Wednesday, March 4, 2015

Market Reaches Bull/Bear Inflection Point; Plus Another Look at the Long-term

Last update expected a stop-grabbing rally to run north of 2114, but anticipated that it would reverse to take out the 2103 low.  This is exactly what happened on Monday and Tuesday, so hopefully readers were prepared and reacted accordingly.

The market has now reached its first potentially-significant inflection point.  If the decline to 2098 was a corrective ABC, then it's probably complete.  The bearish count is that the decline from 2117 to 2098 was wave 1 of C/(3), which would mean the market would likely come under significant selling pressure south of 2098 (not necessarily immediately -- see INDU 1-minute comments), with a first target near 2080 +/-.

Here's a slightly wider view of SPX.  Note the black trend channel was both broken and back-tested during yesterday's session.  The rally is (so far) only an ABC up into that back-test, which may favor the bears.

INDU has broken and back-tested two trend lines recently:  (continued, next page)

A small warning to bears that even if yesterday's lows are broken directly after the open, there is at least the potential for a complex flat here, and we could see a rally toward or beyond yesterday's highs.  In the event that occurs, then that rally should be a decent sell (this is entirely contingent on the lows breaking FIRST).  I'm not making this call, because we're talking about 7.7 ten-thousandths of a percent here -- I'm just warning that it's possible.

TRAN is still looking ABCish off its January low.  Bull options are that 9214 marks wave i of either a new impulse, or part of an ending diagonal (which would still need two thrusts to minor new highs):

Finally, I'd like to step way back from the near-term charts and examine the big picture again.  This chart has a lengthy annotation, so I'll let that do all the talking:

In conclusion, the near-term counts have been winners for the last few updates, and we've now reached an apparent bull/bear inflection point.  We have clear levels to watch, thus it may be wise to allow the market to simply declare its next move.  Trade safe.

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