SPX, NYA, and the Beard Updates

Last update ended with us "watching to see if bears can do anything with this": and they did -- and didn't.  Bears got a nice decline but then bulls rushed in to buy, flush with fresh cash from predatory payday loans dropped from drone helicopters piloted by Ben "the Beard" Bernanke from his cave on Alcatraz.

Which means we're still basically in the same place we've been all week:

The triangle and WXY both remain live for now:

Finally, I want to call bears' attention to NYA, which I've mentioned a few times in conjunction with INDU going back to June 12, when I wrote:

[T]here'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. 

That larger rally has since materialized -- and NYA is still cause for bears to be on guard, as explained below:

In conclusion, bears are clinging to technical hope for the time being, but they are running thin on real estate, so if they're going to get something going, they'll need to do so soon.  Trade safe.

SPX Update: Why Not Try Angle?

Last update noted that SPX could make another run at the black trendline, which it did:

This keeps the triangle alive:

For now, the WXY shown above also remains alive, since nothing has yet happened to invalidate it.  Not much else to add at the moment, now it's just watching to see if bears can do anything with this.  Trade safe.

SPX Update: In the Pedants' Day

As those of you who've previously installed the Outlook Calendar app already know, America just successfully turned 250 years old -- so a Happy Belated Independence Day to all my fellow Americans.

The market has, not surprisingly, continued sideways-up ever since I drew the Most Frustrating Pattern in the World on the June 25.

But now it's about time for bears to either make good on this pattern or return to hibernation.

Not shown:  INDU made a new all-time high on Thursday.  SPX tested black:

In conclusion, bears have reached the first upside inflection zone, so we'll see if they can make good on it -- or if it was all just another Bear Head Trip™ caused by Ben Bernanke, huddled in his cave, sticking pins in bear voodoo dolls.  Trade safe.

SPX Update: Structural Isomorphism

Last update, titled "Still on Guard" ended with a warning:

[B]ears should be modestly cautious for now, because in the event the first leg up was a W and the decline since was X, then the market would be forming a larger WXY and a trip back to that all-time high from here isn't impossible.  That would fit in the sense of explaining why this decline doesn't feel like a proper C wave, so worth keeping in mind. 

And modestly cautious was probably a good stance.  As I noted on Friday, the decline was bothering me and just didn't feel right for a C-wave:

SPX is behaving a bit oddly given that this is supposed to be a C-wave decline -- it's rare that A waves (the last decline) are more relentless than C-waves.  This means that either the C-wave is just warming up and it will rectify itself soon... or that something more annoying is afoot.

At this point, we can probably make a pretty good argument that it's likely it was indeed not yet the actual C-wave.  It's likely either the triangle that I proposed on Friday, or the WXY that I mentioned on Monday.  The trick is that these two options (triangle/WXY) are, at this phase, observationally isomorphic -- essentially, they're identical wave structures (ABCs), with the difference being the final length of the wave, not the structure itself.  Since we can only see the structure at this phase (we obviously can't see the length until it's actually completed), the distinction remains uncertain.

In other words, the reason this is difficult is not because I’m hedging or being vague. It’s because the two viable structures produce the same observable evidence at this stage.  The difference in these two comes LATER in the pattern: The triangle forms a series of contracting ABC structures, while the WXY simply forms two similar ABC rally structures, with a smaller ABC in-between (the X wave).  

Which means, in short, that you simply cannot tell the difference at this phase -- they would and should both look exactly the same right now.  Which, of course, makes it functionally impossible to anticipate which it is.  The second chart following this one will help us make that determination (possibly).

I've added the WXY in black on the chart below:

So, the next thing to watch is the black line that I discussed on June 25:  If SPX sustains trade back above, then we may be looking at the WXY.  If it gets rejected here/at the red line, then we may be looking at the triangle.  This isn't foolproof -- corrections are always less predictable than impulses -- but it's the best we've got at this phase.

In conclusion, I'm going to lean toward the triangle slightly just because it was my first instinct back on Friday, and my first instinct usually has a slight edge -- but that's far from being guaranteed, so take it with a grain of salt. Of course, given that nothing in life is guaranteed, there's also always the possibility that something more bullish than either of these counts is afoot, so we should never forget that the market is probabilistic, not deterministic.  Trade safe.

SPX Update: Still on Guard

On Friday, SPX did "the thing" again, where it basically goes nowhere.  Accordingly, no real change since last update:

The triangle isn't off the table yet, though I redrew it slightly, to try to better align (what is essentially a guess) with the ever-changing variables:

Nothing else to add beyond that, really -- though bears should be modestly cautious for now, because in the event the first leg up was a W and the decline since was X, then the market would be forming a larger WXY and a trip back to that all-time high from here isn't impossible.  That would fit in the sense of explaining why this decline doesn't feel like a proper C wave, so worth keeping in mind.  Trade safe.

Gold, Oil, SPX, INDU -- and the Most Frustrating Pattern in the World

Lots of interesting goings-on since last update, so let's get right to it.

Gold recently captured its next downside target, published exactly three months ago:

Oil has been behaving according to its preferred count, which has been a big win no matter what happens next:

SPX is behaving a bit oddly given that this is supposed to be a C-wave decline -- it's rare that A waves (the last decline) are more relentless than C-waves.  This means that either the C-wave is just warming up and it will rectify itself soon... or that something more annoying is afoot (more on that shortly).

On June 12, I warned that INDU and NYA didn't seem to be playing along and that this was cause for bears to be on guard.  While SPX was busy clowning around, INDU actually made a new all-time high yesterday:

As promised, here's the "something more annoying"/"Most Frustrating."  The potential exists for the current wave to NOT be wave C yet, but to be part of a triangle B-wave.  I do have to give a shout-out to forum member 1FE who, although I think he was talking about a different triangle, may have played a role in planting the triangle idea in my subconscious.

So the triangle's not a given or anything, but it's something to keep in our minds as a live possibility for now.

In conclusion, Gold has performed as expected and captured its next target -- and may have further to fall if gold bulls can't hold it here.  Oil has performed as expected.  SPX is, technically, performing as expected directionally, but the choppy nature of the decline is enough to send up a caution flag to watch for the triangle.  Trade safe.

SPX Update: No Change But the Typo

SPX is so far behaving in accord with the larger preferred count, though the near-term has been behaving a bit goofier than it was last time.

Note there was a typo on Monday's chart targets (the first number in the first target range was too broad and had accidentally inherited the prefix of the second range):

No changes (other than to correct that typo) so far.  Trade safe.