SPX Update: But INDU is More Interesting

Last update suggested that Fed Chair Jerome Powell "to the People" would use the word "tools" during the upcoming Fed announcement, and that was a hit, with one forum member ("porkchop") coming up with an unofficial count of (9) uses of the word.

As for the market, if we can call it that, SPX has continued range-bound since last update.  SPX did finally briefly whipsaw the vaunted blue line, but it failed to claim the price low, which led to yet another small bounce, still within the range so far.  This chart is uninteresting and uninformative, so we're going to skip over this and focus on INDU next.

INDU seems to be where the more interesting patterns lie:

As we can see, the solid overlap of lower prices on INDU is suggesting either a completed WXY correction (probably the best fit as long as 27.1K holds), or an ending diagonal in formation.  (I also can't rule out a massive bull nest, but my incredulity meter gives that low odds, because it would lead to a big sustained rally from here.  I suppose anything's possible, though, but not even a consideration as long as bears hold the 27.6K zone (not a typo)).

In conclusion, while SPX can run a little higher if it needs, INDU suggests the market is still in an inflection zone.  I think for the time being we're going to focus on INDU as the better tell.  Trade safe.

SPX Update: Fed Day

Last update noted that the market had tested the outlined support zones, and that they had held their first test.  Those zones have continued to hold (so far), and SPX actually tested the blue trend line a second time right at the close yesterday.  Futures are indicating a gap up open, so the market is reacting to that line again.

In conclusion, the market really hasn't done anything since last update, but has remained rangebound, so there's nothing much to add.  Bears still need to break (and hold the break) of support.  Today, the Fed is due to give their weekly bi-annual quarterly report for the month, so the market is probably waiting on that before breaking solidly in one direction or the other. 

Incidentally, current expectations are that the Fed will continue to do things, and that Powell will probably use the word "tools" at least once.  Some analysts fear that if he uses the word "tools" more than three times, that could signal a more dovish stance, which could contribute to at least four hours of additional Fed-related discussion on CNBC.  We'll keep our fingers crossed that this does or does not happen, depending on our mood.  Trade safe.

SPX, INDU, COMPQ, and Gold: The Leroy Brown Market

This market reminds me of Leroy Brown at the end of the song Bad, Bad Leroy Brown:

"Leroy looked like a jigsaw puzzle... with a couple of pieces gone."

That's how this market looks.  Lots of missing pieces.

Despite that, on Friday, the market actually behaved "normally" and did exactly what I was expecting.  SPX and COMPQ both headed lower, and then tested the zones they "should" have tested:

COMPQ retested the black line (retests are rarely "to the penny," so this was in the ballpark it should have been):

And INDU even came down and tagged its red trend line (this one, like SPX, was actually to the penny), just for good measure:

Finally, I want to include a quick update to a gold chart I published (forum only) back in mid-March:

In conclusion, what does all this mean?  Well, it means that bears haven't broken support yet.  And that means we're no farther along than we were on Friday.  Bulls are free to try to rally it from here, bears need to break and hold first support to help signal lower prices.  Unfortunately, that's about all the news that's fit to print at the moment.  Trade safe.

SPX, INDU, COMPQ, NYA: Market is Still... This

This market continues to lollygag around, refusing to trend.  This is often what you see in an undecided market -- but once it makes up its mind, we could finally see a stronger directional move.  We've had hints this "non-trend" might occur here, because NYA, INDU, TRAN, et al, are all still below their June highs:

NYA below:

SPX remained stalled yesterday morning, then decided to go for a test of its breakout before doing anything else.  Nothing too surprising there; from last update:

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.

It's reasonable to assume that we'll see a more definitive test of support today or Monday, and as we can see on the next chart, support is still a bit below current prices:

COMPQ has also formed a pattern that, most of the time, suggests further downside is still needed:

In conclusion, the market is still unresolved, so the oft-discussed B-wave high remains on the table.  Near-term, it would not be unusual to see some downside follow-through at some point, though that doesn't need to be immediate, of course, we would normally expect lower prices at some point (as discussed above).  Trade safe.

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.