SPX: Follow Up of the Short Term EWP
Again today I don't have much "new" to say regarding the short-term scenario.
The FED announcement due at 12:30 et will "determine" if price will complete the corrective EWP off the June lows in the range 1440 - 1450 or if there is going to be a "blow out top" at the following resistance located at the weekly gap at 1478.49.
Regarding the longer-term time frame I am moving to a higher probability the EWP options that imply that price, in the near future, will not revisit the June lows as long as in the next pull back price does not breach the 200 d MA which today stands at 1346. Therefore the approaching top may be a wave (A) of a larger Zig Zag up.
Usually in an extended move price unfolds a Triangle or an Ending Diagonal. I don't see any clear terminal pattern in the case of SPX, but I do "see" a potential Ending Diagonal for NDX, which needs the last wave up in order to be considered completed.
In addition NDX daily momentum is showing an obvious deterioration:
- RSI: Negative divergence + TL off the June lows is under attack.
- Stochastic has rolled over + bearish cross.
- MACD: Bearish cross
I have been mentioning that the divergence between VIX & SPX is also favoring at least for the short-term a bearish outcome.
Today I suggest monitoring XIV (Inverse VIX etf), which has been in sync with SPX since the kick off of the summer rally. So far, Monday's Shooting Star could have established a potential top. If the negative divergence were maintained it would be a big red flag for the equity bulls.
Lastly if SPX is approaching, maybe only a short-term top, the EUR has to show weakness.