Friday, July 19, 2019

SPX and INDU: Bears Still One Wave Short as Market Continues Wrestling with Major Inflection

Nothing has changed in terms of the big picture, as the market continues playing with the current major inflection zone.  In terms of the near-term, bears are a wave short of getting their needed impulsive decline (see second chart).

Near-term, this is my best guess as to how the wave breaks down (below).  INDU (not shown) counts similarly.  During yesterday's session, I expected SPX would probably tag 2970ish before rallying, given that the channel line was there, but it fell about 2 points shy -- which (for everyone's future reference) can signal selling exhaustion and/or heightened buying pressure (everyone is tripping over themselves to get in, so they jump the gun just a hair and buy prior to the market tagging support).

The classic TA chart from Wednesday had value on the way down, but if the decline was just a corrective ABC, will probably not have as much value on the way back up.  There's really no such thing as "resistance" in a bull market, except when INSIDE a corrective wave that's trending lower.  Once that countertrend move ends, near term resistance vanishes with it.  The same thing happens in reverse during a bear market ("no such thing as support, except during near-term countertrends").

In conclusion, bears need another low to get in the game for more than the short-term.  From a classic TA standpoint, the next intermediate support/resistance zones (first chart) still appear clear.  Trade safe.

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