Wednesday, August 24, 2022

SPX, NYA, TLT: Inflection Zone

On August 17, I suggested it was a good time for bears to show up again, and then I followed up on August 19 with a "gut instinct" call that the bear market rally had ended.  SPX has now lost 200 points from its high of August 16, so these calls have worked out well, but we do have to remain aware that SPX has yet to form a larger impulsive decline.  We can see on the chart below that this is technically still three waves down from 4325, making the current area an inflection zone:

Looking at the trend line chart, we can see that SPX has room to form a large gray 4th wave if it is so inclined:

No change to the big picture:

TLT has now formed a significant decline from the trend line that was called out back on August 5:

No change to NYA:

In conclusion, the next couple sessions are going to be the "make or break" for bears (and bulls, if viewed the other way).  SPX has formed three down so far, and while there's every indication this is going to become an impulsive decline (and while I continue to suspect it will), it has not yet officially done so.  Trade safe.

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