Friday, March 27, 2015

SPX and INDU: Bears Having Fun

Last update noted that the bear count remained very slightly preferred, but that there had been no confirmation from the market yet.  Later that session, confirmation arrived in a big way, as INDU dropped through both noted key early confirmation levels, and the decline accelerated.  By Thursday, it had broken its prior March low, which officially confirmed the bear count:

Let's take a couple more looks at INDU, first via the old trend line chart, which shows INDU flirting with the previously-highlighted critical support zone.  Bulls likely need to hold that zone to stave off a complete retrace of the February rally.

And next, INDU via the daily chart, where the preferred intermediate count (as covered repeatedly for the past few weeks) remains intact:

Finally, SPX.  By all rights, it's difficult to imagine a pattern where SPX does not ultimately break the March low of 2039:

In conclusion, the market was indeed tipping its hand with the pattern from the March lows -- as I mentioned a number of time over the past few weeks, it was unlike any meaningful bottom we've seen from true bull waves (going all the way back to the start of the bull market in 2009).  My apologies to readers for not screaming more loudly to short the top, but let's face it, we're all a bit conditioned by years of bull market, and coming across as overly bearish when the pattern isn't crystal clear is still a little challenging for those of us who are NOT "perma-bears" by nature.

At present, it appears that the decline is not yet complete -- and it is potentially far from being complete, in the event of the blue path shown on INDU's chart.  While it's possible that the current small blue wave 4 could become more complex and rally further, this is hardly the spot for any degree of bullish complacency.  Trade safe.

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