Wednesday, June 22, 2022

SPX Update: One Chart to Rule Them All

Well, I have begun a longer piece, but I can already tell I'm not going to finish it in time, so this is the abridged version.  With any luck, I'll complete the longer piece for Friday or Monday.  The only thing about that is that the chart below (SPX, not BKX; second chart) inspired the longer piece, so it feels a bit naked without it, but I suppose I can always publish the chart again.  So let's start here:

The near-term charts are a bit mixed:  Some seem to suggest we may be closing in on a bounce, others seem to suggest waterfall potential; if we refer to the BKX chart below, this dichotomy makes some sense, as we appear to be in a fifth wave, and fifth waves are the final waves that complete a larger structure, thus they tend to suggest a bottom of sorts is near... but if they extend, then they waterfall.  

Presumably, SPX and BKX will track reasonably closely in structure over the next few sessions.  Personally, I'd like to see a standard fifth here (not a waterfall extension) to relieve some of the bearish sentiment and give pundits some hope before the next leg down.  So in a perfect world, that's what we'd get -- but just keep in mind the market always reserves the right to form a fifth wave extension.

While sustained trade above Tuesday's high might be viewed as a caution signal for bears (as one option would be the larger complex black "or 4" on the chart above).

Either way, due to a question I received a few days ago, I really wanted to instead focus on a singular big picture chart today:

I originally annotated the potential targets for this bear market back in August of 2021, when I was still bullish and riding the trend higher -- but I annotated it in anticipation of the bear market we now find ourselves in.  I simply want to refer back to that annotation.  Sometimes the best targets are the targets you draw when you're not in the thick of things.

In conclusion, BKX covers the near-term, but (due to a question I received on the forum, which I assume is a question some others may have as well), I did want to again highlight that this is not a correction in a larger bull market.  Meaning:  It's not going to be over next month.  Or the month after that.  It's almost certainly going to take years to unfold, so (assuming I'm correct on the wave degree, and all early indicators suggest I am) it would help to adjust one's thinking in that direction.  Even my use of the term "early" above (as in: this is still the early phase of this bear) might be taken as a hint.  Trade safe.

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