Daily Analysis

By: TheWaveTrading | Wed, Dec 7, 2011
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SPX refuses to confirm 4 consecutive toppish candlesticks.

With light volume and most of the daily rise done during the pre-market, probably the price action is mainly due to short squeezes and buying time for this week huge event.

As we are approaching the critical events, ECB & EC summit meetings next Thursday and Friday, the odds of a "large" pullback are decreasing. Instead of a price correction it seams that we are witnessing a sideways time correction, then most likely today is probably the last chance for some selling.

I am more concerned on the EW structure of this move more than anything else since the "future" of this rally will depend upon if this move is an impulse up or a corrective up leg. The reason has been already discussed (the ZigZag needs an impulsive wave (C) while if corrective it could be suggesting a Triangle).

The short-term SPX key levels are:


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Although it may seem a contradiction the bullish Zig Zag scenario could be strengthened with a measured pullback instead of price creeping higher.

Short Term Price Action - Elliot Wave Pattern:

Yesterday SPX choppy action may have left by eod a potential reversal pattern if today price confirms a potential Double Top by breaching the 1250 horizontal support.

If confirmed the DT has a target at 1233, where we also have the 10 dsma. If lower then the next target is at the .382 retracement = 1225


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If instead price moves higher then the impulsive structure could be jeopardized.

The EUR remains a concern since it is not showing the same exuberance of the equity & EU bond spreads moves.

I have already discussed that EUR is not rising with am impulsive structure but a potential wave (B) could carry price towards a target range = 1.3695 -1.3950 if the 50dsma = 1.3605 is transformed into support.

For the short term I am working with an initial Zig Zag with a pending wave (C) up.


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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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