Wednesday, October 6, 2021

SPX, TRAN, COMPQ: On the Line

Since last update, the market has continued to struggle, and made another new low on Monday.  It bounced Tuesday, but has already tested Monday's low in the overnight.  I've made it no secret that I am bearish until proven otherwise at this juncture -- but today we're going to revisit three very long-term charts, which show a consistency that may be "as clear as this game ever gets."

Let's start with the SPX chart we just looked at:

TRAN shows itself in a similar position:

Now let's add the "NasDuck" Composite (COMPQ) to the mix (typo on the chart: "continued" was supposed to be "continues," present tense):

So we appear to have something of a consensus among these different markets.  All are testing their long-term breakouts.  All would qualify as whipsaws if those breakouts fail (by more than a smidgen).  Whipsaws typically lead to above-average moves in the opposite direction.

So:  If you're still bullish, you could view them as "testing support" -- but watch out if that support fails.  The bull case will be much harder to defend if (or, in my opinion: "when," but I could always be wrong) that happens.

Near-term, not much change.  The market still has the option of complex second waves.  All paths ultimately lead lower:

In conclusion, multiple markets are testing their long-term breakouts.  I continue to suspect those tests will ultimately fail, leading to significant sell-offs.  Trade safe.

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