Wednesday, February 14, 2024

SPX, COMPQ, INDU: Nailed It, Go Figure

On Friday, my last real update (pre-illness generated fever, that is), I wrote:

Last update discussed that the market likely needed a few more highs before it could enter an inflection zone, and if the gap up in futures sticks, we'll be getting into that zone today.

We then ended up making one more high on Monday (before reversing all of Monday's gains), but I can't call it much better than that.  By all rights, the decline does appear to be impulsive, so any intrepid bears now have a zone to act against (north of the all-time high would suggest that impulsive decline was the c-wave of an expanded flat).

Note on the chart below, I sketched in 2/B as a gap fill, but as a corrective wave, 2/B can run higher or lower than that.  Its only hard rule is that it can't break the red 5 high.

COMPQ ended up dying right at the median channel line, just as I'd predicted a week ago:

Finally, INDU reminds us of the most bearish potential here, but again, this is "only" that at this stage; it's far too early to say if it will be this bearish or only be a short-lived correction:

In conclusion, while the INDU chart shows the most bearish potential and the (iii) target label, which was added back on January 8, was ~reached, please keep in mind that the correction could always just be a simple ABC as shown on the COMPQ chart.  While it seems reasonable to think we'll get at least one more wave down, it's too early to say if that will then go on to develop into a still-larger impulsive decline, but we'll keep an eye out as it develops.  Trade safe.

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