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.

SPX and INDU Updates

On June 12, I talked about how INDU and NYA didn't seem to be playing along with the bear case, and both have since made new highs.

SPX has now rallied up to the rough retest of its prior high:

So bears probably can't afford too much more rally if they want to get a C-wave down.  I do suspect that if SPX forms another scary wave down, this is probably not the end of the bull market yet, based on INDU and NYA -- but I can't rule that out, of course.  Trade safe.

SPX and INDU: Narrator: "It Did Not"

Last update ended with: In conclusion, SPX looks straightforward, but 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. 

INDU did not break down -- in fact, it rallied:

And now SPX futures are indicating bears are indeed in for a larger rally:

So we'll just have to see how SPX does with its next inflection zones. Trade safe.

SPX and INDU: Holding the Bear Case to the Fire

So SPX performed almost exactly as drawn on the black projection in the prior update, but that doesn't mean we should rest on our laurels.  We should instead rest on someone else's laurels and save ours for a special occasion.  

No!  That's not what I intended to say when I started typing.  What I meant to say was:  as I looked through the charts last night I found several... "counterexamples" isn't exactly the right word, because they're not conclusive -- but in that vein.  Basically, charts that aren't quite playing along with the bear thesis (yet, anyway).  Let me show an example of what I mean:

NYA and BKX are also not looking... exactly "bearish" at this moment.  Again: yet.  They could always resolve that later... OR: maybe they're warning signs for bears.  It's a little early to say, but I'd be remiss not to mention it.  

Point is, markets are dynamic and the situation -- via INDU, NYA, BKX -- is, for the moment, seemingly in flux.  So we should at least entertain the possibility that the bear case may not be quite the slam dunk it looked like a couple days ago.  Maybe that will resolve in bears' favor in the next few sessions.  But we should stay open, in case it doesn't.

Looking at the bear side of things, we have SPX (and COMPQ looks similar):

In conclusion, SPX looks straightforward, but 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.  Trade safe.

SPX and COMPQ: A Larger Impulse Down

SPX did go on to form a larger impulse down, as suspected.  I spent a lot more time than I anticipated on the charts, so we're long on charts and short on text body today.  Let's start with intermediate SPX:

COMPQ, as promised:

Near-term SPX for a detailed look (typo: Occam's):

In conclusion, while a b-wave high is always possible (this would be bulls' lone remaining out, here), there's no clear evidence of one in the charts.  Thus, the assumption should probably be that the trend is now down, until proven otherwise.  

Note that it's hard to detail this without cluttering the charts, but something that approximates a retest of the high prior to the next down leg is "not impossible" in this scenario.  We'll play it by ear if bulls sustain trade out of the crash channel.  Trade safe.

SPX Update: Both Downside Targets Captured

Last update noted that we had a new "impulsive looking" decline -- and the market confirmed that and captured both its downside targets -- plus.

The chart below looks out a little further into more speculative territory, just so readers have an idea of some of the things we should be watching here next:

In conclusion, the near-term impulsive decline begot a second impulsive decline, as it normally should.  Now we're on watch to see if these turn into a still-larger impulsive decline (five complete waves).  Right now, it's still three waves down.  The upcoming sessions will be important, though I think bulls would want to be cautious if it sustains trade much below ~7330 in the meantime, even without a full five wave structure (see annotation on second chart).  Trade safe.

SPX Update: Not from Our Universe

Last update noted:

There are some early signs that maybe it wants a correction here (that's what prompted me to draw those potential support lines) but that's not guaranteed.

Those early signs did play out and the market declined.  Most of the time, I would expect another decline to follow.  You'll of course forgive me for being modestly gun-shy in the current environment.

Assuming that impulse is indeed wave A or 1 down, then the next targets would be as shown below:

In conclusion, we have a new "impulsive looking" decline, so we'll see if that gives bears a moment in the sun or if the market pulls the rug on them again.  Trade safe.