SPX and BKX: Visualize Whirled Peas

The past few updates prognosticated that the market still had farther to run on the upside, which has proved out -- but the next upside target (from Jan. 23) was captured, so it's "wait and see" for a minute now:

I want to keep the bigger picture in the forefront of our memories unless and until bulls can demonstrate that they have the firepower to keep this (I want to say "charade" -- is that wrong and can you blame me?) going.

INDU can run higher, and very well may, but worth knowing that it's now done what it needed to do for the rally to complete any time it's ready:

Same with BKX:

In conclusion, SPX has captured its next upside targets and could thus embark on a correction if it so desires.  Not a lot in the way of targets yet as any correction may or may not be short-lived, but the long-term red line is probably worth watching.  I also don't want to imply that a major top is imminent, as this could run higher for a while first; I'm just pointing out that a top is possible any time it's ready -- but we'll watch for impulsive declines to signal that.  Trade safe.

SPX, BKX, COMPQ: Credit Delinquencies Rise with the Market

Last update noted that it was "still bulls' ball" and SPX made another new high since then, but appears to have done so in three waves so far.  This means that even if it drops a bit immediately, it will probably need to head back up and resolve that imperfect high shortly thereafter:

COMPQ continues to have the same appearance in that regard, but at a slightly larger scale:

Last update showed data indicating that the "bull market" since 2022 has been very narrow, largely being driven by only 7 stocks (AMZN, TSLA, NVDA, MSFT, GOOGL, AAPL, and META), and a look at the chart of, for example, BKX confirms that bank stocks still remain heavily depressed from the 2022 highs.  This chart also serves as a reminder that it's still quite possible for this party to be relatively short-lived.

Another interesting bit of data shows that while mortgage delinquencies remain very low (in keeping with my April 2022 thesis that the fundamentals do not support a "housing crash" anytime soon), delinquencies on credit cards and auto loans have been rising steadily since 2022.

In conclusion, bulls still appear to have more new highs on the horizon one way or another, but whether all this is going to be a (relatively) short-lived celebration remains to be seen.  Trade safe.

SPX and COMPQ: Still Bulls' Ball

As I mentioned a few days ago, COMPQ continues to look pretty good for bulls to keep the ball over the near-term:

SPX met noted resistance and broke down briefly but is threatening to regain its melt-up channel.  Bears will need to sustain a breakdown there to get anything going for the near-term:

Here's (or "here ARE," as some Latin purists might argue) some interesting data from JP Morgan:

As we can see above, if we were to remove AAPL, AMZN, META, MSFT, GOOGL, NVDA, and TSLA from SPX, then SPX would still be in a bear market.  That's pretty incredible, as it suggests that most buy-and-hold investors are still in the hole vs. the 2022 highs.  This has, so far, been a pretty narrow "bull" market.

That's about it for today.  Trade safe.

SPX and COMPQ: Little to Add

Last update discussed that, due to the apparent three waves up in COMPQ, it appeared that bulls would continue to control the ball one way or another, and so far, they have.

SPX is in a melt-up channel, as long as that persists, bears are out of luck.

There's just not much to add to the last few updates.  Trade safe.

SPX and COMPQ: Eat Your Crow. There Are Starving Children Who Would Be HAPPY to Have Some Crow

The big news from Friday is that SPX made a new all-time high, thereby resetting the long-term bear counts to zero and proving my long-term lean from early 2022 (which was for a big bear market -- I was right on the timing of the top and about "a" bear market, but not about it being "the" bear market) to be premature.

While it would not be unreasonable for the rally to continue a while longer, given that the rally from the bear market low is shaping up to look like five waves, I'm not sure the new all-time high will, in distant hindsight, be anything for bulls to cheer about.

COMPQ does suggest that, while a correction here isn't out of the question, there's probably at least a bit more upside left before bears can get a new intermediate trend going:

So, I was wrong about the BIG bear beginning in 2022, and while 2022 was a good year to be a bear -- and in 2023 I made some pretty solid near-term calls -- overall, that belief led me to lean the wrong way during a few key points of the rally of 2023.  For that error, I apologize.  

The good news is that now those counts are completely reset, so I can look at the charts "fresh" each day, so to speak.  Trade safe.

The Bull Case: Weimar 2.0?

Throughout the course of history, governments that use fiat currency have overspent and eventually gotten themselves into dire situations with debt.  Their response has never been to correct their errors and return to fiscal discipline, it has instead universally been to attempt to inflate their way out of trouble.  

I bring this up because I've been trying to give honest consideration to some version of an actual bull case, and one version of that case involves completely ignoring the economic fundamentals and instead focusing on the Fed firing up the QE presses again anytime they feel they need to.  We already know the Fed has been providing a ton of "back door" liquidity to the banking system, which likely staved off a broader collapse nearly a year ago when SVB (et al) failed.  

So maybe they can keep kicking this can even farther down the road than any of us want to imagine.  We can see on the chart below that the Fed has managed to trim about $1.2 trillion off their public balance sheet, so far with minimal visible damage to the market, though, granted, this is a drop in the bucket vs. what's been added.  But maybe this chart ends up looking like a staircase before it's all said and done:  A trillion off here, then 4 trillion back on there, and so on.

If that, and/or similar things, were to happen, then they could inflate the market higher longer than seems reasonable.  Though the long-term costs would be devastating to the American public, the short-term option of "not during my term in office!" has historically been too tempting to avoid.

I discussed this possibility on the forum more than a year ago, but I guess deep-down I keep hoping for a return to something approximating an actual free market, whether the Fed/government does so voluntarily or has their hand forced by circumstance.  But maybe that hope is still premature and this game needs longer to play out.

I think that's the bull case.

Because the market has already priced in the "soft-landing" outcome and is now further banking on no recession, even though one might say those hopes are also premature, since recessions typically don't show up until 7-16 quarters after the first rate-hike -- and we're just barely at the lowest end of that timing range now.

Chart-wise, I drew up another longer-term chart illustrating one bull option that I'd only discussed verbally in prior updates:

And futures are indicating that SPX was indeed a b-wave high:

I'm about out of time for today.  Trade safe.

SPX and NYA Updates

SPX has been rejected again by the very long term resistance line we've been watching for months:

This comes on the heels of reaching "enough waves up" for a reversal if it wants (i.e.- not enough in the charts to say with any certainty, but enough in the charts to open it up as an option):

If SPX does choose to continue lower, one possible target/inflection zone will be a bit south of 4687, but bears should also be careful around the 4730-40 zone (plus or minus, no exact targets for that zone), as that's another area that could act as an inflection for a smaller expanded flat.

Finally, NYA has continued lower since reaching its inflection zone back in December:

In conclusion, not a lot to add to the past few updates.  As noted previously, bears do finally have some opportunities again, but it's still up to them to make the most of those and not immediately let bulls back in the driver's seat.  Trade safe.