Daily Analysis

By: TheWaveTrading | Wed, Apr 18, 2012
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SPX short-term price action:

I maintain what I mentioned yesterday: "I am expecting another down leg, a wave (C), off the April 2 peak that should at least match the 64.80 points drop of the first down leg."

Monday's doji proved that the wave (B) was not over. The internal price structure suggests that price is unfolding a counter trend Zig Zag bounce that should be capped at 1398.

In this zone we have a cluster of resistance with the 1 x 1 target = 1396; the 0.618 retracement = 1397,51 & a gap fill = 1398, which should represent a potential reversal point.

If the assumed wave (B) tops in this area then the following wave (C) down could aim at the 20w MA = 1328.

On the other hand if price is able to achieve an eod print above 1398 then even though the idea of pending wave (C) down will not be invalidated price could retest the April 2 peak. If this scenario plays out then price should be unfolding a Flat, in which case the pending wave (C) will most likely bottom at last Tuesday's lod = 1357.58


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The EWP of IWM (Russell 2000 etf) is probably the best example that suggests that we should expect more weakness ahead.

Here we have a clear impulsive down leg followed by counter trend move. This price structure strongly suggests that there is at least one more pending down leg.


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Yesterday strong rally has pushed Trin into overbought territory, while the RSI has reached the Trend Line Resistance. Therefore today the odds of a reversal are large.


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Last Thursday, I mentioned that VIX could bee involved in unfolding an Inverted H&S, by shaping the right shoulder. So far the idea is on track. If this pattern plays out then the target is at 28.60, which should coincide with the expected SPX wave (C) down.


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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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