Today we will witness at the opening of the US market and probably during the first two hours of trading an excitement moment as the entire planet will be trading the price reaction to the NFP.
The time has come to validate or kill my short-term scenario of SPX that calls for:
- Price has established the top of the wave (3) of (C) from the November 25 low.
- The correction of the wave (4) is in progress.
- The first down leg is expected to unfold a Zig Zag therefore the current bounce is a wave (B) that is expected to establish a lower high.
I have no clues yet regarding the EWP that will establish the low of the wave (4). At the moment I am guessing either a Flat or a Triangle. We should not rule out either that, given the strength of the US market, the next down could complete the EWP, but I doubt it.
Since price has recovered above the 0.618 retracement and it has even closed Tuesday's gap down we have to be open minded since
- if price achieves an eod print above 1370
- if it consolidated above the 20 dsma = 1360 until FED day next Tuesday then the bearish set up will be delayed as price could retest the pervious high (Double Top).
But maybe too many if......
Now as far as the technical indicators are concerned nothing has changed. We still have sell signals across the board.
- Stochastic: the sell signal remains in force.
- Summation Index: the sell signal remains in force.
- McClellan Oscillator: It has bounced from the extreme low reading reached last Tuesday but it is still below the zero line, and the 5d<10d MA.
- NYSE 10d MA of Adv-Dec Volume remains below the zero line.
Yesterday I mentioned that I would have closely monitored AAPL and the EUR:
- AAPL: The wave (B) Zig Zag can be now counted as completed, therefore if the count is the correct one the next directional move will occur to the down side with an impulsive wave (C) with an initial projected length in the range of 32$-52$
EUR: I have already mentioned that I don't have a confident count of the overall EWP off the January's low but the large impulsive down leg which price unfolded from the February 29 peak which also confirmed a Double Top has clearly shifted the trend to the down side.
Where I am more confident is regarding the s/t pattern as in my opinion price should be on the verge of completing a zig zag. If this scenario plays out then I expect soon the resumption of selling pressure.
Here In my opinion the odds are very large that price has completed the counter trend bounce with a truncated wave (5) of (C) within an Ending Diagonal. In addition price has confirmed a likely Head & Shoulder and atm it has even lost the horizontal support at 1.3237
If the EUR has finished the "bounce" and this afternoon AAPL confirms the wave (B) EWP then the SPX scenario that I am working with will be on track.
If the EUR, AAPL & SPX short-term scenarios play out then TVIX should break to the upside a potential bullish falling wedge.
Have a great weekend everyone.