Monday, October 24, 2022

SPX Update: More Cause for Bear Caution

Last update highlighted a near-term pattern in SPX24 and noted:

These can be terminal patterns, in which case a bounce may be imminent, but they can also be nesting patterns -- so while a minor break and whipsaw of the lower line would be perfectly fine, bulls should be cautious if there's a sustained breakdown at lower black.

It turned out that a bounce was indeed imminent, and the cash session began rallying immediately after the open and kept going through the close.  

Let's start off by looking at the next hurdle bulls face, and the possible outcome if they can clear it:

In terms of the wave count, this just doesn't "feel" like a fourth wave to me.  If it is, then it needs to be an ending diagonal, in which case it needs two more new highs anyway:

Big picture, presently I'm slightly leaning toward this either being the Big C wave that we've discussed a million times, or a nested 2nd wave:

Finally, TLT is firmly into its target zone now, so I'm going to give my first warning for "bear caution" since I published this target back in April.  As of yet, there's nothing even vaguely bullish in the chart, but my gut has started saying: "be careful, bears" -- for whatever that's worth.

In conclusion, futures are indicating that SPX will likely clear 3763 on the open, and as I've written previously, I think that bears need to be cautious when it does.  I've outlined a couple options above -- both of them point higher for now.  As I noted, bears' remaining near-term hope would be for an ending diagonal (or a b-wave high that runs down to Friday's low, but then runs back up to today's high), but even a diagonal would need to run higher before it ends.  Trade safe.

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