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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Author: TheWaveTrading


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