SPX, INDU, BKX, USD/JPY: No "All Clear" for Bulls Just Yet

So here we are, 217 points off the low.  China cut rates.  The Fed decided not to raise rates, or at least postpone a rate increase, or will raise rates and keep rates the same all at once (depending on when you talk to Janet, and what sort of mood she's in on that particular day).  The Bank of Japan is maintaining the status quo.  Everyone is expecting SPX 2300 by next Thursday (weather permitting); bears are finally capitulating; and my last published upside target of 2090-95 SPX was captured.

So, the questions everyone wants answered now are some variation of:  Is there any more significant upside remaining; if so, how much?  Or is the rally over?

And the answer, as far as I'm concerned, is a resounding:  "I don't know."  I want readers to understand that, from here until such time as the market declares its next intention, in my opinion, projections can only be speculative.  Despite the massive rally, arguments can still be made for the bear case.  Arguments can also be made for the bull case.  But the fractal, at this exact moment in time, could be viable as several different things.  It could be a complete/nearly complete bear fractal, or it could be an incomplete bull fractal.

The funny thing is:  When we were near the all-time-high earlier this year, I began leaning bearish when lots of folks were still bullish.  AFTER the market dropped, then the naysayers turned bearish -- too late.  I was bullish on the retest of the crash low last month, when lots of folks were still bearish, and I continued to lean bullish for 200+ points.  Now that the market has rallied those couple hundred points, lots of folks have turned bullish.  Is it again "too late"?  Well, I'm not sure.  But it's certainly possible.

When I look at equities charts, I'm inclined to think the rally may have a bit farther to run, but the chart that has me cautious here is USD/JPY.  USD/JPY is highly correlated with equities, somewhere in the neighborhood of 80% correlated in recent years, so this is worth paying attention to.  For purposes of illustration, I've outlined the bear count on the chart below.  This is certainly not the ONLY count, but until bulls can sustain a breakout, it probably has a slight edge:

Now, even if the bear count is in play on the chart above, equities can certainly continue to rally without USD/JPY rallying too.  Even 80% correlated means 20% total chaos, so this isn't a nail in the coffin of equities.  But, again, it's worth watching heading forward, and it's keeping me from joining the "SPX 2300" camp just yet.  A sustained breakout (not a head-fake, obviously) might change that, and signal more of an all-clear for equities.

One potential that falls short of being a "rah-rah, to the moon!" count is as shown on October 16.  This option might fit well with a deep decline in USD/JPY -- that is, if such a decline were to occur, of course:

BKX came within .86 of its preferred target so far:

Finally, SPX has captured every target I've published for several straight weeks.  At the moment, I have no strong opinion, because the pattern could be any of several things:

In conclusion, right now, there are more questions than there are answers about this market.  The pattern could be several different things at this stage, and getting married to one of the options is probably not advisable at this moment.  While bulls have been running with the ball, USD/JPY does warn that there is at least potential for things to slow down or reverse.  The pattern in USD/JPY isn't exactly a "lock," though, so perhaps bulls will break out there and erase any concerns.  The bottom line is that all of that remains to be seen for now.  Trade safe.