Friday, November 3, 2023

SPX Update: Finally Bouncing from Target/Inflection Zone

Apparently it was "that simple" as SPX finally committed to bouncing solidly after capturing its downside target and inflection zone.  In fact, the bounce is now close to wave 1/4 overlap territory, which would suggest the bounce is either another 2nd wave or the ALL OF C bull option discussed on 10/26:

Next resistance is fast approaching (blue rising line), so we'll see if that zone can slow the bounce or not:

Not much to add beyond that.  Trade safe.

Tuesday, October 31, 2023

SPX and NYA Updates: Five Nights of Fed-days, Starring Jerome "the Gnome" Powell

Not much to add to the past few updates.  SPX and NYA have both continued to bounce from their target/inflection zones.  A day late for Halloween, but today is still a Fed day nevertheless, and how the market reacts will probably determine whether a higher-degree bounce plays out now or not.


NYA has rallied to the lower end of the blue circle:

In conclusion, nothing really to add.  Trade safe.

Monday, October 30, 2023

SPX Captures Its Target: Let's Discuss This in More Detail

On Friday, SPX captured its preferred target zone for Wave 5 of 3/C, so it's entirely free to bounce in a decent reaction rally now.  But -- just in case -- because we're into potential "crash window" territory (not something I say often), today we're also going to discuss some of the "But what if it's not that simple?" options.

Let's start with NYA, which has behaved like a champ (at least, if one has been following the ongoing targets and wave counts listed in these updates, it has):

Next, we'll look at SPX:

On the NYA chart, I mentioned the option of "just a LITTLE lower," and this is because nailing down the exact end of fifth waves isn't always as simple as "well, it captured the target, we can all go home."  So, there's an in-between option that isn't as dramatic as the fifth wave extension, but that still delays bulls from any warm and fuzzies yet.  The chart below discusses one such potential:

COMPQ hasn't quite invalidated the diagonal from a technical standpoint, but I ultimately continue to favor the bears, as I have for the past few months.

[Note:  Typo.  "~13520" should instead read "~12520."]

Finally, the SPX "roadmap" chart continues to track well, and time and price have again collided to keep SPX riding right along the blue line:

On the chart above, it's worth a brief mention that SPX has not quite overlapped the a/1 high, which sits at 4101.  Overlap there is going to take some of the wind out of bulls' sails, and I would expect once it happens, the previously bullish Elliotticians will get on the bear bus (unless they're hopeless permabulls) -- if they haven't already done so with the overlap at blue b (which is where most of them probably think the wave 1 peak is).  This will be annoying, because I hate when everyone agrees with me, especially when it comes to trading.  But it's a necessary evil, I suppose, though it may lead to the market throwing some kind of curveball to try to shake everyone again.  

I mention this because it's one of the reasons I've been considering the possibility of an extended fifth:  An extended fifth wouldn't allow latecomers on board, and it would keep bulls trapped.  So those who have only recently woken up to the possibility that the market is in a high-degree third wave won't be able to profit from it.  In fact, they will most likely lose money, even with their newfound knowledge, because there's a strange tendency traders have where if they aren't short heading into a steep drop (such as we just had), they will start bottom hunting and buying way too early.  Not because they're necessarily bullish, but mainly because they aren't short and they're trying to get in on the action.  Or they're trying to recover the losses from their stopped-out longs.

So, if you put it all together, there's some psychological impetus for the market to just keep dropping here.  Extended fifths are brutal, some of the worst waves one can encounter because they move very quickly and only come up for air long enough to grab a few stops (on the shorts) and sucker a few bulls -- then they resume their relentless waterfall.  They don't bounce hard until they're entirely done (then they bounce fast and brutal, your textbook V-bottom massive "short covering rally" -- which then, after it has stopped all the shorts and lost money for everyone who shorted the hole, retraces and becomes more of a W-bottom to shake the late buyers before bouncing even harder).

Anyway, we'll see how it plays here.  The short version is this:

  1. SPX has captured its Wave 5 target and does not need to go any lower.  It could form a decent bounce from here (plus or minus a little).  If one has been following these updates, then one already has hundreds of points of profit and may not feel the need to get overly greedy (not trading advice).  Maybe it's that simple.
  2. Wave 5 still has the option to extend/waterfall if it wants.
  3. There's an in-between option that keeps everyone guessing for a while and which could also satisfy the "burn the former bulls who are now buying too early" scenario discussed at length above.
  4. In options 2 and 3, there could be a short-lived bounce toward one of the noted resistance/inflection zones before the downtrend resumes.
That's about all I've got for today.  Trade safe.

Friday, October 27, 2023

TRAN, SPX, COMPQ: Now Entering "Bounce or Break" Territory

Where to start today?  Let's start with the near-term SPX chart.  Yesterday, SPX came within 7 points of its preferred target zone, which also puts it into the C-wave inflection zone (not that I'm expecting this to be a C-wave, but I'm not always right, so I never ignore things that run counter to my biases):

Returning to my bear bias at the moment:  Keep in mind that we cannot yet rule out a fifth wave extension -- so this is a little bit tricky, in the sense that we're into "bounce or break" territory.  A normal fifth could bounce soon, where an extended fifth will waterfall.  My approach at such times is to pay closer attention to near-term trend channels and at least keep a few runners short until such time as the market breaks out of its crash channel.  The red channel on the chart above is an example of a crash channel.  This approach doesn't guarantee anything, but it does at least sometimes keep one from missing any sudden "whooshes" lower.  None of this is trading advice, of course.

The reason I mention runners (as opposed to stubbornly refusing to take any profits at all) is because most of the time, fifth waves end in the ballpark of where they're "supposed" to.

Next up, let's look at a TRAN chart I drew exactly one year and 8 months ago, published in a piece titled As in December, I Remain "Long-Term Bearish Until Proven Otherwise":

We can see in the updated chart (below) that 2/B moved a hair faster than originally drawn, but the price placement of 1/A and 2/B were both pretty decent -- especially considering that insisting the market was entering a long-term bear market back in February 2022 was widely considered ridiculous at the time:

When we look at TRAN's chart above, it doesn't take a master's degree in Elliott Wave to recognize what appears to be a pretty clear 3-wave rally.  Could it be something weird, such as an expanded flat?  Sure.  But that's fairly unlikely.  It's more likely to be exactly what it appears to be, and that bodes really poorly for the broader market, because TRAN is a leading indicator for both the stock market and the economy.  TRAN companies are involved in the business of moving goods and people around the country and around the world -- and an economy moving fewer and fewer goods/people is an economy in contraction.  

This is true regardless of what the "spreadsheet economy" guys keep saying.  (You know the ones I mean.  They love to say things such as, "Why are people so depressed about the economy?  GDP was GREAT and unemployment was GREAT and yada yada!"  These folks are apparently so far removed from the real world that they think everyone exists only inside their spreadsheets as an easily-comprehended digit, so they can't understand why actual humans who are struggling to feed their families might feel differently.)

Next is a quick update to a very-long-term SPX chart:

Finally, COMPQ seems to echo the "bounce or break" theme of the fifth wave (or potential extension thereof):

In conclusion, nothing has changed from the past few weeks of updates, but we are finally in the ballpark of where a smaller fifth wave could complete and trigger a decent bounce (which, given that it's expected to be a larger fourth wave, could turn into a sideways grind that burns some time).  In the event bulls can't muster a bigger bounce here (meaning the approaching target zones), we could fall directly into a fifth wave extension, do not pass Go, do not collect $22,867.  (Inflation.)  Trade safe.

Tuesday, October 24, 2023

SPX, NYA, COMPQ: Bears Still Getting Things Done

Since last update, my "against the crowd" lean that The Rally Everyone Was Getting Excited About was nothing more than a corrective fourth wave proved out:

SPX isn't tracking my September roadmap perfectly, but it's tracking it well enough.  For now, I've left everything as it was originally drawn:

SPX over the near-term is a bit unclear -- even under the most bearish scenario, SPX could head lower early, then reverse back up to/beyond yesterday's high to complete a micro 4th wave.  Or it could just enter the micro 5th (down) directly if it chooses.  As noted, it's not terribly clear on the one-minute chart which option it wants.  I'd probably very slightly lean toward the bounce, but waves can get weird if the market is in bad shape, so neither outcome would surprise me.

Oh, and of course that bounce could end up being the start of the bigger complex blue 4 from the first chart, probably shouldn't entirely ignore that.

NYA's chart describes how it could work with the big complex 4 in SPX, were such a thing to occur:

Meanwhile, COMPQ is in "bounce soon or break spectacularly" territory:

In conclusion, no real change from the last few months of updates, other than to note that things are progressing as well as bears could have hoped.  Trade safe.

Sunday, October 22, 2023

SPX, COMPQ, Gold: Friday's Update was a Hit

Friday's update concluded with:

Incidentally, if today begins with a little bounce back up over 76, then there's a reasonable chance that the overnight low is a corrective b-wave -- meaning the overnight futures low would be revisited and broken soon after (the overnight low sits down near ~4253 cash equivalent, though this isn't an exact equivalent, so allow a little leeway).

Friday's market found support 3 minutes after the open and bounced up to 76.56, then reversed and dropped below 4253, fulfilling the prediction quoted above.  It eventually dropped all the way down to 4223 near the close, so hopefully that was helpful to readers.

Friday's close is into the zone that constitutes a retest of the prior swing low ("retests" are never to the penny and are plus/minus zones above and below prior lows (or highs)), so we'll see if bulls can muster any sort of bounce from this zone.  Keep in mind that the complex 4th wave discussed previously stays on the table plus and minus the current zone:

COMPQ is also testing its low:

I did want to mention that Gold did not sustain a breakdown at its key trend line, and as long as that continues, it will avoid the option of the blue path.  The next step for gold bulls would be to attempt to decisively clear the zone around the last three highs.

Finally, the very-long-term chart of SPX remains interesting:

In conclusion, the market traveled, without incident, from the blue 4 inflection all the way down to the zone where it will enter the upper portion of the inflection for a more complex blue 4.  I'm not crazy about the idea of a complex fourth, because I think it's too easy on bulls, who ideally should be trapped now -- but it's always possible.  How the market behaves over the next week or so may determine if November 2023 becomes known as "Black November" in the future; if it goes directly into a fifth wave, there is potential here for an extended fifth (extended fifths become waterfalls).  Trade safe.

Friday, October 20, 2023

SPX, NYA, COMPQ, TLT: On the Right Track

Yesterday no doubt came as a surprise to people who don't read these updates, as SPX continued lower from Blue 4, ultimately dropping through a level that many bulls thought was going to act as strong support. 

Let's look at the SPX chart first, which (spoiler alert) mentions the primary target for Wave 5 (if blue Wave 4 doesn't become more complex, and if blue 5 neither extends nor truncates), which, coincidentally enough, aligns right with the location where I previously placed the Wave 5 label, along with some other zones of interest:

Next up is NYA:

Next is INDU:

COMPQ (nothing new here):

And finally, TLT is reaching a zone that probably needs to act as support.  Funny thing is, this is a falling support zone, so it could always bounce along down this zone like a slinky (if slinkies bounced, that is.  You know what I mean!).  So even if it finds support at this zone, it doesn't necessarily mean a big rally.  Some part of me thinks 75 +/- looks like an aesthetically-pleasing next target, but don't hold me to that.

In conclusion, not much to add to the past few updates, which means the last few updates were on the right track and the market's done nothing but add confidence to my bearish lean.  Incidentally, if today begins with a little bounce back up over 76, then there's a reasonable chance that the overnight low is a corrective b-wave -- meaning the overnight futures low would be revisited and broken soon after (the overnight low sits down near ~4253 cash equivalent, though this isn't an exact equivalent, so allow a little leeway).  Trade safe.