Wednesday, June 1, 2022

SPX and BKX: Target 2 Captured

Since last update, SPX captured Target 2, good for 163+ points (T2 was an "if=then" target that became active above 3982).  That's the good news.  The bad news is that this is an inflection zone on a (presumed) corrective wave, and corrective waves are much more difficult to anticipate than motive waves.  Corrective waves have a million different options, which means the high probability portion of this trade is over, unless, of course, the market reverses and heads lower directly.

Bigger picture, we have a sense of some of the different options the market has here:

It's worth mentioning that BKX might be trying to retest the broken neckline -- if that's the case, then SPX may find a way to stretch a bit higher.  Of course, there's no law that says BKX needs to test that line, it's just a common "return to the scene of the crime" reaction -- so not a given here, either.

In conclusion, SPX has captured Target 2, which is also a pretty significant inflection zone (plus a little, if blue 4 (first chart) becomes more complex).  If all it wanted was a simple ABC rally, then it's in the ballpark of enough waves up for that to complete (and if that's a complete ABC, then, of course, it means SPX is headed to new lows from here).  We'll see how it reacts next.  Trade safe.

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