SPX and INDU: Market Reaches First Important Inflection Zone

The market's been pretty straightforward for the last couple weeks with "no change/still pointed lower" being the preferred outlook each day.  And, of course, that outlook has since proven to be correct.  While there have been a couple minor inflection points along the way, we are finally reaching a more significant inflection point:  The point where an ABC down from the all-time high could be complete or nearly so.

While cash fell just a few points shy of my first next downside target zone (2737-47), that zone was captured in the overnight session by the S&P futures.  Now, I'm not presently favoring that this decline was merely an ABC that's complete/nearly complete, and consider it an outlier, but it is something we should be aware of.

In more immediate terms, the thing bothering me most right now is that we're supposed to be working on a C-wave or 3rd wave at blue degree (on the chart below), and 3/C-waves are normally stronger and faster than 1/A waves -- but that hasn't been the case so far.  That tells me we are likely either:

1.  Warming up for the meat of the move, via a series of first and second waves at micro degree.
2.  Not even in the actual 3/C wave yet.  This second option would mean we're seeing a b-wave low unfold, and we'll rally up toward 2/B before the "real" 3/C kicks off.

B-wave lows can be frustrating because there's just no way to predict them -- all we can do is remain alert to their potential.  So, that's what we'll continue to do.  If we begin to see small impulsive moves in the upwards direction, then that will be the first warning sign.

Additional consideration is that if we WERE to form a b-wave low near current prices, it would cause the most confusion to the market, since this is also the previously-discussed ABC inflection zone.  The ensuing rally toward "or 2/B" would cause bulls to become bullish again, and the impulsive nature of that rally would really throw everyone for a curve.

Sometimes the market instinctively chooses "the path of most confusion," so again, at least stay alert here.

No change to INDU either, and you'll note we're now right at the inflection zone shown by the projection lines that were drawn on the May 29:

The bigger picture INDU chart still shows the most straightforward path for ease of understanding, but the complex 2/B path discussed is alive here as well:

In conclusion, there's no real change to the intermediate outlook, but we have reached the first 3/C inflection zone, and the market may react to it.  If it DOES react, and especially if we get the complex correction, then things will become a bit less straightforward.  But we'll burn that bridge if/when we come to it.  Trade safe.

SPX and INDU Updates: No Change

No change whatsoever from recent updates.  Worth noting that INDU's 38.2% retrace sits near 24,770, which may provoke some kind of reaction from the market.  Other than that, nothing to add, so I've simply updated the price action on the charts:

Classic TA view:

And SPX:

In conclusion, nothing to add.  Last few update discussed that there was (as there often is) potential for a complex corrective wave, and that option still remains on the table, but will diminish the lower the market goes.  It still remains a case of "pay me now or pay me later," and all roads still point lower for the time being.  Trade safe.

SPX Update: Bears to Market: "Pay Us Now, or Pay Us Later"

Last update, I wrote:

On the chart, I then made reference to "complex corrections" -- this is because that the 2800-09 zone is an inflection zone. There is a possibility for a complex corrective 2/B that runs back toward 2900-30 before the next leg down begins in earnest. At present, I'm not favoring that, but instead suspect a more direct bearish resolution, but we can never rule out complex corrections (and can rarely predict them -- corrective waves by nature are inherently less predictable than impulse waves), so they should always at least be considered as a possibility. 

Since then, we have resolved lower directly, so that was a hit -- but I was primarily basing that call on the pattern off that low, which suggested a b-wave that needed fairly rapid resolution.  I do want to note that the more complex correction has become a bit more of a toss-up now.  I've shown that option in a bit more detail on the INDU chart below (black path):

Bigger picture, at present, all roads still appear to point lower.  The chart below only shows the most direct path for simplicity, but complex corrective options still apply, obviously.

SPX is in a similar position, with the same options as INDU:

In conclusion, it appears likely the market will remain intermediate bearish for the foreseeable future (until targets are reached).  The main question is whether that will happen directly, or if bulls can pull out a quick misdirection bounce before heading lower again -- but bears do appear to have a solid hold on the overall trend, at least for now.  Trade safe.

SPX Update: First Downside Target Captured

Last update was as unambiguous as I ever get, and was titled "Bears on Deck?"  In that update, I wrote:

There is potential for a large move down over the next few sessions.  SPX discusses initial targets.

Target 1 in SPX was 2800-09, which was captured yesterday.  On the chart, I then made reference to "complex corrections" -- this is because that the 2800-09 zone is an inflection zone.  There is a possibility for a complex corrective 2/B that runs back toward 2900-30 before the next leg down begins in earnest.  At present, I'm not favoring that, but instead suspect a more direct bearish resolution, but we can never rule out complex corrections (and can rarely predict them -- corrective waves by nature are inherently less predictable than impulse waves), so they should always at least be considered as a possibility.

We're just going to focus on the SPX chart today.  I've sketched-in the "or 2/B" potential:

In conclusion, bears captured their first downside target, and, presuming they hold the key upside levels, we will assume a more directly bearish resolution.  If they can't, then bears do need to be aware of the complex corrective potential.  Again, barring that, we're likely looking at a downward trending market over the coming week and/or beyond.  Trade safe.

SPX and INDU: Bears on Deck?

Still  no material change, as bears have continued to hold the first key level.  There is potential for a large move down over the next few sessions.  SPX discusses initial targets:

Not updating the INDU chart until I need to, because Stockcharts will mess with it when I do:

In conclusion, everything is "lined up" as well as it can be for bears, all they need to do is take advantage of it.  Note that a sustained breakout over 2893 would not necessarily kill the bear case, since the first option would be a bearish ending diagonal... but it would call for bear caution.  Trade safe.

SPX and INDU: No Material Change

No change from last update, which made the rather bold presumption that 2/B had completed at Thursday's high.  The market continues to track according to that presumption.  Since most of us trade SPX (or ES) instead of INDU, I've added an SPX chart with comparable targets for that index.  Much below last week's low, and the zone around the falling black trend line becomes next meaningful support.

INDU's chart is unchanged:

In conclusion, bulls need to sustain a breakout over 2893 to stall or ward off the bear options.  Barring that, we will continue to presume that bears have the ball.  Trade safe.

INDU Update: So far, so good...

Well, not much to add... "so far, so good" for bears.  On May 13, I published the following chart:

Here's what it looks like with the updated price action:

SPX would be expected to track INDU closely (over the weekend, I'll probably draw up a more detailed SPX chart).  Keep in mind the option for a more complex red 2, wherein INDU/SPX would likely test/break their recent lows, then could bounce again all the way back up to yesterday's highs.  Additionally, I can't entirely rule out a diagonal c of 2 yet, but that looks like an underdog.

In conclusion, bears aren't 100% on their count yet, but things look as good as they can look at this stage for them.  Trade safe.