Monday, May 16, 2016

SPX and INDU Updates: Bears on the Verge

Since SPX captured Target 2 back on May 6, I have been "very slightly" favoring the bearish near-term count of an expanded flat, and it's beginning to look like I never should have doubted my initial read from May 4 (which was that any immediate bounce from the 2040 zone should be sold north of 2083).

SPX failed to make a new low on Friday, but INDU did, as did NYA and BKX.  BKX is now below its apparent key overlap, which suggests that the remaining bull pattern there is for an ending diagonal or similar.  Intermediate-term, the odds that ALL OF C are complete are increasing, though we still can't rule out a final thrust higher in SPX.

The preferred intermediate count remains unchanged over the past few months, and I'm still inclined to believe that the low from earlier this year will be broken:

Near-term, I've added a second, lower target based on the current pattern, though of course 2039 needs to be broken to confirm Target 1 and 2:

INDU appears to be one of several markets that likely provides a tell for SPX:

Bigger picture, INDU is attempting to whipsaw its recent breakout, which will create bearish potential energy if the attempt is successful:

In conclusion, the "very slightly favored" near-term count is on the verge of proving itself correct.  The preferred intermediate outlook remains bearish, and odds are increasing that ALL OF C completed at 2111 and an intermediate turn is underway.  Trade safe.

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