way of analysis until the market declares its next intention.   Trade safe.


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