In my last weekend up date I mentioned that I "touched up" my SPX "road map".
I was looking for a larger corrective Zig Zag from the April 2 peak with a target in the range 1340 - 1292 before the resumption of the intermediate up trend.
But after last Wednesday's price statement in conjunction with a simultaneous reversal of market breadth I now have to consider that on April 23 the wave (c) truncated and consequently the correction, btw it has been extremely shallow, it is over.
Therefore my new scenario calls for a pending wave (5) up that will complete the EWP from the October 4 low. The future top will be my assumed wave (A) of the large time frame scenario.
I will maintain this scenario as long as price does not breach the now critical pivot support at 1358.79.
You like it or not this scenario is connected with the "idea" that the EUR also has more business to the upside in order to complete a Zig Zag from the January 2012 low that may have a tough time to break the 200 w MA = 1.3700.
So far so good.
If last week AAPL and the FED seemed to have officially kicked off the beginning of SPX wave (5), on Monday the EUR has put a dent in the short-term immediate bullish scenario, with a likely price reversal.
Consequently this reversal has opened the door for some more follow through to the down side. Therefore I consider improbable that the pending SPX wave (5) can be launched as long as the EUR does not achieves a bottom.
Regarding the potential EWP of the EUR I have 2 scenarios in mind, both are calling for a large wave (C) up once the corrective pattern from the February top is over:
- Triple Zig Zag wave (B): This scenario calls for a Zig Zag down with a potential target in the area of 1.2960 if price breaches the now critical pivot support at 1.3100.
- Triangle wave (B): The end result is the same as for the TZZ option. The only difference is that price has to establish a bottom above 1.2993.
The Bund now becomes also a major player for my primary equity scenario since I don't expect a major move to the upside of the European equity market (I am hinting mainly to the DAX) until the Bund reverse to the down side. And it seems that the impulsive up leg from the March 23 low is not over yet.
So far so good.
Now nets go back to the SPX potential EWP.
In my opinion the up leg from the April 23 low is not impulsive therefore I have to put on quarantine the impulsive wave (5) option.
If this up leg is not impulsive then:
- The (5) will unfold an Ending Diagonal; hence we are now in the wave (II) pullback.
- We don't have the bottom of the wave (4) yet. We are having a false or a failure to resume the up trend. If this scenario plays out then price could be unfolding a Triangle:
For the immediate time frame the odds of a large pullback are quite large if price is carving out the right shoulder of a H&S pattern that has a target at 1372.
To sum up:
I will maintain a bullish bias as long as price does not break the critical pivot support at 1358.79.
My preferred SPX scenario assumes that price has a pending wave (5) up.
But the kick off the wave (5) rally has been delayed until the EUR "finds" a bottom.
I don't know if tomorrow I will be able to publish the daily equity up-date. If I can't then I wish you in advance a great W/E.