SPX Update: No New Ground

Not much has changed since last update, since SPX didn't break any new price ground on Friday, so I recommend rereading that update if needed.

Near-term, SPX is still holding the recent swing low, though it did dip below red again -- which can sometimes be a sign that buyers are running a little thinner, so bulls should stay on their toes here:

Big picture, it will be interesting to see if the major breakout (blue, then black) gets challenged:

In conclusion, not much more to add since Friday.  Trade safe.

SPX, INDU, NYA: Getting Weird Out There

Last update intimated that bulls seemed to have reclaimed the ball and that was partially the case:  INDU and NYA both made new all-time highs, for example -- but SPX didn't.  The overall pattern is one of the more ambiguous patterns we've seen in at least a year (probably longer), so we'll discuss the options in a moment.

First up, INDU's near-term chart is flat-out bizarre:

SPX, while also a bit cryptic in the near-term frames, has performed phenomenally well if all you did was trade my intermediate trend lines:

Near-term, SPX captured its target from last update:

Maybe the closest chart I can find to a conventional and more readily recognizable pattern would be NYA:

Of course, if NYA reverses higher without making a new swing low, then it could simply be a bull nest.

In fact, let's take this opportunity to discuss the apparent options here:  

• One option was just mentioned (bull nest).  If recent lows hold, then it may be that simple.  
• If recent lows fail, then the slight odds-on favorite would probably be a complex expanded flat, with recent all-time highs being complex b-waves -- SPX and NYA's charts both outline the "common" targets in that case.
• The third option would be that things have gotten weird because the market is topping in a more significant manner.  Since we can't rule that out, bulls probably need to be cautious in the event things start breaking (much beyond the expanded flat targets noted above).  This third option is reflected in the chart below, which I published (again) about a week ago:

In conclusion, as we've just examined, the pattern is less than definitive from a predictive standpoint -- but we have a handle on the most likely potentials, so we should be able to track it as more data comes in.  Trade safe.

SPX Update: This is Why Bears Can't Have Nice Things

Recent updates have noted that, no matter what the market did next, it seemed likely that the all-time high was (at worst) a b-wave and hence not a lasting top (i.e.- still a bull market).  The market has rallied enough since then that now bears would need to reclaim 6631 to indicate they still had even the near-term ball:

Bigger picture, SPX has yet again rallied up to the blue trendline after whipsawing red:

In conclusion, for a minute, bears had some near-term fun -- but for now, bulls have recovered all the levels they needed.  Trade safe.

SPX Update -- and Bonus Sentiment Chart

So the market is into interesting territory now.  Last update noted:

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.

On the intermediate chart, SPX effectively held the red channel (after a brief whipsaw):

Near-term, this does keep all options open, though this bounce is not a bear killer (yet) and would still be in line with a bear wave (if this is a fourth wave bounce):

Finally, the chart below is interesting and probably doesn't need much explaining.  It tends to suggest that, while we could still be a ways away from a top, this rally can't go on forever:

In conclusion, SPX has now followed its prior three wave rally into the all-time high with a rather ambiguous decline.  Instead of getting lost in the minutiae of every squiggle, the most straightforward option is to keep using the red intermediate channel as the key pivot -- especially since that's been working for months now.  Trade safe.

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.