Daily Analysis

By: TheWaveTrading | Wed, Jun 13, 2012
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Technical + Elliot Wave Analysis cannot predict with 100 % assurance future price action but it can be wisely used as a guide in choosing the most likely outcome.

I maintain the scenario, which calls that on June 4 price has established the bottom of the wave (A) of a larger potential Zig Zag from the April 2 top.

This EW option implies that price will unfold a 3 -wave pattern with two down legs. Therefore now price is involved with the counter trend wave (B) that will be followed by the second down leg wave (C).

A counter trend bounce usually is expected to top:

Therefore theoretically for SPX the assumed wave (B) target range is located in the range 1344.46 - 1362.84. In addition we have a gap that could be filled at 1353.39 while the 50 d MA which, today stands at 1353 and is pointing down, is the critical MA to be watched.

SPX
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Additional weakness towards the 1292 area could shape a bullish Inverted H&S that has a theoretical target at 1404.

Critical levels:

Time wise, during the last week of June price is expected to establish the top of the wave (B). Then a wave (C) down will most likely head towards the Trend Line support in force since the March 09 lows. Initially we can assign a projected 155 points drop.

SPX
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Short-Term price action:

So far price is involved in a consolidation phase with immediate support at the 10 d MA = 1306 and resistance at 1335.50

I would not rule out that price has not completed yet a corrective patter from last Monday's hod.

Therefore we could still have a pending wave (c) down with a target in the range 1301 - 1293.

If this is the case then the mentioned Inverted HS pattern could pan out although it remains to be seen if the 1404 target will be achieved, instead I would be looking at a potential 1 x 1 extension target of 68 points.

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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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