In the past couple updates, I talked about how the market appeared fractured and undecided, and suggested that this hinted there may be some curveballs coming. On Monday, SPX threw its first curveball to bulls, though this move had been telegraphed rather plainly by BKX all the way back on Thursday. (I showed the BKX chart on Friday, then on Monday I suggested that readers refer back to Friday's charts via "no change since Friday.")
BKX did indeed break its April 22 low, as the preferred count (in fact, the only count I labeled) anticipated. Now it enters into territory where the pattern can go either way. The first chart below is how bulls would count the decline, but I'm not entirely sold that this is the only interpretation (see second chart that follows).
This next chart discusses a more bearish option:
Since SPX is still inside the chop zone, there are a great many options that remain in play, so I've decided it might help to move the bull and bear counts onto different charts. We'll start with the bull count, which still has the potential for some nice near-term bearish twists:
The bear count has two near-term variations, but one intermediate end result. I've discussed some of the warning signs in the annotation at the bottom. (continued, next page)
Still no real progress in INDU, and the March highs remain intact for the moment:
In conclusion, the market has been warning that it remains undecided, and indices remain fractured heading into the Fed press conference today, and that could be a recipe for some wild price action. My preference at times like this is to outline the options as objectively as possible -- so, hopefully I've outlined the signals well-enough to be of some help in real-time as the action unfolds today. Ideally, we'll see markets sync up in the next session or two, after the Fed does their thing. Trade safe.