SPX Update

Since last update, SPX found resistance in the potential resistance zone noted on December 8, and denoted on the chart by the highly technical Elliott Wave symbol:  "?".  This, of course, keeps both possibilities on the table, but there is at least a chance that the "?" high is a b-wave, which would mean we're headed back up there.  I'm far from certain of that, though, so we'll see if bulls can hold the general zone near this week's low:

No change bigger picture, so, near-term question marks aside, I continue to suspect that this is most likely still "top is closer than the bottom" territory.

In conclusion, the near-term jury is still out on the status of the current rally as a fifth wave to new highs (or whether said wave has already completed), but no change to the bigger picture. Trade safe.

SPX Update: No Material Change

Still not too much to add to the past couple weeks of updates; the market has been trading sideways/up since December 7.  Obviously, the Bull: 5 count remains active:

Bigger picture, if bulls do get their low-degree fifth wave here, then (barring a fifth wave extension) that will have potential to complete the rally at one or more wave degrees, up to and including the entire bull wave since 2009.  

In conclusion, no material change from the past few updates.  Trade safe.

SPX Update

Nothing much to add since last update, but I did stumble across this chart of inflation-adjusted earnings yield from Bloomberg and found it interesting as a possible fundamental argument favoring the idea that Wave 5 could be near completion/complete:

Chart-wise, we're still in pretty much the same spot we were in last update:

No change to my stance on the long-term unless SPX can sustain a breakout over the noted trend line:

In conclusion, no change to the last few updates, but the earnings yield chart is interesting.  Traditionally (for whatever that's worth these days), low earnings yield suggests overvaluation, and present readings are extreme.  Trade safe.

SPX Update

Last update noted that the intermediate green trend line had held, and anticipated a sizeable bounce either way, but SPX has now exceeded the sketched bounce and is thus keeping the "Bull: 4" option alive.  

Let's start with the intermediate chart; the green trend line can continue to be used as a potential warning zone for bulls:

Next up is the near term.  If bears are still in the building, then they'll need to show up soon:

Bigger picture, if the bull: 4 count continues to hold and the all-time high breaks, then we'll watch the upper channel line next:

In conclusion, this is not an easy market by any means.  After acting crazy for a while, SPX has bounced strongly, keeping the "bull: 4" count on the table, but bulls are now into a zone where they may face resistance from the all-time high, so we'll see if they can keep that momentum going, or if the market stalls out soon, near-term or otherwise.  Trade safe.

SPX Update

 

Last update discussed the intermediate green line, and SPX again found support in that zone on Friday:

Near-term, still no overlap of the first waves, so still can't rule out the fourth wave option.  In gray is just one near-term potential if the fourth wave doesn't show up... but this is a difficult overlapping mess of a wave (in the downward direction) since the ATH, so take it with a grain of salt:

In conclusion, not much else to add to the past week's-worth of updates.  Trade safe.

SPX Update: Green Line in the Sand

The last couple updates have been quite detailed, so there's no need to rehash all that, so we can instead get back to the near-term now.  First up, the short-term SPX chart shows that this week's low could be a complete WXY correction, and that's probably the last "not unusual" type of wave that could fit as a fourth wave (in other words, it's not impossible for an even more complex correction, but that would be an outlier type of wave).

Bigger picture, the green trend line highlighted below has been on a number of my charts through the years, so it's interesting that SPX has found at least some support there:

In conclusion, the fourth wave option for bulls isn't dead yet, but if SPX heads much lower, then there won't be many common waves that could still fit for a near-term bull count.  New lows would also break the green trend line, so that's probably the first line in the sand for bulls now... and the most bearish potential count out there is a nasty bear nest... so in the event of any sustained new lows, bulls should probably exercise extreme caution.  Trade safe.

SPX and NYA: Is It Time to Sell the Rallies?

Calling tops has always been a difficult endeavor in market analysis, and considering that for the past 12+ years we've been in a historic bull market driven by unprecedented Fed intervention, it's that much harder now.  While I may have jumped the gun just a little very recently, some people (or maybe it's just one person) seem to have forgotten that -- to cite only one example -- in 2020, I believed we would crash, but also believed that was "only" a large fourth wave, and thus destined to recover to new all-time highs.  I mention this mainly because a certain troll recently claimed "this analyst has been saying the same thing for a decade" (implying that I'd been bearish for a decade), which is so wrong that it drifts into the realm of outright stupidity.

(I won't even go into my call for a long-term and massive bull market back in January 2013 -- most veteran readers know that I've been on the right side of this market more often than not.) 

Anyway, in a moment, there's a market-relevant point that I'm going to make about the following charts -- but first, here's the INDU chart I published on February 26 of 2020.  Note the (4) label and the line headed back up to new all-time highs from there:

Here's the SPX chart I published in March of 2020; again, note 4 is followed by new highs in 5:

Now, here's the "market point":  The Covid crash was a pretty clear fourth wave.  That means we have almost-certainly been riding out the fifth wave ever since.  

And the fifth wave is the final wave of a move -- which, now that we're finally getting into a potentially-complete wave structure, means we're likely approaching the end of the 12+ year bull market.

What we're currently trying to nail down is whether the fifth wave of the fifth wave of that larger fifth wave has completed or not.

Read that again.

As I mentioned last update:

Even if SPX manages to make a new high, that will probably be the fifth wave, and (barring an extension) is thus reasonably likely to be followed by a correction (or worse) anyway.

In other words, even if SPX manages to make a new all-time high, we are probably into territory where we should be considering selling the bounces.

Let's look at the near-term chart first, with the emphasis that "bull 5," even if it shows up, could very well be the final high of this 12+ year bull market.

 

Of course, if that final fifth doesn't show up, then we might have already seen the all-time-historic-high.

Let's look at the old intermediate term chart of NYA next.  Worth noting that NYA recently captured its 17,000+ target (published 8 months ago):

So that's the bear case, but what are the remaining bull hopes here?

Well, their first hope would be for an "extension of the extension."  The rally since 2020 has been an extended fifth wave -- bulls would like to see the (presumed current) fifth wave of that fifth wave extend.  That's always possible, but given that inflationary pressures are finally forcing the Fed's hand (per Powell yesterday), it's hard to imagine there's going to be enough fuel for that extension if the Fed follows through and indeed pulls away the punch bowl.  If they don't, then that might be another matter.

But here's the nice thing:  On the next chart, we'll look at a signal to watch that could tell us if the fifth wave of this fifth wave is going to extend.  Thus, we can reasonably presume the fifth wave is ending here if that signal does NOT materialize.

So, on the chart above, in the event SPX sustains a breakout over the upper black line, then we might forget about selling the rallies for a while and watch to see if bulls can get an even-more-extended fifth wave.  We can't yet rule that out, given that the fifth wave is short relative to wave 1 on that chart -- but nevertheless, I'm taking the approach of "making the market prove itself here," so if it doesn't break out, then we'll stick with the idea that the top is now closer than the bottom

Referring back to the NYA chart for a moment:  The second option bulls have is for a more complex fourth wave (shown by black "or 4" and "or 5"), similar to what happened in 2020, but at a much smaller scale.  We'll simply have to track that possibility as it unfolds -- but again, unless there's an extended fifth here, that potential wouldn't change the longer-term outlook too much.

Now, all that said, I would again like to emphasize that calling a top to the most powerful bull market in history is no easy task, so if you think the market is going to keep going up, then hey, you could be right.  I could be wrong, or could be early, or whatever.  Or the market could choose to extend the fifth of the fifth here, which no one can really predict.  I can't promise anything, and nothing I publish here is trading advice; I can't manage your risk for you.  That's what brokers are for.

All I know is that we just about tagged the upper boundary of the very long-term channel, we reached the long-term NYA target, we came within 6 points of the long-term SPX target, and there are roughly enough waves (give or take a couple micro waves) to mark a complete five-wave rally from the 2020 crash low.

Near-term, if bulls are going to get their fourth and fifth wave to new highs, then now may be the time.  Longer-term, until the market dictates otherwise, I'm sticking with the idea that the top is closer than the bottom, and thus that it's probably not a bad time to take some risk off the table.

Trade safe.