Weekly Technical Reviewof SPX

By: TheWaveTrading | Sun, Aug 26, 2012
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SPX Long-Term Count
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SPX Flat Option
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SPX Expanded Flat Option
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SPX Triangle Option
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Regarding the definition of the EWP of the assumed wave (B), in my opinion, the best way to label this price structure is a complex Triple Zig Zag = (ABC=W; X; ABC=Y; X, ABC=Z)

SPX - The Complex Triple ZZ
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In my opinion, in spite of having a new sell signal issued by the daily Stochastic and MACD, I doubt that price has reversed to the down side due to the following facts:

In addition we have the following critical events:

Therefore I believe that the Triple ZZ could have one more wave (C) up in the cards.

For the immediate time frame I "venture" to expect one more down leg before price resumes the uptrend with the last wave (C) up.

The target of the second down leg could be located in the range:

1382 (TL off the June 4 low) - 1371 (50 dma)

The lower range could be accomplished if price unfolds the H&S and the target is fulfilled.

If this scenario plays out then the equality extension target for the final wave (C) can be located in the range 1442 - 1454. In addition remember that at +/- 1445 we have the Trend Line that connects the May 2012 & April 2012 tops (weekly chart above)

If I am wrong and price has already completed the Triple ZZ, then since the initial down leg has a corrective look the Triangle Option should be the front-runner.

In the technical front there are no reasons to consider this recovery as sustainable:

SPX Momentum Daily
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NYSE Advance/Decline Volume

NYSE Summation Index

Conclusion:

Despite price has extended the current rebound above 1422; the internal structure of the move is clearly suggesting that price is involved in a countertrend move.

Additionally Momentum and Breadth indicators are confirming that price should be now involved in a topping process opening the door to a likely correction in September with at least a wave (C) down.

If my longer term scenario plays out then the near term correction will be shallow as it will not substantially breach the June lows.

Once the correction is completed I expect, during the last quarter of 2012, the resumption of the intermediate up trend, with one more up leg that will complete the wave (X) from the March 2009 lows.

 


 

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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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/