Wednesday, September 6, 2017

SPX, NDX, BKX: Market Throwing Some Mixed Signals

So they're keeping things interesting.

On the one hand, we have NDX, which made a new all-time-high during the last rally, but has (so far) not formed a complete-looking wave structure.  That suggests that either the recent drop was just a fourth wave in NDX, or the ATH is a b-wave. 

On the other hand, we have BKX, which rallied from its inflection point, but has since broken back below it.  And which looks increasingly like a bear nest. 

And in the middle we have SPX, which didn't quite rally high enough to meet the guidelines for a 3-3-5 flat (came very close) -- although that's not a complete death sentence for the flat (in this case we're dealing with a guideline, not a rule). 

SPX dropped sharply, but didn't break the prior low, so it hasn't locked-in a three wave rally just yet.  Accordingly, it still has a lot of options on the table, including the discussed flat, the option for a triangle (mentioned below), and other possibilities.  At this point, a sustained breakout/breakdown beyond the edges of the recent range implies some degree of follow-trough (subject to change if the pattern changes, of course.)

In conclusion, there's no overarching theme permeating the market right now.  Bears can hope that BKX is a bear nest, while bulls can hope that NDX fulfils its bullish fourth wave potential.  Whether either of those things happen, and whether either of those things will mean much to the broad market, remains to be seen.  Accordingly, this is a mixed signal market at the moment, with nothing pointing a clear way to a high-probability outcome.  That can always change in a single session, though, so we'll keep watching for additional clues.  Trade safe.

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