Monday, November 23, 2015

SPX and INDU: Charting the Muck

Last update expected there was probably some more upside due for the very short term, and Friday saw an opening pop.  That move then stalled, leaving all options on the table for now.  The issue I have at this moment is that the decline from 2116 is completely ambiguous, and could be either an impulse wave or an ABC, which leaves me hesitant to commit too heavily to a near-term outlook.

In looking at the total structure now from the 2116 high, one new option that comes to mind is a triangle, shown loosely below.  That's a pattern that would frustrate everyone, and might be fitting after all the strongly-trending moves we've had lately.  The market tends to cycle between trending waves and oscillating waves, and that's one of the ways it steals money from us:  Often, after the market has conditioned everyone to expect minimal moves, we get a huge move (think of the recent crash wave, and how many bears closed their positions way too early) -- and then, after we've become conditioned to expect huge moves, we get minimal moves.  Rinse and repeat until everyone has lost money.

The long-term INDU chart shows that we're back into the congestion zone of the first half of the year:

In conclusion, I really have nothing concrete to add, because we're still below the 2116 high, and I can't get a clear handle on that wave.  The double-retrace I discussed in the prior update is still on the table, and (most frustratingly) would actually remain on the table even in the event of a marginal new high.  The bottom line is that I'm still seeing ambiguity at multiple wave degrees -- so the market just isn't in a position where I'm terribly anxious to commit tons of capital right now.  As noted, this is often how it works.  Things will clarify again soon enough, and a higher-probability wave will emerge from the muck.  In the meantime, trade safe.  

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