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"

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


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

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The same count can be applied also to the 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:

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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

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Author: TheWaveTrading


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

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