Friday, June 23, 2017

RUT, NDX, BKX, Oil: "Trade What You See"

Last update talked about how INDU had formed a near-term topping pattern, and that pattern thus made me inclined to lean bearish on all major indices... although for NDX, I wrote:

NDX is interesting -- and here, NDX would definitely look a bit better with another push up to 5800+, either immediately, or after another down/up move.

INDU has indeed continued lower since then, and it is likely poised to head lower still.  As for NDX, the reason I wrote the above on Wednesday was because NDX didn't look quite complete for a five wave rally (the chart showed/shows NDX in a c-wave, and c-waves are five-wave moves), but instead looked more like three waves.  Since then, NDX has added another wave up and rallied to the suggested 5800+ target (5802 to be exact), which fits the pattern for a C-wave -- and more importantly, allows such a wave to be complete in a clean manner (this is important for future charting down the road).  This of course doesn't mean NDX can't rally a bit higher fairly directly, but there are now at least enough waves in place for a completed, and clean, correction to red "bear: A/1":

BKX has been in a near-term downtrend after getting that final push higher I'd hoped for, and stalled repeatedly at the noted resistance zone.  BKX has actually dropped about 3% already since then -- so anyone who sold the red resistance zone might consider tightly-protecting at least some percentage of those profits, just in case everything goes haywire bullish out of nowhere (not that THAT has ever happened in this market).

Crude is unchanged -- and I'm mainly publishing this chart again simply because after I published the last one, I noticed that StockCharts had messed up a few of my labels (unbeknownst to me), so I simply wanted to fix them:

And finally, RUT broke 1399, which adds at least a bit more confidence to the bear case:

In conclusion, as I've been discussing recently, a number of markets appeared to have been aligning -- and now finally appear to be aligned in a way that makes a bearish move quite possible over the coming sessions.  If RUT, BKX, and NDX have all topped (or nearly so), then there is in fact potential for us to be on the cusp of a fairly significant downdraft.  So as long as bulls don't pull a surprise breakout from these patterns, it makes the most sense to continue to lean bearish and simply "trade what you see" (as they say).  Trade safe.

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