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Monday, August 5, 2019

SPX and INDU Updates


Of all days for me to be having trouble with Stockcharts… I am unable to update the near-term charts, but did manage to pull the intermediate charts, which are more valuable today anyway.

Anyway, last update warned that the market was "on the edge" and concluded with:

The biggest challenge at this point is reconciling the decline as complete -- so maybe the simplest answer is that it's NOT complete yet. As I warn bears during uptrends: Await an impulsive turn -- and that advice now applies to bulls. This could easily turn into an even-uglier decline, with the 2900 SPX zone now on the radar -- and possibly much beyond. Bulls should await an impulsive rally before getting too committed.

This turned out to be a sound approach, and the expectation that further downside was pending was correct.

We're now getting very close to the intermediate uptrend channel on both INDU and SPX, and as last update noted, that level was likely to be tested once red support (chart below) was breached:


A similar picture in SPX:


In conclusion, when I was leaning bearish near the top, everyone thought I was nuts and that the market was breaking out forever.  I'm going to now warn the opposite:  While bulls SHOULD still await an impulsive rally, we ARE approaching intermediate support, so if one is getting bearish this late in the game, approach that emotion with extreme caution.

The pattern in ES (e-mini S&P futures) suggests a "bounce or break" shortly after the open.

If the market falls right through support, back tests it and gets rejected, then we should remain bearish and could see a continued waterfall.  But don't assume without question that that's what will happen -- pay close attention to the market's behavior around the upcoming support zone.  In any case, that represents the next inflection/challenge zone, so let's see how the market reacts.  Trade safe.

Friday, August 2, 2019

SPX and INDU: First Downside Target Captured; Market on the Edge


Well, the past couple sessions have been rather interesting, though came as no surprise to the preferred count, as the expectation for a decline to the 2955 target was met and exceeded.

The question now is whether this decline is going to turn into something even more significant, or if it's nearing completion.


Recall the larger inflection zone that the market has remained stalled at, which was discussed at length on July 12.  Because it's coming off a major inflection, this decline could easily turn more significant.


Near-term, INDU is difficult, but not impossible, to reconcile as complete/nearly complete.  The chart below discusses some challenges to watch.


In conclusion, the market performed as expected, and I'm glad I was able to warn readers well before the nasty declines of the past couple days got rolling.  The biggest challenge at this point is reconciling the decline as complete -- so maybe the simplest answer is that it's NOT complete yet.  As I warn bears during uptrends:  Await an impulsive turn -- and that advice now applies to bulls.  This could easily turn into an even-uglier decline, with the 2900 SPX zone now on the radar -- and possibly much beyond.  Bulls should await an impulsive rally before getting too committed.  Trade safe.

Wednesday, July 31, 2019

SPX and INDU: No Change


Still no change, except to note that the market has indeed reacted to the 3025-30 SPX inflection zone.  Bears are holding their levels, so far -- bulls also held the first test of support:


SPX has now caught up to INDU, which has stalled sideways:


In conclusion, the market is in a state of equilibrium, caught between resistance and support.  The move down from the high in SPX could be viewed as 3-waves down (so far), but I can't entirely rule it out as an impulse with an extended fifth.  Either way, the next zone bears need is clear, as is the next zone bulls need.  Trade safe.

Monday, July 29, 2019

SPX and INDU: No Change


So, no real change since last update.  SPX is now in the "common target zone" for a (B) wave, if that's what this is.  Again, a (B) wave (if it develops) is only near-term bearish, it's still intermediate bullish.


INDU is still not joining in the party:


In conclusion, if bears are going to get a near-term reprieve, they probably need to start working on that pretty directly (the e-mini futures did react to the inflection zone on Friday -- we'll see if bears can do anything with that).  First step for bears would be an impulsive decline.  Again, (B) wave highs (or lows) are always ultimately expected to be exceeded, no matter how strongly the market reverses away from them -- so if bears DO get an immediate near-term reprieve, ironically, that's ultimately bullish.  If the pattern instead continues as an immediate bullish pattern, then it will still need a larger fourth wave, to pair with the red B/2 on the first chart.  Trade safe.

Friday, July 26, 2019

SPX and INDU Updates


In the prior update, I was inclined to lean toward "up, then down" and we did get further upside, though I had been hoping for a stall shy of 3018, which was instead slightly exceeded... then yesterday, we did see some downside, but not enough (yet) to complete the near-term pattern I've been leaning toward.


I'm leaning toward the above pattern due to the action a few days ago in ES (the e-mini S&P futures).  ES made a new low where red B/2 is on the chart above, which suggests the expanded flat as shown.  Do keep in mind that while blue (C) does not need to run to 2945-50 as shown, it would normally at least be expected to break the blue (A) wave low. An expanded flat would then, likewise, suggest a reversal from that low back to a new high.  Meaning that, at present, there's nothing to suggest the larger uptrend has ended yet.

The first step for bears on the chart above would be to sustain a break at the red and black trend lines.

INDU hasn't been playing along with SPX at all lately, and failed to make a new ATH when SPX did:


In conclusion, in the bigger picture, nothing has changed from last week, and the market is still mucking about with the larger inflection point.  Near-term, I'm inclined to think we open today's session higher but that the odds are decent we then reverse toward blue (C) as shown on the first chart.  I am solely basing that call on the futures, however, and something cash is able to ignore the futures, so I can't be 100% on that... but we'll deal with other options if/when we need to.  Sustained trade beyond 3030 would cast doubt on bears receiving the above short-term reprieve.  Trade safe.

Wednesday, July 24, 2019

SPX Update: Short and Sweet

Last update noted that:

I'm inclined to lean toward lower prices at this point, at least for the near-term -- but the market might not do so directly. In fact, I wouldn't be at all surprised if it rallies back toward 3007 first, then fails to crack the all-time high, then reverses back below last week's low.

Yesterday, we rallied up to 3005.90, about a point shy of the target -- but we may yet get another wave up (bulls probably need to hold 2990ish for that to work out).  I've outlined some of the key near-term levels and my reasonable expectations assuming the market maintains those levels:


In conclusion, presently, I'm inclined to lean toward further downside (same way I was leaning in the last update:  up, which we got, then down), but do keep in mind that we still do NOT have an impulsive decline -- so I might be violating my own rules in even suggesting further downside -- thus, in other words, trade safe.

Monday, July 22, 2019

SPX Update


Friday was an interesting session.  The market gapped up, then reversed and trended lower until the close, ultimately closing directly on the next important trend line:



So far, there have been no key overlaps by either bulls or bears.  I'm inclined to lean toward lower prices at this point, at least for the near-term -- but the market might not do so directly.  In fact, I wouldn't be at all surprised if it rallies back toward 3007 first, then fails to crack the all-time high, then reverses back below last week's low:

(NOTE:  Typo:  "2007" should read "3007."  ("2007, 3007... whatever it takes."))


Shortest version possible:  If it continues rallying from here, then bulls will need to be cautious around the next upside inflection points of 2997 and 3007ish.  If it decline directly and breaks the trend line, then bears will need to be cautious around the (first) larger ABC inflection, near 2955.  Trade safe.