Daily Analysis

By: TheWaveTrading | Wed, Jan 18, 2012
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Reminder of "my Big Picture":

My primary scenario calls for a large corrective pattern from this summer highs:


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This weekend I have discussed that despite the EW pattern is not completed, we already have several warnings in the technical front and from sentiment indicators therefore we have to be open minded and "vigilant" since the higher the price it goes, in this counter trend rebound, the R/R will increase for the short side.

Within the complexity of the wave structure, I have discussed several times that in my opinion price has "only" 2 options: either an ED or a large 5-wave impulsive up leg.

We know where the ED is wrong as if price refuses to "enjoy" a pause and marks an eod/intraday print above 1310.44 - 1310.76 (depending upon where you place the top of the first wave) the ED scenario will be aborted.

Therefore it is just a matter of waiting for price to end the up leg off December 19 low and follow the pullback.

If in the current up trend, price does not extends above 1310.77, the ED will need the overlap below 1267.06 during the wave (IV) pullback and should bottom at the 200 dsma & gap fill = 1257.60 from where the last corrective wave (V) will complete the wedge.

Unfortunately the pullback may not allow us to differentiate the ED from the impulsive option, but atm this is not the trading problem, as the bias is still up until proven otherwise.


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I believe that the forex market will play a major role in establishing the "length" of the equity wave (B).

In this respect the EUR is holding the key as if it achieves to establish the bottom of the down leg off its October peak then the following counter trend rebound should maintain a proportionality, time & price wise, with the preceding down leg, therefore I would guess that SPX could retest the summers highs.

Regarding the potential ending pattern I am "working" with, a potential Ending Diagonal, it still needs an eod print above 1.2878 in order to be considered completed.


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For the immediate time frame despite yesterday's daily shooting star, if my s/t count is correct price needs one more push up.

Hence today price should not close yesterday's gap at 1289.09

On the other hand the shooting star will be confirmed with a move below 1277.58 in which case the gap at 1257.60 and the 200 dsma will come into play.


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Above I have the impulsive count but you could label it also as a corrective up leg, hence, the ED is also valid.

Thursday could be a turn window with INTC report.

 


 

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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