Monday, November 7, 2022

SPX and BKX: Bimodal Market

Here's my conundrum:  A couple weeks ago (and since), I published several updates urging bears to be cautious (though I ended those on November 2).  The market then rallied until the Fed announcement, leaving me to wonder if that satisfied the near-term bullish instinct I had a couple weeks ago.  But also leaving the charts in a state of near-term flux.  This means I can't refer to the charts and say, "Oh, hey, this is clearly near-term bullish, so..." And neither can I say the opposite.  The charts are essentially silent here (only on the near-term; the long-term is bearish), except in the sense that they're pretty bimodal:  We're likely either setting up for a decent bear market rally, or for a significant decline.

But here's my real problem:  My gut still says the market wants to rally some more, but I can't find much in the charts to justify that, and I have to present the charts as I find them.  Part of trading and analysis is learning to sort out what's "personal feeling" from objective reality.  The objective reality is that the charts are simply bimodal.  My personal feeling is that the market wants to rally some more.  The charts have to trump feeling, though.

This is also why I've stated several times that I'm open to whatever the market wants to do here -- because I am, as I don't value subjective reality above objective reality.  But I wanted to at least attempt to clarify what I'm feeling, for whatever it's worth.  With that out of the way, let's get to the charts.

Near-term, SPX is still above recent support:

BKX may offer an early warning to the broad market, in the event it were to sustain a breakout.  If it does not sustain a breakout, then that last rally was a simple ABC corrective wave:

Big picture remains unchanged, but I've added a reference to BKX:

In conclusion, the charts remain bimodal heading into Election Day, at least for the near-term.  The long-term remains bearish, since even an election outcome that might put DC into gridlock (gridlock is historically bullish for the economy -- strongly implying that the best thing for America almost always involves our government doing nothing) won't go back into the past to rewrite all the damage that has already been done.  Trade safe.

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