Weekly Analysis

By: TheWaveTrading | Sun, Oct 23, 2011
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This weekend, family has kept me away from the screens, so this one is going to be a short one:

On Friday (OPEX day) SPX achieved a powerful break out above the critical 1230.71 resistance and the 100 dsma.

Now it remains to be seen if next week price will be able to continue the break out move.

As mentioned on Friday, my working scenario remains the same:

"I am expecting a 3 -wave up leg off the October 4 low.
The end of the first up leg (wave A) is in a pending confirmation status.
Once the wave (A) is confirmed in place, a wave (B) pullback has a potential target range = 1177 - 1155"

SPX
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In my opinion the risk/reward favours a pull back.

Reasons:

1. We have a potential impulsive thrust out of a Triangle wave (4):

SPX
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The same count can be applied also to the DOW:

DOW
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If this count is correct, price is on the verge of ending the wave (A) of the assumed Zig Zag off the October 4 low.

(The alt count = Triangle wave (B) which would imply that the countertrend rebound is almost over)

2. NDX is showing relative weakness because it should have already completed the first up leg off the October 4 low:

NDX
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3.Breadth and momentum indicators are overbought & we have negative divergences:

  1. Overbought RSI of the Summation Index
  2. NYSE Summation Index

  3. Overbought daily Stochastic (ES Globex)
  4. No higher high in the daily RSI (14) (ES Globex)
  5. Negative divergence in the daily RSI (5) (ES Globex)
  6. Overbought
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  7. Overbought McClellan oscillator & with negative divergence

4. CPCE is at an extreme low reading (eod print below the BB)

5. NYSE TICK eod print = 861 (overbought)

6. SPX weekly Hanging Man is a potential "toppish" candlestick

SPX
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TheWaveTrading

Author: TheWaveTrading

TheWaveTrading

Contact: If you would like to contact the author, you can e-mail him at thewavetrading@gmail.com

The main objective of this project is to share my views on several markets and asset classes.

In the initial stage TWT website will be a free service.

My main focus will be the equity market with SPX being the leader but I will also follow US equity sectors, major European indices, fixed income, currencies and commodities markets.

My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

My goal is to establish the most likely path that the price of a particular asset will undertake and profit through ETF instruments both on the long and short side and mainly with leveraged ones (2 x & 3 x).

The advantage of ETF investments is that it allows getting involved in equity indices & sectors, currencies, fixed income, commodities etc.

Therefore the main purpose of TWT will be to establish investment strategies regardless if the market is in an up trend or in a down trend, leveraging the chosen scenario while managing the risk by establishing protective stop losses.

Hence I will always define the risk, I will try to let winners run the wave and I will cut the losses if my strategy is wrong.

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