SPX and INDU: Near-term Charts

Nothing's really changed from the past few updates, so today we're going to look at some shorter-term charts for potential clues.

I've outlined the apparent key levels for INDU (first chart) and SPX (second chart):

In conclusion, the bigger picture remains up for grabs.  We did decline to back-test the prior all-time high as we anticipated at the end of August -- and so far, that back-test has held.  INDU still has the appearance of a larger expanded flat (discussed last update), so if we decline back toward this month's low again, then bears will have to be very cautious of a bounce developing soon after (leading back up to new all-time highs for SPX).  We'll burn that bridge in more detail if we come to it.  Trade safe.

INDU Updates: No Favors

We're going to focus on INDU today, because we were using that as our "canary" in the prior update, and INDU broke its August high since then.

This means that if we reverse more or less immediately (quite possible, if that low WAS indeed a b-wave) then we'll probably have a similar situation as we had with the August low (the c-wave of an expanded flat, leading to new highs).

Longer term, INDU is approaching a potential long-term resistance zone:

In conclusion, the market continues to provide very little for bears to sink their teeth into, in terms of concrete, non-speculative signals -- but if my read of a b-wave low in INDU was correct, bears might get at least a short-term reprieve in the form of black c.  If we continue higher unabated, then we'll just keep tracing the trend until the market says otherwise.  Trade safe.

SPX and INDU Updates: Still No Material Change

Last update expected SPX might bounce, since it had reached the lower trend line, and it's done that.  Ultimately, my "best guess" remains that lower prices are probably still needed, and the best evidence for that might be INDU:

The pattern above isn't a sure-fire lock, but it's better than 50% odds that the a/1 low will be broken before too long.

SPX would be expected to follow a similar path (as it usually does), but in SPX's case, an equivalent new low would break the lower red trend line:

In conclusion, no real change from last update, and my best guess is still that lower prices are needed before any kind of lasting low become viable.  Obviously, sustained trade north of the all-time high would cast doubt on that "best guess."  Trade safe.

SPX Update: No Real Change

Last update expected lower prices, which we got.  We've now reached a near-term downside inflection point, at the lower red trend line:

The pattern into Friday is anything but clear, so I'll give my "best guess," but I can't have high confidence in this at the moment:  My best guess is that we'll rally a little on Monday, but that the overall decline isn't complete.  A sustained break of the lower red trend line could spark a larger sell-off.

In conclusion, the decline since the all-time high hasn't been terribly clear.  It's either a very complex corrective wave, or it's the warm up to a more significant decline, but presently there's no way to sort those two options.  As I said, my best guess is that lower prices are still needed, but my confidence is limited.  For now, we'll continue under the assumption that Red B is complete, but we'll do so cautiously.  Trade safe.

SPX Update: Inflection Point Continues

Last update expected SPX would continue lower and test the zone near the prior all-time high, which it's done -- but it does still appear pointed lower, in the sense that the pattern does not look complete for a lasting bottom yet.

This is a very difficult spot because we can't have high confidence (yet) in any particular scenario.  It's possible the market will continue just a little lower, then bounce up to new highs.  I can't rule that out, or even declare it unlikely, given the pattern so far.  What I do have fairly high confidence in is the idea that yesterday's low isn't THE low for this move.  The market looks like it still needs to head lower, so for now, we'll treat this as at least a near-term downtrend:

In conclusion, the intermediate time frames are still up for grabs.  There are potentially enough waves for a complete B-wave rally, and the market still appears to need lower prices for at least the near-term, so for now we'll treat Red B as the leading option -- but there are no guarantees here, so please don't ignore stops, and remember to protect capital.  Trade safe.

SPX and INDU: Test Time?

Last update, we discussed that the market's intentions were less-than-clear/questionable, and we may be about to get some answers.

It appears that SPX is considering testing the prior all-time high breakout in the upcoming sessions.  If it drops down and bulls find support there (meaning prior resistance has become support), then rallies back up and clears this week's high, that would be a positive sign for bulls.  If it drops back down and falls through, then that could be a positive sign for bears.

Of course, it's always possible it will just keep rallying immediately, but I think both bulls and bears would prefer to see a retest of that zone first, so we'll assume that's on deck for now.

Like SPX, INDU has also fallen back through its trend line breakout:

In conclusion, a retest of the prior breakout (in SPX) would be healthy.  Presuming that happens, how the market reacts at that point could provide clarity as to whether bulls are "for real" with this breakout, or if it's just been a head-fake.  Trade safe.

SPX and INDU Updates: Questionable Intentions

SPX has remained above its prior all-time high, but has not yet back-tested that zone (which would be a more true test of whether this is to be a head-fake or a lasting breakout).  If this is a true bull wave, there is of course no law that a back-test is required, but given how long the market stayed below that zone, it's not unreasonable to anticipate the potential. 

If this is a bull wave, we would expect to begin to see a stronger upside run begin soon.  The wave since the February low has been choppy and full of overlap, which is more typical of a b-wave.  If it's the bull count, then that overlap was a bull nest of first and second waves, and it needs to begin a strong upside run in a third wave.

INDU currently still remains below its all time high.

In conclusion, due to SPX breaking the all-time high, we do have to allow for the possibility that this rally is part of a meaningful bull wave -- but as yet, the pattern remains less-than convincing.  That could always change tomorrow, of course, and, conversely, bears still have little to sink their teeth into.  Thus it remains, if nothing else, a market with "questionable intentions," at least for now.  Trade safe.