Friday, August 27, 2021

SPX and NYA: One for the Bears

Last update noted that a sustained breakout over the long-running black trend line should get SPX into the upper portion of the standing target range (4880-4550 is the range from June 7) -- but it again failed to break out.  This brings up another point:  We are still inside the Wave 5 target range from June 7!  And that means bulls should not be complacent here, because the current wave has done what it needed to for now, and does not "need" to continue to rally.

I wanted to take another look at the hourly chart, and lo and behold, it's not even a stretch to fit a diagonal onto this pattern; it actually fits rather easily:

Looking at the above chart, we can see there are now two valid ways to count us as in a fifth wave (at the degree shown above), so bulls are almost into territory where they NEED an extension to keep this rally going.

No change on the long-term chart, but we did rally almost to the middle of the target range... so we don't "need" to keep going; the minimum requirements have already been met:

NYA is interesting as well:

In conclusion, while it may be hard not to get lulled into complacency here, we should remain mindful that the market is into its upside target zone, which is territory where bulls are going to need to prove themselves with a sustained breakout, both in NYA and SPX.  If they can't, then we can see that the downside potential is not insignificant.  Trade safe.

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