SPX Update: An Ultra-Rare Pattern to Close the Book on 2016

After Wednesday's session, it became apparent that the previously-assumed triangle count was off the table, so before the open yesterday, in our forums, I posted a new short-term wave count, along with a first downside target of 2244.

With that chart, I included the following commentary (slightly edited for clarity):

Since I don't do Thursday updates on the main blog, I at least wanted to publish this quick chart for everyone here on the forum.  Triple zigzags are among the most rare legitimate patterns (there are patterns that are more rare, but the only patterns more "rare" are patterns I don't consider valid (lol), such as the "expanding ending diagonal," which I don't believe exists at all, thus making it technically more rare than the triple zigzag, since the "EED" has a frequency of 0%). 

Anyway, if ever I've seen a pattern that COULD be a legit triple zigzag, this is it.

If 2248 fails, then this pattern is a triple zigzag, which you'll have to forgive me for not anticipating in real-time. In the past couple decades, there have literally only been a small handful of these, so it's something of a fool's errand to even watch for them, and these types of long-shot patterns are generally only tracked by perma-(bears/bulls) who are trying to find SOMETHING that can fit their underlying bias. (IMO, watching for triple zigzags is somewhat akin to betting on an unforeseeable black swan event every time the market corrects even slightly).

If 2248 fails, then we have to presume this is a triple zigzag, in which case we have 3/C targets at 2244 +/- and 2226 +/-.   Just a heads-up for everyone.

Here's the triple zigzag chart:

Here it is on the now-defunct triangle chart:

Again, if SPX sustains a breakdown at the blue/red trend line (blue on the first chart, red on the second), then bulls might want to hold their fire until things clarify again, because it's always possible that red C (above) is only wave 1 of a larger C-down.  Nimble traders might even consider shorting against the all-time high IF (and I stress IF) we get back up within a few points of it -- playing for a more complex correction, that could even head as low as 2200-2215.  That's looking a bit down the road, but something to keep in mind.

As of yet, no real change to the bigger picture:

In conclusion, we just witnessed a corrective pattern so rare that I can't recall having seen one at this wave degree in at least the last 5+ years.  Whether this is ALL OF the correction remains to be seen, but there are enough waves for a complete ABC down, if that's what the market wants.

On another note, the next time I do an update it will be 2017.  Which seems ridiculous, really, because 2017 sounds incredibly futuristic.  I'm going to be sorely disappointed if we don't at LEAST develop warp capabilities in the next 48 hours, so technology can get caught up with the sound of the year.  I mean, c'mon, if you'd told high-school kids in the 80's what the differences would be between 2017 and, say, 1989, we'd have been SORELY disappointed.

To illustrate this point, let's look at an unbiased list of the pros and cons of 2017 vs. 1989.

2017 Pros:

1.  Everyone has cell phones.

2.  Virtually all other communication, shopping, bill paying, etc., can be done over the internet.

3.  At a loss here, and I've been thinking for like four entire minutes.  Oh!  Digital cameras.

2017 Cons:

1.  Everyone has cell phones.  Even little kids have cell phones, which makes YOUR kids (yes, you have kids now!  It's 2017, duh.) believe they, too, are entitled to a friggin' cell phone -- so when you refuse to get them cell phones because you want your kids to learn how to communicate like actual human beings and not constantly bury themselves in a "one-step-removed" form of interaction, AND you want them to learn to entertain themselves without technology, they believe you are the most ruthlessly-strict parent to ever walk the face of the Earth.

2.  The music sucks.

3.  Commercial forms of art are dead.  Virtually everything (from movies to music) is a "reboot," a remake, or an outright ripoff of something that came before.  It seems like nobody has any original ideas anymore, probably as a result of everyone having their face buried in a cell phone or laptop 24/7, which allows them no TIME to think up original ideas.  Some of the greatest inventions and ideas in mankind's history have come about simply as a result of boredom, which gives people time to daydream and motivates us to create.  When we fill up our every waking minute with "busy work" or mindless entertainment, we leave no space for true creativity to break through.

4.  Everything else.

Anyway, my point is:  Happy New Year!  Despite the inherent cons of 2017, I do wish all my readers a safe, healthy, and prosperous New Year.  Trade safe!

SPX and RUT: Is SPX Finally Ready to Resume the Trend?

For the past couple weeks, we've been viewing the recent move as a consolidation/continuation pattern, and there's still no material change -- though it is quite possible that SPX is finally ready to break out of this chop zone and start heading higher again.  Note that yesterday it cleared the upper red resistance line, then came back down to back-test it:

RUT has also formed a second, and so-far-successful, back-test of the breakout from its uptrend channel:

In conclusion, this is, theoretically, the "easy" part of a move; and barring something bizarre, higher prices are still expected across the board.  Short-term corrections will occur within that framework, but the broader trend still remains up for the time being -- and, for now, anyway, that also applies to the foreseeable future.  Trade safe.

SPX and RUT: Are Fourth Waves Annoying, or Just Plain Awful?

We have a saying in Elliott Wave, when we Elliotticians gather in whatever places Elliotticians are found.  What we say, when we're gathered amongst ourselves, far away from the autograph seekers and the paparazzi, is:  "Everybody loves 'em a good fourth wave."  Then we mimic a perfect Fibonacci spiral with our thumb and forefinger, and we add:  "Not!"

Then we laugh hysterically, because we're easily amused, us Elliotticians.

It appears that SPX has decided to continue its triangle, which was something I noted could happen in the last update, because I've been around this block a few times and I've seen what these sneaky bastage fourth waves can do -- because they hate us, these fourth waves.

RUT has back-tested its black trend channel -- thus far, successfully.  Given how far RUT came in such a short time, a minor break back into the channel isn't out of the question.  Bulls obviously don't want to see a major break back in:

In conclusion, SPX has continued its sideways grind.  The triangle stays on the table as long as 2248 holds, and targets 2288-2300.  As an aside, does anyone else find the now-constant play-by-play on "Dow 20,000" to be getting a bit tired?  Every day, I have between 50 and 1000 new emails from Marketwatch alone, that all read like this:

Dow Retreats 9/100ths of a Point Farther from 20,000, Oh the Horror

Dow Shakes off 9/100ths of a Point Morning Retreat to Put 20,000 Back on the Table, Huzzah!

Dow Moves Toward 20,000... No, Away!  No... Wait, Hang On, We'll Send Another Email in a Second...

Dow to Officially Be Renamed as "Dow 20,000," Thus Finally Rendering This Play-by-Play Irrelevant

Beyond that, I'd like to wish all my readers a happy and safe holiday season.  As is now tradition, I'll link to a non-market-related article that I first published in 2013:  A Christmas Story -- Reflections on What Matters.

I truly hope everyone enjoys this time with their loved ones.  Trade safe.

SPX Update: SPX is Poised for (sound of retching)

A slightly-late and super brief update today, because I've been down most of the evening with a very nasty stomach bug (presumably food poisoning) and am quite under the weather.

Below is the update to the triangle count.  Note that until SPX clears 2277, the triangle could still be unfolding, and it's not impossible for the rally from 2248 to all be part of a complex b-wave (so it could be red b, with red c/d/e still to come (!)).  For everyone's sake, let's hope that's not the case -- but it is technically possible.

Sorry for the short update today.  I'm going to go throw up again now.  :)  Trade safe.

SPX Update: Please Do Not Adjust Your Television Set...

Friday saw traders everywhere vigorously scrubbing their screens with Windex in an attempt to erase the strange little "-" symbol that had appeared in front of their price quotes, while brokers' tech support lines were inundated with calls demanding to know why they had changed their color palettes from green to red.  Confusion quickly turned to panic as the S&P 500 closed down almost 4 points, sparking a rash of questions and rampant speculation as to whether the next bear market had finally begun.

The Fed held another secret meeting and vowed to henceforth raise interest rates ONLY if a 50%+ rally had occurred since the last rate hike, lest they spook the market and cause another Lehman-type event -- which could cause years worth of hard-earned bubble gains to vanish faster than you could say "Janet Yellen smells like Doritos."  (Although why anyone would even imply such a vicious rumor is completely beyond me.  Nevertheless, I challenge you to try NOT to think about this next time you're watching Yellen on TV.)

Meanwhile, due to the massive move of only 4 points, there is no material change to Friday's update, except to expand upon how a triangle may or may not be continuing to unfold here:

In conclusion, there's really nothing else to add from Friday's update.  Trade safe.
 

SPX and INDU: Fed Raises Rates, Market Burps Quietly in Response... Next Levels to Watch

On Wednesday, the United Federation of Planets ("Fed") did something it has only done once in the past 10 years:  It voted to have hors d'oeuvres (pronounced "horse's doovers") served at the next meeting. 

It also raised interest rates in our sector of the galaxy by one-quarter portion (okay, now I'm mixing sci-fi franchises, which is a major no-no!).  Anyway, this means that the previously-booming dilithium crystal refinancing market will slow considerably, since nobody wants to refinance their dilithium at a higher rate -- if you could imagine! 

Everyone is now expecting three (3) quarter-point rate increases in 2017, which seems a bit silly, inasmuch as I thought we were expecting something along those lines for 2016, but it never happened because the Fed chickened out repeatedly.  According to Janet Yellen, this was due to "reasons," which included (in order):  "The chance of evening thundershowers; that one hurricane that almost hit somewhere; the Cubs winning the World Series."

As timid as this Fed has shown itself to be, all it will take is one marginal job report to put the brakes on this "three rate increase" schedule. 

The market reacted as though it was surprised by the current rate increase, which is also silly, and the rally went whatever direction is the opposite of "up" (there's a word for this other direction, but I can't remember it.  Starts with a "D" I think.  Darn?  Dane?  It'll come to me.).

Near-term, the market has a few options, but clear levels which will eliminate some of those options:

   
I should also note that there are a couple less-common patterns that could fit the present wave structure, but for ease of reader consumption, I'm keeping those to myself and merely watching to see if the market makes the "next step" in those patterns, upon which I would then discuss them publicly.

Taking a look at INDU's chart:  For all practical purposes, INDU captured its 20,000 target.  This means that, heck, sure, the rally could be over, why not?  But that seems unlikely, given the supporting evidence.

  
In conclusion, the near-term pattern indicates that the market has kept its options open, but presently, it's unlikely we've arrived at any sort of long-term top.  However, in the event bears were to kick out 2240 with authority, then we'd at least have to consider the possibility of a larger correction unfolding in the interim, which would cause the market to head... um... "down"!  That's the word I was looking for earlier.  Trade safe.

INDU Update (Brought to you by The World's Least Reliable 4G Network!)

Still no real change, except to mention that NYA made a new all-time high yesterday (it had been lagging SPX and INDU).  This is the type of market that can burn traders out of sheer boredom.  We get bored with the move running on and on, and sometimes that leads to trying to predict turns more because we ourselves get anxious than because the market dictates such a prediction.

On another note, I've spent the last hour+ trying to get my internet functioning at better than dial-up speeds, and finally got it working about 10 minutes ago... so there's just going to be one chart today:

In conclusion, as I've been saying for the past several weeks, there's just nothing to do here except ride the trend -- at least until the market says not to.  I know, it gets kind of boring, but don't let boredom drive you to waste capital front-running excitement.  I will note that the rally gives some hints that it may be all or part of an extended fifth, so when it does finally end, it may do so quite abruptly.  That said, I'll reiterate that such an end could easily come quite some time from now, and at much higher prices (of course, it could always come tomorrow; we'll know it when we see it!) -- so we're not chasing a top here, we're just alert to the fact that when the warning signs finally come, we're going to pay attention and not act complacently.  Trade safe.