Market Stil a Pigsty

Wave counts at time frames beyond five minutes are still too muddy to bank on, so today's we're going to look at a long-term trend line chart, which may offer some clues heading forward.

The middle dashed black line (most recently tagged at the 2624 low) is interesting, inasmuch as it runs back about two years and has been a consistent support/resistance zone.  Most recently, of course, it acted as support.

Near-term, we have a couple potential basing patterns unfolding in INDU and NYA:

NYA:

I'm not certain how "good" those patterns will end up being, but it's not uncommon to see them form just before a market takes off. 

This type of yuck market is not surprising, considering that  the much-anticipated Fed Fun Day is coming up in the middle of the week -- wherein the Federal Reserve is expected to jack interest rates by just enough basis points to qualify as "greater than zero."  The market often goes into a holding pattern ahead of such announcements, just in case the Fed comes out and says, "We're raising rates to 57 percent!  Surprise, suckers!"  while laughing maniacally.  Or in case they say, "We're going to launch another QE program, and will be buying up any assets that aren't moving.  And we mean that literally -- as in any assets that consist of inanimate objects, such as The World's Largest Ball of Twine.  And William Shatner's kidney stone."

The market knows it needs to be ready for such surprises, because we've had, you know, SO MANY from this Fed (/sarcasm), and investors just don't want to commit ahead of time.

Anyway, in the meantime, the market has been enjoyable and predictable for so long now that you just knew they needed to throw in some weirdness at some point, in order to keep us from collectively raising enough trading capital to actually buy the Federal Reserve and rename it something demeaning.  Also, we would staff it entirely with pigs.  Then we would require the pigs wear suits, and we would force reporters to address the head pig as "Mr. ChairPig, sir. Or madam."  (Because we don't know how to tell pig genders, so we'd make them use both.) 

That seems somehow fitting (no offense to pigs).

Sorry, got off on a tangent there.  I think the point was:  This market is still a mess, so trade safe.

SPX and NDX: Fun

I've studied a lot of charts since yesterday's close, and I was hoping to have something clear-cut to publish here... but in the end, it's probably a 50/50 bull/bear proposition at the moment, and I simply have to reiterate the "Yuck" sentiment from last update.  Let's look at why.

We'll start with NDX, which we can see could either be a completed correction, or a b-wave low:

Likewise, SPX is sporting a rare wave that could be EITHER an impulse or a correction.  Normally there's something to clear out one option or the other, but not in this case.

Not shown is INDU -- but INDU is the one market that makes me tempted to lean (if I had to, which I'm not) toward the bears very slightly, because its recent low looks very much like a b-wave.

In the end, though, I have to figure this as a 50/50 proposition, because there's nothing that screams the answer.  Bears could take a crack at low-risk entries with tight stops if they're so inclined.  Trade safe.

SPX and NDX: Yuck

Last update noted the potential that we could reverse back down to break the prior low for a more complex wave iv, and SPX has been on a relentless, though subdued, decline ever since.  Thus the more complex iv is obviously still on the table.  Complicating matters, though, is that because the last rally did make a new all-time high, it is entirely possible that ALL OF 5 is complete, meaning the whole rally would be over, and we wouldn't see new highs for a while.

It's still rather unclear what SPX's intentions are at the moment, which is a change from the past few months when things have been crystal-clear.  I've drawn up an NDX chart that may help act as a canary (next chart):

NDX does have a couple more options beyond what I've shown, but this is probably the best we can do at the moment to help add clarity:

In conclusion, the double-retrace option (second red "iv?" on SPX) looks pretty viable at the moment, and we'll just have to play it by ear into the next couple sessions.  Trade safe.

SPX and COMPQ Updates

I have to admit, although Friday's market didn't rally a few more points (as I'd hoped) for a cleaner retest of the high prior to dropping, I'm still rather proud of the call.  It's one thing for the people who call tops every other day, but I've stayed consistently bullish for months, then shifted my stance at the perfect moment.  Can't do that perfectly every single time, but I did this time, and I do hope these last few months have been quite profitable for my readers.

We're going to get right to the charts.  A reader asked about my long-term outlook recently, and it is unchanged (for the moment -- I sometimes balk at overly-long-term projections, because the market is such a dynamic environment):

Near-term, the big question is whether wave iv is entirely complete, or if it's going to become more complex and drop back down to break Friday's low once before rallying for real:

In conclusion, there's no change, and I still suspect we're in a "blow-off top" extended fifth wave (that's what extended fifth waves do).  Trade safe.

SPX Update: Extended Fifth Target from October 4 Captured

Back on October 4, I wrote the following:

Last update noted that it appeared the rally still had farther to run, and that SPX was inching its way toward its upside target zone.  Yesterday, that target zone was captured.

So now the question becomes "is it close to being finished?"  And the answer is:  It looks like it still has some fourth and fifth wave unwinds yet to do, so it's probably not entirely over yet.  And given the structure of the entire wave, there is a genuine possibility of an extended fifth wave, so bears are going to want to be careful until the market declares that extended fifth wave potential is off the table.

The chart included with that update noted that an extended fifth would target 2650-60 (and even emphasized that target was "not a typo").  Yesterday we got there.  This allows the possibility that the rally is over for the time being.  SPX also seems to have formed a small impulsive turn off the all-time-high, suggesting at least one more leg down is due after the next bounce.  Given these two facts, a retest of the zone just below the all-time high (which there's a chance we'll see today) could mark the best opportunity bears have seen in a long time.

Below is a closer look at the near-term:

In conclusion, a retest of the zone near the all-time high presents the potential of an opportunity for bears, but if we sustain a breakout over the all-time high, then we could see an extension of the extension, and bears should get out of the way.  Trade safe.

SPX Update: Next Upside Target Captured

Outside of one missed call for the possibility of a more complex near-term correction, we've been on the right side of this market for the past two and a half months, and I'm quite pleased about that, because this has been a very strong rally that no trader wants to be on the wrong side of.

Last update suggested we should presume that bulls had the ball on all time frames unless proven otherwise, and that worked out well as SPX captured its next upside target zone:

Bigger picture, I've been convinced that we're in an extended fifth wave, and I mentioned a few times that we could actually see the rally accelerate in its later stages, which is exactly what has happened:

In conclusion, the nice thing about extended fifths (presuming that's what this is) is that they are "blow off" moves, so the rally should be fast and furious while it lasts... but more importantly, they provide fairly reliable retracements afterwards.  So we should see an abrupt end when this does end, but we'll likely get one good retest of the prevailing all-time-high before it gets too serious about a reversal.  Thus, we'll just hang with the trend until it ends.  Trade safe.

SPX Update

I hope everyone had a pleasant Thanksgiving.  Personally, I gave thanks for the wonderful near-term mess in SPX, because if there's anything I love, it's an untradeable mess.

As you may have gathered, the above sarcasm means that there's no real change in SPX.  Lately it seems the market only rallies when it's closed (via futures), which is the same thing it did around (though after) Thanksgiving 2011.  This is actually something it's does periodically, and I have mentioned it a few times in the past, mainly because it always feels like "cheating" to me.  The leverage in the ES futures market allows one to push the market around at a fraction of the total market cap of the cash market -- so one firm all by itself can (and sometimes does) push futures to wherever they want them for the cash open.

But that's the nature of the game, so it does no good lamenting such things.  It is what it is.

Anyway, no news that's fit to print on SPX.  While the pattern was clear for a good 6 weeks or so (wherein I kept repeating "higher prices still to come"), it's currently a bit muddled, and may remain so for the very near-term.

One thing worth noting is that the 24 hour SPX chart, which contains the action of the futures market, does have the look of an ending diagonal or bull nest.  If we see a quick overthrow of the upper trend line of the blue diagonal, followed by a solid whipsaw, we could see a near-term decline follow.  Conversely, if we break out the diagonal and begin to run, then we could put in a solid upside move (as this would suggest a bull nest). 

It's also possible that the diagonal (if that's what it is) has already completed -- if the black trend line is the upper boundary; in which case watch for a breakdown at the lower trend line.

Something to be aware of anyway:

In conclusion, there's no real change from the prior update, but we do have a near-term pattern that may be worth keeping an eye on.  Trade safe.