SPX Update: Bears Sharpening Their Claws

 On August 27, I warned:

[W]hile it may be hard not to get lulled into complacency here, we should remain mindful that the market is into its upside target zone, which is territory where bulls are going to need to prove themselves with a sustained breakout, both in NYA and SPX. If they can't, then we can see that the downside potential is not insignificant.

On September 10, I reiterated:

Do continue to keep in mind that the ATH does mark a potential MAJOR inflection zone, inasmuch as it could have completed an ending diagonal fifth (as we previously discussed -- thus, "major" as in: It was a possible "end of the 12 year bull market" wave).

In that update, and in every update since then, I've warned that more downside looked probable.  And yes, it's still too early to tell if the bull is completely dead, or if this will just turn out to be a scary "correction."  But we can't ignore that the market captured the standing upside target, then reversed -- and has continued breaking each key level I've outlined as "the next warning zone."  So, because I sometimes tend to warn softly, I want to make this as clear as possible:  

At this point, the default stance should probably be:  
"Bearish unless/until we see an impulsive rally."

Let's look at the near-term SPX chart first:

On the long-term chart, I've sketched-in the potential I discussed back on 8/27, to help readers visualize it a little better:

Worth noting that on Friday's close, I observed in our private forum that:

This whole "afternoon" (NYC time) looked like a complex flat to me. I think a gap down is entirely possible on Monday. If we don't get one, the open might be a gift to bears, as the low looks like another b-wave.

As of the time of this writing (about ~5 hours before the cash open), futures are down more than they've been in a while, so it looks like Friday afternoon was indeed a complex flat.

So, in conclusion:

1. The market hit the upside fifth wave target zone from June 7 (4480-4550).
2. It then hung around for a minute and reversed.
3. It's now dropping out of a pattern that has the appearance of an ending diagonal.
4. Ending diagonals are terminal patterns.
5. On July 31, I published a piece titled Why the Fed Will Be Powerless During the Coming Supercycle Crash, in which I opined that to bring things crashing down "all it will take is a catalyst."
6. The potential Evergrande contagion may be the catalyst.
7. It's certainly interesting that Evergrande has shown up right at a major inflection point.
8. Caveat:  Again, it is too early to say with complete certainty if this is THE end of the 12 year bull... but... all the conditions have been met so far.

Trade safe.

SPX, NYA, TLT

Last update concluded:

...the question at the moment seems to be whether bulls will manage a near-term bounce, perhaps back up to retest the black trend line on NYA (dragging SPX with it, perhaps also to test its black trend line).  Other than that, it's hard to find a lasting bottom pattern here, so lower prices do still ultimately appear reasonable to expect.

Below is NYA's chart since:

SPX also rallied up to its black line, then even managed to tag its red line for good measure:

Both markets then reversed pretty hard and tested their recent lows, before bouncing back up toward the aforementioned highs, where we currently find ourselves.  

Which brings us to the "bonus" TLT chart:

In conclusion, both SPX and NYA have completed minimum retests of broken support and could thus head directly lower if they want -- but do remain aware that it's not uncommon for markets to do a couple trips where the zone from the bounce is revisited (even slightly broken) and then the broken support zone is revisited.  In Elliott Wave, this often takes the form of a complex flat -- and they are generally pretty unpredictable.  I'm not trying to "predict" one here, just noting it's always possible.  Other than that, no real change to the past few updates.  Trade safe.

SPX and NYA Updates

Last update expected further downside "after the current bounce completes" and that came to pass.  There's actually little to add since last update, except to note that SPX has now reached the next red horizontal, which is potential support:

NYA is still above its next (apparent) key zone.  There are still a few tricks bulls could pull if that zone breaks, but it would be one more thing that lowers their odds:

In conclusions, the question at the moment seems to be whether bulls will manage a near-term bounce, perhaps back up to retest the black trend line on NYA (dragging SPX with it, perhaps also to test its black trend line).  Other than that, it's hard to find a lasting bottom pattern here, so lower prices do still ultimately appear reasonable to expect.  Trade safe.

SPX and NYA Updates

Last update noted:

Below yesterday's low would suggest a trip to the 4472-80 zone at the minimum, and a minor (near-term) waterfall at the maximum, potentially rather quickly down to 4445-56.

SPX dropped down to that first target zone early, then bounced... then later in the session moved "rather quickly down" to... 4457.  So it missed the second target zone by 1 point (though it's interesting to note that futures did capture the equivalent of 4456 in the overnight session last night and then bounced).

This is getting into interesting territory now, and I've outlined some zones on the charts:

NYA is just below the previously-noted black trend line, and will likely bounce to open the session, so we'll see if bulls can do anything with that bounce, or if it ultimately fails (I'm currently leaning toward the latter).

In conclusion, SPX effectively captured its next target zones, but bulls have work to do to right the ship, as presently it appears that further downside is reasonable to assume, after the current bounce completes.  Trade safe.

SPX and NYA Updates

 Last update, I wrote:

So my endless string of weird issues with Stockcharts continues. Today, for some reason, I couldn't download anything, so I had to take screenshots -- so if the charts seem to be missing portions, you can thank Stockcharts.

And there's been no change to that portion of the update.  As far as the market goes, we have now whipsawed the black breakout and traveled down into the upper edge of the "bull 2 of iii of (v)" option that I noted a while back.  It should be noted that, as a potential second wave, there is no hard zone except green "bull:ii."  This is part of the reason why, on September 1, I opined that this pattern, if it occurred, would be "harder to trade."

[also, note that black (v) should be at the ATH, obviously, not sure how I overlooked that!]

So, since there's no hard price zone (anywhere nearby, that is), we'll have to work with the near-term patterns as best we can.  Starting with:

Below yesterday's low would suggest a trip to the 4472-80 zone at the minimum, and a minor (near-term) waterfall at the maximum, potentially rather quickly down to 4445-56.

NYA (next) is not quite to the black rising line:

In conclusion, yesterday's low is the first zone bears want to claim -- this would help them near term, with room for even a near-term waterfall, but would still leave things up in the air at the larger time frames... for now.  Do continue to keep in mind that the ATH does mark a potential MAJOR inflection zone, inasmuch as it could have completed an ending diagonal fifth (as we previously discussed -- thus, "major" as in:  It was a possible "end of the 12 year bull market" wave).  Trade safe.

SPX and NYA Updates

So my endless string of weird issues with Stockcharts continues.  Today, for some reason, I couldn't download anything, so I had to take screenshots -- so if the charts seem to be missing portions, you can thank Stockcharts.

First off, SPX has slightly whipsawed its black line:

And NYA has done the same:

Bulls would like to recover these lines, or risk the breakout being a head-fake.  Other than that, not much to add, as we've already discussed these options in detail in prior updates.  Trade safe.

SPX and NYA Updates

"Politicians to the left of me,

Bankers to the right,

Here I am... stuck in the middle with you."

-- SPX, Greatest Hits (Remastered for 2021)

SPX has finally broken above black, but near-term, has remained stuck between the next trend lines:

NYA looks eerily similar:

In conclusion, SPX and NYA are holding their own so far, but bulls are not entirely in the clear just yet, so no real change from last update, where I wrote:  

[T]he "standard" fifth target zone of June 7 (4480-4550) has been almost fully captured now, placing SPX at a decision point (see first chart). While a whipsaw of black wouldn't be the end of the world for bulls (see smaller subdividing bull 1 of iii of (v) option), it could be a warning of more bearish things to come, and thus harder to trade -- accordingly, bulls would like to see this back test of black hold for the near-term.

While I know everyone wants to know exactly what's next, there are simply some times where we have to let the market communicate.  Trade safe.