Daily Analysis

By: TheWaveTrading | Thu, Dec 22, 2011
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I am almost on holiday hence starting from today, daily posts wil be brief and from next Saturday until January 8, I will probably not able to share my views.

Despite Tuesday's extreme high reading of TRIN = 0.17 and a sell off of NDX SPX managed to achieve a marginal higher high but the eod candlestick = Hanging Man could be a warning that a pull back is due.

I remain bullish for the short-term time frame given the reasons I have discussed several times, but I am also very cautious since price has not given enough clear information in order to have enough confidence to grasp on one of the potential EW patterns that in my opinion are the candidates to unravel the complex pattern that price has been unfolding up to now.

If we focus only on the pattern from the November 16 low, a potential impulsive up leg followed by a corrective pull back, it seems reasonable to expect more upside.

But the larger time frame pattern from the October 4 low, despite being bullish, opens the door to several EW patterns that have been already discussed in depth.

A major worry is related to how price will react when/if it approaches once again the obstacle of the 200 dsma which today stands at 1259.50

In the daily chart below we can see that price has been tracing corrective moves. In order to obtain a directional price needs to overcome the 200 dsma and achieve a higher high above 1267, otherwise the undecided moves could continue with a Triangle or Double ZZ that could shape a bullish flag.


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One of the major concerns for a bullish resolution remains the VIX, which yesterday closed below the lower BB of the envelope (20,20).

It seems reasonable to expect limited down side while the upside could be large with a mean reversion at 27.80


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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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