Daily Analysis

By: TheWaveTrading | Fri, Jul 6, 2012
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The odds that SPX is forming a bearish weekly candlestick are large; so far we have a Spinning Top.

Today's unknown traders reaction to NFP release adds a lot of uncertainty regarding the short-term outcome of the EWP in progress.

But we "know" that:

In the weekly chart below I highlight the potential path:

SPX Weekly Chart
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I am quite confident regarding this intermediate time frame outcome.

Regarding the short-term price action my confidence on the exact location of price within the corrective EWP in progress is smaller.

I believe that price is unfolding a Double Zig Zag but until we see the internal structure of the next pullback there is no way that we can have assurance that price is completing the wave (A) of the second Zig Zag or the wave (C) which would imply that the bounce is over.

What I can say is that if the pullback is corrective and it does not breach the 50 d MA = 1340 SPX then price will most likely undertake the last wave (C) up with a target in the range 1389 - 1406 (SPX).

In the case of NDX, the idea that price should unfold an upward Zig Zag off the June 28 higher low looks ok, if in the next pullback, price does not breach the 0.618 retracement.

NDX Daily Chart
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While for the DOW (and SPX as well) the internal structure is open to both interpretations:

DOW
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In addition to the information that will be given by the price in the next pullback (which I expect as early as today), market breadth and momentum indicators should give valuable information regarding the longevity of the current rebound.

RSI
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NYSE McClellan Oscillator

VIX Wedge
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This weekend I am out with family and friends so I will not post the technical update next Sunday.

Have a great weekend everyone.

 


 

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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