Monday, November 14, 2016

SPX and INDU Updates

Friday was an inside day, remaining within the range of Thursday's prices.  This leaves things little changed from the prior update, so today we're simply going to give the bulls some additional intermediate airtime via the Dow Jones Industrial Average.

First up is SPX, which hasn't changed materially.  I am still very alert to the fact that SPX found support and staged a strong rally from the standing tongue-in-cheek "Bull 2 (or something)" zone that has been posted on this chart for a couple months now.  That's one of the fun things about Elliott Wave -- you might not always be able to predict exactly what the market will do, but you can often identify the key inflection points that could reverse the market.  As they say, forewarned is forearmed... so at least the possibility of a strong bounce/rally from the 2100 zone was something we were aware of well ahead of time.

On INDU, I've filled in a few of the potential bull targets with a bit more detail.  I really didn't buy into the pattern as huge 1-2 bull nest, but if INDU doesn't reverse soon, then I'm going to have no reasonable choice but to treat it as that most bullish 1-2 option until the market says not to.  As I discussed back in July, this has always been a difficult pattern for bears, because (as I wrote then) "their main hope is a big counter-trend decline."  So if this breakout sticks, then we'll just have to assume that counter-trend decline isn't going to be materializing for the time being.

In conclusion, it's still "last call for bears."  So far, they've managed to at least slow, and partially reverse, the rally at the 2180 SPX inflection point.  But from here, if bulls can sustain a solid breakout over the all-time-high, then bears will probably need to hibernate for a while.  There is significant potential energy in this pattern, so bulls may be able to capitalize on that and keep the rally going for longer than will seem reasonable.  Trade safe.

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