Wednesday, April 8, 2015

SPX and INDU Updates

I'm going to let the charts do most of the talking today.  Let's start with noting that the ending diagonal previously-discussed as the bull option no longer appears viable.  Now, that doesn't mean there are no bull options, it just means that the bull pattern would most likely be a triangle, not a diagonal.  A triangle would also explain the reason that the rallies have been corrective -- and the corrective rallies are largely what has led me to favor the more bearish options.

Now, that said, the declines have appeared to be impulsive, which doesn't fit the nature of a triangle, as both rallies and declines should be corrective in a triangle.  Therefore, I'm still inclined to favor the more bearish options, but this isn't a screamingly-clear call here...

Near-term, SPX has followed the "or (2)" path, and that wave may or may not be complete:

One market that leads me to continue granting bears a slight edge is TRAN, which has made new lows for the year:

INDU followed the near-term "best guess" path I laid out at the end of last month:

Note INDU's back test of the broken uptrend line. 

In conclusion, so far, there has been nothing truly unexpected from the market -- in fact, the potential for a double-retrace was outlined all the way back on March 27.  Due to the overall shape of the pattern, odds have to continue to be given to the bears, but we certainly can't say we haven't seen bulls pull out stranger upsets, so nothing would really surprise me at this point in the 6-year bull market.  If bears are going to turn things back down, then -- allowing for the possibility of another thrust to new highs to complete wave C -- the current zone is where that might begin.  Trade safe.

1 comment:

  1. Bulls vs Bears.....who would win ? ..... Da Bears (Mike Ditka).