SPX and BKX: SPX Captures Target 2

In the prior update, I wrote that I expected SPX to capture Target 2 (4970-5005, from 4/12) and yesterday, it dropped down to 5001, capturing that target.  The immediate question now is whether wave v is close to being complete -- or if it will extend.  

After that, the next question is as discussed last update:

As we can see on the chart above, to complete C/3 down, bears would need another new low, which I'm currently inclined to suspect they'll get after a bounce. That would complete red v, which would complete THREE waves down [4/19 Note:  We are here now, at three waves down.], so from there, a rally to new ATHs would not be off the table. For bears to demonstrate more control, they would then need a bounce in a larger 4th wave, followed by another new low, at which point, we could conceivably label the entire wave off the ATH as an impulse.

Now, something worth mentioning:  It's unusual for a simple ABC correction (i.e.- a three wave move) to show the type of strength we've seen in this decline -- it's far more common to see this during the third wave of an impulse.  That said, it's not entirely unheard of, just much less common.  So, given that, the odds probably favor this becoming a larger impulse in the end.  Keep in mind, though, that odds are just that:  Odds.  They're not guarantees any more than you're "guaranteed" to win when you start with pocket aces in Texas Hold 'em.  Just like in poker, no matter how good your odds, you're still going to lose sometimes, irrespective of how strong your starting hand seemed before the flop.

BKX, though, does seem to continue to suggest that a major turn from the recent all-time-highs is quite possible:

In conclusion, SPX captured Target 2, good for around 200 points of profit for readers.  It would look a little better if it were to head at least a bit deeper into the 4970-5005 zone, but that's not required and if that's ALL OF 3/C down, a big bounce is possible any time.  If SPX does head a bit lower, then we'll have to watch and see if the fifth wave wants to extend or not, and I currently have no opinion on whether that will occur (it's essentially unpredictable), so don't go in "expecting" an extension, nor "expecting" the opposite -- stay nimble out there.  And trade safe.

SPX and BKX: SPX Captures Downside Target

Since last update, SPX captured its downside target of 5070-90 from April 12:

As we can see on the chart above, to complete C/3 down, bears would need another new low, which I'm currently inclined to suspect they'll get after a bounce.  That would complete red v, which would complete THREE waves down, so from there, a rally to new ATHs would not be off the table.  For bears to demonstrate more control, they would then need a bounce in a larger 4th wave, followed by another new low, at which point, we could conceivably label the entire wave off the ATH as an impulse.  The alternate bull count is that a WXY is complete/completing.  So, for now, bulls still have options in SPX.

BKX formed another low, which makes the decline appear reasonably impulsive -- although, to be completely objective, it would look a bit better at the micro level with one more low, so I can't be 100% on the "1" label just yet, though I'm leaning that way.

In conclusion, we have an apparent impulse down in BKX, but not yet in SPX.  One possible conclusion is that we're closing in on a trend change (BKX could bounce in wave 2 while SPX made another ATH, then the rug gets pulled).  That said, if SPX were to go on to form an impulsive decline (conditions for such outlined below the SPX chart) immediately, then, in that event, we would presume the trend had already changed at intermediate, and possibly long-term, degree.  Trade safe.

SPX, BKX, NYA, TLT: Examining Both Sides of the Trade

Last update noted it was bears' ball "for now," and I think we can call that a hit, but today we're going to examine both sides of the trade.

To do that, let's start with BKX:

NYA is in a similar position:

SPX has kept alive "Option a" from a couple updates ago:

Finally, the TLT update I promised on Friday (on the Forum):

In conclusion, because of BKX and NYA, we can no longer be 100% certain that it's still bears' ball (I anticipated this potential, which is why I included "for now" in the statement last update).  That said, it feels like bears may have more in the tank (perhaps after a bigger bounce), but this market hasn't been kind to "feelings" for a while, so take that with a grain of salt and we'll let the charts lead where they may.  Trade safe.

SPX, INDU, BKX: Bears' Ball -- for Now

Last update discussed two options for SPX, and it appears that SPX choose the first of those two options:

As discussed on Wednesday, both of those options were ultimately bearish in the event of a break of 5146 -- which means that the "bounce" option was corrective.  Which in turn means that it (the bounce) doesn't need to reach the 5230 threshold -- since corrective waves are not bound by rules, targets can be simply described as "most commonly, here's what happens," but being against the larger trend, corrections can (and often do) fall short.

So, presuming bears hold 5257, we may be witnessing a change of trend that's going to last for more than a minute.  The bull option is that this will go on to form a larger fourth wave (still likely to be of decent size and duration), and then go on to a last hurrah.  Perhaps this is best illustrated by INDU -- though please keep in mind that the fourth wave as drawn on that chart is highly speculative and has been on there since January, so its potential targets will need to be updated as things develop.

The most bearish option is that the last hurrah is already over, as best illustrated by BKX:

In conclusion, Wednesday's break of 5146 is technically significant and implies we may be looking at a developing bear nest, which will lead to a stronger sell-off.  There are still other, undiscussed, bull options, but the first thing bulls would need to do to give those more consideration would be to break above 5257.  Assuming that doesn't happen, then the "Occam's Razor" interpretation is that bears may have the ball for a bit.  

SPX and BKX: "I'll Just Leave This Here"

The market didn't go anywhere since last update, but I have outlined a couple of the "bad news" (for bulls) options on the near-term SPX chart:

Of course, those are not the only two options in the event of a breakdown at 5146, just the two "most obvious" -- the market is sometimes more probabilistic than deterministic, so I almost never entirely write anything off.

Bigger picture, as the internet is fond of saying: "I'll just leave this here."

Not much to add beyond that -- just that if bears can sustain a breakdown at 5146, while it doesn't guarantee (anything, ever), it does at least put bulls on significant notice, at least for the immediate term.  Trade safe.

SPX Update: Four Chords and the Truth

Two interesting charts today, first up is the SPX near-term chart:

As we can see, there are three pretty clear waves down from the recent all-time high, and it's interesting how perfectly that drop tested the upper boundary of the red triangle (which, if nothing else, goes even further to confirm that pattern as the right read).  So the question now is whether that's it for the correction, since there are enough waves down for a completed correction.

Next, is the bigger picture SPX chart, which captured its February upside target:

So, if we put these two charts together, we can see that there are enough waves for a completed correction (the bear option might be a bear nest or similar) -- however, in the event bulls do manage a new all-time-high, they do have blue overhead resistance with which to contend.  Trade safe.

BKX and INDU: Objects in Mirror May Be Closer Than They Appear

The market took a dive yesterday, after shocking comments by Minneapolis Fed Bank President Neel Kashkari, in which he finally publicly apologized for the fact that his parents apparently had no idea how to spell "Neil."  He also mentioned that while he originally had two rate cuts "penciled in" for 2024, he just realized that he actually has a doctor's appointment on that exact same day, so he might be forced to reschedule those rate cuts for 2025.  Or beyond, if bulls won't stop leaving annoying messages on his voicemail.  

Of course, the market has been banking on a return to "nOrMaLCy!!!!" which, to the market, apparently means ridiculously low interest rates and the printing presses spewing endless free money.  The market, of course, ignores the fact that the environment of the prior ~15 years was anything but "normal" and that rates were instead insanely low for insanely long, and QE Infinity is unsustainable.

As I wrote a while ago, though, this market has been suffering from an extreme case of "irrational exuberance," so Kashkari's comments serve as yet another potential wake-up call.  Thing is, wake-up calls have been ringing out all over for a while, but the market hasn't cared -- so we'll see if the "irrational exuberance" psychology finally starts to shift a bit, or if the market goes back to fueling itself primarily on the sweet sweat of its own drunken euphoria.

My guess is that when the market finally wakes up for real, it's going to get ugly beyond belief.

But we may not be quite there yet, and another high, even if we correct further in the near-term, is not out of the question.  Let's look at two long-term charts for clues, starting with BKX:

BKX is probably the most potentially bearish chart going right now in the big picture, though here again, another high is not out of the question as (C)/(3) could still be unfolding.  Without even labeling it, we can see that the decline from the most recent high is only three waves down so far.  If it becomes impulsive, then bears might be coming out of hibernation.

INDU is interesting as well, though here again, it's unclear if (iii) -- if that's what this is -- is complete. 

In conclusion, while bears don't have a lot to sink their teeth into yet, since there's not been an impulsive turn, there are ongoing hints that we're not in "a new paradigm" and stocks have not "reached a permanently high plateau."  We'll keep watching to see if there's already a turn underway, or if bulls can manage another high before the cliff starts to crumble.  Trade safe.