Friday, February 5, 2016

SPX and NYA: Big Picture Charts

Since last update, the market has barely moved on a closing basis, so there's no real change in my analysis since that update.  My first instinct was that the decline was the C-wave of a bullish expanded flat, and that possibility remains alive and well.  The immediately bearish option is still that ALL OF wave (4) completed at 1947, and there's nothing to rule that out yet, either.  If we were to try and simplify things, we'd say that bulls probably don't want to see 1872 fail in the near future -- but we have to stay aware that there are many complex corrective possibilities in the current wave.  So, for example, 1872 could fail as part of the c-wave of another b-wave, then rally back up to 1947, then decline back down, THEN bottom and rally again.  Or vice-versa.

Look, I realize I've been pretty noncommittal about the short term waves ever since January 21 (immediately after the downside targets were captured) and I don't like writing that type of analysis any more than you like reading it -- but, really, given how the market has behaved since January 21, has that approach not been entirely correct?  I think part of my duty as an analyst and a trader is to try to recognize (ideally in advance) when a pattern may not be as clear-cut as it seems, because chop zones can be account killers if you head into them expecting a trending move.

As it sits now, I can still see roughly 829,971 near-term possibilities in the wave structure.  Due to the myriad options, and the fact that nothing has really happened (on a closing basis) since last update, I'm not going to update the short-term waves today, except verbally, as follows:

Again, the simplistic view is that bulls want to hold 1872, while bears want to hold 1947 -- just remain aware that, due to the complex corrective potentials here, a breakout or breakdown could indicate the larger direction over the next 7-10 days or so, but for the very near-term, could certainly whipsaw directly and run to the other key level extreme before heading back to the original key level (the level it broke before the whipsaw).  Can a breakdown or breakout run immediately and strongly in the direction of the break?  Absolutely it could.  I'm simply warning that such an outcome isn't as clear-cut as it may seem.  In other words, those key levels could only be used as "trade triggers" if that approach is coupled with extreme caution.

So, instead of causing everyone's heads to explode by yammering on about all the noise-zone options, let's step back a bit and take a look at a couple big picture charts.  Let's start with NYA, which is currently pinned between support and resistance:

 Next up is a long-term chart of SPX:

In conclusion, there's no material change from last update for the near-term, or the big picture.  The market continues to look like it's trying to build a base, but, thus far, has been unable to break through any meaningful overhead resistance zones.  Trade safe.

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