Monday, May 15, 2017

SPX, RUT, BKX, INDU: Giving the Bears Some Airtime

It appears that it's time to begin an increasing focus on the bear case, since a larger correction is likely drawing near.  SPX probably still has another fourth and fifth wave left to unwind (there's a slight chance that wave has already unwound, but that looks like the underdog right now), and thus may still make another higher-high, but the larger third wave rally we've been tracking since November appears to finally be nearing completion.

Accordingly, we're going to look mainly at bear signals that seem to be manifesting across various markets.  We'll start with the trusty SPX chart that has remained materially unchanged for the past 7 straight months:

Next, we'll look at RUT, which may be leading the way.

A larger view of RUT (continued, next page):

INDU's bear chart, which I first published a few weeks ago -- the near-term projection I published played out reasonably well, and INDU captured both downside target zones:

Finally, BKX is another market that seems to be leading, and it suggests a deeper correction is already underway in the banks:

In conclusion, things seem to be aligning reasonably well for a bearish move to finally get underway.  Keep in mind that presently it's not projected that this will be the "end of the bull market" just yet -- but even that seems to be getting close, as we may only have one large fourth and fifth wave left to unwind before a much bigger correction kicks in.  And that correction would be a correction to the entire bull run since 2009, so it will probably take the form of an actual bear market.  (We're not quite there just yet, so let's not put the cart TOO far ahead of the horse.)  In the meantime, another high in SPX (perhaps into the 2410-20 zone) would fit just fine, but in all likelihood, a larger fourth wave correction is finally looming.  Trade safe.

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