Daily Analysis

By: TheWaveTrading | Wed, Feb 8, 2012
Print Email

SPX is refusing to give in an overdue correction, something that momentum and breadth indicators have been warning for a while.

It dies not matter which indicator is your preferred one, across the board the suggestion is that price should not have much more upside left. And the "logical" next move should be at least 1-2 weeks of consolidation.

In addition as price has reached the horizontal resistance at 1347 it could be forming a potential "topping" candlestick similar to the one we had the last week of January. When this sort of candlesticks are forming price could be unfolding a potential ending pattern.

Above 1347 the next resistance is located at 1356.

Larger Image

The awaited top should allow probably at least 2 weeks of a corrective pullback, followed by further upside in order to complete the Zig Zag off the October 4 low. The projected target for the wave (C) is located in the 1376 area. If this scenario plays out then, once the wave (C) is in place I will reassess the longer-term time frame outlook.

I keep monitoring:

Larger Image

Larger Image

Therefore the combination of extreme overbought readings + an overly mature up leg + a converging structure of VIX etc. ...should "spark off" a sudden and sharp move to the down side. Probably a catalyst is needed.

Larger Image




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).

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.

Disclaimer: The content of this article is for educational purposes only, the information supplied is not a recommendation to buy or sell any security or financial instrument.

Thewavetrading.com nor the owner can not be held responsible for any loses occurred from the information provided within the website.

The Information supplied cannot be copied or reproduced without the permission from the owner.

Copyright 2011-2016 TheWaveTrading

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com