Wednesday, October 18, 2023

SPX and INDU: Blue Velvet

I believe it was Jon Keynard Maynes (distant cousin of the more famous "John Maynard Keynes") who once said, after a few beers, "The market can remain insolvent longer than you can remain rational."  (Although some reports suggest he may have said, "I'm not gonna drink none of yer important... imported... GAH-rbage.  Pabst! Blue! Ribbon!")  

Whichever quote is accurate, he no doubt meant it.

And I bring this up today as a simple, yet poignant, reminder that drinking and speaking don't mix.  (Support MADSMofos Against Drunk Speaking.)  

And also as a reminder that even if everything goes swimmingly for the bears from here forward in terms of them getting the exact wave count they want, the market can always still grind sideways before getting rolling.  Not that I'm predicting this, mind you, any more than Jon Keynard Maynes was predicting the rise and fall of Pabst Blue Ribbon -- it's just a word of caution that the market sometimes doesn't move in straight lines.

SPX made another slight high since last update, and while there are potentially enough waves for a complete 4, it's as yet unclear if it still wants one more minor high (as we'll see on the INDU chart after this one):


In conclusion, the early stages after an ambiguous pattern are always touch and go, as the pattern leading in provides little confidence one way or the other, at least until we see a bit more of the decline.  I can say that the first wave down from yesterday's high appeared impulsive, suggesting at least one more wave down of similar or larger size -- but whether that will terminate the decline at "3 down" and make another high after, or whether we just saw the start of the turn down to new lows, I cannot yet say with high confidence.  Trade safe.

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