Daily Analysis

By: TheWaveTrading | Fri, May 11, 2012
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Today, since I don't have much to add new from what I have been posting in the last few days, I prefer to summarize my view regarding my preferred scenario, leaving the details for the weekend update.

I maintain, depending upon the time frame, the following bias for SPX:


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The internal structure, of the current pullback is clearly corrective, but most likely not over.

We have to be "astute" since price is giving us a major statement, as the pattern so far does not suggest extremely bearish implications.

But we have a problem in order to have a confident location of price within the EWP. Since corrective patterns can morph easily.

For the time being I am assuming that price is now involved in tracing either the wave (C) of a larger Zig Zag, which would imply the resumption of more down side shortly (once a relief bounce is completed), or a more complex Double ZZ, which implies a larger rebound.

I am considering the 50 d MA = 1386 as the line in the sand between this two options. Given the weakness seen so far it seems more likely the wave (2) option with a target in the range 1375-1378.

Regarding the potential target, in the weekly chart below I have highlighted the range 1300-1285.

We can also see that the 1340 area is the last obstacle that bears have to break in order to kick off the expected move towards the target box.

Short-term momentum indicators are oversold and CPCE is extremely high.

And the EUR is also oversold. Like for the SPX's short-term scenario I expect more down side for this pair but after a relief bounce. The Gap at 1.3089 should not be closed if the EWP that I am following is the correct one.


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To sum up:

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).

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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