Daily Analysis

By: TheWaveTrading | Fri, Apr 13, 2012
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Today I don't have many "fancy" ideas to share so I will keep it very short.

Wednesday's Harami was suggesting more follow-throughs to the upside, but not a rally coming out of nowhere from the opening to the closing bell.

Bulls launched an unexpected rocket in order to save the Trend Line Support from the October lows and easily reached the lower range of the target box (1386.87-1398.08) I suggested as a potential top for what I still consider a countertrend bounce wave (B), which will be followed by at least one more down leg.

I maintain the idea that price has begun a corrective phase that will retrace a portion of the 3 - wave rally from the October 4 low. But nothing can be "written on stone" in a market environment where HFT/Program Trading can trigger "monster moves".

In addition we have to deal with corrective down legs, which are not Bear friendly.

Barring a "V Bottom" which would imply that EWP off the November 25 low is not done yet, I still consider that the initial down leg off the October 2 peak is a wave (A) within a larger corrective Zig Zag, therefore a pending wave (C) is expected to revisit at least the 1340 zone.


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For the short-term, since there is not an ending pattern in sight I expect more upside that should be capped by the 1400 area, where we have a cluster of resistance with the 0.618 retracement = 1397.5, a gap fill = 1398.08 and the 20 d = 1400.

Since we have an overbought Trin reading at 0.43, for today I expect a potential sideways move that should shape a small range body. Hence the pattern resolution will most likely postponed into next week.


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My preferred short-term scenario, in my opinion, fits with a "logical" minimum 2 down legs move that is "required" in a corrective EWP.

We could use IWM as a "proxy" of this idea.

I will establish as the line in the sand the 0.618 retracement.

If above it then we cannot rule out a retest of the April's peak.


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Yesterday VIX collapsed 14% approaching the critical support range 16.70 - 16.16.

That range must hold; otherwise my short-term bearish equity ideas will be seriously wounded.

I am watching and waiting to see if the "project of an Inverted H&S" can materialize with the right shoulder.


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On Saturday I am going to my niece wedding. I am afraid that the party will end very late, therefore depending upon the intensity of Sunday hangover I might not post the usual weekend up-date in which case I will see you again on Tweeter on Monday.

Have 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).

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