Amazon

Monday, May 6, 2019

SPX and INDU Updates: Market Continues to React to Wednesday's Inflection Zone


Today's premarket indicates that bears have gotten restless, but there are a number of zones that will be important to watch over the near-term, which will test the bear resolve.

First, last Wednesday I published a chart that I hadn't published (or talked about) for four months and warned that we had finally reached the inflection point for that intermediate bear count.  For SPX, Wednesday ended up being the high of the move off last year's low, and the market is reacting strongly to that inflection point, so it appears my timing couldn't have been much better in that regard.

It does remain to be seen if this decline will be "just a correction" (it could even retrace 50-63% of this year's rally and remain "just a correction"), or if it will ultimately break last year's low -- but either way, it never ceases to amaze me how often the market recognizes and reacts to major inflection zones.

We're going to maintain our focus on INDU for the time being (because I like the pattern there better, and INDU typically leads SPX), but first, a quick update on some upcoming SPX zones to watch:


The most important thing to note on the chart above is that the first inflection zone could come fairly quickly after the open -- meaning bears' first test will likely come soon, so be very careful if you attempt to short the hole.

INDU's long-term chart shows that it has remained stalled at the intermediate resistance zone that I've called attention to in prior updates.


Near-term, here are some levels to watch in INDU:


In conclusion, the market has reacted to the inflection zone I discussed on Wednesday.  Bears do still have some work to do, but this appears to be the best shot they've had in a while.  We can't yet rule this out as another fourth wave (which would be a short-lived correction), but bears do at least have the option to turn this into a much more significant decline.  We'll see how the market reacts to the upcoming inflection zones, and take it from there.  Trade safe.

Friday, May 3, 2019

INDU, RUT and [BLANK] Updates

Last update discussed the potential that the Fed meeting, combined with technical resistance, at least had the potential to trigger some selling, and could even get the ball rolling on something more bearish.  Wednesday then saw a relatively strong sell-off, after the Fed announced that they would NOT be issuing a new series of $50,000 bills featuring Ben Bernanke's smiling visage.

At the moment, bears did make a stand -- but they still have some more work to do to create an impulsive decline.  As of right now, the decline is only three waves down, so it could be a simple ABC.  Let's start with INDU:


INDU's near-term chart shows the potential 3-wave structure clearly, and highlights the recent inflection zone.


Of note, RUT did complete the minimum necessary to validate the preferred count of April 1:


There's no SPX chart today, because StockCharts continues to be my arch-nemesis, deleting every annotation I put,, which makes updating the charts a frustrating chore that makes me want to use a hammer on my computer screen.  Frankly, INDU's structure is the most clear anyway, so it will probably make a better canary at the moment.

In conclusion, bears did turn the market down from the recent inflection point, which is about all they could have hoped for at this time -- but the market has since run into the downside inflection zone and bounced.  This means that bulls have the option to run it to new highs as long as yesterday's low holds.  If that low instead fails, then bears may have more fuel in the tank.  Trade safe.

Wednesday, May 1, 2019

SPX Update: A Look Back


Probably the most interesting thing to happen since last update is the fact that SPX made new all-time highs.  This validates my decision to essentially capitulate on the bear counts, which I did publicly back in early January (I did so a little earlier privately, but waited a bit before publishing -- because there's nothing scarier for an analyst than the thought of voiding the bear count as preferred only to have the market crash the next day.).  Here's what I wrote back then:

One of the traps I see Elliotticians fall into, time and again, is linear thinking. It's easy to forget that just because one is expecting a c-wave decline (or similar) does not mean that the market has no other options. 

There are times when both the near-term and intermediate-term require a resolution in one direction, and those are the high probability times. Then there are times that can feel like a coin flip, because they almost are. During the latter times, there will be "dead spells" where the market needs to do X in order to tip its hand, and unless/until it does, it's sometimes unwise to do anything other than ride the current trend until the market says otherwise.

And so here we are, having refrained from fighting the trend along the way... and with the new all-time highs now officially "resetting" all the most bearish counts.  The most bearish count was that a new motive series down had begun, though we were never that bearish in the first place.  At my most bearish, I thought the decline was only a C-wave, which is still a corrective wave that ultimately ends in new all-time highs.  That has proved correct; the bottom simply came just a hair earlier than looked "right" -- but we can see on the chart below that even the "bear count" led to new all-time highs fairly directly.

Today is, of course, a Fed day... which means that if the market wants to throw a curve ball, this is a good day for one.  At this stage, we still can't rule out the more complex flat I spoke about in the January 9 update (chart dated 1/7, because I drew it then, and originally intended to publish it then).  Here's the chart I published in January:



The red path has played out very well.  Now the question is whether we'll get the more complex "Curve: (c) of B" and larger actual C -- or if ALL OF C was instead completed back in December.

Beyond the new all time high, there's nothing to even update about the current charts, and I bet no one would even notice if I just republished Monday's chart.  Not that I would ever do such a thing!


In conclusion, bears do have a shot in the near future to activate the "curveball" path discussed in January -- but it's only a shot at this point, not even close to being a "done deal" yet.  Accordingly, we'll be watching carefully for impulsive declines -- but continuing to show patience if we don't get one.  The most bullish current count would still take us toward the 3070-80 zone next.  Trade safe.

Monday, April 29, 2019

SPX Update: Short and Sweet


There's little changed, so no need for a circumloquacious update today.  Last update noted that "there's nothing definitively bearish about the charts yet," and that there were as yet no impulsive declines -- and Friday's session confirmed both points, late in the session, with new highs.

That remains the case, and the wave structure is such that any immediate decline would likely end up being a buy op.


In conclusion, beyond the things noted on the chart above, there's still not much to add.  The market is still facing resistance, which means that bears could always show up at the last minute and we do need to remain alert to that -- but as of right now, they have not shown up.  Trade safe.

Friday, April 26, 2019

SPX and INDU: Vive La Resistance!


Last update ended with:

In conclusion, the market has now rallied right up to resistance, so we could see some backing and filling to start the session today. Normally, given the momentum of yesterday's rally, we would expect to see higher prices once that completes.

And both of those things happened on Wednesday, as SPX meandered around before making a very slight new high.  Thursday saw an early sell-off to get bears excited, but SPX recovered before the close.  There's still nothing concrete in the charts that screams "short!" but we are still testing intermediate resistance, so anything can happen at a time like this.


SPX has created a bear option for itself -- but this is simply an option at this point.


In conclusion, bears would need to kick out yesterday's low (first potential support is near 2920 and rising) to start to open up more options.  Otherwise, the main thing they have going for them is the test of resistance, which can always lead to a rejection.  For that reason, bulls should be cautious here, but there's nothing definitively bearish about the charts yet.  Trade safe.

Wednesday, April 24, 2019

SPX and INDU Updates


Yesterday (and the entire last few months, really) illustrated the wisdom of why bears who are looking to buck the prevailing trend are wise to await an impulsive decline before doing so (for more on this, see:  Why Impulsive Turns Are Important).

Other than that, there's surprisingly little to add.  NDX made a new ATH yesterday, while INDU is somewhat compressed between near-term support and intermediate-term resistance:


SPX tagged an interesting confluence of resistance yesterday:


In conclusion, the market has now rallied right up to resistance, so we could see some backing and filling to start the session today.  Normally, given the momentum of yesterday's rally, we would expect to see higher prices once that completes.  Of course, in the event we see an impulsive decline in the interim, then that could always change.  Trade safe.

Monday, April 22, 2019

SPX and INDU: Next Upside Target Tagged...



So another exciting week in the market has come and gone.  Last week the market did what it does best lately:  Nothing.

INDU did advance enough to finally begin challenging the resistance zone I spoke about a couple weeks ago:



I'm not going to update the SPX chart, because every time I try to, StockCharts deletes ALL my annotations -- so I'll simply note that while SPX has reacted to the noted inflection zone, we don't know yet whether that will be short-lived.  Bears will need to sustain a breakdown at 2875ish to at least begin to open up possibilities on their end.


In conclusion, last week began and ended in roughly the same place, providing little in the way of new information.  As I suggested on April 12, this would take a little time to play out once we hit resistance, which we've now done.  As soon as new information becomes available from the market, we'll have more to talk about.  Trade safe.