Friday, February 7, 2020

SPX and INDU Updates: Out on a Limb

Last update noted that:

One ongoing possibility is for the low in SPX to be a b-wave low instead of an impulse, which would put the market in a complex 3-3-5 flat. Such a flat could make a new all-time high, then reverse not too long after and retest the recent low.

For now, that's the count I'm going with, though the first step bears need to accomplish is a sustained breakdown at 3325 in SPX, and sustained breakdowns as shown below in INDU:

IF the C-wave decline is correct, it could play out something like this:

SPX would count as follows, and would follow a similar path to INDU. If this count is even correct -- and so far, we don't have an impulsive decline, so this could either be wrong, or be early (the rally could continue a little higher if it wanted without causing problems for this count immediately).

In conclusion, long-time readers know that it's rare I only publish one count, so keep in mind that there are many caveats here, and I can't guarantee that the rally doesn't continue unabated.  Nevertheless, for the time being, the count shown above is the count I'm going to favor until the market says otherwise (a significant continuation of the rally would create problems for the above count).  As noted, there are some early key levels to watch (3325 SPX, INDU trend lines) that would help add slight confidence to this count.  If the market holds those levels, then patience is probably in order.  Trade safe.

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