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Pretzel Drills down with the Charts doing the Talking
http://www.pretzelcharts.com/
"Last update discussed the conundrum, today I want to drill down and use the charts to illustrate it, and to discuss some things that may help map the way going forward -- starting with INDU. INDU's near-term pattern is one of the main things keeping my bearish angels in check right now; the annotation explains why:"
"SPX discusses the options:"
"And with any luck, COMPQ may help point the way going forward:"
"In conclusion, those three charts probably say just about everything there is to say right now. Trade safe."
"... "You gotta know when to hold 'em, know when to fold 'em," etc. Sometimes we just have to wait the market out for a minute, since the market (collectively) isn't behaving in a way that makes bold calls appropriate just yet, in my opinion."
http://www.pretzelcharts.com/
"SPX hasn't really gone anywhere (except sideways) since last update, so we still have a situation where:
On the one hand, there are potentially enough waves up for a decent correction to begin from here.
On the other hand, the various indices all seem to be doing their own thing, so one can see whatever one wants to, based on which market they pick and their preexisting bias.
This lack of agreement between markets continues to make me uncomfortable from an analytical standpoint. A look at the following three charts may help shed more light on why, starting with INDU:"
Next, COMPQ:
"Finally, a near-term chart of SPX:"
"We can see that INDU is flirting with a price point (not quite there yet, but close) where it would tend to imply the rally continues over the long run, though it does allow for a sizeable correction in the meantime. COMPQ hasn't made a new high above the 5 label, but it's still unclear if it needs another 4/5 unwind. Even SPX at a near-term level is about as clear as coffee.
So, at this point, I'll simply remind readers that we've had a solid handle on the market here for multiple months now -- but, as the famous Kenny Rogers song says, "You gotta know when to hold 'em, know when to fold 'em," etc. Sometimes we just have to wait the market out for a minute, since the market (collectively) isn't behaving in a way that makes bold calls appropriate just yet, in my opinion. Trade safe."
"Be aware that if they can hold their breakouts, I'll probably have to publish a more bullish intermediate count....."
http://www.pretzelcharts.com/
"On Friday, I expressed some skepticism about the decline in SPX due to the recent behavior in NYA and INDU, and it turned out that skepticism was justified, as SPX then went on directly to a new high.
Of note, INDU and NYA also went on to break their prior swing highs, which is probably not ideal for bears, but we'll see if they can hold those breakouts or not. Be aware that if they can hold their breakouts, I'll probably have to publish a more bullish intermediate count (one I was already thinking of publishing, but that would seal it).
Because of all that, for the moment, I want to take us back to basics in order to keep us focused on the present:"
"That's the only chart I'm going to publish today, because when the market starts acting a little funky, it can be a good idea to step back from our preconceived notions for a minute and just watch and wait. Trade safe."
"......there's not much agreement between markets right now, so bears might want to stay on their toes...."
http://www.pretzelcharts.com/
"In the prior update, I was leaning toward SPX and COMPQ still needing another high, which they both got. Yay. To boot, they then both reversed exactly as they should have, since that wave was expected to be a micro 5th wave to complete a larger wave. Yay. Again.
But then we have NYA and INDU and BKX (et al), which all rallied yesterday. Normally, I like to see something approaching agreement between markets, especially near turn zones. Because when every market is instead doing its own thing, it starts to feel more like a box full of agitated cats, and it makes me uncomfortable, like trying to sit on a bean bag chair filled with olive oil while dressed in a tuxedo and holding a box full of agitated cats. In other words, it's hard for bears to declare any sort of confident victory just yet.
Of course, all that could change tomorrow or Monday, if INDU and NYA were suddenly to reverse dramatically. But that hasn't happened yet -- or, as Kamala Harris would say: “So I think it’s very important... for us, at every moment in time, and certainly this one, to see the moment in time in which we exist and are present, and to be able to contextualize it, to understand where we exist in the history and in the moment as it relates not only to the past, but the future.”
(I really wanted to use the altered quote there, because it's funnier, but she didn't actually say: “Today is today. And yesterday was today yesterday. Tomorrow will be today tomorrow. So live today, so the future today will be as the past today as it is tomorrow.” No matter; the actual quote will suffice.)
Anyway, the point is, if I remember correctly, that there's not much agreement between markets right now, so bears might want to stay on their toes.
Below, we can see COMPQ did exactly what it was supposed to:"
"As did SPX:"
"But then we have INDU:"
"And NYA:"
"Put 'em together and what have you got? Bibbidi-bobbidi-boo. Which, in this case, actually appears to be roughly correct.
So, in conclusion, this COULD be the start of a meaningful turn... but the lack of agreement between markets, at least "at this moment in time in which we exist and are present," fails to inspire confidence so far. Accordingly, I'm going to pause a moment and wait to see what NYA and INDU, etc., do next before slapping numbers and projections on these charts. Trade safe."
".... we are getting into "this thing could end whenever it wants" territory."
http://www.pretzelcharts.com/
"Last update expected that SPX and COMPQ both needed at least one 4/5 unwind, and they both stalled and then made a new high, in line with that expectation. But it's finally getting tougher now, for reasons we'll discuss below:"
"`When we study the above chart, we cannot help but be reminded of the famous poem by William Carlos Williams Carloses:
so much depends
upon
a red wheel number
barrow iii
glazed with rain
water
beside the white
chicken nuggets
The moral of that poem, of course, is: It's getting tricky around these parts now, so watch your back -- and please check the bottom of your shoes before entering the house (believe me, we have wild chickens all over our yard here in Hawaii, and they're not just the cute decorations that William Williams makes them out to be).
COMPQ is in a similar boat:"
"Also, Stockcharts is on that weird kick again where it deletes all my prior annotations every time I try to add a new annotation, and it's been doing that literally since I first annotated the above chart. Since I'm tired of re-typing them, I took a screenshot before I edited the chart, so here they are for anyone who reads legacy annotations:"
"Anyway, we can see from COMPQ and SPX that it's probably a bit more likely that there are still new highs out there and thus that it may be premature to start publishing the chart below, but I'm publishing it anyway, because it's worth keeping in mind:"
"In conclusion, while it's probably slightly more likely that new highs are still lurking (have I mentioned that yet in this update?), we are getting into "this thing could end whenever it wants" territory. That said, because of the possibilities of a fifth wave extension (and similar), I continue to advocate waiting for an impulsive decline before getting too aggressively bearish. Many a bear has been burned by that final fifth wave, which usually runs stops and looks bound to go to the moon before reversing (of course, many a bull has been burned for the exact same reason) -- so my broader point is, while these updates have had a solid handle on the market's intentions going back several months now, this is where I tend to start to lean toward more of a "wait and see" approach. Trade safe."
"No material change in SPX yet........"
http://www.pretzelcharts.com/
"Last update prognosticated:
What we see on both charts is three waves up (so far) off the recent lows, which suggests that this is (most likely) not yet a complete rally wave. An alternate potential to remain aware of (for the next session or two, anyway) is for those three waves to mark yet another b-wave high, which would reverse back toward the right-most "IV?" on the COMPQ chart, before rallying again. Given the strength of the rally so far, that seems less likely, but it is still technically possible... At this point, it appears to remain bulls' ball, for now, with at least one micro fourth and fifth probably still needed, possibly two.
Friday's market obliged, and it's worth mentioning that the b-wave high option appears even less likely after Friday's continued rally.
I've added a few "rough" spec labels to COMPQ as a visual aid (don't take these as gospel):"
"No material change in SPX yet, either:"
"In conclusion, not much else to add to recent updates. Trade safe."
".....thankfully, no surprises over the past two weeks, so we were able to avoid bull and bear traps during the sideways mess. At this point, it appears to remain bulls' ball........."
http://www.pretzelcharts.com/
"SPX continued rallying on Wednesday, bringing the pattern I thought I was seeing (originally on June 24) to a more satisfying fruition."
"Since the chart above references COMPQ, let's look at that chart before we talk further:"
"What we see on both charts is three waves up (so far) off the recent lows, which suggests that this is (most likely) not yet a complete rally wave. An alternate potential to remain aware of (for the next session or two, anyway) is for those three waves to mark yet another b-wave high, which would reverse back toward the right-most "IV?" on the COMPQ chart, before rallying again. Given the strength of the rally so far, that seems less likely, but it is still technically possible.
In conclusion, thankfully, no surprises over the past two weeks, so we were able to avoid bull and bear traps during the sideways mess. At this point, it appears to remain bulls' ball, for now, with at least one micro fourth and fifth probably still needed, possibly two. Again, though, once V finally completes, there is potential for a larger correction -- though I do still continue to advocate awaiting an impulsive decline as opposed to trying to front-run this wave. Trade safe."
"......we're now into territory where things could begin wrapping up, but it remains to be seen whether the market will choose to subdivide the current wave to stretch the rally longer and higher....."
http://www.pretzelcharts.com/
"First off, I want to take a moment to thank everyone who responded to Monday's post (as well as everyone who was already a reliable supporter, of course!) -- I truly appreciate your warm response, thank you. (I may speak about this more on another day.)
Chart-wise, SPX performed about as well as we could have hoped in order to match the pattern I thought I was seeing a week ago:"
"COMPQ discusses the options from here:"
"In conclusion, we're now into territory where things could begin wrapping up, but it remains to be seen whether the market will choose to subdivide the current wave to stretch the rally longer and higher. In the event it elects for an extension, then it could run notably higher. Trade safe -- and have a safe and pleasant 4th of July!"
"Never bank on fifth waves."
http://www.pretzelcharts.com/
Friday's update concluded:
"If I was forced at gunpoint to offer something, I'd probably lean toward SPX correcting some more (either with or without a modest new high), then (after correcting) going on to make another high to finally complete wave 5 and thus wrap up the remaining 4/5 I discussed a couple weeks ago.
SPX then went on to make a modest new high before reversing almost all the way back to the low of the week. Although it was challenging to predict last week with much confidence, I can't call it much better than that, though in hindsight, I believe I probably should have used "were" and not "was" in that first quoted sentence.
Which brings us to something I've never said in the 13 long years I've been updating this blog: If you value these updates and want them to continue, then it's becoming more important than ever that you click the "donate" button on the upper right side of this page.
I've published a fair number of charts recently, so just one today:"
"One thing that makes this a bit more challenging is that SPX is expected to be nearing the final fifth wave before a larger correction -- and one of my old sayings is: "Never bank on fifth waves." So we could place an "alt. 5" where that (b) label is, at least in our minds. I didn't label it that way because the odds favor the b-wave (and thus that the current correction is part of a larger 4th wave), but odds are always just odds.
In conclusion, the market remains in difficult near-term territory, but last week's call (which was initially made on Monday during the live session) saved us from getting burned by multiple whipsaws. I've outlined the options on the chart, so we'll just see how the market wants to play it from here and take another look on Wednesday. Trade safe."
".....I'd probably lean toward SPX correcting some more (either with or without a modest new high)....."
http://www.pretzelcharts.com/
"Last update wondered if SPX would catch up with futures to thus behave according to Monday's real-time prediction, and it ultimately did. Thing is, this wave structure is less than clear, so let's take a look at the chart really quick:"
"Interestingly, INDU is still leaving open at least the near-term bear option:"
"COMPQ might indirectly argue more for the bull case, though it's always possible COMPQ makes a new high as part of a complex IV or to complete V:"
"In conclusion, there's not a lot of agreement across markets, which makes it all but impossible to make a high confidence call here. If I was forced at gunpoint to offer something, I'd probably lean toward SPX correcting some more (either with or without a modest new high), then (after correcting) going on to make another high to finally complete wave 5 and thus wrap up the remaining 4/5 I discussed a couple weeks ago. But again, there are no high confidence calls at the moment, so treat that accordingly, and remember that a launch higher out of this pattern isn't impossible. Trade safe."
"......the number of near-term options has increased significantly. I tend to want to continue to lean very, very slightly toward the bears over the coming sessions....."
http://www.pretzelcharts.com/
"So, they've elected to make things interesting. Last update, I speculated that perhaps bears would get a little respite... which they sort of did, but not as much as I'd projected. Perhaps counterintuitively, this makes things more complicated, not less. Let's get right into it, starting with SPX and a bear case:
h
"Here's the forum post referenced above, along with the SPX 24-hour chart, as of ~30 minutes before market open:"
"So, that's at least interesting. We'll see if SPX elects to break that near-term low, or if it instead wants to "catch up" to futures and run up to that level, too. And if it then feels it's done making lows entirely and feels that little new low it made was enough to satisfy my prior instinct (on Monday) that another near-term low was still out there.
Also of interest, INDU shows that in the event things did go bearishly for SPX, then there could be some room to run."
"Finally, let's talk about the bull case. COMPQ reached my unofficial target zone (my "unofficial" targets are those I often scribble on the charts based on experience and instinct, but don't call out beyond that, because I have no concrete math to back them up.). I added the lower "IV?" to this chart as of today:"
So we can see on COMPQ that the decline reached an inflection zone and bounced, so that does give bulls the option to take over.
"In conclusion, futures behaved as I suspected they would, but the fact that cash hasn't (yet?) pushes everything into an area that's much less comfortable, analytically, because the number of near-term options has increased significantly. I tend to want to continue to lean very, very slightly toward the bears over the coming sessions, but we'll take it as it comes. Trade safe."
"On Friday, the market went to breakfast and never returned..........."
http://www.pretzelcharts.com/
"On Friday, the market went to breakfast and never returned, leaving both bulls and bears to wonder if maybe they'd chosen the wrong profession. Accordingly, I have no real choice but to repeat Friday's closing paragraph, with one change (noted below):
In conclusion, because we are into "never bank on fifth waves" territory, there's always the possibility that the rally is done, but right now it probably looks slightly more likely that there's still another 4/5 unwind out there lurking. Do be aware though, that even if the current drop is "only a fourth wave," because the prior fifth wave extended, it does at least have the potential to retrace much deeper than shown (it could retrace most of the post-Fed rally if it wanted without creating any technical problems). In any case, not a lot to go off of beyond that, so we'll see how things look on Monday Wednesday.
Here's an updated chart:"
"Sorry! I didn't have my reading glasses on, I don't usually publish that Wilshire 5000 chart! Lemme put those on real quick... okay, here's INDU:"
"And here's SPX, only exploring the bear case, because we all know what the bull case is, and because INDU rallied in three waves after an impulse down, so unless INDU can break higher, we might be looking at the near-term bear options:"
"In conclusion, we're still in very speculative territory here, so keep that in mind as a caveat and just because I only published bear charts doesn't mean those are hard and fast predictions, just speculations -- the market could easily go the other way (refer back to first paragraph for context). Trade safe."
".... "never bank on fifth waves" territory, there's always the possibility that the rally is done, but right now it probably looks slightly more likely that there's still another 4/5 unwind out there lurking."
http://www.pretzelcharts.com/
"Readers got a free "bonus update" on Wednesday because nobody reminded me that it was Juneteenth, which is an important holiday commemorating the fact that months can also be numbers. There have been years I've forgotten my own birthday (not kidding) until someone (usually my wife or one of the kids) said, "Happy Birthday," so I can hardly be expected to remember every holiday on the calendar, especially those that have only become official recently.
Anyway, it turns out I should have taken that day off and now the market owes me one. Also, there's not a lot to add to that update, so I took the time to label the COMPQ chart. I've discussed this in prior updates, but sometimes it helps to have a visual, so here it is:"
"In conclusion, because we are into "never bank on fifth waves" territory, there's always the possibility that the rally is done, but right now it probably looks slightly more likely that there's still another 4/5 unwind out there lurking. Do be aware though, that even if the current drop is "only a fourth wave," because the prior fifth wave extended, it does at least have the potential to retrace much deeper than shown (it could retrace most of the post-Fed rally if it wanted without creating any technical problems). In any case, not a lot to go off of beyond that, so we'll see how things look on Monday. Trade safe."
".... I continue to encourage bears to await an impulsive decline before getting too committed, especially since a continued 5th wave extension is not outside the realm of the possible."
http://www.pretzelcharts.com/
"Last update noted that there was a reasonable possibility that the few days prior had merely been a micro 4th wave correction, and SPX proceeded to launch a pretty blistering rally from there. I continue to encourage bears to await an impulsive decline before getting too committed, especially since a continued 5th wave extension is not outside the realm of the possible."
"In conclusion, the last few updates have (in my opinion) clearly outlined where I stand on this wave. Essentially, while it's very possible that we're closing in on the end of this rally, and several other indices are behaving much more weakly than SPX and COMPQ, the trend in SPX remains up until there's an impulsive turn lower. Trade safe."
" BKX....may be the canary in the coal mine."
http://www.pretzelcharts.com/
"While I have my eye on many charts right now -- for example, NYA and INDU have both languished below recent highs despite the relative strength in SPX -- one chart I'm watching carefully is BKX. BXK has been in a downtrend for a month now:"
"As noted, BKX is only three waves down so far, but we should keep an eye on this one to see if that decline becomes an impulse. If it does, it should portend at least an intermediate correction (were it to form an ABC down), if not much more -- the most bearish case being the red 2/B on the chart, with Red 3/C being the start of a major bear wave.
SPX may have simply completed a complex ("simply... complex"?) 4th wave at micro degree, but I can't rule out the bear option yet."
"In conclusion, SPX still has not formed an impulsive decline at any wave degree, so there's nothing for bears to write home about yet in that index. I'm keeping a close eye on BKX (and NYA and INDU) though, because if those markets go on to form impulsive declines at larger degree, then that may be the canary in the coal mine. Trade safe."
The Miracle of AI
http://www.pretzelcharts.com/
"On Wednesday, Fed Chair Jerome Powell gave his scheduled speech, but no one knows what he said, because I'm too lazy to look it up. Given the market didn't bother to react, I assume it was his usual canned talk about "tools" and "keeping careful watch" and such."
(Above: Chair Powell speaks; original image made with AI.)
"The above image of Chair Powell was made possible by The Miracle of AI and was generated merely by using an increasingly-frustrated series of prompts. Even with all the frustration and missteps, it "only" took 15 minutes to get something vaguely resembling what I was asking for -- whereas, before AI, I never would have even bothered, because "Chair Powell" just isn't a good enough pun to waste hours on in Photoshop.
While I never got the image I quite had in mind, that may be my fault for not having Enough Commitment to the Project. Here's the final image AI generated from my prompt, and precisely where I gave up:"
"Anyway, the point is, NONE of that frustration would have been possible without The Miracle of Eh Aye. The future is bright indeed!
Chart-wise, we're now getting into the zone where I think it's reasonable to start placing the 5 label with a "?". Assuming no fifth wave extension, we could be close to completing the current fifth, though the prior caveat about it being unclear if there is one more 4/5 unwind still needed persists, for now."
"Interestingly, INDU has not exceeded its prior high. On June 5, I offered this speculation:
INDU is interesting, and there are multiple possibilities in its pattern -- including the possibility that a larger correction in INDU has already begun. In that option, INDU could bounce in wave 2/B while SPX rallies to a modest new high in Wave 5, before they both decline again together."
"And COMPQ is likewise in its inflection zone:"
"In conclusion, multiple markets have reached inflection zones, but please continue to keep in mind that we do NOT yet have anything resembling an impulsive turn lower, and these are zones, not hard levels, so we'll just have to see how the market reacts from here. Trade safe."
"I continue to advocate awaiting an impulsive decline before getting too committed to the bear side of things."
http://www.pretzelcharts.com/
"There's not a lot to add since last update, but I think last update's conclusion bears repeating:
[W]e're probably getting close (days to weeks) to a significant correction, and potentially even to the start of a new bear market. That said, fifth waves are intentionally tricky to nail down, so they always leave themselves the option for things like fifth wave extensions, just to severely punish bears one last time... so my policy is generally to await an impulsive decline before deciding to buck the trend with any conviction. Even after that first impulse down, MOST OF THE TIME (not always, of course), there's a big bounce that comes reasonably close to the prior high, and that's usually a reasonable time for bears to get serious.
COMPQ is unchanged, but I do want to expand a bit on the annotation here. I noted that COMPQ might need one more 4-5 unwind requiring "days to weeks" -- in case readers don't entirely know what's meant there, it would mean COMPQ is still in a lower degree 5th, which, when it completes, would correct in a 4th wave, and THEN go on to the final fifth wave rally to new highs."
" SPX is in a similar boat, in the event that blue 3 and 4 are actually the lower degree iii and iv:"
"It is for those reasons, along with the ever-present threat of a fifth-wave extension (in fact, we seem to be witnessing a micro fifth wave extension in ES as I type), that I continue to advocate awaiting an impulsive decline before getting too committed to the bear side of things. We'll see what the Fed meeting brings today. Trade safe."
"SPX is into "fifth wave could complete whenever it wants" territory:"
http://www.pretzelcharts.com/
"Let's start with COMPQ, which has now captured its "official" upside target from May along with its "unofficial" upside target zone from November of last year:"
"INDU remains worth keeping an eye on:"
"And SPX is into "fifth wave could complete whenever it wants" territory:"
"In conclusion, we're probably getting close (days to weeks) to a significant correction, and potentially even to the start of a new bear market. That said, fifth waves are intentionally tricky to nail down, so they always leave themselves the option for things like fifth wave extensions, just to severely punish bears one last time... so my policy is generally to await an impulsive decline before deciding to buck the trend with any conviction. Even after that first impulse down, MOST OF THE TIME (not always, of course), there's a big bounce that comes reasonably close to the prior high, and that's usually a reasonable time for bears to get serious. Trade safe."
AI
