Friday, March 29, 2019

SPX and RUT: The Charts in More Detail

Last update I mentioned that, due to the expanded flat I spotted in ES, I was still unwilling to commit to the bear case, and that turned out to be the right decision.  Wednesday saw SPX decline back to retest its presumed C wave low, and then bounce strongly.

This gets a little tricky now, because we are dealing with a corrective wave, and corrective waves do not need to follow the same narrow rules as motive waves -- which makes corrective waves less predictable.  We have a potentially complete correction at 2785, so the market can rally right on up past 2860 if it wants -- but it also has the option to form a complex correction if it feels the need.  Accordingly, I've outlined both options in some detail.

Let's start with RUT, as many of my readers follow and trade this index:

Moving on to SPX, we'll look at the detailed count first:

And the bigger picture chart, which is unchanged:

In conclusion, the market has done what it needed for a complete correction, but always reserves the right to form a more complex correction if it feels the need (it does complex corrections to draw out time and price, and to confuse participants).  Both options are pointed higher for the near-term, but we should approach the upside inflection point in the next session or three.  If we see an impulsive turn from that inflection zone, then we're prepared and already alert to the potential of a complex correction.  Trade safe.

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