Last update highlighted NYA, and noted that the pattern suggested at least a near-term pause/decline was forthcoming after the next bounce, and that call turned out well. Below is the updated chart:
As noted previously, SPX’s recent rally bears some of the hallmarks of an extended fifth — and there are now enough waves in place for the rally to be complete or nearly so, IF it’s an extended fifth. As also noted previously, if the rally is a third wave instead of a fifth, then we still need another decent rally leg. I’m slightly more inclined to think it’s an extended fifth — but if that’s the case, at worst, it could only support one more pretty minor high. Any more than that, and bears really have no choice but to stand aside, or risk significant damage.
Also of note, oil has held the top I called back in early June. So far, anyway. Given that my oil calls are into a near-flawless streak that’s measured in years, this is the point at which I ask myself if I should ONLY be trading oil and the heck with everything else…
In conclusion, if the recent rally was an extended fifth, then we may be on the verge of a reasonable decline, to at least back-test the 2100 zone. Bears do need to remain cautious if the rally pushes much over recent highs, though, because there’s no way to rule out the possibility of a third wave (as discussed above). Trade safe.
We may be skating on very thin ice here, but the weight of the evidence still supports a weak bull case for the near to intermediate term. So I’m adding buy picks on the chart pick list and adjusting trailing stops to account for the risk.
These reports are not investment advice. They are for informational purposes, for a broad audience of investment and trading professionals, and other experienced investors and traders. Chart pick performance changes week to week and past performance may not indicate future results, as you know. Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance.