Wednesday, April 15, 2015

SPX and INDU: The Moment of Truth Arrives

Still no material change, but this is where things get really interesting.  SPX and INDU are within spitting distance of prior highs, and those prior highs have already demonstrated that they represent resistance -- yet, of course, this is where everyone wants to feel bullish, since we've been rallying for a while.  I would caution folks against becoming too bullish unless and until the market can sustain a breakout over this resistance zone.

INDU and SPX could both support one more marginal new high for this wave, without violating the bear counts:


Although I'm unwilling to favor the bull counts until resistance is claimed, I do always consider both sides of the trade, and try to look a few steps down the road.  On the bull side of the trade, each decline this month has been bought (so far), so let's end with a more detailed look at the bull count, in the event the market CAN break out here.  Do note that there are potentially enough waves for a complete triangle:

In conclusion, the moment of truth is here.  If this is a bearish corrective wave, then bears can allow one more minor new high, but do need to make a stand directly.  If it's a bull wave, then bulls have to show us that by powering through the prior resistance levels that they've struggled with on two occasions.  Either way, we should have some conclusive answers shortly.  Trade safe.

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