SPX and INDU: A Bit More Detail

Last update was 90% caveats and 10% update.  Bears managed to turn the market down almost immediately on Friday, which confirmed that the micro-count I posted for NYA (of a completed five-wave rally) was correct, but the idea that it could be wave c of an expanded flat was a bust.  Today it appears that complete five wave rally was definitely not a c-wave -- it was either wave-a or wave 1.

I remain a bit head-tripped over the fact that SPX found support right at the 2054 inflection point from June 10.  I'm head-tripped because that was the inflection point for the most bullish count I could find on June 10.  I don't think many other technicians are as worried about it -- probably because they didn't/don't even see the expanded flat count I was worried about (I posted that count publicly on Friday, so they probably "see" it now.). 

The linear thinking here says "we had an impulsive decline, therefore we're due for an ABC rally and another impulsive decline."  That's the most obvious read, therefore that's the read most Elliotticians will probably be tracking.  I hope, for bears, that it really is THAT simple.  But the one time that an impulsive decline can mark the end of a move instead of the beginning of a move is when that impulse is an expanded flat c-wave (bulls, of course, will be rooting for this outcome).

Frankly, I wouldn't be as worried about it if the market hadn't bottomed where it did.  What I didn't discuss back on June 10 was that the second target/inflection point (2054 +/-) I had calculated was potentially the most bullish of the three, because it was where the market would bottom for a second or b-wave retrace.  Now, to give some small encouragement to bears:  One thing I've learned over the years is that if you read the waves right, you can often find the inflection points for possible counts and the market will honor those inflection points whether that count is "the" count or not.  It's almost as if the market knows what to do to create maximum ambiguity, so it bottoms or tops at an inflection point even if it intends to break that inflection point later.  Maybe that's what will happen here. 

But to wrap that point up: all of the above is why I'm head-tripped right now.  And that's why I'm being more cautious than I might otherwise be.

So, with that out of the way, here are the current options:

The options are essentially the same for SPX:

Note I've included the "true bull" target of 2175-80 on the chart above -- that's in the event that 2150 marks the bottom of the c-wave of an expanded flat 2nd wave.  Do note that SPX can break 2120 and bears do still have some options until 2132 is claimed.

In conclusion, it's entirely possible I'm over-complicating this wave, simply because I'm seeing a possibility that most people probably aren't seeing.  Sometimes seeing the "non-obvious" counts actually puts you at a disadvantage if the market is intending to behave in a straightforward fashion.  There aren't any other clear "tells" right now that allow us to eliminate that more complex count -- but way back at the lows, I did feel the rally was probably a larger B-wave, so for now, that's what I'm going to continue defaulting to until the market proves otherwise.  I'm just not crazy about the near-term pattern now, so take that for what it's worth.  Bears need to break 2050 to make things "straightforward" again.  Trade safe.

SPX, INDU, NYA: Monster Inflection Point

Last update, I wrote:

A back test of the 2085-90 zone would not be unreasonable, but presently I expect the market will then be sold to new lows.

I'm inclined to think SPX will AT LEAST test the 2054 +/- target/inflection zone (noted back on June 10)...

SPX hit 2085.65, then turned and dropped like a rock to new lows.  It went on to capture the 2054 target, which was also mentioned as an inflection zone -- and inflect it did, launching SPX all the way back up to almost 2080.  That's a pretty solid double-round-trip call.  Now things get a little more tricky.

I'm going to try to keep things as simple as possible today, given how complex things truly are.

Let's start with INDU for a detailed explanation as to why:

I didn't detail the SPX chart, but the potential counts are essentially the same. 

For our last chart, let's look at NYA, simply because I detailed the chart, and it does suggest that the zone around yesterday's high is an inflection point.  It's entirely possible bears could turn it right back down from here.

In conclusion, yesterday's low appears to represent a monster inflection point, and could be the dividing line between "very bullish" and "very bearish."  So, what am I favoring?  Well, this is a very difficult call, so I want readers to understand that this is not a "high confidence call" (Wednesday, when I wrote:  "I expect the market will then be sold to new lows." is an example of a strongly-worded high confidence call.) -- but I'm leaning slightly toward the bears here.  This is NOT "mortgage the house and go fully leveraged short with no stops!" territory by any means.  The bull count is wholly viable, and the market bounced RIGHT off the inflection point.  That has to be respected.

But I'm slightly inclined to think the bears will turn it around.  Be aware that if they can't do that fairly directly, then it's entirely possible they won't do it until we retest the zone around 2120.  And if they can't turn it back down today, then it's possible they won't do it at all.  Protect yourself accordingly.

Said more simply:  Yesterday's high could be treated as a pivot zone, and a zone to act against.  But if we clear that zone, then things get ambiguous, and possibly dangerous for bears.  Vice-versa for bulls, with SPX 2050 -- that zone is also likely to function well as a pivot.  Trade safe.

SPX and NYA: Failing Support Not Terribly Encouraging for Bulls, Will the Fed Bail Them Out?

Despite what those of you who own Gregorian calendars have been led to believe, today is yet another Fed Friday.  This means the Fed gets to waltz out and make blatantly obvious statements that pundits can then quote with great excitement and fanfare -- as if the Federal Reserve somehow knows more about things than common dummies like you and me.  For example, Janet Yellen said that the pending British referendum on whether to leave the European Onion (EO) "could have significant economic repercussions," which is like saying that the surface of the sun "could be a place that would benefit from air conditioning."

The implications of Brexit are so incredibly obvious that even feral cats understand them -- but pundits love to run wild when Yellen says something like this, presumably because it means that even she gets it.  Besides, feral cats are a wholly disenfranchised segment of the population, so it doesn't really matter WHAT they understand about Brexit, since their oppressed voices are only heard late at night when everyone but me is trying to sleep.  And what I usually say to them is: "SHUT UP YOU FERAL CATS!"  So I readily admit to being "part of the problem" when it comes to their disenfranchisement.

Anyway, I'm not entirely sure how I ended up on that tangent, although I suspect that the feral cats currently howling near my back patio may have been a contributing factor. (I'm pretty sure that Maui's feral cat population is higher than its human population!)

Getting back to the market... er... getting TO the market, since we were never on that topic to "get back to," at least not today, there is currently nothing terribly bullish about the charts.  Let's start with NYA:

Next, let's look at three different charts of SPX and see if there's anything particularly bullish in them.  First is the preferred wave count from June 8, which still sees SPX testing 2000-2020 before the next real decision point occurs:

Next is the near-term SPX chart:

Finally, the big picture trend channel chart:

In conclusion, there's just nothing particularly bullish about support failing across multiple time frames.  Can bulls suddenly put something together and reverse the whole thing?  Of course, the market can change in a heartbeat.  But as of right now, there's no reason to think that will happen -- so unless bulls start putting together something more convincing (or the Fed comes out and announces something ridiculously bullish), I'm inclined to think SPX will AT LEAST test the 2054 +/- target/inflection zone (noted back on June 10), and probably test the 2000-2020 zone.  Trade safe.

SPX, BKX, NYA: Near and Intermediate-term Battle Zones

Last update noted that we had an impulsive decline from 2120, and suggested a first downside target/inflection zone of 2090-96, which was captured during Friday's session.  Interestingly, we bounced almost perfectly at both edges of that inflection zone:  first at 2096, then we dropped down to 2090 and bounced again.

I have a lot of charts to cover today, so let's get right to it.  First is NYA, which is a good representation of the broad market.  Notice that the broad market has gone essentially nowhere in the past two and a half years -- almost amazing to think about, when you consider the huge price swings we've had in that same time period.

Next is the SPX chart, which shows two potential counts.  Bears do have some work to do to get to either of these counts, as we'll see in the bigger-picture chart which follows this one.

I suspect bears will "git 'er done" in the end and at least reach the red C inflection zone shown above, but we do have to remain aware of the approaching support zone shown on the chart below:

Next is a chart of BKX.  This pattern has considerable bearish "potential energy," so if noted support fails and turns into resistance, we could see a decent sell-off ensue:

Finally, a near-term chart of SPX with some clues to watch as the upcoming sessions unfold:

In conclusion, I'm favoring the bears here, but I'm not oblivious to approaching support and the fact that the important battles have yet to be fought.  What happens in the immediately upcoming sessions is thus critical.  Trade safe. 

SPX, NYA, Crude Oil: What's 100% Gain Amongst Friends?

Things may be about to get interesting for bears again (finally).  While we closed yesterday's session only a few points off the 2120 high, we did so after an impulsive decline, and that means we should expect at least one more wave down of equal or greater length.  The next thing bears want to see is TWO more legs down (to create an even larger impulsive decline).  Even though that larger impulsive decline hasn't happened yet, because this first (small) impulsive decline has come from a massive intermediate inflection point, we should be on early alert to the potential that this may be the beginning of a much larger trend change.  

Near-term, the first downside inflection zone sits at 2090-96 -- if we blow through that zone, then bulls might want to sit this out until we see an impulsive rally.

It sounds funny to say this, but NYA's recent new high is actually bearish per the pattern I've been tracking for the past several months.  That pattern "needed" to see NYA make a new high beyond 10641, so with that out of the way (and Target 2 from March captured in the process), bears are now free to take this market back if they so desire.

I'd also like to update crude oil, since the last real public update I did for crude was back in January.  On January 13, I wrote the following:

From an intermediate standpoint, oil appears to have some fourth and fifth waves to unravel here, thus, due to the size of the overall waves, some very large "backing and filling" price swings may be forthcoming in the not-too-distant future.  Be aware that a large fourth wave does not need to unravel itself in the time shown on the chart above (i.e. -- this chart is not a "time projection") -- fourth waves are known for their complexity, and it would not be unheard of for a complex fourth at this degree of trend to unfold over the course of years instead of months.

I first published the chart below on January 11 in our forum, then published it publicly with the update on January 13:

It's actually somewhat ridiculous how well that chart has tracked, especially considering that the expected rally from blue (iii) to blue (iv) represented roughly 100% gain, and I didn't hedge, caveat, or show any alternate counts at all.

Updated chart below:

In conclusion, equities have made a small impulsive turn out of the current massive intermediate inflection zone.  The preferred count of the past several months continues to remain as such as long as the all-time-highs hold.  As I wrote last update: SPX finally rallied into the zone it was "supposed" to -- now it's up to bears to get to work, or head back into hibernation.  Bears are off to a promising start; now they need to see this decline develop into a still-larger impulse wave.  Trade safe.

SPX Update

SPX actually did something in recent sessions, as it made a new high and, additionally, finally broke 2116, while flirting with the upper boundary of the larger chop zone in the process.  At this point, it's put up or shut up for the bears, as they (ideally) don't want to see a sustained breakout over the all-time-high, which isn't far away.

INDU and NYA did not make new highs, so one potential pattern is shown below, but please do not take this as a "high-probability projection."  We have nothing in the way of a decent impulsive decline yet, so I can't guarantee that red wave c is complete.

Bigger picture, things are unchanged:

In conclusion, SPX finally rallied into the zone it was "supposed" to -- now it's up to bears to get to work, or head back into hibernation.  Trade safe.

SPX and BKX: Still a Chop Zone

Friday saw the market open sharply lower, but buyers showed up for the remainder of the session.  Near-term, the pattern is nothing but chop at this point, so I can't draw any high-probability near-term conclusions at the moment.  Bigger picture, we're also still in the chop zone that I warned about back in March.  Stay alert to the possibility of a head-fake higher.  In the event there's a breakout followed by a whipsaw with this pattern, I would suggest bulls behave extremely cautiously.

BKX did what it was "supposed to," but it didn't do it in a pattern that leaves much clarity in its aftermath, so there are no new conclusions to be drawn here presently:

In conclusion, we're still inside a larger chop zone, and there still isn't any new information from the market.  Thus, as of yet there really isn't too much to add beyond the last few updates.  That will hopefully change soon, but patience is in order for the moment.  Trade safe.