Wednesday, August 7, 2019

SPX and INDU: Hanging by a Thread

Last update talked about the significance of the black intermediate uptrend channel, and INDU and SPX have since broken that channel, but INDU made it back over, while SPX has merely back-tested it (so far).  The move in SPX is commonly called "the kiss of death," and if that's all bulls can muster, they're in continued trouble.

Let's look at INDU first:

SPX below:

Now, I hesitate to say this next part because counting this wave is an exercise in insanity, and we're right at an inflection point... but my best-guess count is that we probably still need at least one more fifth wave to new lows -- possibly even two more (meaning new low, bounce, and then another low beneath that new low).  So if you forced me to make a prediction here, I'd be inclined to think that we at least retest the most recent low, and if we break it by much, then the targets on the SPX chart come into play.  That said, here are the caveats:

In conclusion, the market is at an inflection point here -- if bulls can whipsaw the most recent channel breakdown, then they could put together a solid rally.  So far, in SPX anyway, they haven't even gotten back into the channel, though -- and a sound rejection of yesterday's back-test would be bearish.  Trade safe.

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