SPX, NYA, and Powell Updates

On Wednesday, The Gnome Jerome emerged from his garden and announced the Fed would not be raising rates, cutting rates, or tracking crime rates.  "In fact," he said, "we will no longer even be using the term.  From now on, it will be known as That Federal Funds Thing, and it will be expressed as a trinary fraction."  

Powell bitterly took a few questions, refusing to even clarify what the current Federal Funds Thing is, except by shouting, "I'll give you a hint: it starts with 11!"  He then laughed maniacally and left.

The market initially reacted with confusion, then (as reports streamed in from mathematicians) realized that nothing had actually changed and sold off, before stabilizing a bit lower to end the day.

Which means SPX is still holding its first key zone and hasn't revealed anything new despite The Gnome's offbeat comments:

NYA has continued to sustain trade below its first zone:

As I said last update:  

We'll see if [NYA] is a warning to bulls (it may be)… or a red herring (since SPX is the stronger barometer, and it's still holding its key zone).

The practical implication from the behavior in NYA is that NYA seems to suggest that if SPX can sustain trade below its first support zone, it will then most likely reach its next downside target (the lower boundary of the red channel).

Beyond that, nothing much to add to the prior week's worth of updates -- those warnings and caveats still stand.  Trade safe.

SPX and NYA: Trading in Circles

SPX has traded in a circle since last update, bouncing off dashed red support, then ending up reversing and closing near it again.  Which makes this now the THIRD consecutive update where nothing in the outlook has effectively changed.  Which makes finding new and interesting things to write about rather challenging.

NYA managed to bounce over the blue line, then ended up back beneath it -- so we'll see if this is a warning to bulls (it may be)… or a red herring (since SPX is the stronger barometer, and it's still holding its key zone):

In conclusion, rather than reprint the exact same series of warning and caveats that I've said in the past two updates, I'd simply refer everyone back to Sunday night's update if you forgot them.  Trade safe. 

The Market Doesn't Owe Us 'Certainty'

Why Probabilistic Thinking Is Hard (but Essential):

How to think about markets, risk, and adaptation.

A common misunderstanding among newer traders deserves attention — not just because it trips up beginners, but because it points to a deeper reality that even market veterans sometimes forget.

Market analysis is, first and foremost, about interpreting potentials and probabilities. There is no such thing as a "sure thing" when it comes to trading and investing. The analysis I favor, Elliott Wave Theory, allows me to assess the structure of the market and then project likely outcomes: "If the market does X, then it's likely to do Y." These projections are probabilities, not guarantees.

Veteran traders already understand this. But for those newer to markets, the best parallel I can offer is poker. If you’ve played, you know that over time, probabilities work out according to the law of large numbers. A strong hand might lose six times in a row, leading you to conclude that the universe hates you… then it wins 15 times in a row. That doesn’t mean the probabilities were wrong. It means the distribution played out.

That’s why no one should ever trade as if their analysis is perfect — because probabilities never are. Even if one could read every pattern perfectly, the nature of probabilistic systems means that sometimes the lower-odds outcome will still occur.

That’s what stop loss orders are for. One advantage to Elliott Wave is that it typically provides clear areas for invalidation.

But the key understanding — for all forms of analysis — is that markets are not static pictures to be labeled and filed away; they are dynamic, recursive systems always in motion. Patterns should not be treated as fixed destinies; they are simply possibilities still unfolding, always subject to change.

Too often, analysts will classify a formation — “ending diagonal, therefore bearish” — and let their thinking stop there. But effective market analysis requires a live, continuously updated decision tree: every pattern may morph, extend, or nest within a higher-order wave as new data emerges.

Patterns exist temporally, sometimes only partially formed — not as fixed objects occupying finite space. So that apparent “bearish ending diagonal” could instead be the early phases of a still-developing bull nest… and so on.

Fractal analysis — such as Elliott Wave — demands that one hold multiple scenarios open at all times. The prudent approach is to model not just what seems most likely now, but what could become likely if the structure shifts.

If X occurs, it may confirm scenario A, or
if Y, then B
yet there is always the possibility of Z — a branch that could suddenly dominate, even if it was once improbable.

This is not a weakness in the method, but a recognition of the underlying reality:

Ambiguity is the natural state of complex systems.

The market punishes those who seek comfort in “sure-thing” predictions or who collapse all potential paths into a single, rigid narrative. Insistence on black-and-white answers may feel reassuring, but it fundamentally misinterprets the system. The real skill lies in embracing uncertainty — keeping multiple branches alive, updating models as new information arrives, and remaining responsive to the evolving structure.

People don’t like to do this, because it’s cognitively demanding. This is why we prefer to collapse uncertainty into certainty (and not just in markets; in everything): Holding multiple possible threads open at once can make us feel ungrounded — and the more threads, the more ungrounded.

Yet in a dynamic, ever-shifting environment, the map is always provisional.
And success depends on the ability to adapt rather than the hope for certainty.

The bottom line is this: The market isn’t a clock. It doesn’t tick along with rigid, mechanical predictability. It’s a dynamic mechanism that shifts with every new key reversal or confirmation.

What appears possible today may become impossible tomorrow. And the thing is, given the reality of a dynamic market, all valid forms of analysis must evolve in response.

Even fundamental analysis has to adjust. Imagine analysts project Apple will sell 40 million iWidgets next year — and then a recession hits and sales fall short. That analysis must revise its expectations. The underlying thesis changes with new data.

But it’s human nature to want to dumb everything down. To make it black-and-white. To seek simple answers that let us go back to watching Netflix or arguing with nimrods on X.

Unfortunately, markets — and life — don’t work that way.

If you're here to learn how to better engage with a complex system, then welcome.

But remember: Even the best analysis isn't about certainty.

It's about mapping the uncertainty.

And, perhaps even more importantly: Trading itself is about managing one’s risk accordingly.

SPX and NYA: Cracks Forming -- But Will It Actually Break?

No change since last update, except to note that SPX has reached its first downside target-slash-potential support zone.  If it sustains trade below dashed red, then solid red becomes the next target (and sustained trade below solid red would then target ~5767).  But lest everyone get too focused on the lower levels -- remember, bears do have to punch through dashed red first.

NYA has fallen through its first support line -- bears need to hold that:

In conclusion, the first crack appeared on June 10, and cracks are continuing to spiderweb across the charts -- we'll see if the glass breaks on bulls or not.  But if it does, again, please keep in mind what I discussed last update:

That said, be aware that IF the highly speculative 1?? and 2?? on the near-term SPX chart happen to be unfolding, then these early downside targets might be VERY conservative.  Because if this is a second wave decline, then its job would be to convince everyone that the bear market is resuming -- which implies a deep and scary decline, potentially of 500 points or more.

And it also bears mention that SPX did not reclaim its all-time high -- which means that if the decline gets teeth, then it's not outside the realm of possibilities that the bear market IS resuming, so we should be aware of that, as well.  But before we even consider going there, let's see how bears handle these potential support zones first.  

Trade safe. 

SPX and NYA Updates: What to Watch Next

Last update called attention to a rising wedge that had only just formed in multiple markets, and it turns out that rising wedge was (likely) true.  So now you know for sure that, despite how boring the market has been for weeks on end (and the temptation toward complacency that comes with that), I haven't just been sitting around thinking up backhanded ways to insult our fearless leaders, but have never stopped watching the charts with vigilance -- while at the same time also thinking up backhanded insults.

Which, of course, is the gold standard of quality that long-time readers have come to expect from this publication.  And which isn't as easy as it looks -- after all, you don't see Morgan Stanley dreaming up new ways to insult Fed Chairmen, do you?  And they have entire teams of people working on this stuff -- yet all they can manage to do is occasionally guess the general direction of the market while maybe offering some vague policy critique. 

Anyway, I digress.  The point was, the insults aimed at the Federal Reserve the rising wedge turned out to be true -- or at least, that's what futures are strongly suggesting as of the time of this writing.

There are still some remaining hurdles for bears, though (particularly in the cash market charts), so we'll take a closer look at those in this update.

First up is NYA.  We can see NYA fell out of the wedge, but so far, it simply tested the blue line, which is the first bear hurdle.  Of course, if the big drop in futures holds, then NYA is likely to open below that line -- but there are still ~4 hours until the open, so lots can happen in that time.  

Presuming NYA does open below the blue line, then bears will need to defend that line and turn it into resistance.

Next up is the SPX near-term chart -- which also references the chart that follows after this one:

Here's the intermediate chart:

In conclusion, bears have done the first step, but there's still more to accomplish in the form of cracking support before we get too excited.  That said, be aware that IF the highly speculative 1?? and 2?? on the near-term SPX chart happen to be unfolding, then these early downside targets might be VERY conservative.  Because if this is a second wave decline, then its job would be to convince everyone that the bear market is resuming -- which implies a deep and scary decline, potentially of 500 points or more.

And it also bears mention that SPX did not reclaim its all-time high -- which means that if the decline gets teeth, then it's not outside the realm of possibilities that the bear market IS resuming, so we should be aware of that, as well.  But before we even consider going there, let's see how bears handle these potential support zones first.  Trade safe.

NYA, SPX, and Jerome Powell Updates

Last update prompted an angry letter from Jerome "the Gnome" Powell, which I will reprint here in its entirety [sic]:

Dear Mister Pretzel Logic,

I sawed ewe said a thing about me.  Its KNOT TREW!  Stop spredding lyes or eye'll be forced to SEW you!

Jerome Powell
Chairmen of the Fed Earl Rezerve
p.s.- STOP CALLING ME "THE NOME"!!111

Of course, it's never the intention of these updates to foster ill feelings among our feckless fearless leaders, so in the interest of goodwill, my lawyers have reached out to Jerome "the Gnome."  Hopefully we can get things patched up, which Jerome can do while he's sewing.

The market has, of course, continued to drift higher, like a balloon filled with lukewarm air.  But hey, NYA's chart is of at least minor note -- which is something, anyway:

COMPQ, INDU, and SPX all display near-term patterns that are similar to the rising wedge on NYA -- so it's worth keeping an eye on -- especially since SPX is still bouncing along the underside of the generational black trend line:

Near-term, the black trendline is still the first to watch -- but now, the UPPER red trend line (dashed) could act as first support, so bears would have to whipsaw that (even if black fails) before they'd have a shot at the solid red trendline:

First support is a little easier to see on the near-term chart:

In conclusion, multiple markets have formed apparent "rising wedges" -- but these patterns are not always bearish and can instead suggest a new (minor) launch pad... so we need to keep an eye on the support zones for further clues.  Trade safe.

SPX, NYA, and Jerome Powell Updates

The market has continued to generally bore everyone to death, leaving me forced to write about unsubstantiated rumors regarding Jerome "the Gnome" Powell.  Who, according to Sources Familiar With the Matter™, is soon almost certainly going to be stepping down... a flight of stairs.  The internet is abuzz with this rumor.  Can Powell handle stairs?  Will he use the handrail?  How many stairs in all?  Everyone has an opinion.  But Experts on Jerome Powell dismiss this as wishful thinking.

"Jerome Powell hates stairs," one Expert with a PhD in Powell opined, "He'll almost certainly use the elevator."

We'll keep a close eye on this story going forward.  Unless I forget, which is likely.

Market-wise, not a lot has happened since the last time we looked at it.  Friday traded in a range.  I did spot one "possible curveball" -- but it's just a potential, there's not really anything concrete suggesting this will happen.  So this is designed to arm readers with this knowledge, in case the market drops on Monday:

Intermediate term, SPX is still holding all its trend lines:

And NYA has now officially captured its next target and potential resistance zone:

In conclusion, SPX remains in its intermediate uptrend for now, so not much else to add.  As I've noted several times: The black trendlines on both SPX charts are the first thing to watch for any signs of possible weakness.  Trade safe.