Friday, May 29, 2020

SPX and COMPQ: Caveat Emptor

Last update, we discussed the two leading options for SPX, both of which were near-term bullish (as shown by the chart labels), but one of which then turns bearish for a time.  Yesterday, we rallied exactly up to the first label and reversed:

Note that even if we're in the Red (1)/(2) count, that doesn't mean we can't do a little bit more sideways/up before completing Red (1), but it's definitely worth watching.

Last update we also discussed some of the pressures that seemed to be leading us toward the completion of a Supercycle top, and the riots we've seen since may be an early glimpse of the powder keg that's brewing beneath the surface.  While the horrifying death of George Floyd is ostensibly the spark that lit the fuse for this dynamite, that was not, I believe, the dynamite itself.  The dynamite itself has been lying dormant for some time, and future situations will likely ignite it further.

But I don't have enough time to get into more detail on that right now, so suffice to say this is perhaps a harbinger of things to come.

Near-term, we have some trend lines to watch:

Also wanted to point out the potential megaphone in COMPQ:

In conclusion, SPX rallied up to the (first zone) of the Red (1) inflection and turned.  Because the inflection stretches a bit beyond that label, bulls should stay on their toes here, even if we run a little higher, and even moreso if we sustain an immediate breakdown at the black trend line.  Trade safe.

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