Daily Analysis

By: TheWaveTrading | Thu, Mar 1, 2012
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Price is finally aligning in the direction that breadth and momentum indicators have been warning since the end of January.

Yesterday I mentioned that: "1354 SPX remains the # that must be smashed in order to officially unveil the overdue pullback, in the mean time as price is unfolding a very likely ending diagonal price can either reverse to the down side suddenly without "telling anyone" or to continue to creep higher provided price does not breaks the upper converging trend line resistance. Keep in mind though that when price is in the hands of the last "bag holder" price will "fall off a cliff" as when an ED is finished the first move is always fierce."

Judging from yesterday's price action which traced an impulsive 5-wave down leg, we have very large odds that the overdue correction has been "inaugurated".

Price still has to achieve an eod print below DOW 12882.97 and SPX 1354.92, if bears achieve this goal then we will have the official kick off of the correction.

SPX
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I remind you that I am not expecting a major top of SPX; instead I am looking for a wave (4) pullback.

If my scenario is on track the wave (4) will be established with a corrective wave structure that, if the alternation guideline is satisfied, should be carried out with a Flat or a Triangle.

The potential target range is located in the range 1325 - 1300. In my opinion price should have as an obvious magnet the trend line support and the 50 dsma.

A move below 1290 could jeopardize my scenario.

The longer time frame main idea remains the same as I expect price to complete the Zig Zag from the October 4 low, therefore once the assumed wave (4) is in pace I expect one more impulsive wave (5) up.

SPX
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I am aware that, since the end of January we have seen several bearish set ups that have not "come to fruition", but this time it looks and feels different, since the odds are very large that the overdue US equity pullback will open the door also to "risk liquidation"

As you know I always keep an eye on the EUR, since I think is the best gauge of the "European Risk".

Well the EUR has a likely Double Top in addition to an impulsive down leg. This means that a correction is most likely in progress.

Here I am working with a DZZ which implies that price should know unfold a corrective wave (B) with an initial target at the rising trend line support - gap fill (1,3145).

The potential EWP should be a Zig Zag or Double ZZ and I don't expect a move below 1.2970.

Once/if the wave (B) is in place then I expect the resumption of the EWP from the January lows with a projected target in the range 1.3670-1.4100.

SPX
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Keep in mind that a reversal of the EUR should trigger "Risk Off " on the commodity bloc, therefore I expect weakness in oil / gold / silver etc......

 


 

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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