SPX Update

Since last update, SPX made a slight new low, however NYA and INDU did not.  This leaves everything in roughly the same position it was last time.  I'm not crazy about the current wave pattern, because there just isn't much to say about beyond what I've already said over the past couple weeks.

In conclusion, I wish I had more to add since last update, but the market is simply playing its cards close to the vest right now.  Trade safe.

SPX Update: Inflection Target Captured

It's always a little amusing when the market moves for several days, but there's still nothing to add to an update published 5 days ago, except "inflection target captured" or similar.  And that's where we are.  Since Friday's update, SPX did exactly what I suspected it would, which now puts us in the "to B or not to B" zone that I (preemptively) discussed then:

The IT chart is likewise unchanged:

In conclusion, to rehash what I discussed on Friday:  If the recent high at SPX 4100 is a b-wave, then that would make the impulsive decline (from 4100 to 3795) wave c of an expanded flat, and from here, the market could rally up to retest/break that high.  If 4100 is a clean high, then we now have our first impulse down, and the next bounce will be wave 2/b and then lead to another 300 point or larger decline in 3/c.  The next upside inflection will come once there are three complete waves up off the 3795 low -- more generically, 2nd waves typically retrace 50-62% of the prior decline.  Of course, the market always reserves the right to whipsaw a bit near inflection zones before moving for real, so we can't rule out another low just yet, but for now, we'll presume that was it.

On another note, the bond market closes early on December 23 and there's a reasonable chance it will be a relatively light session for equities, so I'm going to forgo this coming Friday's update in order to spend more holiday time with my family.  Which makes this the final update before Christmas, which in turn means it's tradition to link to a non-market piece I published 9 years ago:  A Christmas Story -- Reflections on What Matters.  And also, to wish everyone a safe and happy holiday, and a very Merry Christmas!  Trade safe.

Brief Update: Three Waves Down

There's almost nothing to add since last update, except to note that the market has now formed three waves down.  Last update discussed the possibility of SPX and INDU forming an impulsive decline and the "to B or not to B" conundrum that would place us in, but this is the first hurdle (three waves down) before we get to that place.  So it's wise to at least be aware of that.

In conclusion, there's very little to add to the last update, except as noted above.  Trade safe.

SPX, INDU, BKX: To B or Not to B

Since last update, SPX was again rejected smack at 4100, the price point I've been watching for more than a month and a half, but the market has left a less-than-clean top in its wake, so today we're going to examine the options from here.  Let's start with INDU:

We can see on that chart where a simple 3-wave decline might end, but I'm somewhat presuming that this will go on to become an impulsive decline for maximum ambiguity.  I've drawn up the most straightforward bull and bear versions of this on the SPX chart below:

I've also noted this first near-term downside inflection on the SPX IT chart (presuming this does go on to become an impulsive decline, of course -- see INDU for the "3 down" option).  Again, do note that this is simply the most straightforward version of this, not the "only option."  If this decline does become impulsive, either as wave 1/A or as the C-wave of an expanded flat, it does not need to end in that inflection zone and is well within its rights to terminate on either side of it.

[NOTE:  Typo in annotation; should read 3790-3811, not 3890-3811]

BKX might lean me slightly toward the more bearish option, as this chart does not look particularly good for bulls:

In conclusion, BKX looks a bit sickly, but the most recent tops in SPX and INDU are not ideal, leaving open the possibility of a B-wave high expanded flat pattern.  Hopefully everything above helps readers to navigate this with a bit more understanding as it unfolds.  Trade safe.

SPX, INDU, and TLT Updates

So the last two updates noted that we had three waves down but had not yet completed the required impulsive decline to indicate a trend change -- and although the wave had the overall appearance of something that might ultimately become impulsive, the market had other ideas and elected to bottom right at the inflection zone:

Yesterday, SPX bounced back up to tag the blue 2 inflection, but was then rejected again, which continues to leave things up in the air for now.  

TLT has continued to rally nearly straight up since the 10/24 warning, and has now cleared next resistance:

In conclusion, over the past few weeks, I've probably written at least half a dozen variations of "I'm still awaiting an impulsive decline before getting too aggressive on the bearish side," and yesterday was a good example of why I take that approach during ambiguous rallies: The decline simply ended at the ALL OF C inflection and bounced furiously, illustrating why front running an impulse can be risky.  

As I've also written in basically every update since December began, there is still no change to my stance, which was probably most succinctly articulated in the piece linked above, as: "Thus, this is a neutral zone... It's not bearish until we see an impulsive decline, but neither is it a zone where one would want to initiate new long positions."  Trade safe.

INDU and SPX: A Little More Detail

Since last update, while the market has technically done nothing, INDU has continued its rejection from the first blue 4 inflection:

I added some detail to the SPX chart, since I don't want the straight line pointing downward to be taken as an actual nuanced projected path.  SPX does not need to follow the exact path shown below and probably won't, but this is more reasonably representative of the type of path SPX could take if we have already seen the start of blue 3:

In conclusion, no change from last update, and we remain on the cusp of an impulse.  Trade safe.

SPX, INDU, COMPQ: On the Cusp of an Impulse

The market has gone nowhere since last update, so let's talk about what to look for in order for the current decline to qualify as an "impulsive decline" (which simply means five waves down).  This is probably best illustrated using the INDU chart:

No change to the big picture -- the main question is whether blue 3 has already begun or not:

Worth noting that COMPQ was again rejected at resistance (I called attention to the test of resistance on November 21), so that test of resistance could very well have been a classic "return to the scene of the crime":

In conclusion, if the market goes on to form an impulsive decline, that would suggest at least one more wave down of similar size -- it does not guarantee that blue 3 has begun.  However, given the turn from the blue 2 inflection, we might treat it that way at least until it reaches the next inflection, which would arrive after the aforementioned "one more wave down."  Of course, if it does not go on to form an impulsive decline, then all of that is moot anyway.  Trade safe.