SPX Update: Next Upside Target Captured -- Market Reacts

For the past couple weeks, we've been focused on SPX heading up to tag the black trendline on the long-term chart, and on Wednesday, it did.  On Thursday, the market reacted hard, dropping 125 points, (something we haven't seen in a while).

It's mentioning that in doing this, SPX dropped all the way back to the previously-noted blue trend line.  We'll see if that line acts as support:

It's pretty interesting how well the trend lines on the long-term chart above, some of which are roughly a decade old, line up with the trend lines on the chart below, which are only a few months old.  So whichever chart you were watching, you knew that SPX had tagged resistance -- but if you were watching the long-term chart above, you also knew it was a significant resistance zone, and an upside target zone.

In black, I've sketched in one possible path the market could take.  My first instinct is that the current decline, as sharp as it was, is probably still a fourth wave, and thus not a long-term top (though it could last a little while, depending on how complex any presumed fourth wave wants to get).  I'm open to changing that view, but at this moment, my first inclination is that the rally isn't done yet.

In conclusion, SPX captured its next intermediate target zone and reacted pretty dramatically to it.  Despite that dramatic reaction, there are as yet no key trend line breaks and no key overlaps, so (for now) we'll assume the long-term trend remains up -- at least unless/until bears break some key zones.  Trade safe.

SPX Update: Still No Material Change

Yesterday, cash officially captured my next near-term target of 3520-25... today it's going to launch higher right at the open.  And when we look at the recent charts, we can immediately see what triggered this reaction:

Bigger picture, I still expect we're going to run higher to ultimately test the black trend line -- and here again, note the value of this "simple" chart.  I first pointed this out when SPX broke out over blue, and it's done nothing but run higher since that breakout:

In conclusion, there's nothing much to add regarding the market.  At some point we'll get a correction (presumably the market cannot run to infinity), but we'll just, as I've said for a while, have take that as it comes.  For the bears, think of it this way:  Even if there were to suddenly be a sharp turn lower, if it's going to go anywhere meaningful, we should have plenty of time to get on board.  Trade safe.

SPX Update and Random Weekend Thoughts

Last update noted that the next near-term upside target was 3520-25, and the e-mini S&P futures (ES) have already tagged that in the overnight.

Near-term, SPX has established an uptrend channel within the broader uptrend channel:

Bigger picture, there's no change... still presumed to ultimately be headed toward black.

Beyond that, I just want to share a random "Supercycle-related" thought I've had more than a few times of late.  How many people are familar with the Hekla 3 Eruption?  (Note: I hate to use WikiPedia as a source, but amazingly, there is almost no good info on that eruption outside of the scientific literature, so such is life.)  This was a massive volcanic eruption that occured in Iceland around 1028 B.C.  It threw 7.3 cubic kilometers of rock into the atmosphere, leading to an 18 year period of pronounced global cooling in the northern hemisphere.  This in turn led to drought and famine in the Middle East, and many historians believe it was in part responsible for the rather sudden end of the Bronze Age, wherein multiple advanced civilizations entirely disappeared simultaneously.

Throughout history, we find periods of prosperity are linked to periods of climactic warmth:  The Roman Warm Period, the Medieval Warm Period, and the Modern Warm Period, for example.  The reason for this is obvious:  During periods of warmth, food can be grown pletntifully.  And, again quite obiously, food is the first basis of civilization (hard to build a thriving civilization during times of famine!).

During periods of cold, civilizations contract -- or end entirely.  The Earth has undergone climactic cycles for all of history -- in fact, the last Ice Age barely ended a mere ~12,000 years ago (actually, to be technically correct, the last Glacial Maximum ended ~12,000 years ago -- we're technically still in an Ice Age, just in the Interglacial Period of said Ice Age, known as the Quaternary glaciation.)

Anyway, we as traders know that the majority of people are usually looking the exact wrong way on things.  If the majority are looking down, the market tends to go up.  We know from history (and logic) that the current warm period is a blessing... and we know from history that it will likely one day end, possibly abruptly.  What if everyone is looking the wrong way again?

Note I am NOT saying "oh, we're headed for another glacial maximum" or anything that bold.  I'm just thinking out loud, sharing a random thought I've had many times.  A global cooling period would lead to a massively contracting global economy, the exact opposite of what we've had since the end of the Little Ice Age, which ended around 1850 A.D.  

Just food for thought.  Trade safe.

SPX Update: Inflate or Die

Last updated discussed how SPX had reached a potential signal line, and not to assume that its reaction would be bearish:

Note the blue trend line, which SPX has just reached... and don't just see one side of that trade (i.e.- don't view it only as "resistance"); note what happens if it sustains a breakout:

The Fed has since announced that it doesn't care about inflation anymore (if it ever really did)... and SPX has since cleared that line.

I don't think bears should underestimate the Fed's signal, because by keeping interest rates artificially low while at the same time (basically) committing to ignore inflation... what other options will savers have but to be forced into high-risk investments?  They gonna put their money into a CD at the current Special Introductory Rate (*for new customers ONLY) of .0000000000000000132% while inflation runs away from their money?

And keep in mind that my second target was 4000+/- (and yes, 3980+ would be within that +/- margin, so knock it off!)... and my out-loud musing about the potential bullish options from 8/24:

Maybe it doesn't seem so crazy anymore.

In conclusion, SPX has broken out over its first long-term resistance zone... bears will have a small window here to whipsaw that (and any whipsaw could start from a little higher), but if they can't, then SPX may (ultimately) be on the way toward the next higher resistance zone (as discussed in the first chart) and my second target.  (Again, we're talking intermediate-term here, so that wouldn't preclude a near-term correction after the current rally completes -- the next near-term upside target that I discussed yesterday morning in the forum was 3520-25, so that could be one zone to watch.)  Trade safe.

SPX Update: Long-term Chart Shows SPX at Important Line

 Last update discussed how we were just going to focus on basics for the time being, and today, we have an important long-term chart to examine.  Let's get right to it.  The following chart is simply the bull market since 2009 (I don't buy into the commonly-accepted idea that "a 20% correction is a bear market!" -- I think that's too simplistic).

Anyway, note the blue trend line, which SPX has just reached... and don't just see one side of that trade (i.e.- don't view it only as "resistance"); note what happens if it sustains a breakout:

We can see this is likely an important zone.  Breakouts have taken SPX toward the black trend line, while rejections have sometimes taken it back toward the first red trend line immediately below the blue line  (Except in 2017, it hugged the line for months before breaking out.)

On the hourly chart, nothing has changed and SPX has remained within its uptrend channels:

In conclusion, nothing has changed since last update, but SPX is reaching a zone that has been important in the past.  If it wrestles with that zone, we could see a correction develop.  If it sustains a breakout over, then bulls may continue their party.  Trade safe.

SPX Update: This Bull is a Bear

First off, I did work on the extended Supercycle piece I've been working on for a while -- but I didn't finish it.  I may never finish it.  I have a pretty good idea of what I want to say, but I'm wrestling with how to say it.  Honestly, I don't think I've ever wrestled with a piece as much as I've wrestled with this one.  There's no good way to talk about things.

As far as the market goes, last update noted that INDU had given a traditional warning sign, but that I was skeptical of it thanks to the Fed.  As it turns out, the Fed is going to buy their way out of it (again).  I've said it before, but this market reminds me a lot of 2012, where it just keeps grinding higher in the absolute ugliest way possible.  I had a heckuva time counting the market for several months that year, too.

This is why, outside of my big picture outlook that predicted the crash to 2100+/- SPX, followed by a recovery to new all-time highs, there hasn't been much to latch on to in this market.  I can tell you that it has been steamrolling a lot of people's signals, though.  

The Fed is warping everything.

Because I've been doing this long enough to know when a market isn't behaving, for today, I drew up a whole new chart.  I think for now we just focus on the basics and avoid the fancy stuff.  There's no room for nuance in this market right now.  Maybe that changes tomorrow.  When the character changes, I'm sure we'll be on top of it, as we almost always are.

(Note: Typo.  "So far" is supposed to be "So for..."  So far, so for!)

So, in conclusion, for now, we'll just take what the market gives us in broad strokes until such a time as it lends itself to more nuanced calls.  Trade safe.

SPX and INDU: Will a Traditional Warning Signal Mean Anything in a Nontraditional Market?

Let's get right to the meat of the title:  INDU gave a signal that is, traditionally, something of a warning sign (at least for the near-term).  I guess we'll see if that means anything in this Bizzaro-world market:

SPX has now tagged the May target "to the point":

In conclusion, in most markets, I would take INDU's break as a warning sign.  In this market, with the Fed buying everything that isn't nailed down, things are a little unusual to say the least.  So I guess we'll see if it means what it usually means... but if nothing else, it should at least serve as a near-term caution for bulls unless INDU can reclaim the August high directly.  Trade safe.

*****

p.s.-- I'm getting closer to finishing my piece discussing/diagnosing some of America's (Supercycle-related?) ailments.  I got a good bit written last night, with the voice in my head coughing up Alec Baldwin from Glengarry Glen Ross to push me past my hesitations.  ("Let's talk about something important!")  

(Then in response to my considerably-long list of internal objections:  "Well I'm going anyway.")

Some things just need to be discussed, even when it might be easier not to discuss them.  For those interested, here's the last piece I wrote about it:  Is America Approaching the End of a Supercycle Rally?

The new piece is maybe halfway done, so there's a chance I'll finish it this weekend.  Stay tuned.

SPX Update: Historic Call Now Official

Back in February, I began publishing a count that showed a massive (and history-making) pending crash, which would mark Wave 4, followed by a historic recovery in Wave 5.  I think, back then, a lot of people thought I was nuts about both the crash and the recovery.

But then the market crashed, and they thought, "Well, okay, he got that right.  But NO WAY we recover!  We just started a bear market!"

I stated a number of times for the record that I was sticking to my guns and that I did not believe we had begun a bear market, but rather that the crash was a "one and done" (though I initially wasn't 100% certain if ALL OF C was complete, I was quite insistent that it was a C-wave, meaning the end of a bear market, not the start of one).

Anyway, I have to bring this up, because, yesterday, SPX finally made a new all-time high.  And that now makes the entire call officially correct.

So I'm going to label this as a historic call, and once again wonder aloud why CNBC doesn't interview me more often (wink).  I will also refer to this chart in the future when people tell me that Elliott Wave "doesn't work" or that the market is "random" and "unpredictable."  (To paraphrase a sentiment from the movie Rounders: I guess I'm just the luckiest guy in the world, to have called this monstrous roundtrip move to within a few points in a "random market.")  

Here's the SPX prediction chart from early March:

(And here's a quick link to the update of March 25:  All Downside Targets Captured.)

Of course, now the question is, "What next?"

And the truth is, I don't know.  This market has me scratching my head a bit at the moment.  I suspect ALL OF 5 isn't done yet, but that doesn't preclude a correction manifesting at some point.  When that point is... well, I'm just hoping to spot it in real-time, because attempting to anticipate corrections has been an exercise in futility lately.

I kind of just... really don't like this market right now.  On a brighter note, May's 3400 target has been "more officially" captured, to within 5 points now.  Doesn't mean it needs to end there, though that doesn't preclude a short-term correction, of course.

In conclusion, there just isn't much to say about this market at the moment.  We could be approaching the end of the larger three, but I wouldn't be surprised to see the market back and fill a bit before that happens.  In the meantime, we'll watch for any impulsive turns to signal otherwise -- and we'll know that, when the market's ready, it will once again give us a cleaner glimpse of the future.  Trade safe.

SPX and INDU... and Some Random Thoughts

 Last update suggested the red trend line would be first near-term support for SPX, and on Friday, the market closed basically right on it.  Today, futures are indicating it's going to bounce up off that support line and gap higher at the open:

INDU has continued to hold the "three down" inflection low that I noted last Wednesday:

Frankly, instead of this, I really want to write about the (presumed) pending Supercycle peak I've discussed previously... but that would mean I need to discuss what's happening in America's cities.  And that would mean I'd need to discuss the intellectual decline of academia and how it's impacting our youth.  And to further discuss the throttling of our information streams.

But all of that will require I wade into topics that some will find "controversial."  (Of course, virtually everything is "controversial" in a society that can no longer agree on any common standards.)  And I'm just not sure how I want to approach that yet.

Instead, I'll leave you with a link to a clip that left an impression on me tonight, which you probably won't see covered by our vaunted media outlets.  I've seen dozens of such clips -- but most of them don't seem to make the mainstream news.  There are certain types of clips that DO make the news, and those clips seem careful chosen to create a specific impression in viewers.  I'll leave it to readers to determine why the media is filtering out many of these glimpses into what's happening on the ground in America:  

Portland (warning: graphic)

Anyway, sorry for the digression.  This stuff is on my mind a lot lately, especially how it all seems to, unfortunately, tie-in to my projected Supercycle peak.  Trade safe.

SPX Update: Short and Sweet Sleep-Deprived Update

Last update argued that Tuesday's decline was just a correction and that bulls probably still had the ball, and SPX has since made a new high, proving that thesis correct.  Lack of sleep has caught up with me this week and I got off to a late start today, so just one chart.  We can see that SPX has finally reached the May target zone:

In conclusion, SPX is finally into its +/- target zone, which (as with many target zones) is also an inflection zone.  One potential I'm alert to at the moment is for a decline toward the low 3300s, followed by another wave up to new highs, but the first step for that would be a sustained break at the red trend line.  Trade safe.

SPX and INDU: Still Work to Do

Last update noted that SPX could be close to completing a fifth wave, which could lead to a correction, and yesterday we did finally see a bit of a correction.  The question now is whether that's just a near-term correction, and today we'll look at two charts that argue it just might be.

These charts are what led me to warn just after the close yesterday (in the forum) that Tuesday's low ("minus a hair") was an inflection point.  First up is INDU, because INDU is a fairly clear "three down":

Next is SPX, which has yet again formed a "less than clean" top, which sometimes indicates a b-wave high:

In conclusion, while yesterday was finally a somewhat exciting session for bears, they do still have work to do to turn it into something more than "just a short-term correction."  Yesterday's low is (as noted yesterday) an inflection point, which means bulls could turn from there and rally it back up to a retest/best of yesterday's highs.  Trade safe.

SPX, INDU, NYA: Or Should We Say, "The Fed"

So the biggest news that's fit to print is that INDU has now -- finally -- broken above its June highs:

 

This means bears need to be quite cautious unless/until there are signs of a reversal.

NYA is still hanging out just below its June highs (indicating that the rally is stronger in big names than in the broad market).  In the past, this used to mean something, but in the modern Fed-sponsored market, who knows.

Finally, SPX has developed into an ugly impulse up off its June lows.  We'll discuss that in a bit more detail after the chart:

As we can see on the SPX chart, there now appears to be a i/ii/iii/iv (I forgot to label the iv, but it's apparent where it would be), with SPX currently in a potential micro v.  That means that when it develops its next impulse down, we probably have to treat that as the start of a brand-new wave.  Frankly, this market reminds me a lot of 2012, in that it's just a relentless grind higher with a terribly ugly pattern.

Probably not coincidental that 2012 was also a year that the Fed was juicing the market.

Wasn't 2012 also the year that the world was supposed to end or something?  Maybe the Aztecs got three of the digits right... (that's a joke -- I think).

In conclusion, INDU has broken out, so we'll see if bulls can hold that.  SPX could be working on a fifth wave, which can always end a move at one or more time frames -- but bears should probably await an impulsive turn before getting too excited, to help signal that the fifth is not planning to extend.  The broader trend, as we've anticipated/known for months now, remains up -- which means bears are still countertrend trading, which is always the most difficult.  Trade safe.

INDU and NYA: Interesting Times

I had intended to do a more complex analysis today, but technology had other plans, as I had numerous issues that slowed me down this morning.  As such, what I had planned will have to wait until Monday.

Instead, we'll simply take a quick look at INDU and NYA, neither of which are behaving like SPX:

NYA below:

In conclusion, the main takeaway from this is:

1.  Either NYA and INDU are "late to the party" and when they do at last (sustain a) breakout, everything will finally rally together and SPX will head for the moon

2.  There's some trouble under the surface, and all the available liquidity is going into SPX, with little to spare to rally the broad market.

Trade safe.

Market Update: Bears Running Out of Real Estate

Last update, we looked at an alarming chart, because the market still hadn't done anything (for seemingly months on end).  But now, it finally has -- possibly thanks to that chart (don't rule this out) -- as SPX (at least) has broken out over its prior swing high.  And it does seem to have some momentum behind its breakout, so bears are advised to remain cautious unless/until there is an impulsive decline.  That said, our "canary," which is INDU, has not quite managed the same feat yet:

However, we can see from the INDU chart that if it, too, breaks out, there may be problems for the proposed diagonal count.

Thus, in conclusion, bears are advised to tread very cautiously in the event INDU does sustain a breakout.  Despite my prior incredulity, we do have to respect the raw pattern potential for a micro third wave launch here (although another head-fake followed by a complex correction wouldn't be too surprising, either).  Trade safe.

Market Update: An Alarming Chart, and INDU

Friday was an interesting day, with the market dropping quickly lower early in the session, then reversing strongly to regain all of that lost ground by the close.  Take a look at this alarming chart:

Did you know this was happening?

I sure didn't.

It appears that hundreds of people are killed each year by getting tangled in their bedsheets -- and, if we firmly ignore the old rule that "correlation is NOT causation," then we are forced to conclude that US Skiing Facilities are profiting wildly from this travesty.

Where is the outrage?  When will Congress finally act?  Yet our leaders again remain silent.

Anyway, sorry, just a little "useless correlation" related humor there (as Nassim Nicholas Taleb once said, "Not only is correlation not causation, correlation is not even correlation.")

Last update, we discussed how INDU might be a better tell, at least for the longer-term, and on Friday, INDU held the inflection level I had outlined and then bounced along with SPX:

I'd put up a chart of SPX, but it's not going to tell us anything at this point anyway.  It does appear from the overnight futures action that SPX may finally break above its most recent high, so do be aware that if bulls can HOLD that breakout, then there is at least an option for a new micro bull nest to run the market strongly higher for a time.  If that were occurring, we'd expect to see the breakout not only hold, but also to see the rally accelerate over the near-term.  If the breakout doesn't happen (SPX could hold the high), or happens and then whipsaws (and/or fails to gain steam), then bears stay in the near-term game.  Trade safe.

SPX Update: But INDU is More Interesting

Last update suggested that Fed Chair Jerome Powell "to the People" would use the word "tools" during the upcoming Fed announcement, and that was a hit, with one forum member ("porkchop") coming up with an unofficial count of (9) uses of the word.

As for the market, if we can call it that, SPX has continued range-bound since last update.  SPX did finally briefly whipsaw the vaunted blue line, but it failed to claim the price low, which led to yet another small bounce, still within the range so far.  This chart is uninteresting and uninformative, so we're going to skip over this and focus on INDU next.

INDU seems to be where the more interesting patterns lie:

As we can see, the solid overlap of lower prices on INDU is suggesting either a completed WXY correction (probably the best fit as long as 27.1K holds), or an ending diagonal in formation.  (I also can't rule out a massive bull nest, but my incredulity meter gives that low odds, because it would lead to a big sustained rally from here.  I suppose anything's possible, though, but not even a consideration as long as bears hold the 27.6K zone (not a typo)).

In conclusion, while SPX can run a little higher if it needs, INDU suggests the market is still in an inflection zone.  I think for the time being we're going to focus on INDU as the better tell.  Trade safe.

SPX Update: Fed Day

Last update noted that the market had tested the outlined support zones, and that they had held their first test.  Those zones have continued to hold (so far), and SPX actually tested the blue trend line a second time right at the close yesterday.  Futures are indicating a gap up open, so the market is reacting to that line again.

In conclusion, the market really hasn't done anything since last update, but has remained rangebound, so there's nothing much to add.  Bears still need to break (and hold the break) of support.  Today, the Fed is due to give their weekly bi-annual quarterly report for the month, so the market is probably waiting on that before breaking solidly in one direction or the other. 

Incidentally, current expectations are that the Fed will continue to do things, and that Powell will probably use the word "tools" at least once.  Some analysts fear that if he uses the word "tools" more than three times, that could signal a more dovish stance, which could contribute to at least four hours of additional Fed-related discussion on CNBC.  We'll keep our fingers crossed that this does or does not happen, depending on our mood.  Trade safe.

SPX, INDU, COMPQ, and Gold: The Leroy Brown Market

This market reminds me of Leroy Brown at the end of the song Bad, Bad Leroy Brown:

"Leroy looked like a jigsaw puzzle... with a couple of pieces gone."

That's how this market looks.  Lots of missing pieces.

Despite that, on Friday, the market actually behaved "normally" and did exactly what I was expecting.  SPX and COMPQ both headed lower, and then tested the zones they "should" have tested:

COMPQ retested the black line (retests are rarely "to the penny," so this was in the ballpark it should have been):

And INDU even came down and tagged its red trend line (this one, like SPX, was actually to the penny), just for good measure:

Finally, I want to include a quick update to a gold chart I published (forum only) back in mid-March:

In conclusion, what does all this mean?  Well, it means that bears haven't broken support yet.  And that means we're no farther along than we were on Friday.  Bulls are free to try to rally it from here, bears need to break and hold first support to help signal lower prices.  Unfortunately, that's about all the news that's fit to print at the moment.  Trade safe.

SPX, INDU, COMPQ, NYA: Market is Still... This

This market continues to lollygag around, refusing to trend.  This is often what you see in an undecided market -- but once it makes up its mind, we could finally see a stronger directional move.  We've had hints this "non-trend" might occur here, because NYA, INDU, TRAN, et al, are all still below their June highs:

NYA below:

SPX remained stalled yesterday morning, then decided to go for a test of its breakout before doing anything else.  Nothing too surprising there; from last update:

All we can do is watch how the market deals with support as it comes down to retest it -- if prior resistance has turned into support, then bulls probably keep the ball. If support fails significantly, then bears may get their B-wave.

It's reasonable to assume that we'll see a more definitive test of support today or Monday, and as we can see on the next chart, support is still a bit below current prices:

COMPQ has also formed a pattern that, most of the time, suggests further downside is still needed:

In conclusion, the market is still unresolved, so the oft-discussed B-wave high remains on the table.  Near-term, it would not be unusual to see some downside follow-through at some point, though that doesn't need to be immediate, of course, we would normally expect lower prices at some point (as discussed above).  Trade safe.

SPX, INDU, NYA: Mixed Messages

So, yesterday SPX gapped up over prior resistance, then stalled.  INDU and NYA both remain below their June highs, which sends mixed messages.

INDU below:

NYA next:

Finally, SPX:

Frankly, because of all this, I still have no strong opinion on whether we're dealing with a B-wave high under construction, or are in the midst of a third wave rally.  All we can do is watch how the market deals with support as it comes down to retest it -- if prior resistance has turned into support, then bulls probably keep the ball.  If support fails significantly, then bears may get their B-wave.  Long-term, the preferred count remains bullish for the time being.  Intermediate-term, I'd still prefer we see a better correction, but the market doesn't really care what I want, especially as long as it can swim in Fed/stimulus money -- so we'll just take it as it comes for now.  Trade safe.