SPX and INDU: Bears on Deck?

Still  no material change, as bears have continued to hold the first key level.  There is potential for a large move down over the next few sessions.  SPX discusses initial targets:

Not updating the INDU chart until I need to, because Stockcharts will mess with it when I do:

In conclusion, everything is "lined up" as well as it can be for bears, all they need to do is take advantage of it.  Note that a sustained breakout over 2893 would not necessarily kill the bear case, since the first option would be a bearish ending diagonal... but it would call for bear caution.  Trade safe.

SPX and INDU: No Material Change

No change from last update, which made the rather bold presumption that 2/B had completed at Thursday's high.  The market continues to track according to that presumption.  Since most of us trade SPX (or ES) instead of INDU, I've added an SPX chart with comparable targets for that index.  Much below last week's low, and the zone around the falling black trend line becomes next meaningful support.

INDU's chart is unchanged:

In conclusion, bulls need to sustain a breakout over 2893 to stall or ward off the bear options.  Barring that, we will continue to presume that bears have the ball.  Trade safe.

INDU Update: So far, so good...

Well, not much to add... "so far, so good" for bears.  On May 13, I published the following chart:

Here's what it looks like with the updated price action:

SPX would be expected to track INDU closely (over the weekend, I'll probably draw up a more detailed SPX chart).  Keep in mind the option for a more complex red 2, wherein INDU/SPX would likely test/break their recent lows, then could bounce again all the way back up to yesterday's highs.  Additionally, I can't entirely rule out a diagonal c of 2 yet, but that looks like an underdog.

In conclusion, bears aren't 100% on their count yet, but things look as good as they can look at this stage for them.  Trade safe.

SPX and INDU: Next Downside Targets Captured

Since last update, INDU captured its downside red 1 target and bounced:

And SPX captured its 2800+/- target (from May 8), and bounced.

The escalation of the trade war with China is certainly going to be near-term bearish for the US economy, and the market along with it.  It's interesting to consider that the INDU chart above was discussed in early January, when few people though the rally could run that high... and then I intentionally didn't discuss it again until it appeared possible that it might be about to complete (c) of the proposed B -- which was on May 1, when few people thought the market could turn suddenly bearish again.

Don't get the wrong impression:  That count isn't a "done deal" yet or anything.  But it remains a very real possibility.  It will be interesting to see if bulls can mount a continued defense of the recent lows, or if they fail directly.  Trade safe.

SPX and INDU: Market on the Brink

Let's get right into the charts today.  First up, let's take a look at what caused Friday's bounce, because it's an important zone that bears will need to get, and stay, below:

Next, I'm about 50/50 on the red intermediate count below.  Getting close to making it the preferred count, but not QUITE there just yet.  For now, suffice to say it's very much in the realm of possibility:

Near-term, Friday's low appeared to make wave b of an expanded flat:

In conclusion, bears have very much kept alive the "curveball count" that I first discussed 4 months ago... and then finally called attention to again on the very same day as the SPX all-time high.  That count isn't the only option here, but it's probably at least even odds at this point.  The next, and critical, step for bears is to sustain a breakdown at the very long-term trend line noted in the first chart.  Trade safe.

SPX and INDU: Market Reaches Next Inflection Zone

I'm not actually crazy about this pattern, because there are several ways to parse it.  Strangely, the micro waves within the wave have been reasonably clear and predictable, but the larger macro wave off the all time high in SPX is not.  There's one way to count the pattern that says yesterday was the bottom of wave C/3 -- which would mean bears need at least one more low for the decline to be considered as a larger impulse.

Let's look at the charts:

INDU big picture:

SPX:

In conclusion, SPX fell through the first inflection zone and ran right to the second.  There's one option that says SPX completed 3 waves down yesterday, which could mark the bottom of either C or 3, and that it needs one more new low to be considered an impulsive decline.  For now, I think that's the option I'm going to lean toward, but given that there is a lot of ambiguity in the SPX chart, I definitely want to reexamine this pattern over the weekend.  I'm not crazy about the pattern at this juncture, but it is what it is.  Trade safe.

SPX and INDU: Downside Targets Captured; Market Reaches Important Inflection

Since last update, SPX captured both its downside targets.  Its second target zone was 2858-65, and yesterday's low was 2862.60.  INDU likewise reached its green support line.

Near-term, some further support zones to watch if bears can force a breakdown:

And some additional targets for SPX if bears force a breakdown here:

This is a very interesting inflection zone for the market, because it's not impossible to count the decline from the ATH in SPX as an ABC, which could complete soon (or could even be complete at yesterday's low), but it would be more common for this to be a bear nest, in which case, SPX and INDU are only half-way to where they want to go.

Thus the aforementioned support zones could be very significant.  If this is an ABC down, then it's done, the current zone (possibly very slightly lower) will hold, and the market could rally to new highs from here; if it's a bear nest, then it's only halfway to its first goal.

Also keep in mind the big picture potential bear count discussed a week ago.  Keep in mind that a sustained breakdown would not yet guarantee that count would come to pass, but if there is a significant breakdown at support here, then it would most certainly remain on the table as an option -- an option that would take SPX down below its 2018 lows.  First things first, though.

In conclusion, the next battle lines remain as drawn on Wednesday -- and we're now there.  For reasons just discussed, this is an important inflection point for the market.  Trade safe.