Daily Analysis

By: TheWaveTrading | Wed, Feb 8, 2012
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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.


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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:


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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.


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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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