SPX and INDU: INDU Confirms Prediction from Nov. 14

Since last update, SPX has done very little, leaving the outlook unchanged across the board here -- which is to say:

1. As long as key long-term support holds, no reason to be bearish (see this update for the most recent LT chart).

2. Near-term zones are as noted.

3. A complex expanded flat is always possible, but not necessarily probable.

Worth noting that INDU did finally confirm my read from November 14:

SPX has so far held its return into the red channel, testing it and bouncing higher.

Near-term support is unchanged:

In conclusion, to get even the near-term ball rolling, bears would need to break down out of the red channel from the middle chart.  If they did that, then we'd watch the next near term support zones -- and if those broke, then the complex expanded flat would be on the table.  Bigger picture, I'm still not seeing anything that makes me particularly bearish, especially as long as the key long-term breakout holds.  Trade safe.

SPX Update: Not Much to Add

The market hasn't done much this week, and recent updates have been pretty thorough, so there's not too much to add -- though I have highlighted some near-term zones worth keeping an eye on:

On the near-term chart, I point out a confluence (upper right red annotation) that's worth watching:

Not much else to add beyond that.  SPX always has the option to continue higher directly, but if it starts dropping, those are the first zones to watch.  Trade safe.

SPX and NYA Update: NYA Confirms Prediction from Nov. 14

Since last update, SPX inched higher, but the bigger news it that NYA made a new high, finally confirming my read from three weeks ago:

Nothing to add to the big picture SPX outlook:

Near-term, we should at least be aware of this possibility:

In conclusion, I do want to reiterate that the black lines on the final SPX chart are not a prediction, just an optional path the market could take.  If it avoids that path, then it will just continue higher directly.  Trade safe.

SPX Update: So Far, Just More of the Same

Not much has happened in terms of price since last update, but SPX has continued holding its key near-term support zones, which is bullish as long as it continues:

Intermediate term:

And long-term:

In conclusion, to reiterate my longer-term stance since September:  As long as SPX continues holding the breakout over blue and black in the long-term chart (final chart), there's just nothing for bears to get excited about, and the trend remains up.  For perspective, the ~9000 SPX target remains live as long as that breakout holds.  Trade safe.

SPX Update: Between a Rock and a Soft Place

The market's done essentially nothing since last update, so it's about time for my ~monthly reminder about the chart note (I don't even need to update the October annotation) from September:

Near-term, for smoothest sailing, bulls would like to continue holding above blue:

But really, the red line on this next chart is probably a bit more significant than the blue line on that near-term chart, though they're not too far apart:

So those are the near-term support zones -- meanwhile, what stalled the market here is the line that I called out last update:

In conclusion, SPX is paused between old long-term resistance and near-term support, so we'll see who blinks first.  Trade safe.

SPX, NYA, and SPX's Post-Thanksgiving History Back to 1930

Let's start with an interesting chart, which will be a big hit with bulls.  Going back to 1930, this past week marked the 16th time SPX had a +2% Thanksgiving week.  The 13 month performance following +2% Thanksgiving weeks has been positive in all 15 prior cases -- with the average thirteen-month gain being 22.9%:

Next, SPX has continued to rally since I issued warning on November 21 that the decline "may be done or nearly done":

NYA has technically (if not officially) confirmed the pattern as interpreted on November 14:

SPX is back into (old) red, but hasn't tested that yet:

Finally, the chart below is worth bringing forward for two reasons:

In conclusion, the market has reached a potential resistance zone, so it may react to that.  Long term, if history is any guide, we might need to continue keeping the "fifth wave extension of a fifth wave extension" option in mind for the time being, but we'll see how things develop from here.  Trade safe.

SPX and NYA: NYA Captures Upside Target

Last Friday, I noted that SPX had captured its first downside target, while NYA came very close to its target.  I also noted that it appeared to be an ending diagonal and that it was probably done or close to it.  Whether SPX follows through to retest the ATH or not -- we do at least know now for certain that those warnings marked a tradeable bottom:

We can see above that SPX has broken out from the diagonal boundaries, which is a good sign for bulls -- but bigger picture, it's facing the old red trend channel (which it looks likely to clear -- the test will be whether it can hold that):

NYA has captured the upside targets I provided on Monday:

In conclusion, bulls shouldn't get complacent -- but so far, SPX is performing in line with the expanded flat I've been tracking since November 14.  Be aware that the bear side of the coin would be that the recent bottom was the A/1 low with the current bounce being B/2.  I'm still assigning that lower odds, but it was a very weird pattern heading in to the ATH (as I noted in real time), so it's not something I can rule out.  

On another note, Happy Thanksgiving to everyone!  As is the 14-year tradition, there'll be no update on Black Friday's short session and the updates will return on Monday.  Hope everyone has a pleasant holiday -- in the meantime, trade safe.

SPX and NYA: Better Nate than Lever

This is the start of Thanksgiving week and traditionally, this is one of the most bullish weeks of the year on a seasonal basis -- so that's worth keeping in mind.

Last update discussed the possibility that the decline had done its job and completed or nearly completed, and the market did manage to hold the recent lows during Friday's session.  It has not yet broken out of its near-term downtrend, though, so that's the next test for bulls:

In SPX, I probably should have mentioned this (see chart annotation) in the prior update but forgot -- and "better Nate than lever" as the old Dad joke goes:

Bigger picture, the zone around black still appears to be the next reasonably significant downside price point:

In conclusion, it's worth reiterating the close from Wednesday's update, because for now, it remains the most germane feature of this market:

In fact, multiple markets beyond NYA appear to be three wave highs, which is the main thing holding me back from embracing an intermediate bearish viewpoint at this exact moment (subject to update if things change).  That said, it's an entirely different animal when an apparent b-wave high occurs in the middle of a seemingly-incomplete wave then it is when you spot one at the end of a massive 5-wave rally.  This is the case here (see "the simple bear case above), so it lowers the odds a bit, because options such as "failed fifth" enter the equation.

Not much to add beyond that.  Trade safe.

SPX and NYA: SPX Captures First Target

Last update argued that 

"Near-term, the Occam's Razor chart interpretation suggest further lows will occur."

and closed with: "Near term the decline probably isn't done yet."

And that proved to be a big hit.  SPX captured its first downside target -- and NYA came very close to capturing its target as well:

Let's look at what is currently my (slightly) leading interpretation for SPX, based on the apparent 3-wave nature of the most recent all-time highs.

Bigger picture, the diagonal invalidation is below the black trend line, so that keeps things reasonable:

Essentially, if I were a bull, I would be VERY cautious in the event the diagonal's KO (2nd chart) is overlapped more than briefly.  Yes, there are always other iterations of a diagonal to be drawn, but this is an imperfect world and sustained overlap there would be a classic big warning sign.

To quote what I wrote in the prior update (note that we got the new lows already -- this is more for the remaining sentences beyond that point):

In fact, multiple markets beyond NYA appear to be three wave highs, which is the main thing holding me back from embracing an intermediate bearish viewpoint at this exact moment (subject to update if things change).  That said, it's an entirely different animal when an apparent b-wave high occurs in the middle of a seemingly-incomplete wave then it is when you spot one at the end of a massive 5-wave rally.  This is the case here (see "the simple bear case above), so it lowers the odds a bit, because options such as "failed fifth" enter the equation.

So, in conclusion, most markets would look better with new lows -- so near term the decline probably isn't done yet.  And, even if it is part of a corrective wave -- which is currently the most likely potential, but never a "guarantee," especially coming at the tail of a possibly-complete 5 wave rally (as mentioned above); again, this does make this less certain than our usual b-wave highs -- expanded flat c-waves can sometimes extend far beyond typical targets, so this isn't a great time to be complacent if you're a bull. 

I couldn't have said it better myself.  Trade safe.

SPX and NYA: Bull Case/Bear Case

There wasn't much to add last update, but I did note:

Near-term, SPX is still holding the recent swing low, though it did dip below red again -- which can sometimes be a sign that buyers are running a little thinner, so bulls should stay on their toes here.

That warning proved appropriate, and SPX has since gone on to break its recent swing low and close below the all-powerful red trend channel:

Near-term, the Occam's Razor chart interpretation suggest further lows will occur:

So I'm going to outline the bear case here, and then the counterargument.  The bear case is pretty simple and can be seen in the blue 1-2-3-4 on the first chart, suggesting the potential that the ATH completed wave 5 of that count.

The bull case is also simple, and is best illustrated by NYA's chart:

In fact, multiple markets beyond NYA appear to be three wave highs, which is the main thing holding me back from embracing an intermediate bearish viewpoint at this exact moment (subject to update if things change).  That said, it's an entirely different animal when an apparent b-wave high occurs in the middle of an seemingly-incomplete wave then it is when you spot one at the end of a massive 5-wave rally.  This is the case here (see "the simple bear case above), so it lowers the odds a bit, because options such as "failed fifth" enter the equation.

So, in conclusion, most markets would look better with new lows -- so near term the decline probably isn't done yet.  And, even if it is part of a corrective wave -- which is currently the most likely potential, but never a "guarantee," especially coming at the tail of a possibly-complete 5 wave rally (as mentioned above); again, this does make this less certain than our usual b-wave highs -- expanded flat c-waves can sometimes extend far beyond typical targets, so this isn't a great time to be complacent if you're a bull. 

Trade safe. 

SPX Update: No New Ground

Not much has changed since last update, since SPX didn't break any new price ground on Friday, so I recommend rereading that update if needed.

Near-term, SPX is still holding the recent swing low, though it did dip below red again -- which can sometimes be a sign that buyers are running a little thinner, so bulls should stay on their toes here:

Big picture, it will be interesting to see if the major breakout (blue, then black) gets challenged:

In conclusion, not much more to add since Friday.  Trade safe.

SPX, INDU, NYA: Getting Weird Out There

Last update intimated that bulls seemed to have reclaimed the ball and that was partially the case:  INDU and NYA both made new all-time highs, for example -- but SPX didn't.  The overall pattern is one of the more ambiguous patterns we've seen in at least a year (probably longer), so we'll discuss the options in a moment.

First up, INDU's near-term chart is flat-out bizarre:

SPX, while also a bit cryptic in the near-term frames, has performed phenomenally well if all you did was trade my intermediate trend lines:

Near-term, SPX captured its target from last update:

Maybe the closest chart I can find to a conventional and more readily recognizable pattern would be NYA:

Of course, if NYA reverses higher without making a new swing low, then it could simply be a bull nest.

In fact, let's take this opportunity to discuss the apparent options here:  

• One option was just mentioned (bull nest).  If recent lows hold, then it may be that simple.  
• If recent lows fail, then the slight odds-on favorite would probably be a complex expanded flat, with recent all-time highs being complex b-waves -- SPX and NYA's charts both outline the "common" targets in that case.
• The third option would be that things have gotten weird because the market is topping in a more significant manner.  Since we can't rule that out, bulls probably need to be cautious in the event things start breaking (much beyond the expanded flat targets noted above).  This third option is reflected in the chart below, which I published (again) about a week ago:

In conclusion, as we've just examined, the pattern is less than definitive from a predictive standpoint -- but we have a handle on the most likely potentials, so we should be able to track it as more data comes in.  Trade safe.

SPX Update: This is Why Bears Can't Have Nice Things

Recent updates have noted that, no matter what the market did next, it seemed likely that the all-time high was (at worst) a b-wave and hence not a lasting top (i.e.- still a bull market).  The market has rallied enough since then that now bears would need to reclaim 6631 to indicate they still had even the near-term ball:

Bigger picture, SPX has yet again rallied up to the blue trendline after whipsawing red:

In conclusion, for a minute, bears had some near-term fun -- but for now, bulls have recovered all the levels they needed.  Trade safe.

SPX Update -- and Bonus Sentiment Chart

So the market is into interesting territory now.  Last update noted:

While SPX is still holding red on the chart above, it has now overlapped its first meaningful near-term zone, suggesting the rally from last month's low is a three wave form.  This further implies it's either a b-wave high or part of an ending diagonal -- at least, those are the most likely implications (bull nest can't be ruled out yet; nor can "failed fifth").  If it's a b-wave high, the c-wave decline would be expected to reach ~6550 or below -- but then it would be expected to recover to a new ATH.  If it's part of a diagonal, it would be expected to grind higher again directly.

On the intermediate chart, SPX effectively held the red channel (after a brief whipsaw):

Near-term, this does keep all options open, though this bounce is not a bear killer (yet) and would still be in line with a bear wave (if this is a fourth wave bounce):

Finally, the chart below is interesting and probably doesn't need much explaining.  It tends to suggest that, while we could still be a ways away from a top, this rally can't go on forever:

In conclusion, SPX has now followed its prior three wave rally into the all-time high with a rather ambiguous decline.  Instead of getting lost in the minutiae of every squiggle, the most straightforward option is to keep using the red intermediate channel as the key pivot -- especially since that's been working for months now.  Trade safe.

SPX and INDU Updates: Three Time Frames

Last update warned that bulls were running short on real estate and that near-term trend has continued.  Let's look at three charts that illustrate the market's position at three distinct time frames, starting with the SPX daily chart:

While SPX is still holding red on the chart above, it has now overlapped its first meaningful near-term zone, suggesting the rally from last month's low is a three wave form.  This further implies it's either a b-wave high or part of an ending diagonal -- at least, those are the most likely implications (bull nest can't be ruled out yet; nor can "failed fifth").  If it's a b-wave high, the c-wave decline would be expected to reach ~6550 or below -- but then it would be expected to recover to a new ATH.  If it's part of a diagonal, it would be expected to grind higher again directly.

Finally, in the big picture, we're now nearly two years into this pattern, and INDU has finally completed the bare minimum requirements:

In conclusion, the market has continued showing weakness and the onus is now on bulls to start recovering some key zones to undo the technical damage.  Trade safe.

p.s.- Just a quick shout out to the people who support these updates (you know who you are) -- you are very much appreciated, thank you!

SPX Update: Running Short on Real Estate

Since last update, SPX fell a bit further, reaching and exceeding its potential target:

It also whipsawed the blue line on the daily chart:

In conclusion, SPX is still above its key levels for now, but has continued to show weakness.  Bulls probably need to make a stand fairly soon or risk a broader sell-off.  One of the more bearish near-term potential outcomes (if SPX sustains trade below its key overlap) would be a trip back to the black horizontal line on the daily chart, currently around 6500.  We'll see if bulls can right the ship soon -- or not.  Trade safe.

SPX and INDU: Right Said Fed

Something we didn't discuss last update that probably needs to be discussed is Powell's "surprise" announcement that the Fed will be ending Quantitative Tightening on December 1.  This means that Fed-held securities that are currently being absorbed by the private market will no longer need to be absorbed -- which frees up more liquidity to buy other assets (such as stocks, bonds, used cars, etc.).  As we've discussed a million times, additional liquidity tends to increase asset prices.

About 6 weeks ago, I wrote Why is the market rallying during QT? Whence Comes the Liquidity? -- so now we'll have the liquidity sources covered in that piece plus the abatement of the Fed drain.  So that's a fact worth keeping in mind heading forward.  It also means the only reason the market would sell off here (beyond short-term) would be if it interprets this as an incredibly bearish signal indicating that the Fed thinks we're on the verge of a serious economic downturn.  Because, barring a massive black hole that soaks up liquidity faster than it can be created, more liquidity is generally bullish.

Chart-wise, SPX hasn't moved much -- but INDU's chart is worth glancing at:

SPX is unchanged:

And everything from last update still applies:

Not much else to add beyond that.  Trade safe.