SPX Update: Exclusive Short List of Contenders to Replace Cohn

Before we get into the charts, my exclusive sources in Washington have uncovered Trump's list of the candidates who are being considered to replace Cohn.  On condition of anonymity, my sources have agreed that it's "okay" for me to share this with our readers.

So, below is the current short list of leading contenders to replace Cohn:

Many pundits were expecting Square Based Pyramid to be on that list, since he's a lot like Cohn (but with more edge) -- but I bet a lot of people are surprised to see Cuboid on there!  Triangular Prism is generally considered to be the most bearish option.

I'm looking forward to us finally being able to watch a long-anticipated season of The Apprentice:  Washington Edition, as these leading candidates are forced to perform wacky antics before a live television audience, while Trump eventually tells all but one of them:  "You're fired."

Kidding aside, the market has continued to remain "more fun than a barrel of radioactive waste from Chernobyl," as there are currently no less than three possible patterns that could develop from here.  The one that has the potential of burning the greatest number of participants would be the black path on the chart below.

However, the blue path offers two different targeting methods that both arrive at 2868+/- as the final target, so that's interesting.

In conclusion, bulls are keeping things interesting, but their ideal count ("Bull Alt: 3") would still seem to be the underdog in the current market.  We'll have to continue to track this as it unfolds.  Trade safe.

Update Schedule NOTE

Didn't realize mainlanders had done Daylight Savings Time already this weekend, so update will be posted tomorrow.

SPX Update: Inflection Point

Last update discussed the possibility of a top nearby, but with two caveats (quoted below):

1.  "The main question now will be an option that I raised on our forums on Monday, and that's for a more complex "double retrace" correction prior to the next leg down." 

2.  "On the one hand, I like the idea of the market trapping bulls near yesterday's high before embarking on a more serious decline, but on the other, I'm never a fan of "bad news" market tops and vastly prefer significant tops to occur on "no news" or good news.  Consequently, I'm only slightly favoring the blue path over the black path."

It's worth noting that the e-mini S&P futures (symbol: ES) will have completed that discussed double-retrace, although this isn't entirely apparent on the cash charts.  In a perfect world, today's open is where bears will make a stand.  If they can't, then we have to consider the possibility that we run toward the Blue C target more directly:

(PLEASE NOTE TYPO:  2990 should read as 2790!)

In conclusion, a gap up open that reverses soon thereafter would be exactly what bears want to see here.  If we instead "gap and go" (keep running strongly), then bears will want to be cautious, as such a move could signal a run toward 2825-60.  Trade safe.

SPX Update: The Perfect Storm?

Monday's preferred market path (as shown in blue on the 15-minute chart) expected that the market would open lower, but reverse that opening to run up toward SPX 2720-30 before reversing lower again.  The first two projected moves were a hit (although SPX ran a hair higher than 2730), and given the "surprise" announcement of Cohn's resignation and the subsequent futures reaction, it appears the third stage of that prediction may come to pass as well, though there are two routes the market can take to get there.

The main question now will be an option that I raised on our forums on Monday, and that's for a more complex "double retrace" correction prior to the next leg down.  That option is shown in black on the chart below:

On the one hand, I like the idea of the market trapping bulls near yesterday's high before embarking on a more serious decline, but on the other, I'm never a fan of "bad news" market tops and vastly prefer significant tops to occur on "no news" or good news.  Consequently, I'm only slightly favoring the blue path over the black path.

But I am still slightly favoring the blue path, because between Trump's tariffs (which seem likely to drag on the economy, IMO, and will certainly suck liquidity out of it either way) and Powell's brazen unwillingness to intervene and backstop this market (which, while potentially painful, will be exactly what the market needs -- a move away from the interventionist policies of the past 10 years and the current bubble), it seems as if the market is facing a possible "Perfect Storm."  Interesting that the charts saw this potential storm brewing back in January.  As I've said for many years:  The charts LEAD the news.

In conclusion, barring the possible "double retrace" rally noted on the first chart, there's no material change from the prior update. Trade safe.

SPX Update: Bears in Control Again?

Last update noted that the rally had stalled at the inflection zone, and I wrote that "downside risk has begun to outweigh upside potential."  That turned out to be true, as SPX dropped roughly another 100 points from there.

The market seems to have formed an impulsive decline, so we probably have to presume at least one more impulsive decline is still forthcoming, although we might see a bounce in the interim:

On the chart above, I'm allowing for the possibility of a more complex correction prior to C/3 kicking off for real -- but currently both preferred paths are pointed lower.  One ends at a retest of the low, while the other continues to new lows.  New highs from here much be viewed as an underdog at present.

Bigger picture is unchanged from a month ago (though I've adjusted the C/3 targets by about 10 points):

In conclusion, while there are a few more complex patterns that could show up here, we'll simply have to try to adjust to those in real-time if/when they show up.  Barring that, we should probably treat this as if 3/C has already begun, or at least as if a retest of the zone near the mini-crash low is on deck.  In both cases, it appears the market is still pointed lower.  Trade safe.

INDU Update: Rally Stalls at Inflection Zone

Just a brief update today.

Last update warned that if the Dow Jones Industrial Average (INDU) reached 25,700-800, that zone would have the potential to stall the rally, and stall the rally it did.  Interestingly, the news media is blaming the stall on "JeRoman Emperor" Powell's testimony -- yet somehow the charts knew that price zone could be trouble before his testimony had even been given.

As I've said for years, the charts lead the news, not the other way around.

Whether this stall will prove to be more lasting or a temporary hiccup is unclear yet.  But either way, the charts do suggest that downside risk is now on the border of outweighing upside potential.

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In conclusion, the market has reached its first upside inflection zone, and downside risk has begun to outweigh upside potential.  Trade safe.

SPX and INDU: Radioactive Waste from Chernobyl

Last update, I mentioned:

...the near-term pattern has been more fun than a barrel of radioactive waste from Chernobyl, so I'm including a few notes on the S&P 500's (SPX) near-term pattern.

I've stared at this chart long enough to give myself a headache, but I still have a difficult time finding a count that suits the very beginning of this wave to my satisfaction.  My best guess is that it's a nested bearish 1-2 pattern off the 2754 high -- but if it continues to chop around (which it very well may), then it will be possible that the expected resolution lower would culminate with a c-wave instead of a third wave.

The "best guess" bear nest will be dead if 2755 is broken -- but on the bright side, the rally to 2747 was not at all unexpected, and ended directly inside the red target oval, so that much shouldn't have been terribly troublesome for bears. 

I also said that I suspected the near-term pattern would culminate with lower prices -- on that much, the jury is still out.  It's possible the pattern is a complex expanded flat, represented by black (B) and (C) on the chart below.  That pattern is by no means guaranteed, it's simply something to remain alert to.

The bigger picture INDU chart is materially unchanged.  Since the first day I published this chart (near the lows), red B/2 has been the "all roads lead to Rome" target, so we've suspected we were headed higher one way or another -- it may simply turn out that "higher" comes sooner rather than later.

In conclusion, there is the potential for the near-term pattern to get screwy again, so remain alert to the possibility of black (B) and (C) -- but that type of pattern is almost impossible to predict, so don't bet the farm on it.  The market may instead continue heading toward its B/2 target more or less unabated.   Trade safe.