Wednesday, June 12, 2024

SPX and COMPQ Updates

There's not a lot to add since last update, but I think last update's conclusion bears repeating:

[W]e're probably getting close (days to weeks) to a significant correction, and potentially even to the start of a new bear market. That said, fifth waves are intentionally tricky to nail down, so they always leave themselves the option for things like fifth wave extensions, just to severely punish bears one last time... so my policy is generally to await an impulsive decline before deciding to buck the trend with any conviction. Even after that first impulse down, MOST OF THE TIME (not always, of course), there's a big bounce that comes reasonably close to the prior high, and that's usually a reasonable time for bears to get serious.

COMPQ is unchanged, but I do want to expand a bit on the annotation here.  I noted that COMPQ might need one more 4-5 unwind requiring "days to weeks" -- in case readers don't entirely know what's meant there, it would mean COMPQ is still in a lower degree 5th, which, when it completes, would correct in a 4th wave, and THEN go on to the final fifth wave rally to new highs.

 SPX is in a similar boat, in the event that blue 3 and 4 are actually the lower degree iii and iv:

It is for those reasons, along with the ever-present threat of a fifth-wave extension (in fact, we seem to be witnessing a micro fifth wave extension in ES as I type), that I continue to advocate awaiting an impulsive decline before getting too committed to the bear side of things.  We'll see what the Fed meeting brings today.  Trade safe.

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