SPX and INDU: Market Reaches Inflection Point

We're going to get right into the charts today, starting with INDU:

We have an interesting bar on the daily:

And looking at the other side of the trade:

In conclusion, this is likely an important inflection point for the upcoming sessions.  If SPX holds this back-test and sustains a breakout over 2743, then bulls would seem to be in the clear for the near-term.  If this most recent trend line breakout whipsaws, then that would be a bearish signal.  Trade safe.

SPX and INDU: Near-term No Man's Land

First off, I need to note that there were more new member activations than I anticipated, so if I haven't gotten to yours yet, I apologize.  I'm working through them; please allow me an extra couple days to complete that process.

In regards to the market, last update expected a reversal lower, but the market flummoxed that prediction and has now landed itself smack in the middle of the huge trading range that has been unfolding since January.  Trading ranges are notoriously challenging, because the more often a market traces through the same range, the weaker support and resistance become within that range.  Which means that trend line breakouts and so forth that take place inside the range are less meaningful than they might be during a trending market, and thus harder to read into.

This is one of the reasons I switched my near-term stance to "borderline neutral" a couple weeks ago -- because in this case, not only are the trend lines are losing meaning, but the near-term wave structure itself is very difficult to get a bead on.  Bigger picture, I remain bearish, but near-term, this is still "anything goes" territory:

On the chart above, the main bullish factor would be the repeated bounces off the blue and red long-term trend lines, but do keep in mind that the market has found support there three times now, which is usually the magic number.  There is no pattern called a "quadruple bottom" (or top) for a reason:  The fourth test of a zone usually breaks it.

While we do have to be aware of the fact that support has held, one of the reasons I remain bearish on the bigger picture is INDU's chart, and its apparently-incomplete fractal:

In conclusion, the near-term is still up for grabs, and I don't really have a confident prediction of what the market will do in today's session.  We may finally be unfolding the long-anticipated complex 2/B to north of 2801 SPX, or we may be building a bear nest, or an even more complex correction.  Nothing is off the table for the near-term.   Bigger picture, I continue to lean bearish.  Trade safe.

Update update

Recently the update schedule has been difficult to maintain, but I will post a detailed update at the end of this weekend.  Also, if you've recently completed the new member requirements, I will likewise attempt to activate your membership this weekend.

Trade safe.

SPX Update -- and the Quantum Market

Science has discovered via quantum physics that, at its most basic known level, the Universe is not deterministic; it is probabilistic.  Particles appear to exist not so much as individual forms, but as a wave function.  This wave function represents the mathematical probability of where a particle could be, given its multiple possible states.  This wave function collapses upon the introduction of an outside observer.

Unlike objects in the macro world, which can be observed and tracked with precision, particles instead behave as a wave of potentialities.  I mention this because the stock market is often better-likened to the quantum world than to the macro world -- and it also appears to be probabilistic.  While a given pattern may work 8 or 9 times out of 10, there will always be a handful of times that it fails to perform as expected. 

Not that this has been a problem for us lately -- in fact, last update stated that "My first instinct is that yesterday's low [2612] will likely be broken to the downside in the coming sessions," which came to pass --  but it is nevertheless always important to remember that the market must be approached as a probabilistic equation.

On Thursday, when SPX was trading near 2598, I posted an alert in the forum that the market could potentially turn higher directly, and run all the way to 2683 -- which it has since done.  The second part of that equation now suggests that the low at 2594 is likely to be broken in the coming sessions.  (But again, these are only probabilities.)

In conclusion, SPX has completed the minimum requirements for the current (presumed) pattern, and thus the probabilities favor that it will reverse lower, to the tune of 114+ points, in the next few sessions.  If it instead sustains a breakout over 2718, we will give more consideration to the bull alternate.  Trade safe.

SPX and Oil Updates

Last update noted:

If the rally since 2612 is corrective, then it may be very near completion, as there are roughly enough waves in place (would look better with a new high above 2676). 

The market indeed made a new high above 2676, then reversed fairly strongly, indicating that there were indeed enough waves in place.  The decline from 2682 is clearly impulsive, however, there is some question in my mind as to whether that's wave c of an expanded flat off the high, which would actually be a near-term bullish pattern (if that's the case). The difficult thing with this pattern is that the market could run beyond 2682 and -- as long as it stalled below 2718 -- it could remain bearish at the larger time frames. 

Thus 2718 is the first truly informational price level -- and some questions in regards to the near-term seems fitting for a Fed day.

I'd also like to update the long-standing Crude Oil chart, which I haven't needed to update since November 2017.  At that time we discussed that if oil could sustain a breakout over 58, it would likely head to 70-72 -- and that target has finally been effectively captured:

In conclusion, the levels bulls need to claim in SPX appear reasonably clear, and I'm inclined to maintain my slight bearish lean unless and until they claim those levels.  In fact, my first instinct is that yesterday's low will likely be broken to the downside in the coming sessions. Keep in mind that the most bearish count at this juncture is a nest of first and second waves lower, and that the third wave is typically the longest and strongest wave. In other words, bulls should be very cautious if there are any sustained breakdowns at the recent swing lows, as that could be the precursor to a strong sell-off. Trade safe.

SPX Update: A Gray Market

Last update was still expecting the wave pointed lower, and while we made a minor new low, we fell 12 points shy of the "ideal" target in the 2590's.  One look at the big picture chart revealed why:

That long-term trend line is likely a key level bulls need to hold going forward.  My first inclination is still that the most recent rally to "4" was corrective, but it remains a bit unclear, so I'm borderline neutral at this moment, with a very slight bearish lean.  I haven't updated the chart below because Stockcharts deletes all my annotations every time I attempt to:

If the rally since 2612 is corrective, then it may be very near completion, as there are roughly enough waves in place (would look better with a new high above 2676).  If it's not, of course, then it's not (profound, I know).

In conclusion, this is a challenging spot and one where understanding one's risk/reward is the critical factor in determining one's trades.  This simply isn't a clear-cut chart at the moment, so please take my "slight bearish lean" with a grain of salt.  Trade safe.

SPX Update: Last Update's Warning Proved Timely

Last update noted:

While this isn't a clear-cut pattern, we probably have to assume "bearish until proven otherwise," because the bull potentials of this type of pattern are somewhat limited. 

There's no material change since the prior update, except to note that the near-term pattern suggests a possible inflection point in the 2590's:

In conclusion, no material change.  Trade safe!