Monday, August 17, 2015

SPX, BKX, NDX: This Market Loves It Some Complex Corrections

Friday's update was a live, forum-only update, and anticipated SPX would make a high at either 2089 or 2092.  (Please note:  If you have recently applied to the forum, your account will be activated within the next 24-48 hours).  As of this morning, SPX has indeed reversed at 2092, and profits should be easy to protect or capture heading forward.

The overall pattern at this point is, quite frankly, an absolute nightmare to try and get an exact handle on, but nevertheless, I've tried to narrow down the options.  Let's start with NDX:

SPX is, so far, following the preferred path.  Whether it will continue to do so remains to be seen, of course, but starting off the day 10 points in the black is always a good thing.

The next chart shows the same count, but zoomed out a bit.  Do note that in the event that SPX cannot break 2078, more bullish options remain on the table.  Also note that we appear to be in an expanded flat, which wholly reserves the right to break 2078, then form a more complex (2)/B right back up to the high.  Not everything can be anticipated in advance...

Finally, I drew up this simple BKX chart back when the futures were still green on Sunday, primarily to help convince (or un-convince!) myself that shorting 2089 SPX was a smart move -- but I'll share it anyway, for educational purposes:

In conclusion, we're essentially still within the noise zone, which has lasted for the entire year, and it's getting harder and harder to interpret the near-term structure, due to the fact that there are simply too many options that remain technically valid.  So, boiling the preferred count down to its most basic common denominator, things are unchanged from the last few months:  The preferred intermediate count remains bearish.  It's primarily a question of exactly how we get there.

Note that the "best guess" is for near-term weakness, which is then bought back up north of Thursday's highs, as shown in the charts above.  Trade safe.

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