Friday, July 7, 2017

SPX, RUT, INDU, NDX: Bulls Running Out of Real Estate

This market has been a near-term challenge lately -- to say the least -- but our intermediate "tell," which we established on June 16 (RUT), has remained bearish throughout all the noise:

We've also been on the right side with NDX, as we caught the last 230 points of decline, then have continued to note (since the target capture) that "no sustainable bottom is in place yet."

INDU was, if nothing else, at least quite orderly since the last update, responding as if on cue to each noted price zone:

SPX remains the most challenging pattern, though that could change soon:

In conclusion, RUT and NDX have kept us looking lower on an intermediate basis, and the overall market is still giving us reasons to hold to a "bearish until proven otherwise" stance.  If not for all the bear-pattern blow-ups of the past few years, I would be unabashedly bearish with what I'm seeing currently... but as it sits, I'm still a bit gun-shy until the following condition is met:  If SPX sustains a breakdown at the red line on the chart above, that would eliminate the (lower case) abc option and open up significant bear potentials, in the form of a large bearish nest of 1's and 2's.  Bull's main hope (if there's a breakdown) would be for an ending diagonal, but even that would not bottom immediately.  Just remember it's never a good idea to get too bearish this close to support -- some signals suggest it will fail, but in the end, either it breaks or it doesn't.  Trade safe.

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