- Tomorrow we have quarterly OPEX.
- On Sunday we have Greek elections (major event risk).
- Next Wednesday is FOMC day (major event risk).
It is not a bad idea, if tomorrow price does not "show" a clear setup, to be patient and wait until next Monday, since price will probably set a "course".
While I maintain an intermediate time frame bearish bias, since in my opinion SPX should unfold a Zig Zag from the April 2 top, we do have Technical & EW reasons to expect a larger rebound from the June 4 low, maybe in the range 1344-1363 which should establish the top of the wave (B). Once the wave (B) is in place I expect a wave (C) down with an initial extension target of 156 points.
Daily momentum indicators are now showing bearish warnings:
- The RSI has been rejected twice at the 50 line and yesterday it breached the trend line support in force since the June 4 low.
- Stochastic could on the verge of issuing a sell signal.
In the market breadth side, the McClellan Oscillator will not be a concern for the short term bullish scenario as long as it does not breach the zero line and the MA bullish cross is reversed.
The short-term price action remains choppy with back and forth swings, but what matters is that the internal structure is corrective, therefore the odds are larger for a bullish resolution.
Price so far is holding above the 10 d MA = 1306.
If this pivot support is breached then price could retest of the 200 d MA.
Clearly what is needed is the confirmation of a higher low.
The short-term pattern will depend upon if price holds above last Tuesday's lod of 1306.62
If price does not breach 1306.62 then we could have two Triangle options:
- Triangle Option 1:
- Triangle Option 2:
- If 1306.62 go then we will have to monitor the internal structure of the pullback and wait to see if the 200 d MA holds or it is breached.
Maybe the EUR is also involved in completing a triangle if price remains above 1.2440.
We don't have major extremes in short term breadth/momentum indicators, but CPCE is approaching the upper BB. This is a contrarian indicator.