Weekend Update - Dow, SPX and Nasdaq

This past week was a very choppy one for the markets. The SPX mainly bounced around 1060 and 1080, while the Dow tried its hardest to hold around 10,000. The Nasdaq was the strongest this week.

The reason the Nasdaq was the strongest is that because it could potentially be on a slightly different wave count.

This count suggests that the Nasdaq is in wave [ii], and has not yet started wave [iii], unlike the Dow and SPX. Regardless, it could turn down soon as the SPX and Dow start their next down move.

The SPX seems to have a bearish set up on most time frames. The wave counts suggest that the room to the upside is running out, unless we get a very strong move to the upside. Here is the current wave count:

This count suggests that we should be lower on Tuesday.

There are currently 2 bearish patterns on the SPX Daily chart. The first is a very simple Bear Flag.

The target cannot be seen on that chart, but it measures out to the 1018 area. This area has been huge resistance before, and I expect it to be our next target.

The second pattern is extremely bearish.

There is a potential head and shoulders pattern playing out. I know these have failed in the past, but it could still be in play.

The target is around 940. If this plays out, we could drop very fast once we breach the neck line.

With this recent down move, I find it very hard for the markets to climb back up. We have a lot of overhead resistance now.

As you can see from this Dow chart, all of the broken support is now resistance.

It will be interesting to see how this week plays out. There are a lot of bearish set ups. Let's see if they play out, or if the bears get caught again. The key will be watching the futures/forex tonight and throughout Monday, as these markets are open since they are traded internationally.