SPX, COMPQ, INDU: Right on Schedule

Last update noted that the market had been "almost too orderly," so a break lower wouldn't be surprising to put The Fear into bulls.  Amusingly, both COMPQ and SPX did exactly that, while INDU held firm above its long-term line.

COMPQ dropped right into its noted support zone:

INDU hasn't even tried to scare bulls yet -- and maybe the other markets will be enough fear for them, we'll see:

SPX dropped a little lower, but it's still inside its noise zone for now:

In conclusion, INDU, SPX, and COMPQ are all still above long-term support.  INDU and COMPQ are brushing against it, but bears are going to need to sustain trade and closes below that support to make this look like anything more than noise.  If they can, then we'd have to pay more attention to the two-month-old "maybe this will turn into a complex flat" idea.  Trade safe.

SPX, INDU, COMPQ: Almost Too Orderly

Last update reiterated Friday's note that bears hadn't accomplished anything yet. Since then, both SPX and INDU made new all-time highs.  Once again, though, they were unable to get any farther than that.  So bulls are keeping the ball away from bears, but can't seem to push down the field very far.

INDU is back to long-term support, though at this point, this is behaving almost TOO orderly, which makes things too easy for market participants.  Now, that doesn't mean the market "needs" to throw a curveball, but we should probably be prepared for that option.  I wouldn't be at all surprised to see it drop through red and blue (maybe down to black) at some point just to put The Fear into bulls.  

That's not required, of course, but if bulls can't get up and over the all-time high pretty soon here, then be ready for it.

COMPQ dropped down to its lower near-term trend line and tagged it on the nose:

SPX has formed an apparent three-down from its recent all-time high:

In conclusion, nothing to add to recent updates, but worth noting that "not getting bearish" after the last decline was the right call, since SPX and INDU both made new highs since then, which would have invalidated any bear counts.  Trade safe.

SPX, COMPQ, INDU: Trump Spins the Warsh

On Friday, Trump announced his nominee for next Fed Chair: Kevin "Car" Warsh. Trump announced this via Truth Social, posting: "I've selected Kevin because his last name should provide hours of entertaining puns from my favorite market analyst."

Kevin "Hog" Warsh is an interesting choice, because at one time he was very anti-inflation and pro-higher-rates, but apparently lately he's changed his tune.  Either way, I'm rooting for Mr. "Mouth" Warsh, literally only because of his name. I know almost nothing else about him, but we haven't had a Fed Chair with a name this good in years.

Equities-wise, not much happened on Friday (though gold and silver crashed when "Brain" Warsh was announced).

INDU tested its long-term line again.  If it sustains a break of the blue and red confluence at this point, we'll probably see it test black:

COMPQ was rejected on its first test of the old black line.  It has long-term support (not visible on a chart at this time scale -- which is why I'm showing it for readers here) in the box:

SPX is still refusing to clearly state whether it's going to run with the complex expanded flat we've been side-eying for two months now -- or whether it's going to end up being a bull nest:

By way of conclusion, I'm going to reprint Friday's summation, because it's useful and detailed:

So, here's where we are now:

1. COMPQ did NOT yet clear its important upside zone. This keeps bear options at least on the table for now.  However:

2. INDU is still above its major support line, so bears have nothing to sink their teeth into there.

3. SPX is still above near-term support, so again, nothing that allows bears to claim victory.

In short, bears held an important upside line FOR NOW -- but they have yet to claim any key downside zones.  So, as of this exact moment, we can't say that bears have the ball.  

A good analogy might be to say that bears prevented a touchdown, but it's only third down and bulls could still score on the next play.  If bears can force the bulls into a fourth down situation (by pushing below the next key levels), then they might take over on downs.  But let's see what play bulls call on third down here before declaring the game winner -- because if bulls can push back up and over 24K, things will look pretty good for them.  If bears start sustaining trade below support, then the calculus begins to shift in their favor. 

Trade safe.

SPX, COMPQ, INDU: Third Down and Inches

Last update ended with:

Near-term, COMPQ, at least, is into its upside inflection zone, which probably makes this an important moment for the rest of the market, too.  If COMPQ can sustain trade north of 24K, then that would be an all-clear for bulls for the immediate future.  If it gets rejected here, then near-term bear options will stay on the table.  

And that proved to be right on the nose in more ways than one.  COMPQ ended up rallying up to just shy of 24K, and then behaving exactly as you'd expect in an inflection zone:

And, as noted in the last update, "the rest of the market" did too:

INDU dropped down to the key blue trend line and bounced:

So, here's where we are now:

1. COMPQ did NOT yet clear its important upside zone. This keeps bear options at least on the table for now.  However:

2. INDU is still above its major support line, so bears have nothing to sink their teeth into there.

3. SPX is still above near-term support, so again, nothing that allows bears to claim victory.

In short, bears held an important upside line FOR NOW -- but they have yet to claim any key downside zones.  So, as of this exact moment, we can't say that bears have the ball.  

A good analogy might be to say that bears prevented a touchdown, but it's only third down and bulls could still score on the next play.  If bears can force the bulls into a fourth down situation (by pushing below the next key levels), then they might take over on downs.  But let's see what play bulls call on third down here before declaring the game winner -- because if bulls can push back up and over 24K, things will look pretty good for them.  If bears start sustaining trade below support, then the calculus begins to shift in their favor.  Trade safe.

SPX, INDU, COMPQ: Inflection Point Arrives

 

Last update noted that as long as INDU held its key zone, there was no reason to get bearish, and the market has continued rallying since then.  Let's start with the most interesting chart:

SPX:

Finally, INDU actually stalled while COMPQ and SPX were rallying, but it's still above its first key trend line:

Last update's conclusion still holds: INDU remains our key chart at this juncture.  Basically, as long as the long-term blue trend line holds, then we can only favor the bulls for more upside.  Which is nice, because that makes things really simple right now.  In the event INDU sustains a breakdown there, then we have next levels to watch.  But if there's no breakdown, then there's just no reason to even consider bearish things unless or until there is. 

Near-term, COMPQ, at least, is into its upside inflection zone, which probably makes this an important moment for the rest of the market, too.  If COMPQ can sustain trade north of 24K, then that would be an all-clear for bulls for the immediate future.  If it gets rejected here, then near-term bear options will stay on the table.  Trade safe.

SPX, COMPQ, INDU: Provisional Targets

Not much happened on Friday, so let's revisit our big picture Rosetta Stone chart first.  I'm going to reprint Friday's notes about it, for anyone who missed last update:

INDU is once again trying to stay over its very long-term blue trend line.  Let's discuss both options:

1. If it CAN stay over blue, then bulls should get at least a few more weeks of happiness and possibly much more.  Bears will get another shot at upper red -- that will be an inflection (and if INDU sustains trade over red (a breakout would be expected either way; the question will be if it can hold it), then that's very bullish).

2. If blue fails, then bulls get another shot to hold support at black.  If black fails substantially, then we'll have to start looking at horizontal support zones (such as 45.7K) and things can get ugly fast.

Next up, we can now project provisional upside targets in COMPQ if it can sustain trade over its all-time high:

SPX's pattern doesn't allow clean targets like COMPQ, but we could expect it to behave similarly (i.e.- a decent rally over the coming weeks) if the COMPQ conditions are met:

In conclusion, INDU remains our key chart at this juncture.  Basically, as long as the long-term blue trend line holds, then we can only favor the bulls for more upside.  Which is nice, because that makes things really simple right now.  In the event INDU sustains a breakdown there, then we have next levels to watch.  But if there's no breakdown, then there's just no reason to even consider bearish things unless or until there is.  Trade safe.

SPX, COMPQ, INDU: One Chart to Rule Them All

Let's not keep everyone in suspense -- the clearest long-term chart right now seems to be INDU.  This is the exact same chart that, almost exactly two years ago, caused us to continue favoring a continuation of the bull market (bottom annotation from January 8, 2024). Now, INDU is once again trying to stay over its very long-term blue trend line.  Let's discuss both options:

1. If it CAN stay over blue, then bulls should get at least a few more weeks of happiness and possibly much more.  Bears will get another shot at upper red -- that will be an inflection (and if INDU sustains trade over red (a breakout would be expected either way; the question will be if it can hold it), then that's very bullish).

2. If blue fails, then bulls get another shot to hold support at black.  If black fails substantially, then we'll have to start looking at horizontal support zones (such as 45.7K) and things can get ugly fast.

Next up, SPX is back-testing the red wedge I drew a few weeks ago:

Same with COMPQ:

In conclusion, the simplest way to play this now is to treat 6789 SPX as key support.  Yes, there would still be the option of a WXY that bottoms not long after... but it might be worth just treating 6789 as key and then getting back into longs IF we see evidence of the WXY.  That's not trading advice, of course, but I'd recommend solid caution if SPX sustains trade south of 6789.  Because the expanded flat isn't a given, and particularly if INDU follows up with a sustained breakdown at black, the market has the potential to enter into a nasty correction.  

Of course, if there's no breakdown at blue, then bulls keep the ball. But I figured it best to lay out the implications, in case it fails. Trade safe.