Daily Analysis

By: TheWaveTrading | Tue, Jun 5, 2012
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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.

SPX
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As I mentioned on Sunday: "important bottoms are nourished by news".

The critical dates for market mover news are:

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.

SPX
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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:

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:

SPX
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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).

SPX
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VIX remains the best short-term indicator to be monitored.

The target of the Inverted H&S = 28.50 is getting closer.

VIX
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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.

 


 

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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