Wednesday, June 26, 2019

SPX and INDU: First Downside Target Captured, but Bulls Not Knocked Out Just Yet

Monday's update noted that SPX appeared to have formed a potential ending diagonal terminal pattern at Friday's high, and gave the first key level for bears to claim as 2940 SPX, with that statement that:

"Much below 40, and bears could take aim at 2915ish."

Yesterday's low was 2916.01.

Now, one of the reasons I called out the 2915ish zone is because there is some potential support in this zone, which usually means a bounce (futures are already indicating that the market is indeed reacting to this support zone), and CAN mean much more than a bounce (i.e.- the end of the decline).  Given the nature of the pattern, I'm not currently favoring the decline being over just yet -- but I should note that (as long time readers know), I'm something of a stickler for impulse waves as an "official" signal, and we do not yet have a complete impulse down -- so if the market wants to do something screwy here and get bulls back in the game, I can't guarantee that it doesn't.

Again, though, I'm not presently favoring that, but bears shouldn't get too complacent here.

Bigger picture, bears have kept alive the deeper corrective C-wave decline, which ideally would take us down below 2802, and in a perfect world, back toward the 2710 zone (possibly beyond -- we'll worry about that if/when we get there).  I still haven't updated this chart since June 21 (partially because there's been no need to):

INDU is in a similar position to SPX (as usual):

In conclusion, everything is going as well as it can for the preferred count as of this moment, but it's not uncommon for the market to react to inflection points (such as last week's B-wave inflection) -- so, because we do not yet have an impulsive decline (only 3 waves down -- and the 3 waves could even support another new low without forming an impulse yet), we have to at least respect that there's been no "official" knockout dealt to the bulls.  Thus, while things are proceeding in the right direction, bears should still remain on their toes for the time being.  Trade safe.

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