Wednesday, March 30, 2016

SPX, INDU, NYA: Still Pointed Higher, but...

Last update's ever-so-slightly preferred count expected that the bottom was in for wave (4), and that a new high would be forthcoming in wave (5).  On Tuesday, Janet Yellen came out and said that the Fed is getting skittish about raising rates aggressively, and basically took the idea of an April rate hike off the table.  This leaves investors looking toward June, but of course, June is probably too close to the election for anyone to actually expect the Fed to raise rates then -- so, for all intents and purposes, Yellen just indicated there won't be any rate hikes until the end of 2016 at the absolute earliest.  And even then, THAT rate hike would only happen if everything looks super-incredibly-peachy, or if a Republican is elected, whichever comes first.

The market reacted as it usually does to any official proclamations that the Fed's Spiking of the Proverbial Punch Bowl will continue:  Prices rallied sharply, as shorts tripped all over each other trying to get out of the way of the inevitable "Rally Caused by Shorts Tripping All Over Each Other while Trying to Get Out of Their Own Way." (Unlike longs, shorts tend to be their own worst enemy.)

And thus it appears the ever-so-slightly preferred near-term count is in the process of coming to pass, which is good, because it means I pointed my readers in the right direction, and that's always the primary goal I try to accomplish with these updates.  It's also good because it means I don't have to adjust the charts much for today's update -- although I will also update one of the intermediate charts.

First is the Dow Jones Industrial Average 30-minute chart:

Next is NYA -- Monday's alternate "or 1" will be off the table north of 10,248.

Finally, an update to the intermediate SPX chart.  Since the market reached its downside target zones (way back in January), I've been warning that the position of this rally was extremely ambiguous in the bigger picture, and that it could run a lot farther than bears were expecting.  We're now getting into price territory that satisfies that potential.  One count I've been considering since the rally began was the potential that the low at 1810 SPX was a high degree B-wave, with the current rally as a high-degree C-wave (and this is why I haven't been anxious to short into this wave).  That count is shown in black below:

In conclusion, we're finally into price territory where I'm willing to make the assumption that "the top is closer than the bottom," but let's sum this up to keep ourselves grounded:

1.  SPX has not yet given any signs of a turn, which means higher prices (including a run to 2116+) are still very much on the table (a nice final "this is never gonna end!" fifth wave rally always makes great icing on the cake).

2.  I am front-running in my assumptions, so I cannot stress this enough:  We do not yet have an impulsive turn -- so 50 SPX points up from here is not out of the question.

3.  Again, readers need to understand that I'm warning ahead of the game (and, of course, could always be completely wrong), which means bears may be able to continue to afford a degree of patience because... 

4.  Until we see an impulsive turn, the trend at all degrees remains up. 

5.  The broader point I'm trying to make is that I would take the next impulsive decline seriously (when it arrives), because it has potential to mark a significant turn. 

Trade safe.

No comments:

Post a Comment