Daily Analysis

By: TheWaveTrading | Thu, Jan 19, 2012
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US stock market has now reached overhead resistance, NDX stands out since it is at less then 13 points away from last summer's top.


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NYSE Tick eod print at 1082 may reflects buying exhaustion; we also have some negative divergence in the McClellan oscillator.

In an extended move such as this one, these warnings have to be taken seriously, since in my opinion now the R/R is larger for a pause, which should lead to a multi day pullback, but not to a major reversal, since, if the wave pattern that I am following is correct, the "wave (B)" should have more upside.

In the mean time the negative divergence of the daily RSI has been erased, strengthening the scenario, which calls for at least one more up leg after the overdue pullback.


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SPX is in addition reaching the 1 x 1 projection of this second up leg off the Nov 25 low = 1310.77

I am not interested in picking the top instead I am anxious to follow the awaited pullback, which should reach the 200 dsma and gap fill at 1257.60

As long as price makes a statement, the 2 scenarios that I am working with, have atm equal chances:

  1. Impulsive wave (C)

or

  1. Ending Diagonal wave (C)


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Today we have BAC & MO before the open and "heavyweight" technology companies reporting after the close: IBM, INTC, GOOG & MSFT.

I guess that a miss, above all in INTC, should trigger on Friday profit taking in the overbought NDX.  On Friday we also have monthly OPEX , a potential "turn window".

In the mean time the EUR is attempting to establish a multi week bottom with price and RSI breaking trend line resistances

An eod print above 1.2880 would be a huge statement otherwise we will have to wait for a daily higher low.


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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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