Daily Analysis

By: TheWaveTrading | Fri, Feb 17, 2012
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Astonishing response from the bulls to Wednesday's potential reversal pattern, which was triggered from the ECB announcement of its intention to swap its current holding of Greek bonds for newly, issued bonds. Don't ask me what it means.........

The EUR, which is best gauge of risk sentiment, had a strong reversal after that the critical support in the 1.3020 area was seriously challenged.

The dip below the 50 dsma was aggressively bought.

Despite this impressive move I believe that the EUR has began a corrective wave (X) pattern that may unfold a Zig Zag, shaping a bullish flag or a Triangle.

In the daily chart below I have the Zig Zag option:


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If I am wrong and the EUR resumes the uptrend off the January's lows then the equity market "will never top!!!!!"

Probably it is worthwhile to monitor commodities currencies (AUD/USD, USD/CAD) for warnings of possible reversal patterns.

Regarding the equity market nothing has changed despite yesterday strong rally.

"Excuses moi", if I keep maintaining a bearish stance for the short-term time frame.

I am strongly confident that price is involved in a topping process.

I don't want to bore you with a ton of bearish charts of indicators that are screaming that something is wrong regarding this buying spree. If you don't mind I post just a few:

McClellan Oscillator

NYSE % Stocks > 50dsma

MACD Sell Signal
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NYSE Summation Index

So today we have OPEX with SPX at a multi month high and on Monday US markets are closed hence I suspect a pullback by eod, well this is an "easy" prediction.

We continue to have the same bearish patterns in progress on both the DOW and the SPX.

DOW Bearing Ending Diagonal
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SPX Rising Bearish Wedge
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Regarding the "required ending pattern" maybe price is involved in an Ending Diagonal. It is only a "project" and it requires a pullback today.

Required Ending Pattern
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I suggest to monitor closely VIX, which as I have already mentioned several times, in my opinion it has already established a potential bottom and it is now in the process of establishing a trend reversal, something that if it is correct does note bode well for the equity market.

VIX
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I am also looking for bearish setups in the IBEX since I think that this one is already in a corrective mode.

Well that is all for today, while I am on the lookout for the definitive exhaustion move, I wish you a great weekend.

 


 

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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