SPX Update: New Low Captured, But Pattern Still Not Yet Resolved

Last update I mentioned that the micro pattern suggested that a new low below 2953 was probably still needed in SPX, and it made that new low during Friday's session.  The thing is, it appears to have done so in a three-wave structure.  This means that if it continues to bounce, we might be looking at ANOTHER b-wave low, which would later need resolution with a new low below 2946.  If it instead keeps dropping directly, we could be seeing either a bear nest or the fifth wave (since 2976, the presumed bottom of wave 1/A down from 2989, has not been overlapped yet).

Intermediate/long-term, there's still no change:

In conclusion, while there's still no change to the intermediate/long-term, the near-term pattern does suggest that the downside is still not complete.  And that could in turn point to pending potential problems for the larger waves (remains to be seen).  The main near-term question at the moment is whether SPX will bounce back above 2990 before continuing to decline, or if it will decline directly.  Trade safe.

SPX Long and Short Term

Last update, I indicated that I thought another low would best fit the pattern, and that happened almost immediately.  At this point, it's a tougher call, but I'm still very slightly leaning toward another low.  I'm basing this on the micro-micro pattern, though, and sometimes that can be sketchy, so we'll see how it pans out.

Bigger picture, we're STILL stalled at the inflection point I mentioned way back in July -- so, if nothing else, big "hit" on identifying that point.  Now, what we have at present is a three wave rally off last month's low.  That means that either that rally completed at the recent high and will (ultimately) head back below 2822 from here, or the rally is still unfolding.  On the big picture chart, the red trend line is really the only semi-meaningful support zone.  Everything that happens between that and the all-time high is basically noise.

I also stumbled across this old support and resistance chart while leafing through my chartbook, and since it's still performing surprisingly well, thought it worth sharing again:

In conclusion, there's nothing much to add from an intermediate standpoint, and we're still stuck in a noise zone.  Trade safe.

SPX Update: Next Downside "Zone of Interest" Captured

No change to the big picture.  Near-term, Monday's update suggested watching 2960-65 SPX, and SPX got there yesterday.  It does appear that it probably needs at least one more low to resolve this pattern, but a near term bounce first (or even a couple days of range-bound trading) isn't out of the question:

In conclusion, no change to the big picture.  SPX still only has three waves up from last month's low, but has not yet overlapped any key levels.  Near term, another low beneath 2958 seems fairly reasonable, though not guaranteed.  Trade safe.

SPX and INDU Updates

In the last update, the only suggestion I even offered was that I could see an option that SPX could head toward 2970 -- though I was pretty noncommittal about it, nonetheless, that's what happened on Friday.

INDU first:

And SPX:

In conclusion, the market is still in something of an intermediate no-man's land, with little changed in that regard.  Trade safe.

SPX Update: Uninspiring Patterns

Yesterday, SPX made a new high for the current rally wave, which resolves the RSI divergence I spoke about previously, and resolves this statement, which I made on Wednesday:  "My instinct is that it still needs at least one more high..."  Beyond that, the market is still stuck at the major inflection zone discussed way back in early July.

Overall, there isn't much to add, and the near-term pattern is as wonky as anything we've seen all year (in the article title, I mean "uninspiring" in the sense of "not inspiring any clear calls").  I can see one option for the market to drop down toward 2970 before rallying again, but I can't assign any higher probability to that than any of the other options I can see (which pretty much run the gamut).  We'll just have to continue to watch and wait and see how the market reacts to this inflection zone.  Trade safe.

SPX and INDU: Market On Hold

So the market's been in a holding pattern since Friday, clearly waiting on the Fed announcement before seeming to commit itself to anything.  My instinct is that it still needs at least one more high (which could in turn generate much higher highs), but it's not really clear-cut in the charts, so take it with a grain of salt.

Also keep in mind that Fed days can get whippy, so a fake-out breakdown followed by a whipsaw back up wouldn't be unusual -- nor would its opposite (a head-fake breakout followed by a whipsaw back down).  Such is the joy of trading a Fed day.

Of note, INDU and SPX have both held the first important trend line I mentioned last update:

SPX tagged the trend line less directly, after running a sideways move into it:

Bigger picture, this is still a meaningful inflection zone:

In conclusion, nothing much has changed in the past few updates.  Trade safe.

SPX and INDU Update: Justin Bieber Declares War on Saudi Arabia

Over the weekend, a major Saudi pipeline was attacked, and the futures market opened lower.  It's interesting that this is coming right at intermediate resistance... but keep in mind that there's an old expression on Wall Street (originally coined by Nathan Mayer Rothschild about two centuries ago) to "buy on the sound of cannons" (meaning war creates initial panic, but is ultimately bullish).

Of course, no one uses cannons anymore, preferring instead to wage war with drone strikes -- or (in the case of Canada) via the export of Justin Bieber albums, against which only full-scale nuclear retaliation would be appropriate.  However, Canada is protected by the fact that it shares a geographical border with the United States, which is what prompted this bold act of aggression on Canada's part in the first place, since nuclear retaliation would render certain places like Wisconsin even less hospitable than they already are.  Canada enjoys no such protection against Saudi Arabia, however, so Justin would be wise to remember that.

What were we talking about again?

Oh yeah... Canada.

No!  Cannons.

Anyway, on the bull side of the coin, this disruption in the global oil market might give the Fed exactly the excuse they need for another rate cut, which the market was already betting they were going to make before the strike.  So that's something for bears to keep in mind.

Chart-wise, nothing much has changed, since the market spent Friday goofing around sideways:

Near-term, I've drawn up a few trend lines to watch in the event the market continues reacting to resistance:

SPX is, as usual, in a similar position to INDU:

In conclusion, the market's in a bit of a no-man's land in terms of prices and pattern:  There are now three waves up from last month's low, so if the rally is corrective, this is likely where it would end.  On the bull side of the coin, RSI showed strong momentum at the last peak, and usually that's a recipe for at least a retest of that high, if not higher prices.  Trade safe.