So far the market reaction to Friday's loss of the 200 d MA has been subdued. Instead of a "black Monday" price seems to have found a short-term support at the December 2011 high at 1267. The gap down was filled leaving in the daily chart a Doji.
A Doji in a down leg suggests a potential bounce attempt.
But indisputably price has not completed yet the EWP from the April 2 top.
Therefore I expect more down side action.
My target "range box" remains at: 1258 - TL Support from the March 09 low, which by the end of June it will stand at 1190.
We can keep an eye at the Fibonacci retracements 1249 - 1208 as the potential bottoming zone.
As a reminder in the daily chart below I have labeled my preferred count.
As I mentioned on Sunday: "important bottoms are nourished by news".
The critical dates for market mover news are:
- June 6 Governing Council meeting of the ECB.
- June 17 Greek elections.
- June 18 G-20 summit.
- June 20 FOMC meeting.
- June 21 Governing Council and General Council meeting of the ECB.
- June 28 EU summit.
Once the Geek elections are out of the way, I guess that the market expectation of a "rescue" from the FED/ECB will increase considerably.
Therefore in addition to the EW count, which should guide us into a potential important bottom, the market will be "subject" to headline news.
As you know, despite many elloticians are counting the down leg from the April 2 top as a fiver, in my opinion price is unfolding a Double Zig Zag.
Therefore price is now involved in the last wave (C) down.
This final wave (C) has to be either impulsive or unfold an ending diagonal.
Just as an indication the projected target range of the wave (C) is located in the range 1259 - 1212.
So far we only have a 3-wave down leg therefore:
- If price is unfolding the impulsive option then we know that a potential wave (4) bounce cannot overlap above 1298.90.
- If price is unfolding an ending diagonal then the bounce could be a larger wave (II) of the assumed ED.
Hence EW wise I have a strong argument for expecting more down side before we can consider completed the EWP.
Today It remains to be seen if price is able or it fails to achieve an eod print above the 200 d MA = 1285.
Below in the 30 min chart, we can deduce the following:
- We have only a 3-wave down leg. (NO BOTTOM)
- Then the EWP so far can be either wave (3) / (I) of (3) or wave (I) of a "speculative Ending Diagonal".
- If price is able to achieve the eod print above 1285 then we have to monitor 2 obvious resistance areas: 1291 & 1298.90
- If above 1291 then we can rule out an extended wave (3)
- If above 1298.90 we can rule out the wave (C) impulsive option in which case the ED idea should pan out.
The daily RSI has a positive divergence, which is odd for a wave (3) down leg.
Then maybe an extended wave (3) & the ED option have more odds of being the correct EWP.
Hence today, hopefully, depending how price behaves at the 200 d MA it will most likely begin to give is clues regarding the "real intentions" of how price will shape the wave (C).
VIX remains the best short-term indicator to be monitored.
The target of the Inverted H&S = 28.50 is getting closer.
From the March 16 lows it seems that VIX could be shaping a bearish rising wedge, which is probably not completed yet. The wedge structure if it pan out, it would be aligned with the idea that price is approaching a potential important bottom.
Yesterday's shooting star is suggesting at least a short-term pause.
Keep in mind SPX Doji that is suggesting a short-term bounce.
The 200 d MA is at 25.12 (SPX 200 d MA = 1285), while the critical horizontal support is at 24.62
It is obvious that if my SPX short term count is correct VIX cannot breach the lower TL support located in the area of 24.