Friday, June 14, 2019

INDU Update: No Material Change

Last update's SPX chart warned:  "We're entering the area where 2/B could complete, but the market might get whippy here."

Frankly, I couldn't have said it better myself.  In fact, pretty much nothing has happened since last update, so there's not much to add for this update.  INDU has continued to hold its black trend line (the line discussed in the prior update):

At this point, a slight break of that trend line wouldn't do any technical damage, and the more important zone is this week's low... but even that doesn't immediately do much damage to this chart, and bears will need a sustained breakdown to start shifting things away from the expanded flat discussed in the prior update.  We're now into a zone where the market can complicate that expanded flat if it so chooses, by turning that flat into a WXY -- which would mean another small ABC lower tacked on to the end of that flat prior to 2/B exceeding this week's high.

In conclusion, as noted last update, we did have an impulsive decline down from this week's high.  If you're of the bearish persuasion, then you could/would act against that high as your first pivot (this is definitely NOT trading advice, just discussion of the first obvious level)… but be aware that if the high was indeed part of an expanded flat as suspected, then it will be tested/broken in the coming sessions... but even if it's broken, my first count would be that any break would be wave 5 of C, which means it's likely to be a short-lived rally afterwards.

As I mentioned on the forum two days ago, I suspect the market has gone into a holding pattern until the results of the Fed meeting are out, and we learn whether or not the Fed saw its shadow and we get six more weeks of "no rate cuts."  (My guess is: "No rate cuts THIS time," followed by a bitter cackle from Jerome Powell, and a muttered, "you fools!")  I suspect the market has set itself up for disappointment here, the psychology of which (call that psychology "soon-to-be-dashed hope") has formed our 2/B rally.

But I digress -- the point is, nothing has changed since the prior update, and the first truly key level for bulls to claim is the all-time-high in SPX, while the first truly key levels for bears to claim is, frankly, unclear -- but a sustained breakdown at this week's low would at least be a start.  I also still tend to think (55/45) the rally wants at least one more high before dying for real.  Trade safe.

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