Wednesday, March 9, 2016

SPX, RUT, BKX: Targets Captured; Here Are the Next Key Levels

Monday's update noted that SPX had formed only its second impulsive decline since the rally began at 1810, and that trade below 1993 would confirm that read, and generate targets of 1987 and 1977.  At Monday's open, SPX broke 1993, and yesterday, SPX reached the 1977 target.

The question now is whether that's all she wrote for the decline, or if bears are just getting warmed up.  Let's take a look at the charts and see if we can answer that question.

First is the SPX one-minute chart:

What jumps out immediately on the SPX 10-minute chart is the break of the uptrend line, and the chart discusses the levels I'll be watching next:

Here it is again on the 30-minute chart:

Below is an update to the BKX chart I published on Monday -- and this market also captured its downside target, and then some. (Typo:  "Note the the..." should be "Note that the..."  This typo was brought to you by the Department of Redundancy Department.)

Finally, RUT encountered resistance at "the scene of the crime" breakdown zone I noted on March 4:

In conclusion, the downward wave does not appear complete.  There are certainly ways to count it "creatively" and come up with a complete downward correction, but that requires the use of some unconventional counting techniques, so that has to be considered lower probability at this stage.  Of course, if bulls can sustain a breakout over 2010, then all bearish bets are off for the moment, no matter how outlandish the wave looks. 

If I run with the assumption that the downward wave is incomplete, then I'm left trying to determine "How incomplete is it?" and the most likely answer would appear to be a bear nest.  In that event, we'd probably break the key overlap of 1962, thereby eliminating the most bullish near-term counts.  Thus, the final conclusion is that this bears presently have the best shot they've had for a trade-able top since the rally began at 1810.  Trade safe.

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