Friday, July 5, 2019

SPX and INDU: Market Captures Next Upside Target/Inflection Zone

Last Monday's update listed 2990-3000 as the next upside target/inflection zone, and SPX captured that on Wednesday.  Futures are already indicating that the market is indeed reacting to that inflection zone, and the e-mini S&P futures have (as of this instant) dropped about 20 points down from their overnight high.

Before I go any further, I want to clarify something for folks who may not entirely understand Elliott Wave:  ABCs are corrections to the larger trend.  Yesterday, a (casual?) reader accused me of "doom and gloom," which I thought was quite odd, inasmuch as I've prefaced virtually everything, for years now, in the context of an ongoing bull market.  This is evidenced by the fact that all of my projections have shown the decline waves as ABCs, not as primary first waves.  Even the potential larger C wave we've entertained on and off for the past couple months (and always conditionally entertained, at that) is ultimately the complete opposite of "doom and gloom" -- a C wave is always the final wave of a correction.  In other words:  a C-wave is not the start of a new primary downtrend, it's the end of a corrective countertrend decline -- thus it leads to new all-time highs.  In my mind, remaining long-term bullish, as I've done for a long time, is... well, it's the exact opposite of "doom and gloom."

I do try to identify the inflection points where bears may have a chance for at least a bit of short-term or intermediate-term relief, because, really, what else is there to do in a bull market?  And there's always money to be made on both sides of the trade.  Anyway, I think I've done a pretty solid job of identifying those inflection zones, as the market reacts to them with pretty regular consistency.  I've likewise done a solid job of identifying the inflection zones where the decline could end and turn back up -- and I try to warn bears to be cautious at such times, as I did on June 3 (see: Market Reaches First Important Inflection Zone).

But the broader point is:  ABCs are corrections against the next larger degree of trend.  If I give a projection for a decline and it shows ABC on the chart, then it's not "doom and gloom" -- not yet.  To the contrary:  It's long-term BULLISH.

Anyway, that concerned me, because I certainly don't want readers mistakenly thinking every ABC to the downside is the end of the world; it's not.

Moving on to today's charts, SPX ran right to the upside target/inflection zone, and the market is reacting to it.  I can't say for sure that "this is the last stand" for bears, but as I noted last update, they're running low on real estate, so if they can't hold the stand they're attempting here, they'll probably have to kick back and watch for a bit.

There really wasn't anything to add to INDU's chart:

In conclusion, the market has captured the prior target, and is reacting to that inflection zone.  As usual, the first step for bears to solidify their chances will be to form an impulsive decline.  If they can't, then the uptrend will continue.  If they can, then we'll look at solidifying some concrete downside projections.  Trade safe.

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