Wednesday, November 22, 2017

SPX and INDU Updates

This market has been quite a bit more fun than riding in a one-horse open sleigh when you're soaking wet and it's -40 degrees out.  And your horse is rabid.  And your sleigh is made of razor wire.  And you're being pursued by Evil Elves who have Janet Yellen's face on their otherwise-normal little elven bodies.  And they're wielding rocket launchers.

Last update noted that the prior decline was an impulse, and caveated that it could be an expanded flat c-wave -- and of course it was an expanded flat c-wave.  Then SPX went on to best the all-time-high.  And now it has answered exactly nothing, because the discussed (B) wave is still possible, but it's also possible that we're already in red 3 (which was the prior alternate count).  The only plus is that I believed from the beginning that the last dip was corrective, and at least now we know for a fact that this was correct.  I guess, to be fair on myself, I did warn repeatedly that the prior chop zone made the near-term increasingly difficult to predict -- but I'm still bugged.

It's interesting to note that INDU managed to work off its severe overbought condition without giving up much in the way of price.  As I indicated in October, when a market gets that overbought, it's actually a fairly reliable and bullish signal that continued upside will follow the next correction.  It will be interesting to see if INDU mirrors its behavior from a year ago in this regard:

In conclusion, the question we all want answered is:  How do we tell now if this is a (B) wave, or if we're already in red 3 and headed toward the next targets?  The only real answer is that bulls probably need to see some fairly immediate follow-through.  Frankly, there's almost nothing harder than trying to predict an expanded flat B-wave -- so this either is or it isn't, and the market simply has to lead from here. 

Either way, Happy Thanksgiving to all my readers!  Trade safe.

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