SPX and Powell Updates

On Wednesday, the Fed disappointed the market by not cutting rates to negative 9000.  Powell then threw fuel on the fire by claiming he'd been abducted by aliens and that they'd implanted "a chip in his nose that plays blues music at all hours."  He also confessed to difficulties telling the numbers 6 and 9 apart: "They're like, the same number, really!  Just upside down!"

This caused a brief panic as the market sold off -- before rocketing higher so it could sell off again.  

Here's where we are now, near-term:

And bigger picture:

In conclusion, by all normal Elliott Wave counting methods, it would appear the market still needs at least two 4-5 unwinds higher.  That said, the decline has some of the hallmarks of an impulse, so another wave down wouldn't be unusual -- with more possible if there's a sustained breakdown of the blue line on the first chart.  Trade safe.

SPX Captures Target

Last update noted:  

SPX has formed a potential bull nest over the near term.  Bears would need this to be part of a diagonal (or b-wave), otherwise it's just going to run higher for a while (at least a few weeks)

Be aware that unless something new materializes, I'm probably going to be saying "no change" a lot.  Nevertheless, I did want to highlight some interesting recent events, starting with SPX's near-term target capture:

Next, we have another target captured and exceeded -- this time from June:

Finally, let's keep this in mind:

In conclusion, unless SPX whipsaws its recent breakouts, we just have to presume the trend remains up. On the bear side of the coin -- well, SPX has reached two targets, so there's always a short reversal window when that occurs...  and while that probably looks less likely, it is a Fed day, so it's never a 0% chance. Trade safe.

SPX Update: Everything's Coming Up Noses

The market has proved incredibly resilient since the "tariff crash" (which seems like a lifetime ago already) and of course is back to yet another new all-time high.  Let's look at where we are in the charts.

First up, I don't need to annotate this one, but it shows that SPX has formed a potential bull nest over the near term.  Bears would need this to be part of a diagonal (or b-wave), otherwise it's just going to run higher for a while (at least a few weeks):

Bigger picture, SPX is back into the blue channel:

Much bigger picture, I still hold the same opinion I've held since August:  Unless/until bears can whipsaw that blue and black breakout, they just don't have much to chew on: 

In conclusion, unless there's a fairly direct reversal to make things interesting again, it's likely that bulls have the ball and a new bull nest to run with.  Trade safe.

SPX and INDU: Only a Test

On October 13, the first update after the Trump mini-crash, I warned that "nothing had happened yet" ("[T]he bottom line is, from a technical Elliott wave perspective, nothing has happened yet and this could just be a particularly violent fourth wave.") and not to get too bearish unless key support broke in the form of the long term chart immediately below -- as well as the red trendline in the chart that follows this one:

SPX red channel chart:

Finally, a quick update to INDU, just to note that this isn't a "bull nest" yet, it appears to be an ongoing third wave still:

In conclusion, futures are suggesting a new all-time high at the open, so it appears that not panicking in the wake of the mini-crash was the right call.  Given INDU's three-wave rally into its ATH, it appears bulls likely still have the ball for the immediate future, even if there's another leg down directly.  Trade safe.

SPX and INDU: Charts from an Alternate Universe

So I'm going to start off by cursing one of my charting services, whom I won't name directly (rhymes with "Fading Shoe"), for giving us a bum price chart.  It turns out the the "BREAK" of the prior low, as shown on that SPX 24 hour chart, was not something that actually happened in this universe and was potentially bleeding over from an alternate reality wherein Dave Barry won the presidential election and Tuesdays were declared a permanent national holiday.  This nonexistent BREAK actually influenced my read on not only Monday, but on the prior Friday (though I didn't mention it on Friday; I simply noted it in my mental model).

Thankfully, I didn't allow it to overrule everything else -- but it did play a factor in my weightings.  Thanks to forum member "porkchop" for calling it to my attention.

Anyway, last update noted that bulls should be cautious in the event of a sustained breakdown -- but that didn't happen anyway, so it was kind of a moot point:

So on the chart above... yes, bears could still get another wave down.  BUT, INDU now presents a bit of a monkey in the works for bears (I figure a monkey is probably more trouble than a monkey wrench):

Finally, SPX is still within the red channel:

In conclusion, I'll simply reiterate the conclusion I first issued on Oct. 13 and have been reprinting since:

[T]he bottom line is, from a technical Elliott wave perspective, nothing has happened yet and this could just be a particularly violent fourth wave.  Even from a standard TA perspective, this could just turn out to be an expected test of old long-term resistance (second chart) before the market moves higher again.  In other words:  While this could turn into something more significant, it's tempting but simply premature to assume that will happen just yet.  Let's first see how the market handles the levels that actually matter. 

With the additional note that now INDU is suggesting the "particularly violent fourth wave" has gained additional credence.  Trade safe.

SPX, ES, and INDU Updates: Not Ideal

Last update reiterated last Monday's note that technically, no key levels had been broken yet -- but then added the following warning:

That said, unless bulls can sustain a breakout over 6723, we do have to respect the three-wave nature of the rally and maybe give a slight edge to bears for the time being.  (Do note that there's also one bear pattern that breaks 6723 briefly before getting ugly, so even 6723 isn't a complete failsafe for bulls.) 

Let's take a look at why I added that warning, starting with the SPX 24-hour chart (I'll explain its significance afterwards):

The key observation about this chart is the BREAK of the mini-crash low.  Yes, there is one potential bull pattern under which such a break would be expected -- but there are at least three potential bear patterns that opened up at that break:

1. a b-wave low (which I was indicating via Friday's parenthetical (quoted above))
2. a bear nest
3. an ending diagonal that still needs a new low

This means, all other things being equal, there are more ways for this to work out in favor of bears than there are for it to work out in favor of bulls -- at least over the near term and as of right this second.  I say that because if bulls can clear the red bear 2/B high, then they eliminate options 2 and 3 from that list.

Let's look at the SPX cash chart with EWT labels:

That chart explains itself, as does the red channel chart:

Finally, a more basic look at INDU:

On the chart above: Yes, RSI divergences can run on and on before meaning anything -- but they're not what bulls want to see, because while RSI divergences don't NECESSARILY mean the rally is over, neither do they offer any indication that it isn't.  So it's another weak warning flag for bulls.

In conclusion, yes, bulls could still recover the ATH directly, there are no slam dunks here for bears... but this is not an ideal position for bulls at the moment.  If bulls can clear the red 2/B high on the first chart, then the picture gets a little fuzzier again.  Trade safe.

SPX Update: Bulls Not Out of the Woods Yet (and we all know what lives in the woods...)

Lots of noise but not much else since last update.  Nonetheless, let's put on our Elliott hats and take a deeper look at what we seem to have so far:

Bigger picture, support is still holding -- but so is resistance:

Let's revisit the conclusion from Monday's update one more time, and then I'll add to it at the end:

[T]he bottom line is, from a technical Elliott wave perspective, nothing has happened yet and this could just be a particularly violent fourth wave.  Even from a standard TA perspective, this could just turn out to be an expected test of old long-term resistance (second chart) before the market moves higher again.  In other words:  While this could turn into something more significant, it's tempting but simply premature to assume that will happen just yet.  Let's first see how the market handles the levels that actually matter. 

That said, unless bulls can sustain a breakout over 6723, we do have to respect the three-wave nature of the rally and maybe give a slight edge to bears for the time being.  (Do note that there's also one bear pattern that breaks 6723 briefly before getting ugly, so even 6723 isn't a complete failsafe for bulls.)  Trade safe.