SPX, INDU, NYA: Mixed Messages

So, yesterday SPX gapped up over prior resistance, then stalled.  INDU and NYA both remain below their June highs, which sends mixed messages.

INDU below:

NYA next:

Finally, SPX:

Frankly, because of all this, I still have no strong opinion on whether we're dealing with a B-wave high under construction, or are in the midst of a third wave rally.  All we can do is watch how the market deals with support as it comes down to retest it -- if prior resistance has turned into support, then bulls probably keep the ball.  If support fails significantly, then bears may get their B-wave.  Long-term, the preferred count remains bullish for the time being.  Intermediate-term, I'd still prefer we see a better correction, but the market doesn't really care what I want, especially as long as it can swim in Fed/stimulus money -- so we'll just take it as it comes for now.  Trade safe.

SPX Update: Annie, Get Yer Gun

I'm just going to come out and say it:  This market stinks.

Let them come after me with their hooves and horns, but it needed to be said.  SPX refuses to resolve itself one way or the other, and has now been stuck in a trading range for a record 4000 sessions.
(Editor's Note to CNN's "Fact Check" Team:  He's kidding.  We think.)

While bears would still need to be cautious if there's a sustained breakout, this is starting to "feel" like a B-wave.

Many other indices (INDU, TRAN, BKX, et al) still remain below their June swing highs.

The major caveat, of course, is that, from a technical standpoint, there is absolutely no way to predict a b-wave once the prior swing high is broken, as it was in SPX.  Since SPX did break its June swing high, albeit just barely, that opens up the technical possibility that the current rally is on the cusp of a strong third-wave launch.

But when you see a market meandering around like this after breaking a prior swing high, it at least can be a sign of a B-wave.  So as I stated last update, bears aren't out of the running just yet -- but really the only practical advice here is, no matter which way you lean, stay nimble and be prepared for the market to go against you.

Beyond that, nothing has been happening, so still nothing new to add.  Trade safe.

SPX and INDU: Bimodal Market -- Bears Not Out of the Running Just Yet

Yesterday, SPX traded in a circle, as we can see on this actual to-scale line chart of Thursday's price action:

Ha ha, just a little trading range humor there, designed to elicit angry responses from CNN's "fact-check" team.

In reality, the market wasn't nearly that interesting, and confined itself to a much smaller range than shown on that chart.

On a more serious note, when I look across markets, I'm still struck by how many remain below their June swing high.  INDU (as noted previously), but also TRAN, NYA, and others.  I think unless/until bulls can claim those highs convincingly, the option of a b-wave high/c-wave decline (as discussed last update) has to remain on the table:

Of course, if bulls CAN claim those highs convincingly, then (as also discussed previously), bears would need to be cautious due to bull nest potential.

In conclusion, the market appears to be fairly bimodal here.  Either it's in the process of forming a B-wave top to be followed by a rapid C-wave decline toward red (now gray) (2) on the chart above, or it's gearing up for a sustained launch in a third wave rally.  The first step for bulls is to form a convincing breakout, which they haven't been able to do yet.  First step for bears is to hold the aforementioned zones and start to break some near-term support levels (Thursday's low would be a start, for example).  Trade safe.

SPX and INDU: Still Being Stubborn

So 3234 has been the level we've been watching for a while, and on Monday, SPX rallied to that level and reversed hard, which may have been good for a short-term trade for nimble traders -- but today, futures are indicating we're going to open at or beyond that level, which is going to make things challenging for bears.

While a B-wave high will still be possible, to be followed by a C-wave down for (previously presumed) wave (2), it is very hard to trade such waves... and usually ill-advised to attempt to front-run them.  Because once the June swing high is claimed with authority, bulls will at least have the option to be in the midst of a third wave rally (see alt: i/alt. ii below), and third waves can be relentless. 

It is worth noting that INDU is a little further below its June swing high than SPX:

As a side note, I'll be frank:  It's really hard to know what to make of that June decline now.  I was pretty sold on it as an impulsive decline, so that means either it isn't (despite appearances to the contrary), or it has to be the C-wave of an expanded flat... but it's challenging to locate the A and B waves of said flat. As far as I'm concerned, that makes it something of an anomaly. And this is not to say that I'm "never" wrong about such things -- but it's pretty unusual for the market to sell me on something like that and then proceed to completely ignore it.  I guess if the B-wave option doesn't materialize, then we can perhaps chalk it up to the unprecedented government and central bank intervention causing mutations in the wave patterns (which does happen).  We'll see how it goes from here.

In conclusion, if SPX can sustain a breakout over the key 3234 zone, then bears are just going to have to be patient, since bulls will have the option of a third wave rally.  In the event bears can generate a solid reversal in the next couple sessions, then we'll play that by ear for the option of a B-wave high/C-wave decline.  Trade safe.

SPX Update: Stubborn Market

Last update noted:

But now it's worth mentioning that there are only three waves down to 3115 so far. Which means bears need to claim and hold that inflection zone to prove they have the ball. Until that happens, we can't rule out the potential for another high to complete B/2 (and can't yet rule out the alternate count, for that matter).

And bulls held 3115, then managed to break above 3184, locking in the three wave move to 3115.  At least we recognized the inflection zone correctly in real-time, but this is proving to be a stubborn market at the moment.

In conclusion, bears are getting into a make or break zone for the wave 2 count.  A b-wave could break above 3234 and then still reverse later -- but if that breakout happens, bears will need to be very cautious, due to the potential of a nested third wave (the black alt. count).  We'll see how it goes today.  Trade safe.

SPX Update: A Good Day for Bears; Can They Get Another?

Yesterday's test of the presumed B/2 high proved to be a solid short op, at least for a near-term play, and made for a nice day for nimble bears.  But now it's worth mentioning that there are only three waves down to 3115 so far.  Which means bears need to claim and hold that inflection zone to prove they have the ball.  Until that happens, we can't rule out the potential for another high to complete B/2 (and can't yet rule out the alternate count, for that matter).

Note I've drawn-in an even more complex option the market could take for B/2, if it wants.  Not saying that's going to happen, but it was easier to draw it in than to try to verbalize it (for readers' sakes):

In conclusion, the market has now been stuck in a broad trading range for about a month, so there's still not much to add to recent updates.  Trade safe.

SPX and INDU Updates: Still no change

Last update noted that bears would like the rally to stall fairly directly, and stall it has, so bear hopes for a second leg down remain active:

Bigger picture -- and on the flip side of the coin -- on June 29 I noted that INDU was testing support and that it might lead to a bounce -- and, of course, it did... so that solidifies that zone as the first level bears need to claim and hold:

In conclusion, ideally, I would still like to see another leg down to break last month's low, but so far we only have three waves down from yesterday's high, so no confirmation of even a micro turn yet.  We'll see what today brings.  Trade safe.

SPX Update: Last Call

Back on 6/22, I noted that I had some concern that the high at 3155 was not a "clean" high, which suggested the possibility that it might be the b-wave of an expanded flat, and that has since proven out. 

For a quick refresher on expanded flats -- which are one of the key patterns to learn to spot via Elliott Wave Theory, because the Fed market since 2009 has loved them -- see below:

SPX is now retesting the June high, which means if bears want any shot of this being wave 2 instead of wave B, they need to make a stand directly.  Worth noting that if SPX breaks the June high and THEN reverses, we're likely looking at a larger degree expanded flat, with the new prevailing high marking wave B of said flat.  That would mean any pending C-wave decline would ultimately be another buy op.  But first things first, of course.

Also worth noting that in the event SPX breaks the June high with increasing momentum, then the most bullish pattern would have the rally from 2965 to 3153 as wave 1, the decline to 2999 as wave 2, and wave 3 underway now (likely to head toward ~3300) -- so bears do need to maintain a modicum of caution if there's a sustained breakout.

Once again, first things first; but it always pays to understand both sides of the trade.

In conclusion, in a perfect world (for bears and for the preferred count) SPX would complete B/2 soon, possibly nearly immediately upon today's open.  Trade safe.