INDU and SPX: Wednesday Downside Targets Captured

On Wednesday, I suspected SPX would decline to at least 2840, and that happened before the end of the session.  Then the market decided to make things really screwy, and now it's not clear whether the decline is done or not.  Yesterday's low was an overlapping mess, which is often characteristic of a B-wave.  If the low is a B-wave, then it will not hold.  But this is a very, very tight call at this stage, so tread carefully.

In blue (projection lines) is my current lean, subject to change if bulls show significant strength here:

Same deal on INDU:

On the long-term chart, INDU exceeded its minimum target, and it resolved what it "needed" to, which is what puts the current charts in a bit more doubt than they recently were:

In conclusion, Wednesday's projection and downside targets were captured and exceeded.  I've described the situation as I see it now, but my confidence isn't outrageously high at the present juncture, so we can't rule out the bottom being in.  Trade safe.

SPX and INDU Updates

Spent so long on the charts I lost track of time and have to rush for publication -- so short and sweet today, but long on charts.  This is a VERY unusual market, so it has kept its options open.

Big picture, still sandwiched between two inflection points:

INDU near-term:

SPX near-term discusses these options in more detail:

In conclusion, it's a very difficult market right now.  I've done my best to outline the options that make the most sense to me (the double retrace has the most appeal of these, but it's a coin flip), now it's up to the market.  Trade safe.

SPX and INDU: To Fourth or Not to Fourth? That is the question.

I don't particularly like this market right now.  We're still muddling about in between a major inflection point and a minor inflection point.  Normally around this time, I'm telling bears to "await an impulsive decline" (and usually that warning means the market will rally for a while) -- but for some reason, I'm not feeling that in this situation.

We are in one zone where a fourth wave -- IF this is a fourth wave -- could terminate soon.  It could support another high before doing so -- after the prior steep decline, the potential range of a fourth wave is wider than usual.

SPX is flirting with the black uptrend channel again:

In conclusion, there are now roughly enough waves for a completed fourth wave rally if that's all the market wants here.  Obviously, if last week's low was the bottom of a complete ABC correction, then there will be no fourth and fifth waves to new lows -- but if the market is attempting to form an impulsive decline, it WILL still needs another new low.  This is a particularly tough moment because of the larger inflection point at the recent all-time high, which (being an inflection where things could go either way) refuses to give context as to which option the market itself prefers.  Thus all we can do is mind the inflection points and wait for the market to provide stronger guidance.  Trade safe.

SPX and INDU Updates

Last update noted that we were in an inflection zone, though I did make one prediction:

So if you forced me to make a prediction here, I'd be inclined to think that we at least retest the most recent low, and if we break it by much, then the targets on the SPX chart come into play.  That said, here are the caveats: 

In conclusion, the market is at an inflection point here -- if bulls can whipsaw the most recent channel breakdown, then they could put together a solid rally.

The inclusion of "in conclusion" in the caveats apparently confused one reader who asked "Where are the caveats?"  The caveats were "the market is at an inflection point here -- if bulls can whipsaw the most recent channel breakdown, then they could put together a solid rally."  My apologies if my phrasing confused anyone.

In any case, we did get the predicted retest of the low, and bulls did whipsaw the channel break, and have put together a solid rally.  Question now is whether that was the bottom or if the rally is part of another fourth wave.  INDU's chart below shows why Wednesday was an inflection point:  It was the divider between an ABC down and an impulsive decline (INDU made a new low on Wednesday, btw, but IT needed to, while SPX did not):

Bigger picture, no change:

SPX also in a similar position, having whipsawed the channel break -- at least for the moment.

In conclusion, Wednesday's prediction for a retest came to pass, and the market has rallied since.  If this rally is a fourth wave, the next near-term inflection zones for SPX are yesterday's high, plus or minus about 8 points, and 2960 plus or minus a few points.  If the rally is the start of a new primary bull wave, those levels ultimately won't matter.  Trade safe.

SPX and INDU: Hanging by a Thread

Last update talked about the significance of the black intermediate uptrend channel, and INDU and SPX have since broken that channel, but INDU made it back over, while SPX has merely back-tested it (so far).  The move in SPX is commonly called "the kiss of death," and if that's all bulls can muster, they're in continued trouble.

Let's look at INDU first:

SPX below:

Now, I hesitate to say this next part because counting this wave is an exercise in insanity, and we're right at an inflection point... but my best-guess count is that we probably still need at least one more fifth wave to new lows -- possibly even two more (meaning new low, bounce, and then another low beneath that new low).  So if you forced me to make a prediction here, I'd be inclined to think that we at least retest the most recent low, and if we break it by much, then the targets on the SPX chart come into play.  That said, here are the caveats:

In conclusion, the market is at an inflection point here -- if bulls can whipsaw the most recent channel breakdown, then they could put together a solid rally.  So far, in SPX anyway, they haven't even gotten back into the channel, though -- and a sound rejection of yesterday's back-test would be bearish.  Trade safe.

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.

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.