$SPX Update

Carrying forward the thought from yesterday, it remains possible for us to be in the smaller ending diagonal. It’s usually not great to have a strong wall into a close on a non-Friday, but there are exceptions (e.g., 12/12/22) and this could be one of those.

I have added this orange buffer to the chart, which shows the range between two important prior highs. A squeeze & overthrow of this proposed ending diagonal, if we get it, will also let them clear any liquidity above these highs, leaving only the August high intact.


So, let’s see what happens tomorrow.

$SPX Update: No Real Changes

I can still see the same basic idea here regarding the S&P 500. And there are two things I can do with it at present.

The signals that are flashing warning signs right now persist in doing so. JNK is still week and diverging, the VIX might be giving me that cup I really want (7th chart here). etc.

So I am in “searching for a top” mode right now.

I’ve pointed out the red wedge we’ve been in (6th chart here). And if that was an ending diagonal, it does look to have overthrown, and it might be done, and if it is, we should keep moving lower:


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A Close Variant $SPX Count

I have been accumulating evidence (e.g., here, here) that we may be topping. If these signals are right, timing things is always the especially hard part. I do worry that we’re seeing far too much bear capitulation. But, even if we are, it doesn’t mean the top is always right this very second.

I’ve spent some time evaluating fib relationships this weekend, and I will present a count that is effectively the same as the one I’ve been focusing on (“we’re at a big pink B”) but it gives the market a wee bit more time and price. At tops of significance, it can often keep going a little higher again and again and again, which is why top picking can be so infuriating—even if you end up being right in the end, it can leave a bitter taste.

So, let me at least allow some space, share it with you so you don’t go out of your minds if I’m right, and if we are in fact close.

There are some excellent fib relationships both in terms of time and price just above us. 4140 is possible. A lot of stocks are near their 200-day SMAs, some right at, a few just above, many just below. If more time is needed to actually tag that important SMA on individual names, so be it. Maybe they need it. If they do, maybe we need to go about 40 points above Friday’s high on the index to do it.


I am building a put position but I am using some duration, so if we get this additional push, I will be able to tolerate it. I also have a futures short, but will allow myself to get stopped out and I will make multiple attempts in this area if need be. So, my goal is to watch this, to be as patient as possible, and to monitor the signals that are flashing warning signs. And I aim to be nimble and if the signals suddenly improve so will my interpretation. But until then, I say it’s a top, and I will accept a little more upside if need be.

I hope everyone has had a nice weekend.

Have the Bears Lost Their Mojo?

I would think very carefully before assuming the answer to that is “Yes.” In this article I will review the thoughts expressed in the early weekend review from yesterday, and add a few more thoughts.

In yesterday’s article, I laid out the mounting evidence that—unlike the rally into the December highs—this rally bears a very different character. At that prior high, high yield credit was undamaged, the $VIX was in a bearish structure, and in the decline from that high, breadth weirdly improved. But at this high, high-yield credit is diverging from equities, the $VIX is not in such a structure, and breadth is diverging from price.

That was yesterday and so let us see how things look today.

High Yield credit continues the divergence we saw yesterday:


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$SPX Early Weekend Review

Normally I save posts with a few extra charts for the weekend, but I want to bring a bunch of things together now, and so this will be the weekend update a day early, and I will review these ideas this weekend.

First, I’m going to briefly back up a few weeks so that you can see a contrast that I would like to make explicitly clear.

When we were rallying to this high on the S&P (red arrow):


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