Wednesday, December 2, 2015

BKX, SPX, RUT: Third Time's a Charm

Last update concluded: "While the market still hasn't cleared resistance, there's not much in the charts that appears terribly bearish at the moment."  Since then, SPX has rallied higher, through its first minor resistance zone.  The pattern into the high is presently very choppy, which either means we're about to launch higher, or that we're going to back and fill and then head higher.

While there are some solid options for a short-term top, it's tough to find a near-term pattern that argues for a meaningful top just yet.  Best case for bears says we probably have to chop sideways up first.  Best case for bulls says we're about to head off to the races again. We'll start with BKX to understand why:

SPX has similar options:

RUT shows that we've now officially tested the broken blue trend line for the third time.  "Third time's a charm," as they say in the charm-making industry, where they always commemorate the third instance of everything by crafting a low-quality charm-bracelet charm out of a mixture of copper and nickle.  These "everything that has ever happened three or more times" charms can be purchased on eBay for 99 cents or less, including free shipping via an "ePacket from China."  Although, they won't tell you the charm is made of copper and nickle; in fact, the new RUT Charm is being advertised as "14K Solid rolled Gold plated, with Genuine simulated Earth-mined synthetic Natural Diamonds!"  (Sorry for the random digression:  I've been doing some Christmas shopping on eBay, so I've learned to carefully read the "item description" a minimum of 17 times before bidding, because the auction title is often VERY misleading.)

In conclusion, some near-term chop wouldn't be at all surprising, but we presently have no indication that any kind of "final top" is in place, and the trend still appears to be up for the time being.  As noted last update, we'll continue watching for any signs of a turn in the form of an impulsive decline -- but while I'm cognizant of resistance here, I'm not really "top hunting," for reasons I've outlined over the past few updates.  The RUT pattern does bear watching, because we have a very similar fractal from about a year ago, and RUT is testing several layers of long-term resistance, so we'll see how the market reacts.  Trade safe.

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