Wednesday, December 21, 2022

SPX Update: Inflection Target Captured

It's always a little amusing when the market moves for several days, but there's still nothing to add to an update published 5 days ago, except "inflection target captured" or similar.  And that's where we are.  Since Friday's update, SPX did exactly what I suspected it would, which now puts us in the "to B or not to B" zone that I (preemptively) discussed then:

The IT chart is likewise unchanged:

In conclusion, to rehash what I discussed on Friday:  If the recent high at SPX 4100 is a b-wave, then that would make the impulsive decline (from 4100 to 3795) wave c of an expanded flat, and from here, the market could rally up to retest/break that high.  If 4100 is a clean high, then we now have our first impulse down, and the next bounce will be wave 2/b and then lead to another 300 point or larger decline in 3/c.  The next upside inflection will come once there are three complete waves up off the 3795 low -- more generically, 2nd waves typically retrace 50-62% of the prior decline.  Of course, the market always reserves the right to whipsaw a bit near inflection zones before moving for real, so we can't rule out another low just yet, but for now, we'll presume that was it.

On another note, the bond market closes early on December 23 and there's a reasonable chance it will be a relatively light session for equities, so I'm going to forgo this coming Friday's update in order to spend more holiday time with my family.  Which makes this the final update before Christmas, which in turn means it's tradition to link to a non-market piece I published 9 years ago:  A Christmas Story -- Reflections on What Matters.  And also, to wish everyone a safe and happy holiday, and a very Merry Christmas!  Trade safe.

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