Wednesday, May 20, 2020

SPX and NYA: Inflection Zone

Last Friday noted that first downside targets had been captured, and SPX (at least) has since rallied up to a new high.  NYA has not yet reached a new high, but did rally up right to the "or 2/B?" label that I'd placed on the chart.  And you know what that means.

That means we've reached an inflection zone.

We'll start with SPX (because I think I wrote a more descriptive annotation for SPX), and we'll return to NYA in a moment.

(Note chart typo:  "2988-3000" should be "2968-3000"-- 2968 being this week's high)

So we can see SPX has three up from 2766.  NYA has three up from 10,551.  Both can run a little bit higher and remain within the inflection zone, but if the market want to opt for the complex flat, they do not need to run any higher.

In conclusion, virtually every market I looked at last night appears to be three waves up from its most recent swing low.  This means that:

1.  If they are going to form impulse waves, they still need AT LEAST one more decent new high to complete a fifth wave (SPX would probably at least want to tag the zone near the solid blue line overhead).
2.  If they are going to form complex 3-3-5 flats, then they could stall fairly directly and head back below last week's low.

Thus, this is an inflection zone -- but a rather unpredictable one, as there's just no way for anyone to know if the market wants to form a complex flat until it gives some signals of such.  The first signal to watch on both markets would be a sustained breakdown of their black uptrend lines.  Trade safe.

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