Friday, August 4, 2017

SPX, INDU, RUT: Market Fracture Continues

INDU has continued its relentless rally, it's now through Target 1 and headed toward T2.  Meanwhile, the rest of the market has been about as orderly as a preschool fire drill.  Everything seems to want to do its own thing, with RUT dropping straight down as INDU rallies straight up -- while BKX, SPX, et al, have been range trading.  I haven't seen a market this uncertain of its identity in a long time, and I still feel that suggests we're getting close to unraveling that larger fourth wave, because (as I've mentioned before), it suggests that there isn't enough liquidity around to rally everything at once.

And further, since INDU is rallying while RUT is falling, it implies there's been at least a near-term "risk off" mentality prevailing.

I don't feel like I can be a huge help on RUT at this exact moment, because this is a very unusual pattern, but folks have been asking for an update, so here it is.  It is possible 5 completed at its "minimum requirement," as discussed on July 26:

SPX is either an ultra-rare triple zigzag higher for a bearish wave 2/b (this has to be considered the underdog, simply because it's such a rare pattern), or it's not done heading higher (has to be the favorite, for that same reason):

In conclusion, I haven't seen a market this confused since the last time I attended an Andy Warhol auction.  But -- as I discussed on July 28 and 31 -- it still appears that some markets have further upside left, while bears may have seized, or be close to seizing, some degree of control in others.  Trade safe.

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