Daily Analysis

By: TheWaveTrading | Tue, Jan 10, 2012
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Following the guidelines and the potential scenario discussed in the weekend post I maintain a bullish "near term" stance.

Among the 3 potential EW patterns that, in my opinion price could be tracing from the October 4 low, I am giving a higher probability to the Ending Diagonal option.

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Price, so far, has traced a 3 -wave up leg from the November 25 low; recall that if this is the assumed wave (III) of the ED it has to unfold a corrective pattern.

Time wise the ending pattern could be done by the end of January.

The lack of a clear s/t reversal pattern in addition to the fact that price is still far from the projected max. equality extension target at 1310.44 could allow more upside, maybe unfolding a Triple Zig Zag.

If today, a small pullback is in the cards, I don't expect the gap at 1257.60 to be closed.

On the upside this wave (III) should not extend above 1310.44

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The EUR attempt to establish a s/t bottom, if it achieved, it is another positive for my preferred equity scenario.

Regarding the larger time frame scenario, I am assuming that given the ovearll price structure + overbought readings + potential negative divergences + Sentiment + VIX falling wedge + etc. etc.. price is in the process of establishing an "important Top".

I mentioned that I am closely following NDX and KBE since both are tracing an impulsive wave structure from their December 19 lows, which is easier to track in order to be ready for the Top.

Today I add to the radar screen XLE, the Energy etf since in my opinion there is a potential Triangle break out.

The projected target for the wave (C) is: 76.50 - 83.79

If long use the gap at 69.13 as a s/t stop.

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Author: 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).

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