SPX Update: First Upside Target Captured

Just a quick update today, as there's not much to add from last update, except to note that the "textbook target" of SPX 2730-40 was captured, and proved to be resistance for a time.  Futures suggest a gap up over resistance:

In conclusion,, this has been the strongest rally we've seen since this decline began, which tends to validate my view that it's a higher-degree corrective wave (potentially (2)/B) -- which is why I warned from the start that it could run farther and faster than many were expecting.  Ultimately, I do tend to continue to believe that the rally is "just a correction," as opposed to a resumption of the bull market.  Trade safe.

SPX and INDU Updates

It seems like weeks ago, but SPX captured the first upside target/reversal zone from Monday's update and then reversed hard straight into new lows -- and has since bounced hard as well.

I currently do not have a strong opinion as to where this bounce is ultimately headed.  There are some clear resistance zones along the way, any of which could put the kybosh on the rally -- but by the same token, it could run farther and faster than most bears are expecting.  The challenge for bears is always "not to give back all the profit they just earned."  I suspect when the rally is over, that will be reasonably clear.

There are a lot of different ways to count the decline from the 2800s, which makes calculating the target for this bounce challenging:

INDU found support near the blue support line that's been on this chart for a while:

In conclusion, it's currently speculative as to whether this rally will find legs or not.  It may just intend to test one of the prior breakdowns and reverse directly, or it may intend to retrace 50% of the decline (from the all-time highs).  We'll take it as it comes.  Trade safe.

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.