SPX and BKX Updates

Friday's SPX chart showed (3) and (4) complete and it appears that was correct, and (5) completed on Friday. I probably should have done more to note to that the completion of (5) could be near and lead to a bounce.

[Edit: Typo -- "decree" should be "degree."  It is thus decreed!]

The above targets loosely line up with some of the overhead resistance zones:

BKX still suggests that more downside is ultimately needed:

In conclusion, it does not appear likely that a MEANINGFUL bottom is in place yet -- this is more likely a temporary bounce.  It may even reverse sooner than most are expecting.  If it does not, then we'll simply have to track that if it gets materially past the noted targets.  Trade safe.

SPX and BKX: No Change

No material changes, the trend and outlook are still down for the bigger picture, but at the moment "how we get there" is still a bit up for grabs.  Gonna let the charts do the rest of the talking:

Near-term SPX chart:

BKX:

In conclusion, there's no change from the past few weeks, and we still expect the decline is underway.  SPX hasn't captured the 2500-30 target yet, and looks like an incomplete downside pattern (though this doesn't prevent near-term corrective rallies, even today), and BKX is only halfway to its target, so all indications are that more downside is still to come in the big picture.  Trade safe.

SPX and INDU: Monday's Target Captured...

Yesterday was a good day in the sense that Monday's downside target was captured, but also a tough day because, early-on in the session, it looked like the market could breakaway to the downside.  That didn't happen, though, and instead the market snapped higher.

At such times, I liken the market to a rubber band that's stretched to the breaking point:  Either it breaks and goes into free-fall, or it snaps back with a ton of force.

All of this was discussed many times over the past couple weeks, so we can't say the snap-back rally was too much of a surprise in the grand scheme of things:

Monday's target was captured and exceeded by a hair:

INDU also failed to sustain its breakdown, and is in a similar position to SPX:

In conclusion, the level for bears to beat is still unchanged.  Whether this rally will develop into the red c wave for a more complex second wave is still unknown for certain at this point, but yesterday certainly left that option very much alive.  Trade safe.

SPX Update: On the Edge of Oblivion

The most useful chart in the prior update was the trend line chart, so let's lead with that.  I've added the most immediately bearish near-term count to that chart, and the micro 3rd wave target zone:

Bigger picture, if the larger red (2) is complete, that would put us on the edge of a nested third wave (the third of a third), which is typically fast and brutal:

In conclusion, if we're about to kick off a nested third wave decline, then surprises will be to the downside.  I don't even attempt to counter-trend trade on nested third wave declines, because indicators get maxed out and fail repeatedly.  Bulls primary hope still seems to be for a more complex second wave.  Short of that, this type of count can turn into a waterfall decline.  Trade safe.

SPX and INDU Updates: Ugly Now or Ugly Later?

No material change from the past few updates.  SPX topped in the red "a?" zone -- there are enough waves for an entirely complete correction, if that's what the market wants.  If it wants a more complex correction, one possible route is to retest the low and then bounce.

If that was ALL OF wave (2) at yesterday's high, then things could get very nasty next week.

Here's a simple trend line chart:

I've noted the potential head and shoulders on INDU:

In conclusion, this has been a solid week.  We spotted the potential for a large bounce at the start of the week, and there are now enough waves up for a complete correction.  The preferred count continues to expect that this will culminate with new 2018 lows, possible significantly new lows -- this is presumed to be a large C-wave, and sometimes Elliotticians are known to say that the "C" stands for "Crash."  In the meantime, the main question is whether the current correction wants to become more complex, or decline more directly.  Trade safe.

SPX and BKX: No Material Change

In Monday's update, I warned bears several times to tread carefully and that a second wave bounce was possible.  Yesterday those warnings paid off, as the market uncoiled itself relentlessly higher.  We have some interesting patterns in development now, with the decline from the all-time high having an (apparent) micro extended fifth, and the current rally likewise having an (apparent) micro extended fifth.

This is the potential recipe for some sharp up and down action over the coming sessions.  Given what's in the charts right now, this would ultimately be expected to resolve lower over the longer-term.  Narrowing down the timing will be helped by seeing if the market forms an impulsive rally or an ABC rally for this current leg.  Right now, it's 3 waves up (ABC), and may even need higher prices before being a COMPLETE ABC.

We'll track that as it unfolds.

In the meantime, BKX is peeking over the edge of a cliff.  If bulls can miraculously stick-save this, then the picture could change, but as it sits, it is what it is.

    
On the SPX chart, the red "a?" and "b?" should be considered as speculative at the moment and will probably need to be adjusted later.

In conclusion, the market seems to have confirmed Monday's read that wave (1) down was complete.  This means that if/when (we're currently assuming "when") there's a significant breakdown at last week's low, we could get a serious and significant decline.  I'd also like to throw out there that the bull count isn't entirely out of the question -- but we're going to continue to treat it as the underdog for the time being.  Near-term, we will likely continue to see sharp price action.  There are now two micro extended fifths on the board, which could mean at least two double-retraces pending.  Again, we'll track that as it unfolds.  Trade safe.

SPX and INDU Updates: Inflection Point

While studying charts this weekend, I discovered a very interesting support confluence, which INDU tagged perfectly on last week's decline.  Coupled with the price action on Friday, this tells us that bears probably want to be cautious here -- because all that means this is an inflection point where the market could reverse higher.

Long-term, this is something of a no-man's land... if the larger wave c of B ended, then we'd ultimately expect the 2018 lows broken -- but that doesn't mean the market can't bounce around for several weeks first.  Especially if last week's decline had an extended fifth wave (which I believe it did) and extended fifths are notorious for being followed by complex corrections.

Near-term, if this is part of a larger expanded flat C wave down, then wave (1) of C may have completed last week.  I've also added a bull count that we can't rule out (an ending diagonal for c of the larger B):

In conclusion, unless and until INDU/SPX can sustain breakdowns of their noted support zones, I think bears want to tread carefully.  If wave (1) down has completed, then a vicious 2nd wave bounce may be forthcoming.  Of course, if SPX instead sustains a breakdown, we'd have to presume the current wave is still unfolding.  Fortunately, we do seem to have a relatively clear dividing line to work with.  Trade safe.