SPX Update: Bears Get a New Shot

On Friday, we discussed what was needed for an impulsive decline, and I drew a black "4?" and "5?" on the chart where the market would be likely to turn IF it was going to form an impulse down.  SPX opened higher, hit the black "4" label and reversed lower, then made a beeline for the black "5?" label -- and then bounced.

This thus gives bears the most hopeful-looking pattern they've had in weeks.  While it's always possible the decline is wave C of an expanded flat, that presently appears to be an underdog, so we'll treat this as a likely trend change, at least in relative terms.

The big question is whether the larger B wave completed at 2941.  If that's the case, we would expect the 2018 lows to be revisited before this decline completes.  That's a little ahead of the game right now, though, so we'll take it one step at a time.  In other words, for the moment, we will presume that the market probably needs at least one more similar-sized wave down before bulls get a decent shot at turning things -- and we'll remain aware that it's possible for this to turn into a much larger decline.  Trade safe.

SPX Update: Inflection Point

Last update we talked about the potential for a triangle, and noted that the 2941 level was critical to confirm that pattern.  SPX stalled just shy and reversed, revealing the "potential triangle" to be a complex wxy correction.  Which means that, in the end, my initial read from 9/26 was correct.  (Most of the time, my first read is the right one.)

Question now is whether the correction is over and on to new highs, or if the decline will become impulsive. 

In conclusion, yesterday's low appears to be critical for bulls, as it's the dividing line between a complete ABC decline, and an impulsive decline that would suggest a larger trend change.  Trade safe.

SPX Update: Potential Triangle?

Since last update, the pattern has turned into an overlapping chop zone, which suggests the possibility of a triangle.  For once, all the subwaves fit for a triangle pattern (each subwave in a triangle needs to break down into a 3-wave (or corrective; WXY works too) move, and the subwaves on this pattern appear to do exactly that.  The question then is whether it's a bullish triangle (more common in this position) or a bearish b-wave triangle.

The bearish b-wave would likely only be near-term bearish, as it would suggest a c-wave down to follow the current move, and then new all time highs.  Of note, INDU has already its September high, and most of the time that means SPX will follow soon thereafter.

Of course, the pattern could yet develop in a way that renders the bear triangle moot and turns into something more bearish -- we'll just have to see how the next couple sessions develop.

In conclusion, we do have some clear levels to watch for the next couple sessions, and some potential targets if those levels are broken.  Also worth noting that if this IS a bull triangle, it would suggest that the next rally will be wave 5 of (something), since triangles are almost always the penultimate wave in a waveform, which could then turn into a decent correction after the upwards thrust completes.  Trade safe.

Update Schedule

I had family in from out of town last week, and they ended up extending their stay for a larger family activity, which pressured the update schedule.  Consequently, the update will return to its regular schedule on Wednesday.  Thank you for your patience!  And trade safe.  ;)

SPX Update

Not much to add since last update.  SPX currently appears to have three waves down from the all-time high, so sustained trade beneath 2912 could suggest an impulsive decline:

The only issue there is that the top isn't clean and could well be a b-wave, in which case an impulsive decline would end the decline instead of being the decline.  In other words, this remains a tricky market wherein we can't yet take anything for granted -- but despite that, an impulsive decline would still help give bears a theoretical edge here.  Trade safe.

SPX Update: The Noise Knows

Last update looked like higher prices were still needed, but SPX reversed a little shy of its textbook target.  I remain less-than-thrilled with this market overall.  While the occasional clear near term pattern has emerged from this mess, the overarching big picture wave count can still go either way (B-wave high with a steep decline to follow vs. a bull wave that would probably need to exceed 3000).  Neither of these two larger patterns looks much better than 50% right now, so when the near term turns messy (which has been often lately), there's nothing that provides a clear "tie-breaker" between one near-term pattern and the next.

Accordingly, we're continuing to simply take it day by day until things clear up again.

In conclusion, I always view it as a bit dangerous to overreach the market with one's projections.  Either the charts justify a solid projection or they don't.  At present, there's still an inordinate amount of noise in the charts, which is clouding the picture.  Eventually that will clear, as it always does.  Trade safe.

SPX and INDU Updates: Bulls Still Holding the Cards

Well, at present, there's not much for bears to get excited about.  SPX did retest the prior ATH, which we anticipated -- and that level held the back-test.  A failure there could have been encouraging to bears, but it, of course, never materialized and that zone acted as "resistance turned support."  Traditionally, that's a bullish signal, so we'll just keep trading the prevailing trend until the market tells us to do otherwise.

INDU's chart had warned us back on September 14 that the best bears could hope for was "just a correction" and that the pattern was ultimately (likely) bullish either way:

SPX below:

In conclusion, there's very little for bears to get excited about presently.  That could always change tomorrow, but right at this moment, the overall pattern looks anywhere from "a bit bullish" to "extremely bullish."  Unless and until that changes, the only thing to do is play along.  Trade safe.