Daily Analysis

By: TheWaveTrading | Tue, Apr 24, 2012
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As I mentioned in my last weekend update SPX short-term price action is clearly bearish:

"It does not happen so often to have a "crystal clear" set up such as the one that price has been unfolding from the April 2 peak:

Once the wave (C) is done price could complete the first part of a larger corrective EWP = wave (A) of a Flat /Triangle or a larger ZZ".

Unfortunately, judging from the DOW and SPX price action, I am afraid that price has not completed yet the wave (B).

The 3 potential short-term EWP I proposed on Sunday have been killed. It is now very questionable that the wave (B) is in place unless we deploy it with a truncated wave (c), something that is always very tricky.


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The Dow certainly does not have an ending pattern and in addition the down side action is clearly corrective suggesting that the countertrend "sideways move" is not over yet.


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The immediate time frame "scene" is confusing, but I am confident that this pattern will ultimately lead the way to one more down leg.

NDX maybe could help clarifying the corrective mess of SPX and the DOW if it accelerates to the down side the thrust out of a potential Triangle wave (B).

Today we should keep an eye at yesterday's gap down since it should not be closed if price is involved with an impulsive wave (C) down.


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This could be the SPX truncated wave (B) idea:


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The EUR is the key market to watch since yesterday's impulsive down leg should result in a potential trend reversal. A bearish resumption should switch the equity market to a risk off mode.


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VIX should also provide insights regarding the "true nature" of the assumed SPX bearish set-up.

Here there are no counting issues. It either confirms the bearish equity scenario by confirming the Inverted H&S or it fails.


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Momentum in the mean time keeps giving bearish vibrations:


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Today after the close we have AAPL earnings release and tomorrow the "ominous" FOMC day.

 


 

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.

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