SPX, INDU, BKX: To B or Not to B

Since last update, SPX was again rejected smack at 4100, the price point I've been watching for more than a month and a half, but the market has left a less-than-clean top in its wake, so today we're going to examine the options from here.  Let's start with INDU:

We can see on that chart where a simple 3-wave decline might end, but I'm somewhat presuming that this will go on to become an impulsive decline for maximum ambiguity.  I've drawn up the most straightforward bull and bear versions of this on the SPX chart below:

I've also noted this first near-term downside inflection on the SPX IT chart (presuming this does go on to become an impulsive decline, of course -- see INDU for the "3 down" option).  Again, do note that this is simply the most straightforward version of this, not the "only option."  If this decline does become impulsive, either as wave 1/A or as the C-wave of an expanded flat, it does not need to end in that inflection zone and is well within its rights to terminate on either side of it.

[NOTE:  Typo in annotation; should read 3790-3811, not 3890-3811]

BKX might lean me slightly toward the more bearish option, as this chart does not look particularly good for bulls:

In conclusion, BKX looks a bit sickly, but the most recent tops in SPX and INDU are not ideal, leaving open the possibility of a B-wave high expanded flat pattern.  Hopefully everything above helps readers to navigate this with a bit more understanding as it unfolds.  Trade safe.

SPX, INDU, and TLT Updates

So the last two updates noted that we had three waves down but had not yet completed the required impulsive decline to indicate a trend change -- and although the wave had the overall appearance of something that might ultimately become impulsive, the market had other ideas and elected to bottom right at the inflection zone:

Yesterday, SPX bounced back up to tag the blue 2 inflection, but was then rejected again, which continues to leave things up in the air for now.  

TLT has continued to rally nearly straight up since the 10/24 warning, and has now cleared next resistance:

In conclusion, over the past few weeks, I've probably written at least half a dozen variations of "I'm still awaiting an impulsive decline before getting too aggressive on the bearish side," and yesterday was a good example of why I take that approach during ambiguous rallies: The decline simply ended at the ALL OF C inflection and bounced furiously, illustrating why front running an impulse can be risky.  

As I've also written in basically every update since December began, there is still no change to my stance, which was probably most succinctly articulated in the piece linked above, as: "Thus, this is a neutral zone... It's not bearish until we see an impulsive decline, but neither is it a zone where one would want to initiate new long positions."  Trade safe.

INDU and SPX: A Little More Detail

Since last update, while the market has technically done nothing, INDU has continued its rejection from the first blue 4 inflection:

I added some detail to the SPX chart, since I don't want the straight line pointing downward to be taken as an actual nuanced projected path.  SPX does not need to follow the exact path shown below and probably won't, but this is more reasonably representative of the type of path SPX could take if we have already seen the start of blue 3:

In conclusion, no change from last update, and we remain on the cusp of an impulse.  Trade safe.

SPX, INDU, COMPQ: On the Cusp of an Impulse

The market has gone nowhere since last update, so let's talk about what to look for in order for the current decline to qualify as an "impulsive decline" (which simply means five waves down).  This is probably best illustrated using the INDU chart:

No change to the big picture -- the main question is whether blue 3 has already begun or not:

Worth noting that COMPQ was again rejected at resistance (I called attention to the test of resistance on November 21), so that test of resistance could very well have been a classic "return to the scene of the crime":

In conclusion, if the market goes on to form an impulsive decline, that would suggest at least one more wave down of similar size -- it does not guarantee that blue 3 has begun.  However, given the turn from the blue 2 inflection, we might treat it that way at least until it reaches the next inflection, which would arrive after the aforementioned "one more wave down."  Of course, if it does not go on to form an impulsive decline, then all of that is moot anyway.  Trade safe.

SPX Update: Rejected at Blue 2 Inflection

For the past few updates, I shifted from my previous near-term bullish stance to a more cautious stance, and on December 5, I wrote: 

What we do have now, though, is a case where the "more upside" of the past couple updates has been achieved, the 4100 target from October has been captured, and the month-long standing blue 2 on the chart above has been reached. Thus, this is a neutral zone; people tend to finally "get it" and become bullish or bearish once targets are captured, but that's the wrong time. Once targets are captured, the market is at last truly free to go either way again.

As we know now, the last week's-worth of warnings turned out to be timely, as SPX has since been rejected literally on the button at the blue 2 inflection (which was 4100+/-: see annotation from November 16):

In conclusion, SPX has been rejected dead-on from the blue 2 inflection, but we do not yet have an impulsive decline (5 waves down).  To that, I would add that the market appears reasonably likely to form one, given the structure so far, but of course that's just how a typical wave would form -- so I'm stating that it looks "reasonably likely" based on the typical wave, as opposed to it actually being there on the chart in black and white yet.  We'll see how it develops from here, but do note that if we're already in blue 3 already, things can get ugly over the coming weeks.  Trade safe.

SPX, BKX, NYA Updates

The market has done nothing since last update, remaining range bound, so there's not much to add in that regard -- however, I did want to pull two charts forward and update them, starting with NYA:

Note that blue (C) can end short or long of the "textbook" target, so if we see any impulsive declines, we'll go on alert immediately.

Next is BKX, which has remained stalled since its last update:

Finally, SPX is still in the blue 2 inflection zone:

This is a tricky market right now, because I don't see a cohesive theme across these markets, since if BKX were to sustain a breakout, then that would look fairly bullish, which might line up with Red 2 in SPX, but would then put NYA in kind of a weird position (since it would probably need to overshoot its textbook target notably in order to keep up with SPX and BKX).  The only semi-cohesive theme might be if we're at, or close to, the top and the rally ends fairly directly (then all three of these markets might already be on the same page).  Doesn't mean that's what will happen, and again, I'm awaiting an impulsive decline... but it's one of the factors making the near-term challenging to read.

Beyond that, nothing to add to Friday's update.  Trade safe.

SPX Update: Call My Attorneys -- 4100 Target Captured

The last two updates said the exact same thing:

[I]f SPX rolls over here, the first zone to watch is 3865-98 (which would be one area a complex fourth wave could bottom), but it is into a zone where I can no longer promise continued upside. I think it would probably look a bit better with more upside, but it doesn't appear to be "guaranteed" the way it did over the recent past -- thus we'll be watching closely in the event it forms an impulsive decline.

Since those updates, SPX has indeed found more upside, so score one for wave aesthetics and "looking a bit better."

It's also worth noting that way back on October 28, on our forums, one of our regular active members (R2CG) pressed me for a number as to where I thought the rally was headed, and the number I gave was 4100 -- which is exactly the price SPX tagged yesterday:

4100 is also where I've had blue 2 sitting on the chart below for a month:

So here we are, finally.  Does that mean the rally needs to end immediately?  It could, but of course it doesn't "need" to, and it's entirely possible it continues on either a little (blue 2 is a zone, not a hard number) or a lot (in the event it decides to become red 2).  Thus, as I've written in the past couple updates, I'm still awaiting an impulsive decline before getting too aggressive on the bearish side.  

What we do have now, though, is a case where the "more upside" of the past couple updates has been achieved, the 4100 target from October has been captured, and the month-long standing blue 2 on the chart above has been reached.  Thus, this is a neutral zone; people tend to finally "get it" and become bullish or bearish once targets are captured, but that's the wrong time.  Once targets are captured, the market is at last truly free to go either way again.  In the current case:  It's not bearish until we see an impulsive decline, but neither is it a zone where one would want to initiate new long positions.  Trade safe.