SPX and INDU Updates: So Far, So Basically Okay

Last update noted that there weren't any clearly impulsive declines yet and hence another high for wave Y shouldn't be surprising -- and SPX did make another high since.  It has also reversed right off the Y inflection zone, which keeps things interesting:

Last update also noted that INDU's pattern would normally see lower prices before having a shot at recovery, so we'll see if bears can knock it down further on this round -- or if the market wants to mess with everyone's heads some more.

In conclusion, I've included targets for Wave C down -- IF this is indeed Wave C down -- but SPX was rejected right in the Y inflection zone just after making the anticipated new high... so that's about all that bears could ask for at this stage.  We'll see how it develops from here.  Trade safe.

SPX and INDU Updates

Since last update, bears did stall the rally for a bit, but the decline that formed is not clearly impulsive.  Note this does NOT say "clearly not impulsive," it says "not clearly impulsive," which means it doesn't appear to be an impulse but I can't rule that out.  We also cannot currently rule out that it's a partial structure (for example, 1-2 down, not a complete impulse).

But... it's "not clearly impulsive," so we shouldn't be surprised if SPX just rallies up to another high here.  No change on the SPX chart.  Y could support another high, though doesn't need it.

INDU is more interesting:

On Monday, a reader asked if Y needs to make a new ATH, and it does not -- in fact, in bears' best world, it would not.  Not much else to add beyond that.  Trade safe.

SPX and NYA: The B-Movie Market

SPX finally invalidated the triangle option as drawn, so at least that's progress of a sort:

We haven't looked at the big picture chart in a month and a half, primarily because there's been nothing to update:

NYA is still roughly in the same place (structurally) that it was on Friday:

Other than the triangle invalidating, there's not a lot to talk about -- for the near-term, it remains a Harlequin Romance "will they/won't they?" market for the moment.  Basically, bears need to stop the rally and develop a new near-term impulsive decline fairly soon.  If they can't, then we're dealing with an expanded flat (if the market makes new highs then reverses in a c-wave decline) or watching a new minute-level bull nest develop in SPX -- both options would be decidedly bullish at higher degree, one just takes an indirect route.  Bears would need to reverse this shy of the all-time high to keep anything other than short-term options open.  Trade safe.

SPX, NYA, and the Beard Updates

Last update ended with us "watching to see if bears can do anything with this": and they did -- and didn't.  Bears got a nice decline but then bulls rushed in to buy, flush with fresh cash from predatory payday loans dropped from drone helicopters piloted by Ben "the Beard" Bernanke from his cave on Alcatraz.

Which means we're still basically in the same place we've been all week:

The triangle and WXY both remain live for now:

Finally, I want to call bears' attention to NYA, which I've mentioned a few times in conjunction with INDU going back to June 12, when I wrote:

[T]here's not a ton of cross-market agreement right now.  And that alone is cause to avoid complacency.  Bears probably want to see INDU break down again fairly directly or they could be in for a larger rally. 

That larger rally has since materialized -- and NYA is still cause for bears to be on guard, as explained below:

In conclusion, bears are clinging to technical hope for the time being, but they are running thin on real estate, so if they're going to get something going, they'll need to do so soon.  Trade safe.

SPX Update: Why Not Try Angle?

Last update noted that SPX could make another run at the black trendline, which it did:

This keeps the triangle alive:

For now, the WXY shown above also remains alive, since nothing has yet happened to invalidate it.  Not much else to add at the moment, now it's just watching to see if bears can do anything with this.  Trade safe.

SPX Update: In the Pedants' Day

As those of you who've previously installed the Outlook Calendar app already know, America just successfully turned 250 years old -- so a Happy Belated Independence Day to all my fellow Americans.

The market has, not surprisingly, continued sideways-up ever since I drew the Most Frustrating Pattern in the World on the June 25.

But now it's about time for bears to either make good on this pattern or return to hibernation.

Not shown:  INDU made a new all-time high on Thursday.  SPX tested black:

In conclusion, bears have reached the first upside inflection zone, so we'll see if they can make good on it -- or if it was all just another Bear Head Trip™ caused by Ben Bernanke, huddled in his cave, sticking pins in bear voodoo dolls.  Trade safe.

SPX Update: Structural Isomorphism

Last update, titled "Still on Guard" ended with a warning:

[B]ears should be modestly cautious for now, because in the event the first leg up was a W and the decline since was X, then the market would be forming a larger WXY and a trip back to that all-time high from here isn't impossible.  That would fit in the sense of explaining why this decline doesn't feel like a proper C wave, so worth keeping in mind. 

And modestly cautious was probably a good stance.  As I noted on Friday, the decline was bothering me and just didn't feel right for a C-wave:

SPX is behaving a bit oddly given that this is supposed to be a C-wave decline -- it's rare that A waves (the last decline) are more relentless than C-waves.  This means that either the C-wave is just warming up and it will rectify itself soon... or that something more annoying is afoot.

At this point, we can probably make a pretty good argument that it's likely it was indeed not yet the actual C-wave.  It's likely either the triangle that I proposed on Friday, or the WXY that I mentioned on Monday.  The trick is that these two options (triangle/WXY) are, at this phase, observationally isomorphic -- essentially, they're identical wave structures (ABCs), with the difference being the final length of the wave, not the structure itself.  Since we can only see the structure at this phase (we obviously can't see the length until it's actually completed), the distinction remains uncertain.

In other words, the reason this is difficult is not because I’m hedging or being vague. It’s because the two viable structures produce the same observable evidence at this stage.  The difference in these two comes LATER in the pattern: The triangle forms a series of contracting ABC structures, while the WXY simply forms two similar ABC rally structures, with a smaller ABC in-between (the X wave).  

Which means, in short, that you simply cannot tell the difference at this phase -- they would and should both look exactly the same right now.  Which, of course, makes it functionally impossible to anticipate which it is.  The second chart following this one will help us make that determination (possibly).

I've added the WXY in black on the chart below:

So, the next thing to watch is the black line that I discussed on June 25:  If SPX sustains trade back above, then we may be looking at the WXY.  If it gets rejected here/at the red line, then we may be looking at the triangle.  This isn't foolproof -- corrections are always less predictable than impulses -- but it's the best we've got at this phase.

In conclusion, I'm going to lean toward the triangle slightly just because it was my first instinct back on Friday, and my first instinct usually has a slight edge -- but that's far from being guaranteed, so take it with a grain of salt. Of course, given that nothing in life is guaranteed, there's also always the possibility that something more bullish than either of these counts is afoot, so we should never forget that the market is probabilistic, not deterministic.  Trade safe.