SPX Update: No Material Change

There's no change since the prior update, so we're just going to look at SPX and its near-term options.

The first thing that jumps out on the chart is that we have a decline from SPX 2454.77 that looks like it is probably incomplete.  If we presume that to be correct, then there are two main options:

1.  The low at SPX 2436 is a b-wave, which would see us rally toward 50-54 before reversing back down to break that low (including the potential for several days of up/down/up/down around those two extremes).

2.  SPX heads lower more directly, thus suggesting either a micro bear nest lower, or an ending diagonal nearing completion.  A rapid and sustained breakdown would suggest the former.

The third option, of course is that neither of these options are correct.  And that's always possible too, so I've discussed that on the chart below:

In conclusion, my near-term preference is for one of the two numbered options discussed above the chart, both of which imply an incomplete near-term decline.  If bulls pull out a near-term surprise here, then things will become a little more challenging, at least initially  And of course there's Fed Speak today, so that should keep everyone on their toes (except for Janet, who has no toes per Federal regulations).  Trade safe.

SPX and INDU: Bulls Defend Their Zone -- but Will It Hold?

In the last update, I talked about the potential ABC decline and how bulls needed to hold the zone around Friday's low to make something of that potential.  I concluded the update with the following thoughts:

if bulls are going to stick-save this monster, they probably have to do so now.  It looks probable that they will ultimately fail in that endeavor, and thus that bears still have the ball -- but nevertheless, it's a good area for bears to avoid complacency.

Yesterday, the bulls read the update, slapped their bull foreheads, and launched the rally they needed, thus doing their best to make everyone believe there was a complete ABC decline in place.  Despite that, I'm still inclined to lean toward the bears.  Either way, the best thing about this pattern now is that we have a VERY clear confirmation level to watch, along with targets that should be fairly reliable.  This is all discussed in detail on the SPX chart: 

INDU did manage the test of the blue trend line from the underside:

In conclusion, bears haven't had much luck with bear nests in recent years, but this time just might be different.  Whether it is or not, at least there is a very clear confirmation level for bears to watch (and for bulls to defend), and probable targets to aim for if/when that level fails.  Trade safe.

SPX, INDU, RUT: Next Downside Targets Captured

So here's where things stand:  SPX has formed a perfect "potential ABC" down, but bulls will have to hold the zone around Friday's low to make something of that potential.  I'm inclined to think this probably is NOT an ABC, just an ABC look-alike -- so that zone probably won't hold, but it's not impossible for SPX to bounce around for a while in the meantime.  It's also not impossible that my inclination is wrong, of course, so bears shouldn't get complacent.

In the "victory lap" category, the decline in SPX has now overlapped both red 1 and red i, which has validated my labeling of the smaller red 5 -- significant because this was correctly predicted (and correctly targeted) while the rally was still underway:

INDU has nearly reached its next downside target... and, at this exact moment, it looks like it's probably going to end up being either a case of either "close enough" or "we'll shoot past it."

RUT has captured and exceeded its first downside target, which was the "or ii of 5" on the chart below.  All current indications suggest it's headed toward the blue (iv) target at the bottom of the megaphone, but it hasn't QUITE invalidated "or ii" just yet, though it's very close.

In conclusion, if bulls are going to stick-save this monster, they probably have to do so now.  It looks probable that they will ultimately fail in that endeavor, and thus that bears still have the ball -- but nevertheless, it's a good area for bears to avoid complacency.  Trade safe.

SPX, INDU, NDX, BKX: A Bad Day for Bulls

Here's a sentence I haven't typed in a long time:  Yesterday was an ugly day for bulls.  Amazingly, it's starting to look increasingly likely that the "Bull 5" peak, which we began anticipating well in advance (at SPX 2489-2500, and north of 22,000 for INDU) may indeed have been correct.

SPX got smacked down by my first resistance level like a mosquito at a WWE match.  It does have a major inflection zone approaching on the radar, so that will be the next test for bears (if we get there, of course):

INDU has continued turning, and is now under first support, with the 21,500 target (mentioned last update) on the radar:

NDX threw a minor curveball and appears to have formed a running flat, which caused it to turn south slightly below its ideal target zone:

And BKX -- remember BKX?  Several months before Dennis Gartman decided to "stake his reputation" on the end of the bull market, we were predicting that BKX was already in the midst of a meaningful correction.  Of course, it still has a ways to go, so it's still technically possible I could have to eat crow on this call -- but it looks "as good as it gets" so far, anyway:

In conclusion, bears fired a serious warning shot yesterday, and as I mentioned a few updates back, if 5 is indeed complete, then this decline is just getting warmed up.  That said, we can't entirely count bulls out yet, but things do look more promising for bears than they have in a long time.  Trade safe.

SPX, NDX, INDU Updates: No Suprise

Last update discussed some pending resistance zones, as well as what we might expect if those zones were breached.  For NDX, I wrote:

We'll start with NDX, which tagged its first upside resistance area on Friday, and will enter into no-man's land if it clears that zone.  Next meaningful resistance isn't until the mid-point of the previous range

NDX cleared first resistance and then sailed, virtually unabated, into a direct tag of the second resistance zone -- a distance of more than 70 points.  Hopefully bears were well clear of that rally, in light of the warnings on Friday and Monday:

SPX hasn't moved quite as far into its resistance zone, but is presently back inside the old black channel:

INDU has continued its bounce from the blue support line:

In conclusion, bulls turned everything right where they needed to and thus have kept their hopes alive for the time being.  On the bright side for bears, the wave pattern gave ample warning of a pending bounce, and confirmation that the bounce would continue, which allowed bears to get free with some decent profits.  I'm hesitant to advise much here, because this pattern is now firmly into "could go either way" territory -- but if one is bearishly inclined, retests of the zones near the ATHs would entail the lowest risk, at least in terms of stop levels.  Trade safe.

SPX, INDU, NDX: Decline Halted (so far) at the Noted Inflection Point

Last update noted that it was possible the decline was complete, and that we were in an inflection zone (inflection zones are areas that represent potentially-complete waveforms, and thus higher probability reversal zones).  I concluded the prior update with:

In conclusion, bears have had a nice week, and should take care not to screw that up.  INDU has tagged support and NDX is sitting in an ABC inflection zone, and it's not unusual for such inflection zones to generate short term bounces even if the prevailing trend is still down.

We did indeed see a bounce on Friday, and that bounce looked impulsive, which suggests further upside coming today.  How much further remains to be seen, but we'll be watching how the market reacts to its upside inflection zones.

We'll start with NDX, which tagged its first upside resistance area on Friday, and will enter into no-man's land if it clears that zone.  Next meaningful resistance isn't until the mid-point of the previous range, although there is some minor resistance near 5880.

SPX's pattern allows us to generate a next upside target/inflection zone:

And finally, INDU is still testing its first support zone, and (as warned), could still bounce from that zone.  Keep in mind that INDU has yet to overlap any bearish confirmation levels:

The worst news for bears is that Dennis Gartman turned bearish on Friday, to the point that he is "staking his reputation" on the bull market having ended.  Gartman seems to have a knack for turning bearish at bottoms and bullish at tops... which sometimes makes one wonder how guys like him get constant national press coverage, while little independent guys like me (and others) often spot tops coming well in advance (while these national guys are still bullish), then warn (correctly) that a bounce is imminent while the national guys turn bearish.  Kinda makes one wonder how/why these national guys got so famous to begin with.  If it's still in vogue to blame George W. Bush for everything, then we can safely assume it's all somehow his fault.

In conclusion, bears would like to see a simple C wave today and/or tomorrow (the apparent A/1 was on Friday).  If the rally goes a wave farther and develops into a five-wave structure, then bulls and bears will know that we'll likely see at least one more large wave up after that.  Trade safe.

SPX, NDX, INDU: Downside Targets Captured; Next Levels to Watch

Well, it's been a good week for traders, as NDX, INDU, and SPX have all captured their downside targets (right on the heels of capturing their upside targets, of course).  The question now is whether the decline will continue, or if it's complete/nearing completion.  While we can't answer that with certainty in the market's present position, we do have a few signals/levels to watch heading forward.  Let's start with NDX:

SPX is in a very similar position:

In the bigger view, INDU has reached the blue trend line, and this represents an inflection zone.  Bulls are going to attempt to defend this zone, so bears should be on alert for bounces.  And until red iii is overlapped, we can't be certain that red v is finished.

In conclusion, bears have had a nice week, and should take care not to screw that up.  INDU has tagged support and NDX is sitting in an ABC inflection zone, and it's not unusual for such inflection zones to generate short term bounces even if the prevailing trend is still down.  To the upside, bulls need to sustain a breakout from the crash channel, and we have a resistance zone to watch at the dashed red pivot line on NDX and SPX.  Those signals (or the lack thereof!) should provide our next clues, and hopefully keep us pointed in the right direction  Trade safe.