Wednesday, July 13, 2022

SPX Update: Preferred Count Set to Come Through

On July 6, I noted that INDU had made a new low when SPX bottomed in the "structural support zone" -- and that this could be a harbinger of things to come, as it suggested that the bounce would fail.  In the week since, I've stuck with publishing the same near-term count, and today, CPI jumped 9.1% (lucky for our government, 1981 was a year for blistering inflation, so no matter how high CPI seems to go, the headlines always say "Inflation Now the Highest It's Been in 40 Years!" and it just doesn't have the same punch it did a few months ago), and futures are suggesting a gap down.  

Seems the market knew a week ago that this would happen, though, as the tells were already there then.  The updated chart below discusses some potential target zones:

In conclusion, although the 2/b bounce ran a little higher than I'd initially anticipated, the preferred near-term count of the past week is on the cusp of being vindicated.  The reason I said that red 3 appears modestly more likely than red c is that (assuming no miracle bounce) BKX is going to make a new swing low for the move, which implies that its last micro decline was wave 1 (which implies the bounce as wave 2 and this decline as wave 3 down at micro degree) -- that said, a complex correction (read: expanded flat, for BKX, anyway; where a new low in BKX would be c of B instead of 3 of 5, and imply a bounce and then more new lows after that) is always possible, so there will still be reason for prudence in the red c target zone.  Trade safe.

No comments:

Post a Comment