Monday, November 30, 2015

SPX, BKX, RUT: Market Continues to Challenge Resistance

Last update noted that some concrete potentials were emerging from the muck, and, indeed, there has been at least one event of significance since last update:  RUT broke above 1200.  This is significant because the market is beginning to rule out at least some of the IT bear potentials.  Let's jump right into the charts, starting with RUT's 30 minute chart:

Bigger picture, RUT is now in the process of testing the broken long-term uptrend line for the third time.  This may be one time too many for bears, as one rarely sees three tests of a broken trend line if that trend break were to indicate that the trend has changed.  One or two tests is more common -- when you get three, it sometimes indicates that the market is going to barrel its way right back into that previous trend (in this case: up).  And if you get a fourth test, then it's usually a sign the the primary trend is about to resume.  We'll see what happens next, and watch for any signs that contradict the above theory.

Since the November 25 update, BKX has proved that the impulsive interpretation of the final near-term wave was correct:

Finally, SPX hasn't done anything since last update, but has been consolidating beneath resistance:

In conclusion, SPX remains below prior resistance, but RUT is attempting a breakout through the 1200 level.  While the market still hasn't cleared resistance, there's not much in the charts that appears terribly bearish at the moment.  Until we begin to see impulsive declines, the "threat" of resistance is really the only thing bears have in their favor.  Trade safe.

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