Daily Analysis

By: TheWaveTrading | Wed, Mar 14, 2012
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Yesterday I mentioned:

"I cannot fight THEM with EWP rules and guidelines, so if the wave (5) of (C) is already in progress let be it."

and

"The short-term price action still suggests that the correction could have more business to accomplish but my confidence atm is only 50%. Certainly a wave (5) requires more conviction from buyers, which has to translate in an improvement of the Mc Clellan Oscillator and the NYSE Adv-Dec Volume."

What a winning chess manoeuvre was executed yesterday by Ben and Jamie.

When the market seemed willing to buy the rumour & sell the news after the release of the FOMC statement, Mr Dimon announced that JPMorgan will raise the dividend and announced a buy-back program. When the news hit the tape financials broke out aggressively with SPX price shooting higher in the final hour of treading leaving a White Marubozu candlestick. (Bullish action but often it is an exhaustion candlestick).

So we finally have the wave (5) of (C) rocketing higher.


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How much upside can be achieved by the wave (5)?


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As a reminder of what I expect from price:

Lets go back to the US financials since Banks were the reason of the last hour rally.

Here we got the triangle thrust after a very shallow wave (4). Keep in mind that triangles are continuation patterns but they also "announce" the proximity of a top. (Here we also have a Marubozu).


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The most likely EWP is a Zig Zag with the wave (C) unfolding a creative impulsive up leg or an Ending Diagonal. We shall see when/if we get a pullback.


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SPX Short Term Price Action:

A wave (5) can only unfold an Impulsive up leg or an Ending Diagonal


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Therefore the short-term price reaction in the next 1 - 2 days will most likely define the EWP.

For the immediate time frame with SPX daily candlestick above the BB, the eod print of Trin at 0.38 and Tick at 1047 the odds of at least a mild pullback are larger than a substantial move higher.

In the Technical front:


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Now it is the time to monitor very closely VIX:


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It does not move very often below the BB of the lower envelope. When it does the odds of at least a mean reversion move are very large. Yesterday it closed with a bullish Inverted Hammer.

A short-term warning of a sell equity signal is issued with an eod print above 15.88

The mid point of the envelope today stands in the area of 18.

 


 

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).

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