SPX Update: "Easy as Cake"

SPX rallied a bit more since last update, which is no surprise, but it occurred to me that it might be helpful to spell out the options with a bit more clarity.  I've been doing this so long that I sometimes forget to convey information that I take for granted.  So let's focus on that today.

The two main options from here are:

1.  For bulls:  ALL OF C completed at 4103 SPX and it's on to new highs (north of 4607).

2.  For bears:  The recent decline was a nested first wave and the current bounce is a nested second wave.  In full disclosure, the argument against this version of events is that the prior wave extended 1.618 times the A/1 wave, which is common behavior for C waves, not as common for nested first waves.  The arguments in favor are more fundamental than technical.

The bull option is straightforward, so there's no need to discuss it further.  

The bear option breaks down into a couple of suboptions, which I've attempted to roughly sketch (don't hold me to these, because where we are is not this predictable) on the following two charts. 

Bear suboption 1 is simply "run it up as fast as we can, then run out of gas like an unsuccessful test rocket":

Bear suboption 2 is to drag things out for a while by forming a two-legged bounce:

So bears should keep in mind that even if everything goes their way, the market can always grind along for a while, and could even give bulls something akin to a false Santa Rally.

I also wanted to quickly update the TLT chart.  My warning from October 23 proved quite timely:

In conclusion, there's no quick and easy roadmap in the current position, so we'll just have to watch for potential impulsive declines in real-time and take it from there.  Waiting for impulsive turns can sometimes help bears stay out of trouble in the event the "straightfoward bull count" shows up, since that approach prevents one from shorting the entire ride up to new highs.  It also gives one a clear stop (against the high where the (pending) first impulse down began), as opposed to the current situation, where the only crystal-clear level is way up at 4607.  None of that is trading advice.  Trade safe.  

SPX Update: A Zweig Breadth Thrust Indicator?

On Friday, the market continued rallying.  Several members of the forum pointed out that this triggered a Zweig Breadth Thrust Indicator, which is a rare signal that's triggered when the market thrusts its breath so forcefully that it wheezes, which makes a noise that sounds like "Zweeeeeig!" That wheeze is a buy signal.  (Or something like that.)

Investopedia defines it slightly differently, stating:

"The Zweig Breadth Thrust Indicator is a calculation that measures the swiftness of market sentiment shifts. It was developed by American stock investor and financial analyst Martin Zweig. The calculation is based on the ratio of advancing stocks to the total number of stocks. It is calculated by dividing the 10-day moving average of the number of advancing stocks by the total number of stocks. The indicator is used to identify major shifts in the primary trend."

Of note, that piece wasn't written over the weekend, but was published April 12, the last time the market triggered this exact same buy signal.  Which was of course in the wake of the "Banking Crisis Averted! (for now)" action from the Fed, which suggests the signal can be triggered by short-covering rallies that shift sentiment.

As I noted on the forum, one thing worth noting is that the forward P/E ratio of the SPX is currently 18.62, which isn't exactly low, and which suggests that if the market were to turn into a new bull from here, that would not be based on fundamentals, but would instead be a new bubble.  Which isn't unheard of, obviously, we've had plenty of bubbles in the past -- but which may be a stumbling block for the Zweig Breadth Thrust Indicator, as the only other time it triggered with the forward P/E ratio this high was -- you guessed it -- back in April of this year.

So, maybe it's a good signal and we'll be marveling at it a few months from now -- but unlike many of the previous successful signals throughout history, this one seems to lack fundamental support.

Anyway, just one chart today, where I updated the labeling to match the annotation from the prior update.  Note that SPX hit the blue resistance line on Friday, so that's its next hurdle.

Not much to add beyond that.  Trade safe.

SPX Update: Finally Bouncing from Target/Inflection Zone

Apparently it was "that simple" as SPX finally committed to bouncing solidly after capturing its downside target and inflection zone.  In fact, the bounce is now close to wave 1/4 overlap territory, which would suggest the bounce is either another 2nd wave or the ALL OF C bull option discussed on 10/26:

Next resistance is fast approaching (blue rising line), so we'll see if that zone can slow the bounce or not:

Not much to add beyond that.  Trade safe.

SPX and NYA Updates: Five Nights of Fed-days, Starring Jerome "the Gnome" Powell

Not much to add to the past few updates.  SPX and NYA have both continued to bounce from their target/inflection zones.  A day late for Halloween, but today is still a Fed day nevertheless, and how the market reacts will probably determine whether a higher-degree bounce plays out now or not.

SPX:

NYA has rallied to the lower end of the blue circle:

In conclusion, nothing really to add.  Trade safe.

SPX Captures Its Target: Let's Discuss This in More Detail

On Friday, SPX captured its preferred target zone for Wave 5 of 3/C, so it's entirely free to bounce in a decent reaction rally now.  But -- just in case -- because we're into potential "crash window" territory (not something I say often), today we're also going to discuss some of the "But what if it's not that simple?" options.

Let's start with NYA, which has behaved like a champ (at least, if one has been following the ongoing targets and wave counts listed in these updates, it has):

Next, we'll look at SPX:

On the NYA chart, I mentioned the option of "just a LITTLE lower," and this is because nailing down the exact end of fifth waves isn't always as simple as "well, it captured the target, we can all go home."  So, there's an in-between option that isn't as dramatic as the fifth wave extension, but that still delays bulls from any warm and fuzzies yet.  The chart below discusses one such potential:

COMPQ hasn't quite invalidated the diagonal from a technical standpoint, but I ultimately continue to favor the bears, as I have for the past few months.

[Note:  Typo.  "~13520" should instead read "~12520."]

Finally, the SPX "roadmap" chart continues to track well, and time and price have again collided to keep SPX riding right along the blue line:

On the chart above, it's worth a brief mention that SPX has not quite overlapped the a/1 high, which sits at 4101.  Overlap there is going to take some of the wind out of bulls' sails, and I would expect once it happens, the previously bullish Elliotticians will get on the bear bus (unless they're hopeless permabulls) -- if they haven't already done so with the overlap at blue b (which is where most of them probably think the wave 1 peak is).  This will be annoying, because I hate when everyone agrees with me, especially when it comes to trading.  But it's a necessary evil, I suppose, though it may lead to the market throwing some kind of curveball to try to shake everyone again.  

I mention this because it's one of the reasons I've been considering the possibility of an extended fifth:  An extended fifth wouldn't allow latecomers on board, and it would keep bulls trapped.  So those who have only recently woken up to the possibility that the market is in a high-degree third wave won't be able to profit from it.  In fact, they will most likely lose money, even with their newfound knowledge, because there's a strange tendency traders have where if they aren't short heading into a steep drop (such as we just had), they will start bottom hunting and buying way too early.  Not because they're necessarily bullish, but mainly because they aren't short and they're trying to get in on the action.  Or they're trying to recover the losses from their stopped-out longs.

So, if you put it all together, there's some psychological impetus for the market to just keep dropping here.  Extended fifths are brutal, some of the worst waves one can encounter because they move very quickly and only come up for air long enough to grab a few stops (on the shorts) and sucker a few bulls -- then they resume their relentless waterfall.  They don't bounce hard until they're entirely done (then they bounce fast and brutal, your textbook V-bottom massive "short covering rally" -- which then, after it has stopped all the shorts and lost money for everyone who shorted the hole, retraces and becomes more of a W-bottom to shake the late buyers before bouncing even harder).

Anyway, we'll see how it plays here.  The short version is this:

1. SPX has captured its Wave 5 target and does not need to go any lower.  It could form a decent bounce from here (plus or minus a little).  If one has been following these updates, then one already has hundreds of points of profit and may not feel the need to get overly greedy (not trading advice).  Maybe it's that simple.
2. Wave 5 still has the option to extend/waterfall if it wants.
3. There's an in-between option that keeps everyone guessing for a while and which could also satisfy the "burn the former bulls who are now buying too early" scenario discussed at length above.
4. In options 2 and 3, there could be a short-lived bounce toward one of the noted resistance/inflection zones before the downtrend resumes.

That's about all I've got for today.  Trade safe.

TRAN, SPX, COMPQ: Now Entering "Bounce or Break" Territory

Where to start today?  Let's start with the near-term SPX chart.  Yesterday, SPX came within 7 points of its preferred target zone, which also puts it into the C-wave inflection zone (not that I'm expecting this to be a C-wave, but I'm not always right, so I never ignore things that run counter to my biases):

Returning to my bear bias at the moment:  Keep in mind that we cannot yet rule out a fifth wave extension -- so this is a little bit tricky, in the sense that we're into "bounce or break" territory.  A normal fifth could bounce soon, where an extended fifth will waterfall.  My approach at such times is to pay closer attention to near-term trend channels and at least keep a few runners short until such time as the market breaks out of its crash channel.  The red channel on the chart above is an example of a crash channel.  This approach doesn't guarantee anything, but it does at least sometimes keep one from missing any sudden "whooshes" lower.  None of this is trading advice, of course.

The reason I mention runners (as opposed to stubbornly refusing to take any profits at all) is because most of the time, fifth waves end in the ballpark of where they're "supposed" to.

Next up, let's look at a TRAN chart I drew exactly one year and 8 months ago, published in a piece titled As in December, I Remain "Long-Term Bearish Until Proven Otherwise":

We can see in the updated chart (below) that 2/B moved a hair faster than originally drawn, but the price placement of 1/A and 2/B were both pretty decent -- especially considering that insisting the market was entering a long-term bear market back in February 2022 was widely considered ridiculous at the time:

When we look at TRAN's chart above, it doesn't take a master's degree in Elliott Wave to recognize what appears to be a pretty clear 3-wave rally.  Could it be something weird, such as an expanded flat?  Sure.  But that's fairly unlikely.  It's more likely to be exactly what it appears to be, and that bodes really poorly for the broader market, because TRAN is a leading indicator for both the stock market and the economy.  TRAN companies are involved in the business of moving goods and people around the country and around the world -- and an economy moving fewer and fewer goods/people is an economy in contraction.  

This is true regardless of what the "spreadsheet economy" guys keep saying.  (You know the ones I mean.  They love to say things such as, "Why are people so depressed about the economy?  GDP was GREAT and unemployment was GREAT and yada yada!"  These folks are apparently so far removed from the real world that they think everyone exists only inside their spreadsheets as an easily-comprehended digit, so they can't understand why actual humans who are struggling to feed their families might feel differently.)

Next is a quick update to a very-long-term SPX chart:

Finally, COMPQ seems to echo the "bounce or break" theme of the fifth wave (or potential extension thereof):

In conclusion, nothing has changed from the past few weeks of updates, but we are finally in the ballpark of where a smaller fifth wave could complete and trigger a decent bounce (which, given that it's expected to be a larger fourth wave, could turn into a sideways grind that burns some time).  In the event bulls can't muster a bigger bounce here (meaning the approaching target zones), we could fall directly into a fifth wave extension, do not pass Go, do not collect $22,867.  (Inflation.)  Trade safe.

SPX, NYA, COMPQ: Bears Still Getting Things Done

Since last update, my "against the crowd" lean that The Rally Everyone Was Getting Excited About was nothing more than a corrective fourth wave proved out:

SPX isn't tracking my September roadmap perfectly, but it's tracking it well enough.  For now, I've left everything as it was originally drawn:

SPX over the near-term is a bit unclear -- even under the most bearish scenario, SPX could head lower early, then reverse back up to/beyond yesterday's high to complete a micro 4th wave.  Or it could just enter the micro 5th (down) directly if it chooses.  As noted, it's not terribly clear on the one-minute chart which option it wants.  I'd probably very slightly lean toward the bounce, but waves can get weird if the market is in bad shape, so neither outcome would surprise me.

Oh, and of course that bounce could end up being the start of the bigger complex blue 4 from the first chart, probably shouldn't entirely ignore that.

NYA's chart describes how it could work with the big complex 4 in SPX, were such a thing to occur:

Meanwhile, COMPQ is in "bounce soon or break spectacularly" territory:

In conclusion, no real change from the last few months of updates, other than to note that things are progressing as well as bears could have hoped.  Trade safe.