Tuesday, July 9, 2024

SPX and COMPQ: So Much Depends Upon a Red...

Last update expected that SPX and COMPQ both needed at least one 4/5 unwind, and they both stalled and then made a new high, in line with that expectation.  But it's finally getting tougher now, for reasons we'll discuss below:

When we study the above chart, we cannot help but be reminded of the famous poem by William Carlos Williams Carloses:

so much depends 

a red wheel  number
barrow iii

glazed with rain 

beside the white 
chicken nuggets

The moral of that poem, of course, is: It's getting tricky around these parts now, so watch your back -- and please check the bottom of your shoes before entering the house (believe me, we have wild chickens all over our yard here in Hawaii, and they're not just the cute decorations that William Williams makes them out to be).

COMPQ is in a similar boat:

Also, Stockcharts is on that weird kick again where it deletes all my prior annotations every time I try to add a new annotation, and it's been doing that literally since I first annotated the above chart.  Since I'm tired of re-typing them, I took a screenshot before I edited the chart, so here they are for anyone who reads legacy annotations:

Anyway, we can see from COMPQ and SPX that it's probably a bit more likely that there are still new highs out there and thus that it may be premature to start publishing the chart below, but I'm publishing it anyway, because it's worth keeping in mind:

In conclusion, while it's probably slightly more likely that new highs are still lurking (have I mentioned that yet in this update?), we are getting into "this thing could end whenever it wants" territory.  That said, because of the possibilities of a fifth wave extension (and similar), I continue to advocate waiting for an impulsive decline before getting too aggressively bearish.  Many a bear has been burned by that final fifth wave, which usually runs stops and looks bound to go to the moon before reversing (of course, many a bull has been burned for the exact same reason) -- so my broader point is, while these updates have had a solid handle on the market's intentions going back several months now, this is where I tend to start to lean toward more of a "wait and see" approach.  Trade safe.

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