Friday, November 10, 2017

SPX Update: Far from Clear-Cut

In the prior update, I warned of the potential for an expanded flat, and the market dropped to within 2 points of the expanded flat target zone.  But it didn't quite get there, and that leaves some questions on the table.

First, let's look at the longer-term chart.  Readers will recall where black "alt: ii" was the last time I updated this chart (hint:  it was right where "red ii" is now):

In a perfect world, that would be it, and everything would be wonderful from here on out -- but this is not a perfect world.  There are markets where you can say, "Oh yeah, that's it, we're now headed to X..." -- and then there are markets like this one.  This is an anti-complacency market right now, as we'll see on the chart below:

In conclusion, there are still plenty of ways for this market to cause pain, not the least of which would be the aforementioned ending diagonal.  The thing that bothers me is that blue C looks more like a 3-wave move than an impulse.  And it's supposed to be an impulse.  If I really stretch my brain, I can find a way to count it as an impulse, but we have to at least consider that maybe it simply isn't -- which would mean that it's the ABC of wave I of a diagonal, or it's the ABC it appears to be, to mark black (A).  Or, and here's one for the bears... or it's part of a bear nest.  This is why any sustained breakdown at 2566 would have to be treated with extreme caution.

The first warning on the chart above would be a sustained breakdown at the blue trend line -- if that fails, then 2566 would have a good chance of failing as well.  Trade safe.

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