SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Fri, Aug 31, 2012
Print Email

I suggest disconnecting from all the rumors. We are not betting on the pools.

A major event is upon us and we don't know if Mr. Bernanke will say more than "we are ready to do whatever is needed".

It is just a personal opinion (so its worthless):

I believe that the major event is not today but next Thursday's ECB meeting.

Yesterday price made a "big statement" by breaking to the down side the tight trading range of the last few days that was suggesting a "holding" pattern. In addition the internal structure if the down leg can be considered impulsive.

Therefore odds are now large that my preferred short-term scenario that was calling for a Zig Zag down off the August 21 high should play out.

SPX: Complex Triple Zig Zag
Larger Image

If price has kicked off the wave (C) down then we know that price will either unfold an impulsive 5 - wave down leg or an ending diagonal.

Likewise we have:

Regardless of what Mr. Bernanke will say or not say today I know where my scenario is wrong as price must remain below the 20 d MA = 1407 and it cannot waste much time in triggering the third leg down.

Below in the 15 min chart I have my best interpretation of the short-term price action.

Larger Image

So this is what I believe is the most likely short-term scenario, BUT I have a major concern since the EUR has not made a lower low and it is now threatening to break above the previous high.

Larger Image

As a reminder I maintain the idea for SPX that the corrective counter trend move from the June 4 low is not over yet. Therefore once/if the current Zig Zag down is done I expect the launch of the last wave up of the Triple ZZ that will challenge 1426 with a potential target in the 1440 area.

Have a great weekend




Author: 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.

Disclaimer: The content of this article is for educational purposes only, the information supplied is not a recommendation to buy or sell any security or financial instrument.

Thewavetrading.com nor the owner can not be held responsible for any loses occurred from the information provided within the website.

The Information supplied cannot be copied or reproduced without the permission from the owner.

Copyright 2011-2016 TheWaveTrading

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com