Daily Analysis

By: TheWaveTrading | Tue, Feb 14, 2012
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As discussed in the weekly analysis, SPX should be involved in a topping process.

If my EW count is correct, price should establish the top of the wave (3) of (C) off the October 4 low.

Today I don't have much to write, I am on a wait and see mode as all the "ingredients" for the overdue correction are in place, it is only a matter to let price confirm it.

Major Factors:

On Friday we had the first sign of weakness but a 1-day pullback is not enough and as a matter of fact price yesterday completely retraced Friday's sell off, therefore we don't have yet a confirmation that a top is in place.

Even if a top is not in place I am confident that we will "see" a correction of the December 19th. up leg very soon.

Given that yesterday price was once again unwilling to confirm the "awaited" reversal we cannot rule out another attempt to achieve a higher high.

Judging from the Dow Piercing Line candlestick, odds favour another push higher but if the Ending Diagonal is the correct pattern just a marginal higher high / Double Top should be the candidate for the long overdue reversal, therefore today we have to pay close attention on how price reacts once/if a higher high is achieved.


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Probably the strongest "warning" is being given by VIX, which by breaking a very large bullish falling wedge to the upside, it should have established some type of a bottom and consequently a trend reversal should be expected.

Yesterday's Hammer may have established the required higher low needed to strengthen the assumed reversal.


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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.

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