SPX and BKX: Bull Count vs. Bear Count

Last update discussed the possibility that wave 4 was completed, but also discussed the potential problem regarding the appearance of a corrective low (b-wave low).  Today I've annotated a few additional charts to give traders some signals to note and signs to watch for -- and I'm going to let the charts take it from here.

Let's start with the SPX 1-minute chart, which contains discussion about several details:

Bigger picture, nothing to add:

BKX kept us looking lower right up through Monday, but there's no crystal clear outlook here just yet (one could, of course, simply subscribe to the bull interpretation of a completed correction, as long as one manages entries and risk properly -- nothing wrong with that and NOT TRADING ADVICE).  The chart which follow this one will show what bears need to do if they want to keep fighting here:

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SPX Update: Micro Patterns vs. Recent Market Behavior

For the past couple months, the market has been pretty clear, and SPX has captured all my targets both to the upside and to the downside.  As of right now, though, the crystal ball has gotten at least a little bit murky.  Let me explain why:

First off, it's entirely possible that the decline is a perfect ABC, to wrap up the anticipated red 4.  The thing holding me back from calling the bottom with more conviction is the b-wave "look" of the 2322 low in SPX (and other markets).  On the flip side of the coin, the thing holding me back from saying "That's a b-wave, so there's more downside coming!" is that earlier in the year, there were a few similar-looking "false b-wave" patterns that ended up being fully-complete corrections -- and the market never looked back.

So I just can't say with certainty whether the correction is done or not.  If it hadn't been for the "false b-waves" earlier this year, I would say it wasn't -- but since the market has been behaving differently in the recent past, that has to be respected.  If we ignore the b-wave look, then we have a perfect 5-3-5 ABC correction down, which would suggest a completed decline. 

In conclusion, I find this to be a bit of a quandary, so you'll just have to decide for yourself which way to play it.  On the one hand, I'd like to lean bullish based on recent market behavior and on the fact that if we ignore the "apparent b-wave," the pattern makes a nice ABC 4th wave -- but this is challenging for me, because leaning even slightly bullish goes against my philosophy of living by the sword/dying by the sword regarding the micro patterns (since the micro pattern in this case wants me to be bearish).  In any case, obviously, any sustained break of Monday's low calls for significant caution from those of the bullish persuasion.  Likewise, if we see impulsive declines forming, then we might heed those as an early warning.  For the record, IF the recent rally was/is a c-wave, then it will end abruptly, and it already has enough waves up to be complete (though one more new high would be acceptable and might look better).

This is just how it sometimes goes, especially after a long run of clear reads and captured targets -- eventually the market has to throw a curveball into the mix to keep things from being too easy.  Hopefully, this situation will clarify further in the next few sessions.   Trade safe.

SPX, RUT, BKX: Bears Still in Control

Last update noted that there were enough waves in place for red 4 to be complete in SPX, but that BKX was still suggesting further downside, and I wrote:

On the chart, the prospect that the final low is in for BKX looks a bit shaky, and a new low or two in BKX would not surprise me at all.

Apparently the BKX chart was leading the way, and during Friday's session, it became apparent that SPX was going to follow.  Not only did SPX make a new low, but it made a low in such a way that the only hope bulls had was for an expanded flat, which would still point to lower prices.  I mentioned this in our private forums on Friday night/Saturday morning:

Bigger picture, if this is NOT simply the fifth wave lower of wave c (which we will not be able to determine immediately), then prospects for an even deeper correction will manifest.  We're going to have to watch this in real-time to determine if this is the case, for an additional reason:  Keep in mind that the label on the charts has been "3/c," because if we see a larger 4/5, then we'll have an impulsive decline, and we'll be dealing with a rally followed by yet another significant leg down.  And that could even eclipse the current low end of the price targets (high 2200's).  Again, we'll simply have to determine this as it unfolds.

BKX was pointing the way:

And RUT looks poised to come close to, or capture, downside Target 3:

In conclusion, this pattern has become a bit more near-term bearish now, and the market announced that during Friday's session.  We're simply going to have to see how the pattern shapes up from here, in order to determine if an even-larger intermediate correction is underway.  Trade safe.

SPX and BKX Updates

Last update I mentioned how it was unlikely the bottom was in yet, and that I expected at least a couple micro fourth and fifth unwinds before a bottom would become possible.  We got the pattern I was anticipating, and now there are enough waves in place for a complete decline.  I cannot unequivocally state that the decline is complete, only that at least now the potential exists for it to be complete.

Bigger picture, it's interesting how perfectly SPX tested the confluence I'd drawn on this chart:

BKX has reached its first downside target zone.  On the chart, the prospect that the final low is in for BKX looks a bit shaky, and a new low or two in BKX would not surprise me at all.

In conclusion, there are now enough waves for a complete correction in SPX.  A minor new low is okay, but any sustained breakdown would need to be approached extremely carefully by bulls, as it would open the possibility of a notably deeper correction.  Trade safe.

SPX and RUT: Downside Target 1 Captured

It's been an excellent month for the preferred count.  At the beginning of the month, SPX captured November's standing 2400 target to the point (good for about 200 points of profit), then reversed.  Since that target capture, the preferred count has continued pointing toward lower prices, and the chart published a week ago was an exact dead-on hit:  The market rallied, the rally turned where projected, and the decline has now captured the first downside target zone.  That projection alone represented another nearly 70 points round trip -- so now here we are wondering if the market will find support soon.

As of this moment, it's foolhardy to call a bottom, because most markets closed on or near the lows of yesterday's session.  That doesn't mean we can't bottom directly, it just means that it's ill-advised to call a bottom when the market goes out on the day's low -- just as it would be ill-advised to go to Vegas and bet your entire life savings on one spin of the roulette wheel (with the understanding, of course, that "ill-advised" doesn't mean you couldn't win anyway!).

Thus, as of right now, we have to see something more from the market to know if it's going to bottom here or not, and today's charts will have to reflect that current reality.  Most of the time, I'd say that this pattern at least LOOKS like it needs to unwind some micro-fourth and fifth waves before it could bottom -- so I'd typically expect to see at least another marginal new low or two, (which, if we see the decline slow, would also serve the function of absorbing some of the inertia from yesterday's sharp drop -- and absorbing that inertia is the first step before it can be reversed).

RUT's pattern has taken on a potentially dangerous look, and bulls will need to put the brakes on this as soon as they can if they wish to stop this pattern from acting as a head-and-shoulders.  Bulls would like to see a sustained whipsaw of the neckline, followed by a breakout over the falling blue trend line.

In conclusion, the market has captured the upper edges of the first downside targets, but there's no clear sign of a bottom yet, so at least marginally lower prices are still likely.  With the chart's current appearance, we also cannot yet rule out the possibility that a deeper correction is in progress.  So, just as in the prior update: lower prices still look likely -- the main question is how much lower, so we'll just have to watch how the market reacts to this first target zone.  Trade safe.

SPX and BKX: No Suprises... Yet

Still no change to the recent updates.  The market has tracked its projections well all month.  The current alternate is that ALL OF blue Bull 3 is complete, which (if it is) would then put us in Bull 4 down, with Bull 5 up still to come.

The near-term count outlined in the prior update has performed according to expectations so far.  Keep in mind the potential that ii/b and/or 2/b may still be unfolding.  Also bear in mind that the bearish overlap noted is not a "set in stone" overlap, because the overlap could be part of a subwave of 2/b, which would not violate any rules:

BKX has also held up its end of the bargain all month and honored the red iii label since March 3:

In conclusion, everything continues to track well, so the market's given us no reason to radically alter the recent outlooks.  Trade safe.

SPX Update: T1/T2 Captured; No Change

No change from the prior update.  SPX captured upside targets 1 and 2, and has, so far, followed the map that was outlined in the last update.  Obviously, all bearish near-term bets would be off with sustained trade above the all-time high.  Keep in mind that this correction is, presently anyway, ultimately expected to resolve higher either way.

Haven't moved anything on the IT chart since last update:

In conclusion, there is no change whatsoever from the prior update.  Again, near-term bearish bets have to be called into question with sustained trade above the all-time high.  Trade safe.