SPX Update: It Was Easier When It Was Hard

On June 12, I mentioned that "there's not a ton of cross-market agreement right now.  And that alone is cause to avoid complacency. Bears probably want to see INDU break down again fairly directly or they could be in for a larger rally."

So I'm going to present the bear case but instead of blinding assuming everything will go according to plan, we're going to talk about all the ways it could go wrong.

Let's start with the near-term chart:

What's bothering me on that chart is Thursday's action -- which has three options:

1. It's a b-wave high in progress, which likely leads to the black path.

2. It's part of an ending diagonal, which would rally just a hair more but then be more bearish than black.

3. It's a micro bull nest -- which could lead to a rough retest of 7577 (+/-) and potentially even new all-time highs.  If it breaks over 7512 immediately and begins to gain momentum, bears should watch out for this option.

Next up is the intermediate chart, which now features a couple of "early bearish partial confirmation" trend lines:

In conclusion, this is the inflection:  As long as bears hold below 7578, they have excellent odds. Option 3 above would act as the first early-warning signal (though that MIGHT only lead to a rough retest of 7578, it still wouldn't be ideal for bears to see).  We likewise have early warning signals for bulls (the trend lines).  Trade safe.