SPX: Follow Up of the Short Term EWP

By: TheWaveTrading | Tue, Sep 11, 2012
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In the last weekend technical update I have discussed why I am "enlisting" an alternative long-term count, which would resolve the issue of the resumption of the intermediate up trend with a corrective up leg.

But at the moment I don't care, since we have to wait for the next pullback in order to assess the long-term EWP options.

Now I am only focused on the short-term time frame since it is my belief that the unquestionable corrective price structure from the June 4 low should be almost completed.

In addition to suggesting that price has unfolded a complex Triple Zig Zag, and within the EWP price should be now involved in the final wave (Z) it is quite obvious that price has formed a potential bearish rising wedge.

Keep in mind that rising wedges usually open the door to "violent" moves to the down side.

SPX Daily
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An ideal reversal would occur at the upper trend line, in addition one more up leg would probably allow the appearance of negative divergence in my preferred short term breadth indicator = The McClellan oscillator.

NYSE McCLellan Oscillator

An Ending Diagonal is the "dream" terminal move, which would put the icing on the cake:

SPX Triple Zig Zag
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Yesterday two issues clearly stand out:

NDX Daily
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In addition here we also have a negative divergence on both the RSI and Stochastic while the MACD has failed to issue a buy signal during the last up leg

The RSI trend line support has to be breached if the EWP off the June 4 low is completed.

NDX Momentim
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VIX Daily
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Conclusion:

 


 

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.

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My analysis is based upon traditional Technical Analysis, Elliot Wave guidelines and investor sentiment.

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