Daily Analysis

By: TheWaveTrading | Wed, Jan 25, 2012
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Yesterday, SPX had a s/t potential reversal pattern known as H&S, but the threat was short lived as dip buyers once again humiliated the bears attempt.

But now we know the pivot price that should reverse the trend to the downside = 1306.06; an eod print below it.

We have the third consecutive small range body, an indication that Mr Market is waiting for today's FED monetary policy announcement.

Due to the overbought momentum indicators, in my opinion by eod, price may establish a bearish set up, in other words as price moves higher the R/R is shrinking for the bulls.

I have already mentioned that the Mc Clellan Oscillator is warning that this up leg is loosing steam; maybe today's FOMC will trigger the next directional move.

I remain focused in the EW pattern off the November 25 low, which should unfold an impulsive up leg = 5 waves within a Zig Zag from the November 4 low.

The "mission" for the wave (C) is to reach 1376.

If this count is correct price is in the process of establishing the top of the wave (3). This pattern will need a wave (4) pull back. The line in the sand is 1267.06

Once the wave (4) is in place the last wave (5) up will establish a multi week/month Top.

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Short Term EW pattern:

I am assuming that price needs to complete a 5-wave up leg off December 28 lod = 1248.64

If this s/t scenario is correct price needs to complete a wave (IV) pullback, maybe with a flat /triangle, which will be followed by the last wave up

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The potential top is obviously located at the resistance trend line off the 2007 top = 1229-1331.

In addition, in the weekly time frame, a 3 line bearish set up may be forming = White Marubozu + Small Range Body.

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If a reversal is confirmed next week, then a key support is at the weekly gap at 1289.09 while price is not expected to establish an eow print below the 50 w at 1268

If this scenario pan out then maybe AAPL will establish the top of the wave (III) of a potential Ending Diagonal. Today's it is expected a large gap up.

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Author: TheWaveTrading


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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.

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