"INDU," people said, usually quietly among close friends, "that used to be a market when I was young. Now look at it! Stuck below blue forever. It was fun while it lasted."
But then, just as INDU was about to be permanently delisted from the Dow Jones Industrial Average (don't ask me how that would work, I just report the news), it broke above blue and made a new all-time high.
Moving on to SPX: in Wednesday's update, I wrote, "the odds are better than 50% that we now have an impulsive decline in place, though I can't entirely rule out an ABC structure." I either assessed the odds wrong on Wednesday, or the minority percentage showed up.
To be fair, by Friday, I was already reassessing those initial odds and wrote "INDU's new high forces more consideration of the ABC count."
And it turned out it was indeed an ABC decline. I guess, considering that Wednesday was the first time I leaned even short-term bearish during ~1,000+ points of rally, that's an error I'm okay with owning.
I noted on Friday that the near-term rally off the red target line (the dashed horizontal line on the chart above) was forming an overlapping structure, which implied it was either corrective or a micro bull nest. We should now assume it was indeed a micro bull nest, which implies the rally will need some 4/5 unwinds before the next inflection.
That said, for the simple reason that expanded flats can show up unpredictably, we should also at least remain alert to the (almost always live) potential of the new high being a large b-wave with a revisit of the recent low in C.
Big picture, SPX has performed as expected:
In conclusion, Wednesday was a whiff and bulls retain the ball. We're back to watching the green uptrend line and the next upside inflections. Trade safe.
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