Monday, March 28, 2016

INDU and NYA: Near-term Focus

No material change from last update:  Equities are significantly overbought, thus I'd be surprised if the market moves markedly higher from here in the near future.  That said, another smallish wave up to mark a fifth and final rally leg wouldn't be surprising.

Since we've been looking at intermediate charts for a while, we're just going to look at near-term charts today.  On INDU's chart below, we can see that there are enough waves for a complete (C)-wave rally, but a final fifth wave would also fit the pattern just fine:

INDU's chart is a little scary for bears, because there are no overlaps at all, which leaves open much more bullish potentials than I'm favoring -- however, NYA helps assuage some of those fears, since it has overlapped its most recent relative highs:

In conclusion, I'll end where I began:  I'd be surprised if the market rallies significantly from here, but one more small leg higher would fit the pattern just fine.  (It's a very tough call as to whether the rally still needs a fifth wave or not.)  If bears can force a sustained breakdown of Thursday's low immediately, then we are either looking at a more complex fourth wave, or the start of a meaningful turn.  In either case, as outlined in the last update, it does appear that the rally is about due for a breather.  Trade safe.

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