SPX Update: No Material Change. For the Market, Anyway.

Today's update is going to be short.  My father passed away on Friday evening, so I haven't been doing much charting this weekend. 

Essentially, there's been no material change from the last update.

All I'll add down here is this:  If you haven't spoken to a loved on in a while and you suddenly feel the urge to call them, then do it.  Call them as soon as you can... don't wait another day.  I was fortunate enough to speak to my father on Thursday night -- but if I'd put that phone call off for even 24 hours, that 24 hours would have lasted for the rest of my life.  Trade safe.

SPX Update: All the Marbles

Last update's preferred count showed SPX as still needing a fifth wave into the 2110-25 target zone, and Wednesday's market provided that.

This is a familiar position for bears:  We have a potentially complete wave structure, but as yet no larger impulsive decline to confirm a turn.  This means that there could still be another fourth and fifth wave to unravel -- and, in fact, that might fit the pattern slightly better.  But it isn't required, and we're into a price zone that has provided significant resistance on two prior occasions.

Way back near 1810, we knew that a rally of this magnitude was a distinct possibility, and I immediately began showing "Bull C" labels on the charts, up near 2116ish.  So, in my mind, all the rally's progress to this point means very little from a technical standpoint.  This price zone near the all-time-highs will provide the true test as to whether the bull market that began in 2009 is still underway or not.

The issue I have with this being the beginning of a major fifth wave isn't shown on this chart -- in fact, I haven't shown it at all in these updates, nor will I.  Suffice to say that if this were to be a major fifth wave, there are certain markers I'll be watching for before I shift footing.  As of yet, I'm still more inclined to think this is a second or (B) wave rally, and ultimately due to be retraced fully.

Near term, we could have completed ALL OF Bear (B)/2, but SPX could still support another fourth and fifth wave unravel.

In conclusion, the charts pretty much sum up my thoughts as well as I can -- basically, we're finally into the price zone that represents THE test for this market.  Trade safe.

SPX, NYA, COMPQ Updates

What is there to say about this market at this point?  Nothing really, except things like "Stocks have reached a permanently high plateau," and so forth.  So far, the market has powered through every resistance zone, and continued capturing its upside "if/then" breakout targets.

NYA captured its breakout target:

COMPQ is also testing its upside target from a month ago:

Thus, COMPQ and NYA are now testing resistance.  SPX and INDU are close to their all-time highs, so there too, we have a test of resistance underway.  From a technical standpoint, the all-time highs are much more important resistance zones than any the rally has encountered thus far, so we're into "make or break" territory for bears. 

Looking at the near-term, last update mentioned that there was a reasonable chance that any downside during Monday's session would merely mark a micro-degree fourth wave, and that's what it ended up being.  SPX may still have some fourth and fifth waves left to unravel:

In conclusion, thus far, the rally has overcome all resistance zones, but we are now effectively testing the all-time highs, so the most important test is now underway.  Trade safe.

SPX and RUT Updates

Last update expected that over the near-term, another small leg down was expected, with Target 2 being 2077.  SPX captured that target (low 2076.31), but left itself options for additional downside.  The question is whether any pending additional downside will simply become a fourth wave at micro degree:

Since the current wave structure is about as clear as mud filled with resin and covered in tar, I've drawn up a simple near-term support and resistance chart:

Bigger picture, RUT is testing its 200 day moving average, and its intermediate downtrend line:

The biggest concern I have for bears is the stair-step pattern that RUT just went through.  There's still a shot that pattern is a terminal, but it could instead be a coiling pattern.  We won't know for certain until it moves a bit farther, but just be aware that if it's a coiling pattern, a breakout could take aim at the 1194-1206 zone.

In conclusion, this remains a difficult market to chart, and frankly, it's always something of a drag dealing with these waves that seem driven more by central banks than by actual humans.  (Not that I'm suggesting for one minute that central bankers aren't human -- wait, scratch that.)  Thus far, the small handful of semi-promising bear moves have each ultimately stalled at three waves down, and then culminated in new highs -- so at this point, it gets difficult to say anything other than, "Well, it's still an uptrend!"  As noted, though RUT is testing intermediate resistance.  On SPX, the first semi-meaningful zone for bears to claim in 2060.  Trade safe. 

SPX Update

A week ago I wrote:

In conclusion, INDU's decline is impulsive, although NYA shows how that impulsive decline could be a bullish C-wave.  SPX is trying to look like a completed ABC decline.  Everything in the pattern is designed to make bulls more bullish and to scare away bears -- but, for whatever reason, I'm not buying it.  Maybe I'm wrong, and we'll rally straight on to new highs; this is a very tricky pattern, because it does "look" bullish on the surface -- so, for that reason, I'd suggest only low-risk entries for bears who are inclined to trade against it.  Trading, at its essence, boils down to calculated risks, and not all of them will win; thus it's important to consider the other side of the trade, and to keep losses manageable. 

It turns out that the pattern was exactly what it appeared to be (an ABC decline), and I was indeed wrong not to buy it (both literally and figuratively).  On the plus side, at least I had the decency to warn bears not to get too aggressive.  This is certainly not the first time I've been had by one of these Central Bank-driven "we're going to break all the records!" rallies.  As the saying goes:  This is not your father's market.  It might be more akin to your grandfather's market, assuming your grandfather was around during the roaring 20's.


Last update, I noted that if SPX could sustain a breakout over 2075, then it suggested a first target of 2090 +/-, which was captured yesterday (within two SPX points falls into the +/- category).  On the chart below, I'm showing SPX in bull (5), but be aware that there's no way to rule out a extended wave yet, so it could run toward Target 2 if it wants.

On Monday, I had discussed BKX as a possible canary in the coalmine, and mentioned that a breakout could be dangerous for bears.  BKX has since broken out, but we'll give it a session or two to see if that sticks.  If it does stick, then bears might want to stand aside until such time as the market declares them back in the game, because that pattern has the potential to be quite bullish on an intermediate basis.  The last bear patterns there are double-zigzags and such, which are never obvious while they're forming, so bears will just have to be patient for the time being.

I've drawn up a near-term chart based on the current 1-minute pattern, with caveats as written.  If we do get the move as shown, it does have the potential to mark blue c for a small fourth wave.  If it develops into a five wave decline (beyond blue c), then we'll know to watch for a bigger turn.

Incidentally, if we sustain a breakdown directly without a whipsaw, then this pattern has the potential to be more bearish than shown.  The simple version is that yesterday's decline does appear impulsive, so more downside is expected, either after the chop as shown, or more directly.

In conclusion, the breakout in BKX has the potential to be bullish if it sticks, so we'll keep a close eye on that heading forward.  Trade safe.

SPX and INDU: Clear Battle Lines

Last update didn't have much in the way of predictions, but shortly after Monday's open, the market revealed its near-term intentions, so at 10:56 New York time, I posted in our forums that I thought SPX might head down to 2038-40, then reverse back up to 2064-67.  That's exactly what happened on Tuesday, so hopefully forum members were able to benefit from that roughly 40-point round-trip call.

If the market breaks out, the near-term pattern will become a little iffy for bears.  I can still see one bear pattern (detailed on INDU's chart), but bears need a fairly immediate reversal for that to stand a chance.  Let's start with SPX in broad strokes, then we'll look at INDU for detail:

INDU's chart contains some additional details, along with some random notes for edumacayshunal porpoises (= really smart sea-dwelling mammals who can't spell):

In conclusion, the market has drawn the battle lines fairly clearly, so the next move will likely have at least some near-term legs in the direction of the break.  Trade safe.

SPX, INDU, BKX: A Canary in the Coal Mine?

Well, there's been no material change since last update, but I do have a new chart for us to keep an eye on (or: "for on an eye us to keep," since you're not supposed to end a sentence with a preposition).  Let's get straight to the charts, starting with INDU.  On Friday, INDU turned right about where I had the 2/b label, but another leg up to complete 2/b still isn't entirely out of the question.  Of course, a breakout over recent highs would take wave 2 (but not b) off the table.

SPX also turned where I had its 2/b label:

Finally, the chart for us to watch is BKX.  In the event BKX were to break out over its recent highs, it wouldn't entirely eliminate all the bear options, but it would certainly call for a healthy dose of bear caution (the FDA considers 200 mg to be a "healthy" dose of caution.  400 mg or more will put you to sleep, but 50 mg or less will tend to blow up your account in about 3 weeks, so dose carefully.  Maybe take a healthy dose of caution before dosing?  Ah, Catch 22!)

In conclusion, there's no material change since last update, so it's simply up to the market now to prove the bears/bulls right/wrong.  Trade safe.