SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Fri, Sep 7, 2012
Print Email

The Bollinger Band set up + the converging internal structure of the pullback off the August 21 high resulted in a "ferocious" break out.

The media justifies the explosion by ECB action.

I justify the price action based upon the missing last wave up of the Triple Zig Zag off the June 4 lows.

Therefore I consider it an ending move. So no need to modify the short-term scenario, BUT a reversal has to occur soon.

I will begin to feel unease if price achieves a weekly close above 1445.

Next week I will pay close attention to:

1. Momentum indicators since:

Momentum indicators
Larger Image

2. McClellan Oscillator, which, in the bigger picture is showing huge negative divergences (it is still below its August peak) but in the shorter time frame it helped in suggesting an imminent launch of the current leg up with positive divergence. Now if price is approaching a top I would like to see the opposite (negative divergences).

$NYMO (NYSE McCleallan Oscillator (Ratio Adjusted) (EOD)) INDX
Larger Image

3. VIX, since if SPX is approaching a top, the "fear indicator" should preferably establish a higher low (Above the August 17 low)

Yesterday it closed at the 20 d MA with a Black Marubozu; hence today we should see a small range body.

Trend Line Resistance
Larger Image

Lets move on to the SPX charts.

So with yesterday´s impressive rally we now have price above the upper BB (Note of caution), but at the same time, usually, a "White Marubozu candlestick is followed by a narrow range body hence a higher high cannot be ruled out (I am not saying that if today we get the higher high it is the Top)

Just as an indication the common extension target range for the current wave up is = 1447 / 1475

While in order to consider that this move is over, initially, we need an eod print below 1422

EWP Chart
Larger Image

Regarding the EWP form the June 4 low I cannot modify my interpretation. It is an unquestionable corrective structure (Countertrend).

My best count remains a Triple Zig Zag, which means that price is now unfolding the last wave (C) up.

Price Seems To Be Shaping a Bearish Rising Wedge
Larger Image

In addition we could make the case that from the July peak price is shaping a bearish rising wedge.

I give a great importance to the area of 1440 - 1445 since if my scenario is correct I don't want to see price breaking above the upper converging trend line.

Today we have another event risk with the release of NFP then next week we have the FOMC.


Conclusion:

Have a great weekend.

 


 

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.

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 2011-2014 TheWaveTrading

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

SEARCH





TRUE MONEY SUPPLY

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