Monday, July 1, 2019

SPX and INDU: Market Reaffirms the Importance of Impulsive Declines

So, given where futures are this morning, I'm trying to decide if I should berate myself or not.  While I was very slightly leaning toward the bigger picture bear case, I feel the last two updates were pretty clear in warning that bears had nothing to latch onto yet.  On Wednesday, I wrote:

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.

And then on Friday, I reiterated "no change" and added:

As I noted in the last update, bears do not yet have an impulsive decline to latch on to, and that remains the case as Friday begins.

I also reiterated on the SPX chart that "if the market is going to bounce, even up to new highs, this is still one zone where that bounce could begin."

So I'm thinking I probably should be glad that I was able to both hit the near term price targets and correctly identify the inflection zones.  I mean, those are probably fairly decent accomplishments in and of themselves.

If nothing else, the market's behavior has reaffirmed why I'm a stickler for impulsive declines.

But I still can't help but feel a little disappointed that things don't seem to be working out for bears in the bigger picture.

In conclusion, we'll give the market a little more room here, but very much more upside (i.e.- much beyond the noted 3000 SPX zone), and we'll probably have to put bear counts back on ice for the time being.  Trade safe.

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