Monday, June 20, 2016

SPX and INDU: A Bit More Detail

Last update was 90% caveats and 10% update.  Bears managed to turn the market down almost immediately on Friday, which confirmed that the micro-count I posted for NYA (of a completed five-wave rally) was correct, but the idea that it could be wave c of an expanded flat was a bust.  Today it appears that complete five wave rally was definitely not a c-wave -- it was either wave-a or wave 1.

I remain a bit head-tripped over the fact that SPX found support right at the 2054 inflection point from June 10.  I'm head-tripped because that was the inflection point for the most bullish count I could find on June 10.  I don't think many other technicians are as worried about it -- probably because they didn't/don't even see the expanded flat count I was worried about (I posted that count publicly on Friday, so they probably "see" it now.). 

The linear thinking here says "we had an impulsive decline, therefore we're due for an ABC rally and another impulsive decline."  That's the most obvious read, therefore that's the read most Elliotticians will probably be tracking.  I hope, for bears, that it really is THAT simple.  But the one time that an impulsive decline can mark the end of a move instead of the beginning of a move is when that impulse is an expanded flat c-wave (bulls, of course, will be rooting for this outcome).

Frankly, I wouldn't be as worried about it if the market hadn't bottomed where it did.  What I didn't discuss back on June 10 was that the second target/inflection point (2054 +/-) I had calculated was potentially the most bullish of the three, because it was where the market would bottom for a second or b-wave retrace.  Now, to give some small encouragement to bears:  One thing I've learned over the years is that if you read the waves right, you can often find the inflection points for possible counts and the market will honor those inflection points whether that count is "the" count or not.  It's almost as if the market knows what to do to create maximum ambiguity, so it bottoms or tops at an inflection point even if it intends to break that inflection point later.  Maybe that's what will happen here. 

But to wrap that point up: all of the above is why I'm head-tripped right now.  And that's why I'm being more cautious than I might otherwise be.

So, with that out of the way, here are the current options:

The options are essentially the same for SPX:

Note I've included the "true bull" target of 2175-80 on the chart above -- that's in the event that 2150 marks the bottom of the c-wave of an expanded flat 2nd wave.  Do note that SPX can break 2120 and bears do still have some options until 2132 is claimed.

In conclusion, it's entirely possible I'm over-complicating this wave, simply because I'm seeing a possibility that most people probably aren't seeing.  Sometimes seeing the "non-obvious" counts actually puts you at a disadvantage if the market is intending to behave in a straightforward fashion.  There aren't any other clear "tells" right now that allow us to eliminate that more complex count -- but way back at the lows, I did feel the rally was probably a larger B-wave, so for now, that's what I'm going to continue defaulting to until the market proves otherwise.  I'm just not crazy about the near-term pattern now, so take that for what it's worth.  Bears need to break 2050 to make things "straightforward" again.  Trade safe.

No comments:

Post a Comment