SPX and INDU: Bulls Hold Support, So Far

Yesterday saw a near-term washout lower, followed by a reversal into the close.  In doing so, SPX tested its next important trend line and managed a whipsaw of the breakdown:

That appears to be three waves down from last month's high, so bears will need to force a breakdown at yesterday's low to turn that corrective decline into an impulse.  The strength of the bounce suggests bull will at least get a test of 2939-49 first (though they first have to clear the blue base channel just overhead).

INDU likewise held its next major support zone (red):

In conclusion, the strength and momentum of yesterday's bounce usually leads to at least a two-legged bounce, so it would e unusual for bears to regain immediate control without a fight from bulls first (even if this is to become a true impulsive bear wave; and there's no way of knowing at the moment whether that will happen or not).  Given that there are now three potential complete waves down, we simply can't rule out the possibility that the decline is over.  Trade safe.

SPX Update: "Pattern Not Resolved" Indeed...

Last updated predicted, in no uncertain terms, that if SPX continued to rally directly and ran north of 2990, then that would imply a b-wave low, and the market would then need to reverse and make a new low -- and that's exactly what happened.  Sometimes Elliott Wave can be quite a powerful predictive tool:

Intermediate term, SPX is approaching the first meaningful support zone:

In conclusion, the last near-term prediction was a hit.  Bulls will likley need to right the ship fairly directly, or they risk a trip back below the August lows -- and possibly well beyond.  Trade safe.

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.