SPX and INDU Updates: Still No Change

Last update expected more upside, and SPX managed to claw back above its weekly high.  Nothing else has changed from recent updates.  In a nutshell, the modestly more likely outcome is new all-time highs, but this remains an inflection zone and thus we shouldn't "take that outcome for granted," so to speak.  Treat it probabilistically.

First up is INDU:

And SPX:

In conclusion, I front-loaded the conclusion into the first paragraph, so just imagine that paragraph [here].  Trade safe.

SPX and INDU: What to Watch Next

Last update flagged INDU as a potentially useful near-term chart, so let's see how it's doing:

Next up, SPX has now reacted to both its upper and lower intermediate trend lines:

In conclusion, INDU's wave count implies at least one more small wave up still due -- that would be negated if it breaks its most recent low (or if SPX breaks down at blue above).  But as long as those zones hold, then bulls are clear for the uptrend to continue at least a bit longer... though again, we are still in trickier waters here, in the sense that there's a fair amount of overhead resistance, and the possibility for a fifth wave to complete soon.  So until the market breaks out solidly over resistance, it remains ill-advised to get too complacent here.  Trade safe.

SPX and INDU: Perhaps a Useful Chart

Last update ended with:  

In conclusion, SPX and INDU captured their first targets, so we'll see if these provide lasting support or not (the market is in the process of bouncing from them, so they've provided some support; the question is whether that's just short-term or not).

And the market continued bouncing from those targets in the two sessions since, but yesterday's high is probably the inflection zone, as we can see best on INDU's chart:

SPX's near-term pattern is less clear, due to the potential of an expanded flat, so it might be best to focus on INDU near-term and just watch SPX from a slightly higher elevation, with its blue trendline being the zone bulls need to continue holding (on a sustained basis):

Finally, the next chart is one of those charts that just gives one pause.

Of course, on the flip side, half a trillion isn't what it used to be and given the Fed had no issues with pumping $9 trillion into the market at the QE high water mark -- and that "moral hazard" isn't something anyone seems to care about anymore -- this chart may just represent yet another can the Fed can add to its kicking bag.

I still remain of the opinion that all of this ends badly -- one day.  It's like watching someone habitually darting across busy streets without looking:  Maybe they can keep it up for years without consequence, but eventually their lack of conscientiousness will catch up with them, usually in a big way.  Trade safe.

SPX, NYA, INDU: INDU and SPX Capture First Targets

One week ago, I warned that bulls had captured their extended fifth target and that this was "a terrible place for bulls to get complacent."  Wednesday doubled down on warnings, noting that the market was "teetering in an inflection zone," and Friday's update followed suit.

So whatever happens from here, we can't say we weren't warned. And after months of me literally just repeating that the trend was up and that there was nothing for bears to do, spotting the shift in real-time before it occurred proves that -- no matter how temporarily boring the updates might get during bull trends -- I'm still paying attention (!).  And (usually) staying one step ahead of the market.

First up, on Wednesday I wrote (in the body of the update, just above this chart):  "If it can't get back above red fairly directly, that could suggest a trip toward the upper blue line next."

In the event SPX were to sustain trade below the blue support line on the chart above, we'd need to be aware of the next important support zones:

INDU also captured its target:

Finally, NYA:

In conclusion, SPX and INDU captured their first targets, so we'll see if these provide lasting support or not (the market is in the process of bouncing from them, so they've provided some support; the question is whether that's just short-term or not).

Beyond that, not much to add to last week's updates.  Trade safe.

SPX and INDU: Market Teetering in Inflection Zone

SPX made another new high since last update (not unexpected) and -- after months of "no change, trend is still up" updates -- it's finally getting squirrely out there again.  For starters, SPX ran further into the target zone (also not unexpected) -- but it's thinking about whipsawing red.  If it can't get back above red fairly directly, that could suggest a trip toward the upper blue line next:

Next up, yes, INDU still hints at another possible high... but I want to warn off leaning on this too heavily.  I really feel that this is just an area where -- if the market doesn't stabilize quickly -- bulls need to be more cautious, regardless of near-term patterns, because things could get out of hand fast.

What I wrote above is, in part due to the following SPX chart.  We can see on this chart that with the advent of Wednesday's high, we can count a possible five complete waves up off this year's crash low.  And given where the big picture is (first chart), that's as strong a call for caution as the charts ever give during an uptrend.

So, yes, the odds probably favor a bit more upside -- but sometimes the market works out to something like "51% odds of making a little bit more money vs. 49% odds of losing a ton of money."  And one has to be aware of when we've entered zones like that -- which we have.  

A week or two from now, maybe the market will give an "all clear" to bulls again... but they don't have one for the moment, not anymore.

In conclusion, I'd like to call back to what I wrote at the end of Monday's update:

In conclusion, while NYA does continue to suggest there's probably still one more 4/5 unwind higher needed, this is a terrible place to become complacent.  For one, SPX captured its "textbook" crazy extended fifth target, so it could wrap up this wave whenever it wants.  For another, that 4/5 unwind isn't guaranteed, of course.  So it's a bit like saying, "I can probably jump across this 80' deep ravine without any trouble."  Sure, you probably can... but just in case the far edge gives way when you land on it, what's your backup plan?  

 Trade safe.

SPX and INDU Updates: Fed Cage Match Day

So today is a Fed Day, but it might be an unusual Fed Day in that it's currently "expected" by many pundits (for whatever that's worth) that Jerome "the Gnome" Powell will face a divided Fed and at least two dissenting votes against his (presumed) plan to hold rates steady.  Whether this meaningless dissent will have any practical impact on the market remains to be seen, but probably not.  Because in the end, rate unchanged means "rate unchanged," no matter who votes what.

The X factor is whether Powell will take up Trump on his offer to compete in a full-contact cage match.  Now THAT would make things interesting, but many pundits currently "expect" Powell to decline, on account of his Gnome-like height.  (I should note, in the interest of accuracy, that Powell is not technically short, despite what his nickname suggests.  One might rightfully wonder why he'd choose a name that rhymes with "Gnome" in the first place, given that he's not short -- but no mere mortal knows the mind of a Fed chairman.)

While there are no big changes from Monday's update, there are a couple near-term patterns I'd like to call attention to, starting with INDU:

Interestingly, that lovely little blue channel doesn't show up on SPX, but it DOES show up on the "24 hour SPX chart," which includes the price action in futures (ES):

That channel is worth watching, because a sustained breakdown there might suggest the "trip below 43.8K" in INDU.  There's not a great comparable pattern zone in SPX, but perhaps 6280ish (plus/minus) and 6200ish (plus/minus) would be the best candidates.  Of course, that's iff ("if and only if") ES breaks down from the red channel above.

Bigger picture, there's no change and the blue channel remains the first meaningful warning zone:

In conclusion, beyond the additional added near-term details, there's no change from Monday's update and I'd recommend rereading that if needed.  Trade safe.

SPX and Warren Buffett Updates

Last week was an exciting week, with not one but TWO updates that allowed me to say something other than "no change."  We had not only the exciting development of a new near-term channel, but also the long-term extended fifth target from March of 2024 was captured.

Since then, the market has done as expected, though, so today I had to scrape the bottom of the barrel for something interesting, and I came up with the Buffett Indicator (below).  This indicator offers savvy diners advanced notice when the buffet is about to run out of cheesecake.  Or wait, I'm thinking of the Buffet Indicator (sorry!) -- this indicator is named after that famous "oracle of Omaha": Sizzler Buffett.

So we can see this indicator has failed spectacularly a few times, but it did manage to catch the dot-com bubble and the the 2022ish bear market. 

And it is at least of some interest that this indicator seems to be making a new all-time-high concurrent with the extended fifth target capture.  In other words, it might be worth it for bulls to give some consideration to protecting themselves here.  We also have a crazy week of data and Fed machinations coming up this week, so that, combined with the charts, might also generate some volatility.

Next up, the blue channel in SPX remains the zone bulls need to hold for the near-term, but do note that SPX has reached the median of that channel, which can sometimes offer resistance:

In conclusion, while NYA does continue to suggest there's probably still one more 4/5 unwind higher needed, this is a terrible place to become complacent.  For one, SPX captured its "textbook" crazy extended fifth target, so it could wrap up this wave whenever it wants.  For another, that 4/5 unwind isn't guaranteed, of course.  So it's a bit like saying, "I can probably jump across this 80' deep ravine without any trouble."  Sure, you probably can... but just in case the far edge gives way when you land on it, what's your backup plan?  

Trade safe.