SPX Update: One More Trick Up Its Sleeve?

So, we've been anticipating another new all-time-high in SPX was still due, and we finally got it... but the market may yet have another trick up its sleeve.

Let's get right to the near-term SPX chart to understand why I say this:

Due to the complexity of the prior wave, I cannot rule out the possibility that wave v of 5 has already begun, but I am a bit more inclined to lean toward the increasingly-complex flat (red ABC) on the chart above.  Thus if the market sustains its breakout, we'll assume the fifth wave is underway; if it doesn't, we'll assume the more complex flat is underway.

Bigger picture, we should be approaching the final fifth before a correction, but please understand that this approach is only structural at this exact moment.  If this fifth wave extends like the last one did, then the price high could still be a ways off.  We'll just have to track it in real-time to determine that.

In conclusion, we did get a new ATH as expected, but, to paraphrase the first Star Wars, "this may not be the fifth wave you're looking for."  Due to complexity, though, it's far from clear (especially since it's basically the same structure we'd have for a WXY), but we should have an answer to that question fairly directly.  Trade safe.

SPX and INDU Updates

Not much has happened in recent sessions, but in the prior update we decided to focus on INDU as our near-term barometer, and it appears that the blue iv correction panned out -- though there's nothing that says it can't grow even more complex:

As usual, we would expect SPX to be in a similar count to INDU.  Bigger picture, it does appear that we're close to wrapping up a larger fifth wave.  Of course, it's always possible we'll see another fifth wave extension -- but the last time that happened, we spotted that extension in real-time just before it unfolded, and adjusted our views higher in tune with the market.  Thus I presume that if this wave shows signs of extending, we will likewise be able to adjust in real-time. 

For this reason, though, it is probably wise for bears to await the first impulsive decline before getting too committed (as has so often been the case during this bull market).

In conclusion, the preferred count has been anticipating that another wave higher was most likely in the cards, and if the rally in futures sticks, then that expectation will pan out.  INDU looks like a possible micro bull nest, so in the event we gap up and reverse immediately, then we might be dealing with a more complex flat.  If we don't reverse immediately, then we probably have a few micro fourth and fifth waves to unwind, and would thus trend higher throughout most of the session.

Since the market is closed on Monday for New Year's Day, I won't be doing another update until Wednesday of next year, at which point I will have trouble remembering to change the dates to "18" instead of "17," so bear with me if the updates seem to be going back in time at some points in January. 

I wish all my readers as safe, healthy, and prosperous New Year.  Trade safe.

INDU Update: Near-term Holiday Fun

There's nothing much to add since the prior update, except to note that it appears we may be undergoing a more complex near-term wave at the moment.  The challenge is that this wave suggests more downside over at least the near-term, but there are at least three different wave degrees which could be impacted, and I'm not certain which one to focus on.

Accordingly, we're just going to look at INDU's chart and let that lead the way for the rest of the market (as INDU often does):

We can see that the most likely outcome is further near-term downside.  Sustained trade north of the ATH would, of course, call that into question and thus nullify the rest of this discussion -- but presuming that doesn't happen, the question (if we break the blue a-wave low) will be:  Which wave degree are we correcting here?  If we sustain a breakdown at the blue i peak, then we're probably in red 4, though it does not need to stretch as low (or remain as high!) as shown -- the area shown is simply the most common zone for a fourth wave at that degree.

If we do continue lower (as I'm leaning toward over the near-term), then bears will be able to hope that ALL OF 5 completed at the most recent all-time high -- but if that's the case, it probably won't be readily apparent.  Nevertheless, it's a possibility to consider.

In conclusion, the near-term now suggests at least a bit more downside is in the cards, with the possibility of more than "a bit."

In other news, the Christmas holiday is upon us, which means the market will be closed on Monday the 25th.  As the result of some family travel issues, it's unlikely I will be able to publish an update on Wednesday the 27th, but I will if I can.

Beyond that, due to certain life-altering events that transpired in my life on Christmas Eve many years ago, Christmas is always a time of contemplation for me personally, and it's become something of "a blog Christmas tradition" to link to a piece I published in 2013, titled:  A Christmas Story -- Reflections on What Matters.

I wish everyone a safe and happy holiday, and whether you read the above linked piece or not, I would encourage everyone to take a moment to consider something my late father once told me, dozens of years ago:  "People are really all there is in this life."  Sometimes in the seemingly-endless quest to maintain "stuff, security, and sanity," it's easy to forget what's important -- especially in that people are both "all there is," and often our greatest source of challenges in life. 

Merry Christmas to all.  Trade, and be, safe.

SPX, RUT, COMPQ, INDU: Intermediate Top in the Cards for the First Time in a LONG Time...

Everything seems to be aligning, so I suspect we're in (or have completed) the final leg of this rally before a very significant correction.  I've been consistently long-term bullish for a long time now, but it looks like I'm finally going to need to hang up my bull horns -- for at least a while -- in the not-too-distant future.

Let's start with COMPQ, which is providing long-term perspective on this whole thing.  I've noted in the past that "SPX would be expected to follow a similar path" -- please note that SPX is in a different wave count, but that's irrelevant.  It does not need to be in the exact same count to follow a similar path.  I would love to see COMPQ hit the final 7425 target, but it's not required and it's already reached the ballpark zone...

RUT's long tem chart suggests we're either "there" or nearly there:

RUT's near-term chart has tracked well... if it continues to (the original projection was for another leg down), then that would jive with the potential top on the LT chart (note this chart below is not intended to be a comprehensive long-term chart or projection, just a near-term discussion):

INDU provides some near-term perspective, for either a b-wave, or a fifth wave extension.  Is it also possible that INDU just topped?  Well, it's not impossible that blue iii is ALL OF red 5...  we'll have to take it as it comes here...

SPX has the "Bear: V" label in use for the first time in a long time.  Here again, it's not my ideal world, but it is technically possible that ALL OF 5 is now complete.  I would really rather see at least one more leg up, though... but if we get close to calling the high of this move, I'll be pretty happy, considering we've stayed bullish through 95% of the rally and are only now switching focus.  And considering that 99% of the investing public is still rabidly bullish.  Along those lines, tons of big-name analysts just raised their 2018 projections -- so we're very much bucking the trend to even be discussing tops.  On the flip side of that coin:  It's one thing for the "perma-bears" to discuss tops (that's what they do) but it's wholly another to consider that we've been bullish and have captured the lion's share of this rally -- more than 200 points since September-- so far.

Point being, we may or may not hit the exact top to the penny, but if we can beat the big-name analysts, in addition to the perma-bears (who we've already beaten), then I'll be pretty happy with those results.

In conclusion, we seem to finally be in the ballpark zone where this entire rally could complete, meaning an intermediate top may be near.  Ideally, I would like to see at least one more push higher, but it's no longer a requirement, as it has been in the past.  Trade safe.

SPX, COMPQ, RUT: Remember that "Blow-Off Top" We Discussed a While Back...?

Last update expected at least one more leg up was possible for the near-term -- but we weren't really looking for this blow-off here just yet... though we noted that bears' best hopes seemed to be for a b-wave expanded flat.  I was somewhat suspecting we might see a more complex iv over the near-term, but it now appears that may have completed as a rare running flat (see SPX chart "or C of iv" label).  The near-term hasn't been the easiest to track -- but at least the b-wave high was a clear signal that we were still pointed higher over the next larger time frames.  The large rally on Friday implies that the b-wave bears were hoping for (it's bad when bears' best hopes continually seem to be nothing better than b-waves) is probably off the table, and that we're unwinding another impulsive rally.

(I'm having random color scheme issues, hence the off-font/color above)

The good news for bears is that at least when this ends, there will be a chance that we've put in ALL OF 5... although that's probably not where our focus should be just yet, given how many times the fifth wave of each rally leg has extended.

Let's start with SPX, which is going to capture its next upside target zone (note typo:  "blue i/ii" should be "blue 1/2"):

COMPQ is still a bit shy of its ideal long-term target, so if this holds any water, the rally may still have some life left:

The one potential ??? in the equation, at least for the near-term (if not longer), is RUT.  RUT followed my blue preferred path to the letter so far... now we see if it will reverse into another leg down.  If nothing else, this may give bears a target to shoot at, at least as long as RUT doesn't sustain a breakout over the ATH:

In conclusion, a few months ago, I began talking about the possibility of an "extended fifth blow-off top," and it appears that's what we're now unwinding.  These can be very difficult to trade if you're a bear, but they're gobs of fun (for as long as they last, anyway!) if you're a bull.  The thing about extended fifths is that they do tend to retrace rapidly, so once this ends, it's going to catch a lot of bulls by surprise.  Bears and bulls will likely both get one good shot at an exit/short entry, since extended fifths virtually always perform a predictable "double retrace" -- but the vast majority of bulls are not going to see that exit as an exit, which is exactly what leads to the second, deeper leg down of the "double retrace." 

We're going to do our best to accurately identify that one good shot when it comes.  Trade safe.

SPX, NDX, RUT

Last update suggested that odds favored that at least one more wave up was still remaining, and we did indeed resolve higher.  The question now is whether we've completed a larger degree wave structure, and there are some hints that perhaps we have.

RUT may be acting as a canary here, inasmuch as it seems to be pointing lower for the time being:

SPX is still virtually "uncountable," but the complex iv would fit the current wave structure quite well:

From a technical perspective, it's not impossible to rule out the possibility that SPX has formed a subdividing bull nest, with the wave labeled as "or B" above actually being wave 1 of a new rally, but that seems unlikely, given how overbought many markets are.. 

Interesting to note that NDX did get another wave higher as expected, but did not break its prior ATH.  If this pattern is a B/2 rally, then it could likewise be complete or nearly so:

In conclusion, I'm still not terribly fond of the current wave structure, which might fit the idea that it's a B-wave for a more complex IV.  B-waves are often quite difficult to read and predict.  Trade safe.

SPX, INDU, NDX: Quick Glances at Multiple Time Frames

Yesterday, SPX and INDU both made new all-time highs, so I'm glad we didn't get bearish near the recent low.  This market still isn't doing anyone any favors as far as future predictability, but we'll look at a couple options today.

First off, near-term, it appears we probably have at least one more wave up still remaining:

From there, the market has the option to put in a simple, short fifth wave -- or the option for an extended fifth.  Almost every wave lately, across all wave degrees, has developed an extended fifth wave, so it's not a bad idea to be wary of one developing here.

The extended fifth would allow a possible "resolution" higher, if it occurs, and could prelude a much larger correction -- while the market's other option would be less direct..  The other primary option here is for an extended sideways chop zone to develop.  Such a chop zone would leave the high unresolved, suggesting an eventual resolution higher from said chop zone:

In conclusion:  Recently, markets have been somewhat fractured, with RUT still well-off its high, NDX a little below its high, and SPX and INDU at new highs.  This is not aiding in "predictability" here, but I'm expecting things will clarify in fairly short order.  Trade safe.