SPX and INDU Updates: Three Time Frames

Last update warned that bulls were running short on real estate and that near-term trend has continued.  Let's look at three charts that illustrate the market's position at three distinct time frames, starting with the SPX daily chart:

While SPX is still holding red on the chart above, it has now overlapped its first meaningful near-term zone, suggesting the rally from last month's low is a three wave form.  This further implies it's either a b-wave high or part of an ending diagonal -- at least, those are the most likely implications (bull nest can't be ruled out yet; nor can "failed fifth").  If it's a b-wave high, the c-wave decline would be expected to reach ~6550 or below -- but then it would be expected to recover to a new ATH.  If it's part of a diagonal, it would be expected to grind higher again directly.

Finally, in the big picture, we're now nearly two years into this pattern, and INDU has finally completed the bare minimum requirements:

In conclusion, the market has continued showing weakness and the onus is now on bulls to start recovering some key zones to undo the technical damage.  Trade safe.

p.s.- Just a quick shout out to the people who support these updates (you know who you are) -- you are very much appreciated, thank you!

SPX Update: Running Short on Real Estate

Since last update, SPX fell a bit further, reaching and exceeding its potential target:

It also whipsawed the blue line on the daily chart:

In conclusion, SPX is still above its key levels for now, but has continued to show weakness.  Bulls probably need to make a stand fairly soon or risk a broader sell-off.  One of the more bearish near-term potential outcomes (if SPX sustains trade below its key overlap) would be a trip back to the black horizontal line on the daily chart, currently around 6500.  We'll see if bulls can right the ship soon -- or not.  Trade safe.

SPX and INDU: Right Said Fed

Something we didn't discuss last update that probably needs to be discussed is Powell's "surprise" announcement that the Fed will be ending Quantitative Tightening on December 1.  This means that Fed-held securities that are currently being absorbed by the private market will no longer need to be absorbed -- which frees up more liquidity to buy other assets (such as stocks, bonds, used cars, etc.).  As we've discussed a million times, additional liquidity tends to increase asset prices.

About 6 weeks ago, I wrote Why is the market rallying during QT? Whence Comes the Liquidity? -- so now we'll have the liquidity sources covered in that piece plus the abatement of the Fed drain.  So that's a fact worth keeping in mind heading forward.  It also means the only reason the market would sell off here (beyond short-term) would be if it interprets this as an incredibly bearish signal indicating that the Fed thinks we're on the verge of a serious economic downturn.  Because, barring a massive black hole that soaks up liquidity faster than it can be created, more liquidity is generally bullish.

Chart-wise, SPX hasn't moved much -- but INDU's chart is worth glancing at:

SPX is unchanged:

And everything from last update still applies:

Not much else to add beyond that.  Trade safe.

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.