SPX Update

Last update was heavy on warnings for bears not to presume the market would continue lower from then-current levels, and yesterday saw SPX rally to the biggest one-day gain it's had in a couple months.  It's actually pretty amazing how well SPX followed the black path laid out on May 4, turning within pennies of the noted 2040 level, then running up to break the 2083 price point:

The near-term charts have been kind to bears, providing plenty of sign-posts along the way, and on Friday, due to the falling wedge (aka: diagonal) in the charts, I added a warning to bears if SPX reclaimed 2052ish.  That exit saved about 32 points of drawdown.

With SPX having broken 2083, we're now into the inflection point for the "bull" abc count shown above (now the "bear" abc count, since bullish/bearish are relative to the current price point -- on May 4, at then-current levels, it was a bullish count) -- the only thing is that it's not quite as clearly bearish as it appeared it would be back on May 4.  This is because the entire decline took the shape of a diagonal (something I couldn't have known would happen back on the 4th), which gives bulls an out.  As mentioned last update, I'm still very slightly inclined to favor the bears, but this is not a high-probability call anymore.

Finally, the 2 hour chart, with nothing to add since last update:

In conclusion, to reiterate:  SPX is now in the bear inflection zone (though it could run a little further to the upside, if it so desires) -- beyond that, there's nothing else to add from the last couple updates.  Trade safe.

SPX, INDU, BKX: No Key Breaks Yet

The last couple updates suggested that Target 2 (2030-40) from April 27 was "a given," and that target was indeed captured on Friday.  Further, SPX bounced directly off the 2040 level that was noted as an inflection point back on May 4.   And, additionally, BKX has so far held its key overlap.  This does at least open the possibility of a completed ABC decline, so for the moment, we have to respect that from a technical perspective.

A slightly wider view of SPX in the updated 2-hour chart:

BKX held its key overlap by .03:

INDU also illustrates the significance of the current inflection point via the trend line shown below:

In conclusion, both of my preferred near-term target zones from April 27 were captured, and SPX bounced within pennies of the noted 2040 price point.

Last update noted that the next few sessions would be "make or break" for the bulls, and that:

the next few sessions will likely answer the lingering question as to whether ALL OF C is complete or not. 

But so far, we don't quite have a "break," meaning the question above is still unanswered, and bulls have kept their options alive from a technical perspective.  We could have a definitive answer soon, but bears do need to keep in mind the the market has captured my downside target zones -- so we have to look at the charts again and see what's there now.  Meaning, we have to observe what has happened in a real sense -- and what has not happened.  What has not happened is a key overlap in any index.  What has happened is that we captured my near-term bearish targets.  Intermediate term, I have been reserving judgment until the market answered the question of whether ALL OF C is complete, via a key overlap.  It has not answered that question yet, so bears still need breaks of the key levels for confirmation of the intermediate bear case.

Again, we have to see what's there in the charts -- not what we hope to see, not what we want to see, not what we think we might see in the future -- but what has actually happened so far.  We can't anticipate the future unless we are able to genuinely see the present.  Seeing the charts clearly is what allowed us to capture roughly 60 points of downside profit.  

That said, I am very, very slightly inclined to think that bears aren't done, but I have to respect the price action above all -- and without key overlaps, there are simply no intermediate assumptions to be garnered from the recent price action.  Thus, personally, I would only take very low risk entries heading forward if attempting any short trades.  Trade safe.

SPX and BKX Updates: Make or Break Time

Last update concluded:

In conclusion, barring a miraculous stick-save by the bulls, Target 2 from a week ago looks like it's almost a given at this point, and lower targets are now appearing on the radar.  It's worth a reminder that, in the bigger picture, a break of the 1800 zone is still preferred.  The question is whether 2111 marks the completion of ALL OF Bull: C, or if there's to be one more minor new high.  As noted, the near-term pattern is beginning to look increasingly bearish; if that continues, the odds that ALL OF C is complete will rise accordingly. 

The next few sessions look like they're going to be make-or-break for the bulls.  Let's start with the big picture chart from March 14:

Next, let's examine how the near-term might provide warning for bears if bulls are going to get their act together:

Another look at SPX below:

Finally, BKX is approaching its first key overlap.  This overlap would help further stack the odds against the recent rally being blue wave v (from the first chart), which I have continued to doubt since day 1:

In conclusion, the next few sessions will likely answer the lingering question as to whether ALL OF C is complete or not.  Trade safe.

SPX and SPX Update: SPX Update

Today's title was brought to you by the Department of Redundancy Department (motto: "If we're being redundant, then please allow us to repeat ourselves!").

In Monday's update, I mentioned that the downward wave appeared incomplete, and thus a new low was probably still needed (along with a whole bunch of caveats in case I was wrong, as is my wont).  Shortly after Monday's close, I mentioned in our private forums that the rally appeared roughly complete -- and, from there, we gapped down directly at the open on Tuesday.  It appears we will gap down again today, and, presuming we break 2052 SPX today, that would leave mainly bearish options for the near-term.

The chart below outlines the two most apparent near-term options.  Both are bearish, but one is directly bearish, while the other would provide bears with another sell-op:

 The updated SPX 2-hour chart is below:

In conclusion, barring a miraculous stick-save by the bulls, Target 2 from a week ago looks like it's almost a given at this point, and lower targets are now appearing on the radar.  It's worth a reminder that, in the bigger picture, a break of the 1800 zone is still preferred.  The question is whether 2111 marks the completion of ALL OF Bull: C, or if there's to be one more minor new high.  As noted, the near-term pattern is beginning to look increasingly bearish; if that continues, the odds that ALL OF C is complete will rise accordingly.  Trade safe.   

SPX and RUT: Target 1 Captured

Generally speaking, the best time to sell or buy the market is usually when it seems like the craziest thing in the world.  Everyone is always bullish AFTER a big rally, and bearish AFTER a big decline, but those are the very times to be skeptical of its continuation.  On Monday, I was cautiously near-term bearish; by Wednesday, I was strongly near-term bearish.  We got a solid decline after that, so that's going to make people want to be bearish now.  That could be correct, but this is where I get cautious again, for reasons we'll examine below.

Let's start with RUT.  RUT came down sharply and back-tested the red trend line on Friday.  So far, it has found buyers at that line.  INDU and BKX (not shown) tested similar lines, and also bounced.  And that means bears should consider being cautious again.

 SPX captured and exceeded its first target:

In conclusion, there's a difference between what "looks more likely" from an analytical standpoint and what makes sense from a trading standpoint.  From a trading standpoint, the play was selling the 2/b bounce when we had an impulsive decline, a clear stop, and I was strongly in favor of a new low (and the risk/reward was reasonable) -- and then taking/protecting at least partial profits in the first target zone.  From an actionable standpoint, things are a little more iffy in the price zone as of Friday's close.  Analytically, the near-term pattern does look like it may be incomplete, and thus that a new low might be needed, but we do have numerous markets bouncing off trend line back-tests, so bulls may try to defend the zone on either side of Friday's lows.  Trade safe.

SPX Update: BoJ and Apple = No Surprise

Monday's brief update noted that 2112 SPX could be treated as a level to act against, while Wednesday's update more firmly anticipated lower prices (complete with downside target zones), and suggested that it might be Time for Bears to Wake Up.  After Monday, Apple "surprised" the market in a negative way; then, after Wednesday, the BoJ announcement likewise "surprised" the market in a negative way.  Long time readers know I firmly believe that the charts lead the news, not vice versa, and this week stands as further testament of that.

Sometimes tops are a challenge, but this one was pretty obvious in the charts, especially by Wednesday.  There's been no material change, and I still expect SPX will reach Target 1 from Wednesday's update, with a decent shot at reaching Target 2:

We're currently in a small third wave decline, but -- bigger picture -- the potential that this is "another fourth" wave can't be fully eliminated until this 3-wave decline becomes impulsive.  Thus, if the market makes it into the 2030-40 T2 zone and the smallest waves begin to look like complete waveforms, bears might want to watch carefully to see how price reacts to that zone.

In conclusion, lower prices continue to appear likely over the near-term.  Bigger picture, the possibility for another 4th and 5th wave can't be ruled out yet, but this remains "bearish until proven otherwise" territory (as noted on Monday) for the moment.  Trade safe.

SPX, RUT, BKX: Time for Bears to Wake Up?

Today is another Fed day, which seem to come at the rate of upwards of 8 per month these days.  I'm going to keep the words short, but I do have three charts for today's update.  This is an inflection point, and as long as bears can keep SPX from sustaining a breakout, they do have an opportunity to turn the market here. 

Frankly, even a breakout at 2112 won't do much harm to the big picture (bulls need the all-time high to technically damage the bear picture), but would reset the red count on the chart below.

RUT is at a big picture inflection point as well:

BKX captured its upside targets, and is also in an inflection zone:

In conclusion, if one is bearishly inclined, this is a larger inflection zone that stands a decent chance of turning the market.  All markets do have a little bit of wiggle room here, and if they were to run slightly higher, it wouldn't change the inflection zone unless and until the all-time high is reclaimed -- but we do seem to have an impulsive decline from 2111 in SPX, so we could be witnessing the early stages of a turn.   Trade safe.