Friday, March 11, 2016

SPX Update: Chop Zone Fun

Last update drove home then point that my interpretation was that the near-term downward wave was incomplete, then speculated on what that might mean for the bigger picture.  The near-term read was right, and there was indeed more downside still pending.  The speculation that followed that conclusion may not have been as accurate -- to be determined. 

For one thing, I had speculated that it was "at least possible" that SPX was forming a bear nest, but that was invalided at Thursday's open (when the prior relative highs were broken), which thus negated the potential bear nest targets.  SPX then went on to decline sharply, and then whipsawed the black support line. 

So, is that it for the decline?  Well, it's at least technically possible now that the anticipated new low was all she wrote for bears.  I'm still not a big fan of this market, because I've felt the big picture remained ambiguous (as I've stated quite often), so I'm simply doing the best I can to identify the near-term inflection points -- so far, each of those inflection points has generated a slight reversal that has lasted from 2 to 5 sessions, but bulls are then powering back up and through those zones.

To this point, we have had only small impulsive declines, but none at higher wave degree.  Until we see a larger impulsive decline, the trend remains up (impulse waves are the market's biggest "tells" as to larger trend).

The near-term bullish signal in yesterday's session was fairly clear:  SPX held the black trend line (I noted on Monday that this zone was important), then whipsawed its breakdown:

 Finally, shown below is one speculative option for the current pattern.  Take this with a grain of salt, because we could just break out and run instead of forming a complex pattern like this.  But this was my first instinct after studying the charts last night.  If 2009.13 holds, then bears have options for the retest to mark wave 2.  If 2009.13 breaks, then it could still mark a (b)-wave..

In conclusion, the wave remains open to interpretation at higher wave degree, and now the near-term pattern has formed itself into a chop zone.  My best guess is shown above.  Trade safe. 

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