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Friday, June 12, 2020

SPX Update: Nothing, But Loudly


(First off, let me apologize for the difficulty I've had on occasion of sticking to the 3:30 A.M. market schedule.  As most readers know, I live in Hawaii, and that means the market here closes at roughly the same relative time that it opens on the East Coast (it closes at 10:00 A.M. here).  So I typically set my alarm around 2:30 A.M., but if, upon awakening, I find the market is particularly active, I often end up needing to manage my own positions while at the same time trying to complete the update.)

As crazy as yesterday may have seemed, from a technical standpoint, there was no key overlap.  From a practical standpoint, the market turned at the "or (1)" inflection, which tempts me to make that the preferred count.


The challenge from an objective standpoint, though, is three-fold:

1.  The decline did not overlap any key levels.
2.  The decline did not break the red uptrend (or even test it; it bounced prior to hitting the line).
3.  The decline is only three waves so far and not yet impulsive.

So, add all that up, and it means that although bears had an exciting day yesterday, the market reserves the right to end it at that.

So we're going to wait to see if bears can break the red uptrend with a new low, and/or create some key overlap, before shifting the preferred count.  If that happens, we'll have some interesting cases to look at, including the possibility that:

1.  The long-anticipated "double retrace" has begun, to roughly retest the zone near the March low
2.  The recent rally was a truncated fifth to end the entire wave, with a bear market on the way

But first things first.

(Addendum:  A reader asked me to clarify why the decline is three waves and not an impulse, so I'm adding this late (and crude) chart.  We have to remember that the A and C subwaves of an ABC ARE impulsive, but three waves does not make a LARGER impulse.  Chart showing how the decline is three down shown below -- if today's rally is a fourth wave, then red (C) is actually red (3) -- hence, another new low would make the decline off this week's high into an impulsive decline):



Now, if the decline from this week's high is to become impulsive, then today's bounce would be part of a fourth wave and likely return to make new lows either later in today's session, or on Monday.  If that occurs, then we should probably anticipate a larger trend change underway.  Trade safe.

Wednesday, June 10, 2020

SPX and NYA: Near-term Intrigue


So now we have what appears to be an impulsive decline from this week's high, but once again this is coming off a "less-than-clean" high, so there's some question as to whether the high is a b-wave (see: "expanded flat").  It is worth noting that NYA is below its first support line, so unless/until bulls can reclaim that, it gives a slight advantage to bears. The next test would be the rising trend channel:



SPX is also trying to break/hold below is first near-term support zones, and "or (1)" remains a viable option.


In conclusion, the market remains stalled at the "or (1)" inflection, and does appear to have formed a small impulsive decline from the recent high.  The option of a complex double retrace that revisits the zone near the crash low is not entirely out of the question yet, so let's keep a close eye on this going forward.  The first step for bears is to sustain/hold a breakdown at yesterday's low.  If bears cannot break that low, then the potential for yesterday to be a b-wave high would remain alive and well and suggest new highs on the way.  Trade safe.

Monday, June 8, 2020

SPX, NYA, COMPQ: Make It Official...

No change from last update, except to note that the long-term preferred count in COMPQ has been officially confirmed.



A reader asked for the potential target for (5) of 5. Do keep in mind that (5) of 5 can always extend.  This may be setting up for that inflection to approach near the election.  As the common market wisdom goes:  Status quo is almost always what a market like this wants, thus that could be the market's best chance to keep the party going.



NYA backtesting blue:


Finally, just a quick update to note that finally calling a bottom in oil (after 9 years) seems to have done the trick:


In conclusion, no material change from last update.  Trade safe.

Friday, June 5, 2020

SPX, NYA, COMPQ: Long-term Preferred Count within Inches of Being Confirmed

Just over two months ago, I penned a piece titled "Why I Haven't Joined the Long-Term Bear Camp Just Yet" and outlined why, despite the clear fundamental destruction, I ultimately remained long-term bullish.

In that piece, I wrote:

So now, here we are, with all initial downside targets captured. Many people are insisting this is the beginning of a new, many-year-long bear market, and while I can completely understand WHY they believe that, I'm still not sold 100% on that belief. 

Readers will recall that, about a month ago, before the crash had really gotten rolling, I noted that "C-wave" was sometimes said to stand for "Crash wave." C-waves are third waves, and bring all the power of a third wave to the table. First or A waves are generally weak, and thus *rarely* function as crash waves. 

Therefore, the strength of recent record-setting crash certainly argues for it indeed being a C-wave, and not a first or A wave. 

Either way, I am pretty firmly in the camp that this is NOT going to be a 5-10 year bear market, and I think the chart below may help reveal exactly why I'm not sold on this being "the big one" JUST yet:

And the chart that followed that is now updated below:


Intermediate-term, at the time I penned that piece, I wasn't yet 100% certain if ALL OF 4 was complete (we were watching first resistance for clues), but long-term, I was pretty convicted that we were in a fourth with new all-time highs still pending.  The preferred long-term count will be confirmed when COMPQ makes a new all-time high.

Intermediate term, so far, the market is behaving as if it's launching into the third wave we've previously discussed:


NYA also updated below; recall that we spotted the Wave 2 inflection in real-time:


In conclusion, the long-term preferred count may be confirmed in today's session, at least for COMPQ.  The intermediate count has the lingering "or (1)" option, but again (as I've said a million times), it's best to await an impulsive decline before betting against a bullish trend.  If the market is in a third wave rally, it could be pretty relentless for a time.  Trade safe.

Wednesday, June 3, 2020

SPX Update: (Insert Interesting Title Here)


The market continues to cast aside any hopes of a decent correction and has, so far, continued to grind relentlessly higher.

My suspicion that last week's high was a b-wave ended up being confirmed yesterday, with new highs.  But we are still within the red (1) inflection zone.


Big picture, there's been no change in a while, and SPX has continued to hold the March 23 low, where it had captured its final "official" downside target in SPX:


Near-term, SPX has remained within the red channel discussed in the last update:


In conclusion, SPX remains within a larger inflection zone, but thus far, bears have not had any clean (meaning clean top with no potential b-wave) impulsive declines, and given how the market has behaved so far, they may do well to continue to await one.  Trade safe.

Monday, June 1, 2020

SPX Update: No Change


America is burning.

I have so much I want to write about all this... and yet I don't want to write about it.  Not today.  The wounds are too raw for everyone.  And we -- collectively -- don't hear each other.

I'm tired.  I think many of us are.

All I'll say is that the (presumably pending) Supercycle peak seems more real by the minute.  The main thing I'm wondering now is how we get a recovery.  Maybe we won't get a real recovery; maybe the fifth wave I'm looking for in the market will be 100% driven by funny Fed money.  (Or maybe we'll get a "failed fifth.")

I'm just thinking out loud above, so don't read too much into it.  Who knows; for the sake of the masses, hopefully things will improve fundamentally.  Just emotionally exhausted right now because I'm tired of watching my home country destroy itself in so many different ways.

I'll leave it at that (for now).

Market-wise, not much happened on Friday.  The decline from 3068 did become an impulse, but there's some question as to whether the 3068 high is a b-wave high.  If it is a b-wave, then the impulsive decline is wave c of an expanded flat and the end of the correction instead of the start of it.  The first step for bears would thus be to capture Friday's low.



Near-term, SPX found support a couple points above the green line, creating a channel:


In conclusion, nothing much has changed since last update, so there's simply not much to add.  Trade safe.

Friday, May 29, 2020

SPX and COMPQ: Caveat Emptor


Last update, we discussed the two leading options for SPX, both of which were near-term bullish (as shown by the chart labels), but one of which then turns bearish for a time.  Yesterday, we rallied exactly up to the first label and reversed:


Note that even if we're in the Red (1)/(2) count, that doesn't mean we can't do a little bit more sideways/up before completing Red (1), but it's definitely worth watching.

Last update we also discussed some of the pressures that seemed to be leading us toward the completion of a Supercycle top, and the riots we've seen since may be an early glimpse of the powder keg that's brewing beneath the surface.  While the horrifying death of George Floyd is ostensibly the spark that lit the fuse for this dynamite, that was not, I believe, the dynamite itself.  The dynamite itself has been lying dormant for some time, and future situations will likely ignite it further.

But I don't have enough time to get into more detail on that right now, so suffice to say this is perhaps a harbinger of things to come.

Near-term, we have some trend lines to watch:


Also wanted to point out the potential megaphone in COMPQ:


In conclusion, SPX rallied up to the (first zone) of the Red (1) inflection and turned.  Because the inflection stretches a bit beyond that label, bulls should stay on their toes here, even if we run a little higher, and even moreso if we sustain an immediate breakdown at the black trend line.  Trade safe.

Wednesday, May 27, 2020

SPX Update, and Some Random Thoughts


Recently, I had an interesting discussion with an investor.  During this discussion, he asked my opinion of the intermediate future (4 years out and beyond).  I told him the same thing I've told my readers:  I suspect the Federal Reserve and the government have thrown enough money at the problem (and that we still have enough goodwill remaining) to keep the party going for a few more years.  But that after that, things could get very ugly.

He's a permabull, so he didn't much like that and mumbled a few things in reply, then concluded, defiantly, with, "But I CHOOSE to be hopeful."

And I thought:  Well, that really sums up the crux of the issue for traders as a whole, doesn't it?  Some traders "choose to be hopeful."  Others "choose to be bearish" (or, they might say, "realistic").  But in the end, the market doesn't give a damn what we "choose" to believe, on either end of that scale, or anywhere in between.  It's going to do what it's going to do.

So, for me, my philosophy begins and ends with: "I choose to try to be on the right side of the trade."

And I think a big part of being successful in that endeavor is being willing to push ourselves out of our natural comfort zones.  Some of us may be optimistic (or pessimistic) by nature -- but we simply must have the mental discipline to not allow our natural inclinations to hold too much sway over our vision.

I touched on this somewhat in a piece I published on March 23 (the bottom came later in that very session, as it turned out):

I think that part of what makes a successful speculator is the ability to find balance. The nature of the herd is to overreact in BOTH directions. The nature of the successful speculator must thus be the opposite: To seek reasons for caution when others are fearless and -- on the flip side -- to seek reasons for hope when others are hopeless. 

*****

The majority of people react to their own thoughts as if they were "real," the way, say, a tree or a rock is real. They have a thought, and then they simply accept that thought as true. But thoughts are not real. And they are often not true. So, to be ahead of the herd, we must be our own harshest skeptics. We cannot afford to be overwhelmed with "the emotion of the moment" by taking even our own thoughts at face value, but must instead seek to chip away at our own ideas -- to find out if those ideas are solid, if they are merely possible, or if they are completely baseless. 

We turned bearish near the high -- then began looking for a broad market crash almost immediately thereafter, while most people were still thinking "short-lived correction." NOW, however, many people have begun thinking this will never end. And surely that means we should at least start looking for hope. 

Consider this case: What if a cure or vaccine is announced directly? If that occurs, then the economy will not only return to normal, but it will return to normal along with trillions of dollars in Fed money to fuel a blistering rally. 

So the economy will return to "normal," but on steroids.

Of course, as mentioned, that piece really couldn't have been any more timely (and in the very next update, I noted that all downside targets had finally been captured and that, for the first time since the crash began, it was at least possible for the bottom to be in -- and that we should not turn bearish again unless the long-term uptrend in SPX failed, which it never did).

But the point is, challenging our emotions and our natural inclinations is what's going to keep us from getting run over in BOTH directions.  When it comes to my personal life, I might "choose" to be hopeful about a given situation, and that's probably a good thing -- but when it comes to the market and the economy, I have no control over those, so "choosing" to be hopeful (or hopeless) seems to me to be complete folly.

I may or may not always be successful in the following endeavor, but I "choose" only to try to see things as they really are.  For better or for worse.

Which brings me to a related point:  I see us glorifying a certain mode of thinking in society that goes directly against the above concept.  Or, it may be more correct to call it a certain mode of feeling.  We're basically told to feel outrage and anger over various (ever changing) situations du jour, typically by the media and/or by politicians.  If we try to "be the voice of reason" and bring a balanced view to such situations, we are then told that we are "cold-hearted" or (worse) often assumed to be taking the "opposite side."

Let me give a hypothetical example of what I mean before continuing.  Let's say someone is accused of a crime and being essentially tried in the media.  More and more, we are expected by our peers to simply condemn that person, as if the actual trial had already been held.  If we say something along the lines of:  "Well, maybe we should wait to see the evidence," then we are often assumed to be taking the "side" of the accused, when in actuality, we're just not taking EITHER side.

And I bring that up, not for that specific example, but because I believe it's symptomatic of where society is today:  We are actively discouraged from even attempting an unbiased view of things.

Try it, for example, on Twitter.  Find any random accused person who's trending and attempt, not even to "defend" them, but to simply suggest that maybe we should withhold judgment until there's more evidence.  Watch how fast you get flamed and grouped-in with whatever hideous thing that person is accused of.  Watch the hate pour in.

Then try the opposite:  Jump on the bandwagon and bash the person with all the faux outrage you can muster.  And then watch the "likes" and retweets pour in.

And I bring up this example because, as I said, it is symptomatic of an underlying societal condition.  It tells us that society, as a broad-based whole, does not even value attempts at reason and impartiality.  What society as a whole values is raw emotionality in place of reason.  We know this because that's exactly the behavior it rewards.

And we get more of that which we reward.  While we get less of that which we punish (in this case, we are punishing reason itself).

So we're building an awful beast here.  And creating a generation that overvalues its own raw emotions while undervaluing both rational thought and objective reality.

And I think all of that ties in to my larger Supercycle.  We're rotting from the inside out.  It just takes time to become apparent.  But, in time, the outward world will increasingly mirror our inner world.

Of course, as I've discussed many times previously, I don't think we're there yet... but I wanted to share a few more of my observations as to some of the forces that are taking us there.  Because, when it comes, I do hope we can correctly diagnose how we got there and rebuild from a more stable foundation.

Anyway, I'm out of time, so let's get to the charts.

First up, the near term SPX chart, which has proven to be valuable:


Next up, the intermediate term SPX... here, we're at a bit of a crossroads.  The blue count is super-bullish pretty much directly.  The red count could see us top anywhere from current levels up toward 3130ish.


In conclusion, the market remains in an intermediate inflection zone, but the first thing bears would need to see is an impulsive decline.  Trade safe.