SPX, COMPQ: Manage Accordingly

The entire function of Wednesday's update was to deliver a series of warnings to bulls, noting:

1. COMPQ had done enough for a complete rally

2. The rally could die at current levels, given the proximity to the all-time-high, and 

3. that if SPX whipsawed its last breakout, it could suggest "a strong move in the opposite direction."

Last update was a case of "something bothering me" in the charts, but we didn't have any clear impulsive declines to call out, so I couldn't point to any form of proof for readers... but the instinct was strong enough that it led to an update that was basically nothing but warnings, even down to the final conclusion.  

Sometimes that's the best I can do: Convey my intuition -- though intuitions are often, by nature, a little vague.  Hopefully, given that it was paired with "watch these specific signals" warnings (COMPQ, SPX), it was helpful.

With COMPQ, I've been warning for a week that it had stalled at blue and hence might retest black from above -- so, while not "proof" of a pending reversal, this was nonetheless specific in detail.

SPX provided the cleanest signal, and its whipsaw of the red breakout was the main actionable tell:

I also dug a decade-old chart out of mothballs, because it's interesting here:

In conclusion, it's worth mentioning that if the bull count is active, this decline could either fit as a fourth or a second wave (at higher degree).  But in this market, given the massive downside potential, bulls might now want to await clear signs of a bottom (impulsive rallies, etc.) before getting too aggressive.  Because:

Even if this is "just" a second wave -- a second wave could retest the crash low.

A fourth wave wouldn't travel that low, but still has hundreds of points (in SPX) of leeway.

In other words, even the bull counts could be pretty horrifying to attempt to ride out.
And, of course, the bear count breaks the crash low.

So, we're not "writing off the bulls" here -- this could well be a correction to an ongoing rally. 
But we also know the downside risk, which is massive -- so we should manage accordingly.

The first warning for bulls would be sustained trade south of the black channel (noted on Wednesday as the first downside target).  If that channel holds, then no harm, no foul.

Trade safe.

SPX and COMPQ: No Guarantees in Life or Markets

Let's simplify things in this update.  While many markets LOOK like they could stand another wave up, the simple observation is:  We are retesting a major resistance zone (the all-time high).  

And, again, keeping things as simple as possible:  Anytime you have a major retest like this, there is a chance the market won't break through.

So, what I'm saying is:  Looks can sometimes be deceiving -- especially in financial markets -- so this would not be a good place for bulls to get complacent.

A chart worth paying attention to is COMPQ, because it has done the bare minimum needed to complete its pattern.  Now again, it would LOOK a little better with another wave up.  But let's not put all our eggs in that basket, lest it get tossed off a roof by a late-lingering Easter Bunny who suddenly realizes that bunnies don't LAY eggs and the entire holiday tradition makes no sense.

Next is SPX -- which is considering whipsawing its last breakout.  Recall that whipsaws (were that to occur) can lead to strong moves in the opposite direction.

So that's it for today... mainly I just wanted everyone to remember that there are no guarantees in the market and retests of all-time highs sometimes fail -- so we should all stay on our toes here.  Trade safe.

SPX, COMPQ Updates

After the close on Friday, Moody's downgraded the USA's credit rating from AAA to "junk" status (okay, maybe that's an exaggeration), causing futures to drop a bit.  This isn't the first time a major agency has downgraded US debt (I recall this happening in 2011 as well) -- "the US debt trajectory is unsustainable" is hardly breaking news to anyone.

But it will be interesting to see if this ends up being just a hiccup (probably), or the start of a more significant turn.  Note the chart below:

COMPQ is still below its next resistance zone:

Near term -- IF this is a bull wave -- SPX has a couple ways to approach it:

The chart below pairs with the near-term chart above:

In conclusion, this will be an interesting test of bulls' resolve here.  Trade safe.

SPX and COMPQ Updates

Last update noted that several markets were reaching resistance zones, and though SPX moved a bit higher, that remains true (given that these are "zones" and not exact levels).  We can see SPX is still within points of red resistance:

It's worth mentioning that there could be enough waves in place for a correction here... but without any impulsive declines yet, please take that with a grain of salt:

COMPQ also remains in its resistance zone:

In conclusion, not much else to add (to recent updates) beyond that.  We'll see if bears can do anything with this opportunity or if it gets squandered.  Trade safe.

OIL, SPX, COMPQ, INDU Updates

A number of readers have asked me to update oil, since it performed basically as expected since the last time I updated that chart (a year ago).  I've been hesitant because I don't like this pattern one bit... plus I have a ~14-year win streak going on this chart(!) -- and I would hate to mess that up (winks). 

So the two main options that jump out in oil are as noted on the chart:

Next, SPX is back to one of its last remaining resistance zones:

COMPQ has also reached its next potential resistance zone:

Big picture, INDU is still performing in line with a pattern we've been tracking for a year and a half now:

In conclusion, a number of markets have reached potential resistance zones, so we'll see if there's a pause and/or if bears can get anything going, even near term.  Trade safe.

SPX and NYA: Not Surprising, at Least

Last update ended with:

In conclusion, so far, bulls have cleared every level they needed -- which tends to put the burden back onto bears to break those levels, to show they still have remaining firepower.  

But things didn't start there -- I've been warning bears for the past two weeks that things weren't looking great for them, once SPX cleared resistance.  Going all the way back to April 25, when I wrote:

In conclusion, if bears still have gas in the tank, they probably want to mount a defense of these zones.  If they can't, then we should not ignore that

Then on April 28, I wrote:

Since last update, SPX has sneaked over its potential trend resistance lines, so bears have a brief window to reverse this or else they probably need to await an impulsive decline (because the pattern does allow for an ongoing rally if there's no reversal soon)

and

SPX has not gone bears way and they need to be aware of that. They probably need a reversal fairly soon to keep their near-term (and perhaps even intermediate term) hopes alive. 

So anyway, here we are two weeks later, with the market about to gap up big.  But at least that shouldn't be taking anyone by surprise.

Does this mean bulls have the all-clear?  Well, not exactly -- they still have the all-time high to hurdle.  But "nothing good happening for bears" (the past couple weeks) doesn't always mean "bulls are a lock."  It just means there are no indications bears should get aggressive.  Today's open is simply going to be a good illustration of why.

Just two charts today, because there's not much else that hasn't already been said already in recent updates.  NYA first:

And SPX:

In conclusion, as I said earlier, this by no means "guarantees" bulls get new all-time highs -- but until bears see something go their way (i.e.- an impulsive decline; see April 28 warning), there's still little reason for them to be involved.  Trade safe.

SPX and COMPQ Updates

Lots of news since last update.  For starters, Trump's "big announcement" was that we've worked out a trade deal with the UK, so that's really great news for the 79 people who drink Earl Grey tea.  Also, on Wednesday, Jerome Powell announced the launch of a signature line of jarred fruit, called "Federal Preserves."  The hope is that they'll sell a few hundred billion jars this year and thus be able to square the remaining $6.7 trillion on the Federal Reserve's balance sheet.

So this is really bullish stuff, if you haven't been paying attention -- and the charts reflect that.  The market is clearly holding out high hopes for "Federal Preserves." (Don't tell the market that I made those up -- we don't want to cause a crash!)

As we can see on the SPX chart, there hasn't been much for bears to get excited about recently, so they'll now need to sustain trade and closes back below black and blue... though, be warned, at some point, the falling blue trendline (the one that runs from the all-time high to red b and beyond) might get tested (again) from above... and that wouldn't be bearish if it holds.

COMPQ is a bit more ambiguous still -- it has merely rallied back to the upside inflection point I suggested a month ago, but not yet beyond.  So bears can hold out hope for a rejection here:

In conclusion, so far, bulls have cleared every level they needed -- which tends to put the burden back onto bears to break those levels, to show they still have remaining firepower.  Trade safe.